Billionaire Jack Ma Cedes Control Of Fintech Giant Ant Group

Tyler Durden's Photo
by Tyler Durden
Saturday, Jan 07, 2023 - 10:00 PM

A little over two years after China launched its billionaire "re-education" campaign by unexpectedly suspending the IPO of one of China’s most influential fintech companies, Ant Financial, in November 2020, a move aimed at humbling (if not crushing) China's then-richest man Jack Ma, the campaign has come full circle on Saturday when Ant announced Jack Ma was giving up controlling rights of the fintech giant as the billionaire further retreats from his online empire following China’s unprecedented tech crackdown.

Ant Group said in an announcement on Saturday that Ma would no longer be the “control person” who holds 34 percent of the company’s shares. Instead, he would be one of 10 major shareholders. The move would "further enhance the stability of our corporate structure and sustainability of our long-term development," according to the statement.

The announcement, which described the move as part of a “corporate governance optimization” plan, gave no details about when the changes would be finalized, and noted that they would not affect the company’s day-to-day operations. Under Ant Group’s current governance structure, Ma does not have a management role.

The company is offering 10 individuals, including the founder, management and staff, voting rights independently, effectively removing Ma’s control of Ant, according to an announcement on Saturday. The adjustment, however, will not change economic interests of any shareholders and Ma will still hold voting rights and economic interests in the company following the change. In a filing in July, affiliate Alibaba Group Holding reiterated that Ma “intends to reduce and thereafter limit his direct and indirect economic interest in Ant Group over time” to a percentage that doesn’t exceed 8.8%. Ma will have about 6.2% of the voting rights after the adjustment, Bloomberg calculated.

Ma’s retreat from the company he founded comes after the Chinese Communist Party waged an unprecedented crackdown on Big Tech and some of China's richest oligarchs. Beijing had made Ma’s Ant Group and its sister company, e-commerce giant Alibaba, early targets in the campaign to curb the power of internet giants. After Beijing forced Ant Group to call off what would have been a blockbuster initial public offering in 2020 and later fined Alibaba a hefty $2.8 billion for abusing its dominance, Jack Ma effectively disappeared from public view and was last seen living in Japan. Last year, Ant Group said it would undertake a major government-ordered overhaul of its business to address regulators’ concerns about unfair competition and the amount of data it collects on users.  

Meanwhile, on Friday the Jay Fai restaurant in Bangkok, Thailand posted a picture of Ma on Instagram, where he appears to have just visited the restaurant. "Incredibly humble, we are honored to welcome you and your family to Jay Fai's," the caption on the post reads. According to Reuters, Ma was at the restaurant with Soopakij Chearavanont, the chair of the Charoen Pokphand Group

According to Bloomberg, the change of control could mean that Ant will have to wait longer for a much anticipated resumption of its initial public offering. Companies can’t list domestically on the country’s so-called A-share market if they have had a controller change in the past three years — or in the past two years, if listing on Shanghai’s STAR market. For Hong Kong’s stock exchange, this waiting period is one year.

Ant’s consumer lending affiliate recently received regulatory approval for a capital injection of 10.5 billion yuan ($1.5 billion), signaling progress in its restructuring and removing a hurdle as it seeks to obtain a financial holding license. The company could issue about 400 billion yuan to 500 billion yuan of loans after the changes, based on Bloomberg calculations.

While Ma was once hailed in China as a model of success, but he faced increasing trouble with the Chinese government, especially after he criticized the nation’s banking regulators in late 2019. As the NYT notes, under Xi Jinping, Beijing had sought to exert greater state control over the economy in recent years, including by reining in the influence of tycoons who amassed enormous wealth but were seen to overstep their bounds.

The Chinese government’s multi-year crackdown has reined in breakneck growth for the entire internet sector, and left global investors feeling the shockwaves. It’s changed the playbook for the nation’s tech champions who once prioritized growth at all costs, introducing a new paradigm for the country’s private sector.