Alibaba founder Jack Ma attends the fifth World Zhejiang Entrepreneurs Convention at Hangzhou International Expo Centre on November 13, 2019 in Hangzhou, Zhejiang Province of China.
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Ant Group’s founder Jack Ma will hand over control of the Chinese fintech giant in an overhaul that seeks to attract a line under a regulatory crackdown that was triggered soon after its mammoth stock market debut was scuppered two years ago.
Ant’s $37 billion IPO, which might have been the world’s largest, was cancelled on the last minute in November 2020, resulting in a forced restructuring of the financial technology firm and speculation the Chinese billionaire would need to cede control.
While some analysts have said a relinquishing of control could clear the best way for the corporate to revive its IPO, the changes announced by the group on Saturday, nevertheless, are more likely to lead to an additional delay attributable to listing regulations.
China’s domestic A-share market requires firms to attend three years after a change on top of things to list. The wait is 2 years on Shanghai’s Nasdaq-style STAR market, and one 12 months in Hong Kong.
A former English teacher, Ma previously possessed greater than 50% of voting rights at Ant however the changes will mean that his share falls to six.2%, in line with Reuters calculations.
Ma only owns a ten% stake in Ant, an affiliate of e-commerce giant Alibaba Group Holding Ltd <9988.HK>, but has exercised control over the corporate through related entities, in line with Ant’s IPO prospectus filed with the exchanges in 2020.
Hangzhou Yunbo, an investment vehicle for Ma, had control over two other entities that own a combined 50.5% stake of Ant, the prospectus showed.
Ma’s ceding of control comes as Ant is nearing the completion of its two-year regulatory-driven restructuring, with Chinese authorities poised to impose a positive of greater than $1 billion on the firm, Reuters reported in November.
The expected penalty is an element of Beijing’s sweeping and unprecedented crackdown on the country’s technology titans over the past two years that has sliced a whole lot of billions of dollars off their values and shrunk revenues and profits.
But Chinese authorities have in recent months softened their tone on the tech crackdown amid efforts to bolster a $17-trillion economy that has been badly hurt by the COVID-19 pandemic.
“With the Chinese economy in a really febrile state, the federal government is trying to signal its commitment to growth, and the tech, private sectors are key to that as we all know,” said Duncan Clark, chairman of investment advisory firm BDA China.
“No less than Ant investors can (now) have some timetable for an exit after a protracted period of uncertainty,” said Clark, who can be an writer of a book on Alibaba and Ma.
Regulatory scrutiny
Ant operates China’s ubiquitous mobile payment app Alipay, the world’s largest, which has greater than 1 billion users.
Ant, whose businesses also span consumer lending and insurance products distribution, said Ma and nine of its other major shareholders had agreed to now not act in concert when exercising voting rights, and would only vote independently.
It added that the shareholders’ economic interests in Ant is not going to change consequently of the adjustments.
Ant also said it will add a fifth independent director to its board in order that independent directors will comprise a majority of the corporate’s board. It currently has eight board directors.
“Consequently, there’ll now not be a situation where a direct or indirect shareholder may have sole or joint control over Ant Group,” it said in its statement.
Reuters reported in April 2021 that Ant was exploring options for Ma, considered one of China’s most successful and influential businessmen, to divest his stake in Ant and hand over control.
The Wall Street Journal reported in July last 12 months, citing unnamed sources, that Ma could cede control by transferring a few of his voting power to Ant officials including Chief Executive Officer Eric Jing.
Ant’s market listing in Hong Kong and Shanghai was derailed days after Ma publicly criticized regulators in a speech in October 2020. Since then, his sprawling empire has been under regulatory scrutiny and going through a restructuring.
Once outspoken, Ma has largely remained out of public view for the reason that regulatory crackdown that has reined within the country’s technology giants and did away with a laissez-faire approach that drove breakneck growth.
“Jack Ma’s departure from Ant Financial, an organization he founded, shows the determination of the Chinese leadership to cut back the influence of enormous private investors,” said Andrew Collier, managing director of Orient Capital Research.
“This trend will proceed the erosion of the most efficient parts of the Chinese economy.”
As Chinese regulators frown on monopolies and unfair competition, Ant and Alibaba have been untangling their operations from one another and independently looking for latest business, Reuters reported last 12 months.
Ant said on Saturday that its management would now not serve within the Alibaba Partnership a body that may nominate nearly all of the e-commerce giant’s board, affirming a change that began mid-last 12 months.
