Alibaba Group has agreed to sell video game developer Lingxi Games to Asian private equity firm Trustar Capital in a deal reportedly worth at least $1.5 billion, continuing the Chinese technology giant’s push to shed non-core assets and concentrate resources on artificial intelligence and cloud computing. Alibaba and Trustar have reached a formal agreement following several rounds of negotiations, according to The WSJ.
Under the agreement, Alibaba will transfer its entire ownership interest in Lingxi Games to Trustar.
The transaction value, expected closing date and details regarding regulatory approvals and other closing conditions have not been formally disclosed by the companies.
The sale represents another significant step in Alibaba’s effort to simplify its sprawling portfolio as it redirects capital and management attention toward businesses it considers strategically critical, particularly AI and cloud computing.
Alibaba has been seeking a buyer for Lingxi as part of that broader portfolio review.
Trustar Capital, formerly known as CITIC Capital, is an Asia-focused private equity firm.
Lingxi’s management believes Trustar has the industry resources and operating capabilities to support the gaming company’s next stage of growth.
Zhou Bingshu and the existing Lingxi management team are expected to remain in place following the ownership change, providing continuity as the studio transitions from Alibaba ownership to private equity backing.
Guangzhou-based Lingxi is best known for “Three Kingdoms: Strategy Edition,” a multiplayer strategy game based on China’s Three Kingdoms period.
The title was developed in collaboration with Japan’s Koei Tecmo Holdings.
Lingxi grew out of Ejoy, the gaming company Alibaba acquired in 2017.
Ejoy had been valued at approximately $1 billion when Alibaba acquired the business and was subsequently developed into Lingxi Games.
“Three Kingdoms: Strategy Edition,” released in 2019 and produced by Zhou, generated more than $1 billion in revenue during its first two years.
Lingxi has gone through a series of changes in recent years.
The company explored external fundraising, but a planned process in late 2023 stalled following proposed tighter regulations for China’s online gaming industry.
Lingxi also underwent a management restructuring in 2024, when Zhou succeeded founder Zhan Zhonghui as CEO.
Zhou had previously led the development team responsible for “Three Kingdoms: Strategy Edition.”
Alibaba’s decision to exit Lingxi comes as the company dramatically increases its ambitions around artificial intelligence.
Chairman Joe Tsai and CEO Eddie Wu have described AI as a major strategic inflection point and positioned the technology as one of Alibaba’s most important areas of long-term investment.
Alibaba has increasingly shifted its cloud strategy toward AI models, AI computing infrastructure and agent-based services.
The company has also been consolidating AI-related operations and increasing investment across models, applications, chips and cloud infrastructure as it attempts to build a more vertically integrated AI platform.
Alibaba’s portfolio rationalization has already included significant exits from traditional consumer businesses.
The company previously sold its stakes in hypermarket operator Sun Art and department-store operator Intime for a combined approximately $2.6 billion as management worked to streamline the portfolio and redirect resources toward higher-priority businesses.
Selling Lingxi would extend that strategy into gaming, an industry Alibaba once viewed as another major digital growth opportunity but which now sits outside its increasingly concentrated AI, cloud and e-commerce priorities.
It is not yet clear whether Alibaba will retain commercial relationships with Lingxi following the sale, including potential arrangements involving publishing, cloud services or technology infrastructure.
For Trustar, the transaction would provide ownership of an established Chinese game developer with a proven flagship franchise and an experienced management team.
For Alibaba, a transaction worth at least $1.5 billion, and potentially more than $2 billion, would provide additional capital while removing another non-core operation as the company increases spending on the AI infrastructure and products it expects to drive its next phase of growth.
