Jack Ma To Cede Control Of Ant Group

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by Tyler Durden
Thursday, Jul 28, 2022 - 11:20 AM

Alibaba's Jack Ma plans to relinquish control of China's Ant Group, the financial-technology giant, the WSJ reports citing sources. The move comes as Beijing's anti-trust crackdown intensified on Ma's sprawling financial empire over the last two years. 

Ma, whose $34 billion Ant IPO was ceremoniously yanked by Beijing in 2020 at the last hour, was forced to reorganize the firm as a financial holding company overseen by China's central bank, overhauling its business to adapt to a new era of tighter regulation for internet companies. Ant has been searching for options to reduce the company's reliance on Ma as the overhaul continues.

Ant was carved out of Alibaba over a decade ago and has since transformed into the Alipay payments network with more than a billion users. WSJ notes that diminishing Ma's 50.52% stake in Ant could pave the way for a potential revival of Ant's IPO. 

Those familiar said Ma could transfer his control and voting power to other Ant executives, including Chief Executive Eric Jing. 

Ant told regulators Ma's intention to reduce his controlling stake, even though he doesn't have an executive role or sit on its board, comes as the company could soon apply to become a financial holding company. WSJ noted, "any change of control isn't likely to materialize until Ant's restructuring is complete." 

"Alibaba Group Holding said all top executives of Ant Group have resigned from its partnership structure in a sign of further partitioning between the e-commerce giant and its fintech affiliate, as the latter awaits Beijing's approval to transform into a financial holding group," South China Morning Post reported Wednesday. 

Bloomberg Intelligence's Analyst Catherine Lim said, "Ma's absence from Ant Group should not affect operations and control under professional management can help expedite pending plans for the group's public listing." 

Here's what others on Wall Street are saying (list courtesy of Bloomberg): 

Abrdn (Adam Montanaro, investment director)

  • Jack Ma ceding control could be an important catalyst in the rectification process that takes Ant a step closer to being free to list
  • The news could provide a positive sentiment boost to Alibaba's shares, which have largely discounted any value from their stake in Ant

United First Partners (Justin Tang, head of Asian research)

  • "With Jack stepping down, a significant key man risk will be removed from the neck of Ant"
  • Still, a weak market means that Ant is in no rush to be listed

WSJ sources said Ant is not in a hurry to rush an IPO and is also considering spinning off units that could be listed down the road. 

Two years of the CCP's crackdown on the private sector has become one of the most watched market developments this decade, with some observers saying the worst could be over.