1PitchBookData,Inc.JohnGabbertFounder,CEONizarTarhuniVicePresident,InstitutionalResearchandEditorialDylanCox,CFAHeadofPrivateMarketsResearchInstitutionalResearchGroupAnalysisKeytakeaways1Introduction2Whatishappening?2RecentgovernmentinitiativesonChina’sIPOmarket4PotentialimpactsontheVCmarket7ContentsPublishedonApril14,2023Note:GreaterChinaisdefinedasmainlandChina,HongKong,Macao,andTaiwan.DataSusanHuSeniorDataAnalystpbinstitutionalresearch@pitchbook.comPublishingDesignedbyDrewSandersHowAlibabaandJD.com’srestructuringcouldimpacttheGreaterChinaVCmarketChineseTechConglomerates’SplitExpectedtoShakeUpVCPitchBookisaMorningstarcompanyprovidingthemostcomprehensive,mostaccurate,andhard-to-finddataforprofessionalsdoingbusinessintheprivatemarkets.Keytakeaways•Alibaba’s“1+6+N”restructuringmovecouldleadthetrendforothertechconglomeratestofollowsuit.Shouldmorecompaniessuccessfullygopublicdomesticallyoroverseas,theventureecosysteminChinawillbenefitfromincreasedliquidityandpotentialreturnofnondomesticinvestors.•Bysplittingintosixunits,eachwithitsownCEOandboard,thenewlycreatedAlibabasubentitieswillbeabletoindependentlyraisenewdebtandequity,includingviaIPO.Alibabaclaimedthemovewastobuildanagileorganization,butitalsolikelybrokedownintostandaloneentitiestocircumventfurthergovernmentscrutinyandcrackdowns.•ThepublicmarketralliedatAlibaba’sannouncement,sendingAlibabaandSoftBank’ssharepricessoaringthenextdayduetoperceivedsignsofstrongergovernmentsupportinthetechsector.•Duringthepastcoupleyears,Beijinghascrackeddownontheinternetsectorinthenameofdatasecurity,leadingtoshakeninvestorconfidence,nondomesticinvestmentpullback,andadeclineinventureactivities.•WhileBeijing’sstanceontechgiantsremainsunclear,theChinesegovernmentfacesachallengingtask:revitalizinganeconomybatteredbytheCOVID-19pandemic.Thispressingneedwilllikelypushtheone-partyregimetolessenregulatoryburdensoncompaniesandfurtheropenthedomesticmarket.•OnApril1,aregistration-basedIPOsystemresemblingthatoftheUSmarketwasoffic...
