ALIBABA Group Holding Ltd. and State-backed firms are exploring bids for a stake in Unisplendour Corp., a cloud computing infrastructure firm, that could fetch as much as US$7.7 billion, people familiar with the matter said. Chip conglomerate Tsinghua Unigroup, which is saddled with some US$31 billion in debt, is looking to divest its 46.45 percent stake in Shenzhen-listed Unisplendour as more of its bond payments are coming due, they said. Potential suitors include Wuxi Industry Development Group, a firm owned by the government of the eastern Chinese city of Wuxi, Beijing government-owned Beijing Electronics Holdings and State-backed semiconductor investment fund JAC Capital, said the people. If Alibaba submits an offer due by the July 20 deadline for binding bids, it will team up with a firm owned by a local government, said two of the people. They did not disclose the name of the potential partner. The Unisplendour stake is likely to be valued at between 40 billion yuan (US$6.2 billion) and 50 billion yuan, said two of the people. That would represent a premium of 34-68 percent to the stock’s average price over the past month of 22.4 yuan, according to calculations. Tsinghua Unigroup said in a statement that to mitigate debt risks, it had “approached several investors under the guidance of a brought-in special working team.” “Tsinghua Unigroup will make an overall arrangement for bringing in strategic investors if it enters a judicial restructuring,” it added. Potential bidders for the Unisplendour stake are primarily attracted to the company’s controlling stake in H3C, which makes server boxes for cloud computing centres, two of the sources said. Unisplendour purchased a 51 percent stake in H3C in 2015 from Hewlett-Packard for US$2.3 billion. Unisplendour generated 59.7 billion yuan in sales in 2020, a 10.4 percent increase from a year earlier and had net income of 1.9 billion yuan, up 2.8 percent. H3C would be a valuable asset to players in China’s fast-growing cloud computing sector including Alibaba, which leads the domestic market in cloud computing, experts say. Alibaba’s cloud computing division recently announced it had become profitable. The unit, which has a market share of some 40 percent according to research firm Canalys, is looking to go public in the next few years, said the sources. (SD-Agencies) | 