(Yicai) Aug. 21 -- Chinese e-commerce giant Alibaba Group Holding will spin off Banma Network Technology, a leading developer of smart vehicle operating systems, for a listing on the Hong Kong Stock Exchange to improve the unit's funding conditions.

Proceeds from the initial public offering will be used to strengthen Banma’s research and development in smart cockpits to expand its domestic market share and overseas presence, while also supporting acquisitions and other expansion plans, according to the Shanghai-based firm's prospectus filed yesterday. The expected fundraising amount was not disclosed.

Deutsche Bank, China International Capital Corporation, and Guotai Junan International will serve as co-sponsors of the IPO.

Banma was China’s largest supplier of automotive smart cockpit solutions by revenue last year. Its systems was installed in over 2.3 million vehicles in 2024, with a compound annual growth rate of 67 percent over the past three years, the filing showed.

Despite rapid growth, Banma remains unprofitable due to intense price competition in China’s auto market. The company reported a net loss of CNY847.4 million (USD118.1 million) last year, a 3 percent improvement from the previous year. Revenue fell 5.5 percent to CNY823.8 million.

Alibaba currently holds nearly 45 percent of Banma and will retain more than 30 percent following the spin-off and listing, the Hangzhou-based parent said in a statement today. The owner of Tmall and Taobao had already removed Banma from its consolidated financial statements late last year.

The separate listing is also expected to raise Banma’s profile with customers, suppliers, and potential partners, while broadening its access to external financing and improving its capacity for equity investment, debt fundraising, and bank borrowing, Alibaba said.

Founded in 2015 as a joint venture between Alibaba and Chinese auto giant SAIC Motor, Banma focuses on developing automotive operating systems. In 2020, Alibaba increased its investment and integrated its proprietary AliOS, gaining a controlling stake in the company.

Editor: Emmi Laine