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Alibaba Group slashes 3rd of deals team staff after regulatory crackdown

Alibaba Group

Alibaba Group slashes team staff after regulatory crackdown

Four people with knowledge of the situation claimed that Alibaba Group is laying off almost a third of the workers in its in-house acquisitions team after Beijing’s broad regulatory crackdown significantly delayed the Chinese e-commerce giant’s dealmaking speed. 
According to two of the people, Alibaba Groupintends to cut the size of its strategic investment team from more than 110 to around 70. The team is primarily based in mainland China, and the company has already informed the majority of its employees that they will be laid off. 
The two sources, who declined to be identified because they were not authorized to speak to the media, claimed that the job losses primarily affect mid-level and senior individuals on the mainland. They said that the company’s deals team also employs people in Hong Kong.

A request for comment from Alibaba did not immediately receive a response. 
According to Reuters, this year will see one of Alibaba Group and its main rival Tencent’s largest rounds of layoffs as a result of the crackdown and China’s COVID-19 growth restraints. 
After years of a laissez-faire attitude that fueled expansion and dealmaking at rapid speed, Chinese officials initiated an unprecedented drive to restrain the nation’s technology giants in late 2020.

Alibaba Group

Alibaba, Tencent, and a number of other companies were hit with the most recent sanctions on Sunday by China’s market regulator for breaking anti-monopoly regulations regarding transaction transparency. 
The majority of internet companies’ sales growth has been drastically curtailed, their share prices have crashed, and it is now much harder to get fresh capital and expand businesses as a result of the regulatory crackdown and the weakening economy. 
Companies like Alibaba Group and Tencent have thus been compelled to seek for ways to reduce operating costs. 
One of the most active corporate investors in China was Alibaba, owned by Chinese billionaire Jack Ma. It has a diverse ecosystem of portfolio companies in industries like retail, local services, and media and entertainment. 
In order to improve its internal dealmaking capabilities, Alibaba has poached expertise from top Wall Street banks and private equity firms over the years, including seasoned Goldman Sachs dealmaker Michael Evans. 
Alibaba Group’s internal investment team swelled to approximately 150 individuals in 2016, three times larger than Tencent’s, in an effort to sustain its global dealmaking drive at a time when Chinese companies were aggressively buying up assets worldwide, according to Reuters. 
According to Dealogic, Alibaba made an average of 44 investments each year between 2015 and 2021, with a peak of 70 agreements for $54 billion in 2018. It cut 38 agreements worth a combined $6.2 billion even during the regulatory crackdown of 2021. However, Alibaba Group has only made nine investments totaling $5.2 billion thus far this year.