Alibaba founder Jack Ma attends the 5th Zhejiang World Entrepreneurs Conference at Hangzhou International Expo Center on November 13, 2019 in Hangzhou, Zhejiang province of China.
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Founder of Ant . Group Jack Ma will relinquish control of the Chinese fintech giant in an overhaul that seeks to draw the line in the face of a regulatory crackdown that was triggered shortly after the giant’s stock market debut. Its giant failed two years ago.
Ant’s $37 billion IPO, which was supposed to be the largest IPO in the world, was canceled at the last minute in November 2020, leading to the financial technology company’s forced restructuring and speculation. that the Chinese billionaire will have to cede control.
While some analysts say relinquishing control could clear the way for the company to revive its IPO, the changes announced by the team on Saturday could lead to further delays due to regulatory changes. listing regulations.
China’s domestic A-share market requires companies to wait three years after a change of control to list. The waiting period is two years on Shanghai’s Nasdaq-style STAR market and one year in Hong Kong.
A former English teacher, Ma previously owned more than 50% of the voting rights in Ant but the changes will mean his stake drops to 6.2%, according to Reuters calculations.
Ma owns only 10% of Ant, a subsidiary of e-commerce giant Alibaba Group Holding Ltd <9988.HK>but exercised control of the company through related entities, according to Ant’s IPO prospectus filed with exchanges in 2020.
The prospectus shows that Hangzhou Yunbo, an investment vehicle by Ma, has control over two other entities that own a combined 50.5% stake in Ant.
Ma’s relinquishment comes as Ant nears completion of a two-year regulatory restructuring process, with Chinese authorities poised to fine the company more than $1 billion, Reuters reported in November.
The expected penalty is part of Beijing’s sweeping and unprecedented crackdown on the country’s tech giants over the past two years that have slashed hundreds of billions of dollars from their value. and reduce sales and profits.
But Chinese authorities have in recent months softened their stance on the tech crackdown amid an effort to boost a $17 trillion economy that has been badly hurt by the COVID pandemic. -19.
Duncan Clark, president of investment consulting firm BDA China, said: “With China’s economy in a hot spot, the government is looking for ways to demonstrate its commitment to growth and the technology and investment sectors. Humanity is the key to that as we know it.”
Clark, who is also the author of a book on Alibaba and Ma, said: “At least Ant investors can (for now) have some timetable for exiting after a long period of uncertainty. sure.
regulatory oversight
Ant operates China’s popular mobile payments app Alipay, the world’s largest app with over 1 billion users.
Ant, whose businesses include consumer lending and insurance product distribution, said Ma and the company’s nine other major shareholders have agreed not to act in sync when exercising their voting rights. and will only vote independently.
It added that the economic interests of shareholders in Ant will not change as a result of the adjustments.
Ant also said it would add a fifth independent director to its board so that independent directors would make up a majority of the company’s board. It currently has eight board directors.
“As a result, there will no longer be a situation where a single shareholder directly or indirectly has sole or common control over Ant Group,” it said in its statement.
Reuters reported in April 2021 that Ant was exploring options for Ma, one of China’s most successful and influential entrepreneurs, to divest his stake in Ant and relinquish control.
The Wall Street Journal reported last July, citing unnamed sources, that Ma could cede control by transferring some of his voting rights to Ant officials, including the CEO. executive Eric Jing.
Ant’s market listing in Hong Kong and Shanghai was derailed a few days after Ma publicly criticized regulators in a speech in October 2020. Since then, empire wide His major was subject to regulatory scrutiny and underwent restructuring.
Once outspoken, Ma has barely appeared in public since the regulatory crackdown that has curbed the country’s tech giants and removed the economic liberal approach that fueled dizzying growth. .
Andrew Collier, managing director of Orient Capital Research, said: “The departure of Jack Ma from Ant Financial, the company he founded, shows the determination of the Chinese leadership to reduce the influence of investors. large private sector.
“This trend will continue to erode the most productive parts of the Chinese economy.”
As Chinese regulators frown on monopolies and unfair competition, Ant and Alibaba have untangled their practices from each other and sought out new business independently, Reuters reported last year. last.
Ant said on Saturday that its management would no longer serve on Alibaba Partners, a body that can nominate a majority of the e-commerce giant’s board, affirming a change. starting in the middle of last year.
