TMTPOST -- Chinese e-commerce powerhouse Alibaba Group Holding is planning to spin off Banma Network Technology, a leading developer of smart vehicle operating systems, for a listing on the Hong Kong Stock Exchange. The move is aimed at enhancing Banma’s funding conditions and supporting its expansion in the rapidly growing smart cockpit market.

According to the prospectus filed yesterday by the Shanghai-based firm, proceeds from the initial public offering (IPO) will be directed toward strengthening research and development for Banma’s smart cockpit systems.

The funds will also help the company expand its domestic market share, increase its presence overseas, and support acquisitions and other strategic growth initiatives. The prospectus did not specify the expected fundraising amount.

Deutsche Bank, China International Capital Corporation (CICC), and Guotai Junan International have been appointed as co-sponsors for the IPO.

Banma has established itself as China’s largest supplier of automotive smart cockpit solutions by revenue. Its systems were installed in over 2.3 million vehicles in 2024, reflecting a compound annual growth rate of 67% over the past three years, according to the filing. The company has positioned itself at the forefront of the country’s push for intelligent vehicle technologies, including connected car platforms and next-generation vehicle operating systems.

Despite its rapid growth, Banma remains unprofitable amid intense price competition in China’s automotive market. The company reported a net loss of CNY847.4 million (approximately USD118.1 million) last year, a modest 3% improvement from the previous year. Revenue, meanwhile, fell 5.5% to CNY823.8 million, reflecting the challenging environment for automotive software providers competing in the domestic market.

Alibaba currently holds nearly 45% of Banma and plans to retain more than 30% of the company following the spin-off and IPO. The Hangzhou-based e-commerce giant, which owns Tmall and Taobao, had already removed Banma from its consolidated financial statements late last year in preparation for the separate listing.

The spin-off is expected to elevate Banma’s profile with customers, suppliers, and potential partners while broadening its access to external financing. Alibaba highlighted that the IPO would improve Banma’s ability to pursue equity investments, raise debt capital, and secure bank financing, all critical for scaling operations in the competitive automotive technology sector.

Founded in 2015 as a joint venture between Alibaba and Chinese automaker SAIC Motor, Banma initially focused on developing automotive operating systems. In 2020, Alibaba increased its investment in the company and integrated its proprietary AliOS platform, gaining a controlling stake in Banma. The integration of AliOS has allowed Banma to accelerate development of intelligent vehicle solutions and position itself as a strategic player in China’s smart mobility ecosystem.

Banma’s spin-off comes as China’s automotive market continues its shift toward connected and intelligent vehicles. Industry analysts expect the market for smart cockpits to expand rapidly in the coming years, driven by increasing consumer demand for enhanced in-car digital experiences and the government’s push for domestic innovation in automotive technology.

By listing Banma separately, Alibaba aims to not only unlock the unit’s value for investors but also provide it with the financial and strategic flexibility needed to compete in the evolving automotive technology landscape, both domestically and internationally.