HONG KONG The Hong Kong-listed shares of China's Alibaba Group fell more than 4% on Monday after the surprise departure of outgoing Alibaba CEO Daniel Zhang from the company's cloud computing business.

The company announced Zhang's decision to depart the unit in an internal letter to staff seen by Reuters. Zhang had been scheduled to hand over the role of group CEO to Eddie Wu on Sunday. The letter said Wu will also take charge of the cloud business after Zhang's departure.

The unit is China's largest cloud provider and is set to be spun off from Alibaba as part of the group's restructuring.

Zhang will continue to contribute to Alibaba by "channelling his expertise differently," the company said in the letter, adding that it will invest $1 billion into a technology fund that Zhang would establish. Alibaba has also gave Zhang an "emeritus" title, a first in its history.

Analysts have estimated the cloud unit to be worth $41 billion to $60 billion but have said the reams of data it oversees could put it in the crosshairs of regulators at home and abroad.

Alibaba's stock fell as much as 4.4% to HK$86.85, its lowest since Aug. 23.

(Reporting by Donny Kowk; Writing by Anne Marie Roantree; Editing by Muralikumar Anantharaman and Christopher Cushing)