SHANGHAI – Alibaba Group Holding Ltd. plans to split its US$220 billion (S$292 billion) empire into six units that will individually raise funds and explore initial public offerings, the biggest overhaul of China’s online commerce leader since its inception more than two decades ago.

The move frees up the Chinese company’s main divisions from e-commerce and media to the cloud to operate with far more autonomy, laying the foundation for future spinoffs and market debuts. Its shares climbed 8 per cent in pre-market trading in New York.

The shift to a holding company structure is rare for major Chinese tech firms and could present a template for Alibaba’s peers. Decentralising the company’s business lines and decision-making power addresses one of Beijing’s primary goals during its sweeping crackdown on the technology sector.

The government had criticised the influence of online platforms, particularly those of Alibaba and WeChat operator Tencent Holdings. That will likely mean the restructuring would draw support from government regulators who have been concerned that concentrated power in tech suppressed innovation. Alibaba and Tencent invested in hundreds of startups over the years, often helping to craft strategy as they grew.

“It is one step in the direction with China’s policy to reduce the monopolistic nature of the tech giants,” said Marvin Chen, an analyst with Bloomberg Intelligence. “While China tech spinoffs are not uncommon, the move looks to be more encompassing, including core businesses, that may serve as a blueprint for the industry going forward.”

Alibaba’s announcement Tuesday coincided with the return of its billionaire co-founder Jack Ma to China after more than a year abroad.

It marks a departure from the internet company’s traditional preference for keeping most of its operations under one roof, running everything from supermarkets to datacenters under the main Alibaba umbrella.

It’s also a strong signal that Alibaba is ready to tap investors and public markets, after the Xi Jinping administration’s clampdown on internet spheres wiped out more than US$500 billion of its value.

Group chief executive Daniel Zhang will head up the cloud intelligence division, a nod to the growing role that AI will play in the e-commerce leader’s portfolio in the long run. He will...