Alibaba Group Holding Ltd. is selling its gaming subsidiary, Lingxi Games, to Asian private equity firm Trustar Capital in a deal that could value the studio at more than $1.5 billion.

Trustar Capital has reached an agreement to acquire Lingxi Games, according to Bloomberg, citing an internal memo circulated on Monday.

Lingxi Games Chief Executive Officer Zhou Bingshu confirmed the transaction, saying Alibaba decided to sell the business to allow the group to focus more closely on its strategic priorities.

He did not disclose the value of the deal.

It was reported last week that the transaction could value Lingxi Games at more than $1.5 billion.

The sale forms part of a broader restructuring led by Alibaba Chief Executive Officer Eddie Wu, as the Chinese e-commerce giant seeks to divest non-core assets and concentrate resources on artificial intelligence and cloud computing.

Alibaba has identified AI as a key growth area and is targeting $100 billion in AI-related revenue over the next five years, making the gaming divestment part of its wider effort to realign the business around its strategic priorities.