Ant Group Takes Control Away From Founder Jack Ma
Ant Group founder Jack Ma will no longer control the Chinese fintech behemoth after the company’s shareholders agreed to a series of changes that will see him relinquish most of his voting rights, the company announced on Saturday.
The move would “further enhance the stability of our corporate structure and sustainability of our long-term development,” according to the firm’s statement. Ma formerly held over 50% of voting rights, but the adjustments will reduce his share to 6.2%, according to Reuters calculations.
The company also announced that it would add a fifth independent director to its board, making independent directors the majority of the company’s board. It currently has eight directors on its board.
“As a result, there will no longer be a situation where a direct or indirect shareholder will have sole or joint control over Ant Group,” the firm added.
The company controls Alipay, the world’s largest digital payment platform, with over 1.3 billion customers and 80 million merchants.
The decision is yet another significant milestone following a regulatory crackdown that scuttled Ant Group’s $37 billion IPO in late 2020 and forced the financial technology powerhouse to restructure. The Chinese central bank summoned company executives as well, alleging that the firm lacked an effective governance framework, violated regulatory compliance requirements, and engaged in regulatory arbitrage.
According to the prospectus filed, Ma only owns a 10% share in Ant Group but has exerted control over the company through affiliated entities. Hangzhou Yunbo, Ma’s investment vehicle, controlled two additional firms with a combined 50.5% interest in Ant Group.
Ant Group said in January 2021 that it will restructure its business structure in accordance with the wishes of the Chinese central bank and financial regulators, then applied months later to become a financial holding company under the direction of the Peoples’ Bank of China. With effect from September 2021, Ant Group’s consumer lending companies, credit card-like Huabei and micro-loan provider Jiebei, was split from Alipay’s other financial offerings, dismantling the latter’s super app that serves more than 1.2 billion users.
In July 2022, Chinese authorities tentatively approved Ant Group’s plans to relaunch its initial public offering in both Shanghai and Hong Kong. Then, back in November 2022, Reuters reported that the country’s regulators were slated to fine the firm more than $1 billion, putting a stop to the fintech company’s two-year regulatory overhaul.
Ma, who’s been elusive since 2020, appeared to resurface in Thailand just hours before Ant Group said he would give up control of the company. The Jay Fai restaurant in Bangkok uploaded a photo of the tech founder on Instagram, indicating that he had recently visited the eatery.
Ma vanished from public view in October 2020 after criticizing China’s financial-regulation system.
However, Ma stepping away from the firm’s controls is casted in a new light after context of the Chinese government’s engagement with the firm in the past two years is taken into the narrative. Some observers are drawing the line of the country’s leaders to the Ant Group founder’s relinquishing of company control.
While some analysts believe that losing ownership could pave the way for the company’s IPO to be revived, the adjustments announced by the group on Saturday are likely to cause a further delay due to listing regulations. Companies must wait three years after a change in control before listing on China’s domestic A-share market. On Shanghai’s Nasdaq-style STAR market, the wait is two years, and in Hong Kong, it is one year.
Information for this briefing was found via Reuters, Business Insider, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.