Outspoken billionaire Jack Ma escapes Beijing's crosshairs by giving up his power

Wall Street Journal reported earlier that Ant informed regulators that Ma intended to give up control and could transfer some of his voting rights to other top executives.

Ma does not hold a management position at Ant and handing over control of the company would cause little disruption to day-to-day operations as he has not been deeply involved in years, said people familiar with the matter, who asked not to be named to discuss personal information. Ma initially ended up with majority vote control because Ant was separated from Alibaba in a complex transaction aimed at minimizing conflicts with Chinese regulations.

Ant has reportedly notified regulators that Ma intends to relinquish control and may transfer some of his voting rights to other top executives. Credit:AP

Ma’s decision may now be a way of aligning with President Xi Jinping’s vision of achieving “co-prosperity.” His company is trying to meet the demands of China’s watchdog, which has pledged to curb the expansion of “reckless” tech companies.

The Communist Party’s growing stance towards the private sector has been one of the most closely watched developments in global markets in recent years, with some observers calling China’s vast internet sector uninvested.

Even before Ma sparked the ire of Chinese regulators, he had distanced himself from the twin empires of e-commerce giants Alibaba and Ant. Ma stepped down as CEO of Alibaba in 2013 and then chairman in 2019. He said in early 2014 he intended to reduce his stake in Ant to no more than 8.8 percent and he intended to donate 611 million shares to charity.

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The change of ownership could delay the revival of Ant’s much-anticipated IPO. China’s securities regulations state that companies cannot list shares on the A-share market if the controlling shareholder has changed in the past three years. STAR markets such as the Nasdaq have a lead time of two years, while Hong Kong is one year.

“Although there will be a waiting period for Ant with this change, it will make little difference as the weak market means Ant is in no rush to get listed,” Tang said.

Ant is currently waiting for the central bank to agree to review its application for a financial holding license, a key step for the company to move forward for any opportunity to go public.

Once valued at $300 billion, Ant’s projected value has plummeted after regulators restricted operations in the company’s most profitable units including consumer lending. Bloomberg Intelligence analyst Francis Chan estimated in June that Ant was worth about $64 billion.

As part of Ant’s restructuring, the company has increased its capital base to 35 billion yuan ($7.4 billion) and has moved to build a firewall in the ecosystem that once allowed it to redirect traffic from payment platform Alipay, with one billion users, to services such as wealth management. and consumer loans.

The Communist Party’s growing stance towards the private sector has been one of the most closely watched developments in global markets in recent years, with some observers calling China’s vast internet sector uninvested.

Assets under management at his money market fund Yu’ebao – once the largest in the world – fell about 35 percent from a peak in March 2020 to 813 billion yuan in June.

While Ant said in June it had no plans to launch an IPO, the company’s chairman Eric Jing said last year that it would eventually go public.

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“Jack Ma no longer holds any titles at Alibaba. I don’t see this having a major impact on the company’s operations,” said Jian Shi Cortesi, director of investment at GAM Investment Management in Zurich. But it will make “investors focus more on developing the company rather than focusing on Jack Ma.”

Bloomberg

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