Sources: Alibaba is nearing a deal to sell its Lingxi Games to PE firm Trustar Capital at a potential $1.5B+ valuation, as Alibaba continues its reorganization (Bloomberg)

Asian private equity firm Trustar Capital is nearing a deal to acquire Lingxi Games, the video game division of Alibaba Group, in a transaction valued at over $1.5 billion, according to a Bloomberg report. Unnamed sources familiar with the situation reveal that Trustar has become the favored bidder, surpassing competitors such as gaming industry strategic buyers.

Negotiations are still ongoing, and a final agreement has not been finalized. Lingxi Games is renowned for its multiplayer strategy title, 'Three Kingdoms: Strategy Edition', developed in collaboration with Japanese gaming company Koei Tecmo. This game has emerged as the studio's flagship and highest-grossing release. This potential sale is part of Alibaba's broader strategy to streamline its portfolio under CEO Eddie Wu.

The Chinese tech giant has been reducing its exposure to non-core businesses and shifting resources towards artificial intelligence and cloud computing. Alibaba has already completed several asset disposals as part of this strategy, including the sale of its stake in Sun Art Retail Group to private equity firm DCP Capital for approximately $1.6 billion last year.

Earlier, Alibaba was rumored to be seeking up to RMB9 billion ($1.3 billion) for Lingxi Games, making a deal above $1.5 billion potentially more profitable than previously anticipated.