DCP Capital has acquired a 78.7% stake in Sun Art Retail Group from Alibaba for approximately US$1.7 billion, aiming to restructure and optimize operations amidst ongoing challenges in the Chinese retail market.

Acquirer and Target Overview

On January 1, 2025, DCP Capital, a private equity firm based in Beijing, successfully concluded a deal to acquire a 78.7% stake in Sun Art Retail Group from Alibaba Group for approximately US$1.7 billion. This acquisition reflects a significant shift in strategic focus for both companies; Alibaba originally purchased its controlling interest in Sun Art for US$3.6 billion in 2020 as part of its strategy to blend online and offline retail channels. However, the company has now opted to prioritize its core e-commerce operations due to changing consumer behaviors, a slowing economy in China, and increased competition from rising rivals like Pinduoduo and Douyin.

With a robust hypermarket footprint spanning China, Sun Art presents DCP Capital with the opportunity to secure stable revenue streams and enhance operational efficiencies. DCP has expressed intentions to delist Sun Art from the Hong Kong Stock Exchange and conduct a thorough strategic review of the hypermarket operator’s operations, indicating plans for restructuring to better meet adapting market demands. In the context of this transaction, Alibaba anticipates an estimated divestment loss of US$1.8 billion while pursuing a realignment of its business model.

Industry Overview

Sun Art Retail Group operates within the highly competitive Chinese retail sector, which is currently undergoing transformative changes due to rapid technological advancements and shifting consumer preferences. E-commerce cont