Alibaba Group Holding plans to spin off its Banma Network Technology unit, as one of China’s largest technology behemoths moves ahead with a separate listing for its autonomous driving unit to raise capital. Alibaba has received an initial go-ahead from the Hong Kong stock exchange for Banma’s proposed initial public offering (IPO), the company said in a statement on Thursday. The stake held by the Hangzhou-based conglomerate in Banma will drop to 30 per cent from the current 44.72 per cent after the IPO, Alibaba said. Details of the spin-off, including the financial size and structure of Banma’s IPO, have not been finalised, while the overall plan would be subject to regulatory approvals in Hong Kong and mainland China, said Alibaba, the parent company of the Post. “The proposed spin-off should better reflect the value of Banma Group on its own merits and increase its operational and financial transparency,” Alibaba said. “Banma’s distinctive automobile system solutions business would be appealing to an investor base with a sector investment focus.” If it is successfully executed, Banma’s IPO would be the first spin-off in recent years out of Alibaba’s portfolio of businesses, which cover the spectrum of China’s technology from artificial intelligence to e-commerce, entertainment to logistics. A spin-off of its logistics business Cainiao was called off in March 2024. For Banma, which began to embed Alibaba’s operating system AliOS in 2016 for smart vehicles to drive autonomously, the IPO would enhance its profile among customers, suppliers and potential strategic partners, gaining it more business and access to the equity and debt capital markets, the e-commerce giant added. Banma claimed to be the largest software-focused provider of so-called smart cockpit solutions in China by revenue last year, serving vehicle assemblers such as SAIC Motor and Volkswagen. The company’s loss widened nearly eightfold to 1.58 billion yuan (US$220.3 million) in its fiscal first quarter that ended in March. Its potential IPO comes as a wave of Chinese technology firms flock to Hong Kong, which has reclaimed its position as the world’s top fundraising market this year on the back of strong equity performance and supportive policies. Banma’s listing was expected to come under Hong Kong’s listing regime Chapter 18C for pre-revenue specialist tech start-ups, said Dickie Wong, executive director of research at Kingston Securities. “The IPO leverages rising demand for smart vehicle technology, which may eventually boost Alibaba’s valuation,” said Wong. However, Banma operates in a “highly competitive market”, Wong said. “More details on valuation are needed for a clearer outlook,” he said. “We may continue to generate net losses in the near term, as we are still in the process of scaling our business and expanding our operations,” Banma said. It plans to use the proceeds of the IPO for research and development, expanding market share in China and the global market, business acquisition plans and general corporate purposes.