Jack Ma gives up control of Ant Group, restructuring China’s largest fintech company to put it back on path for IPO
- Ma will end an acting-in-concert pact with three executives which gave Ma 53.46 per cent of the voting power in the fintech company
- After the restructuring, major shareholders of Ant ‘will independently exercise their voting rights,’ leaving no one in direct or indirect control
After the restructuring, major shareholders “will independently exercise their voting rights”, Ant said. “No shareholder will, alone or jointly with another shareholder, have the power to control the outcome of Ant’s general meetings”, or “nominate the majority of Ant’s board of directors”, and “therefore … have control over Ant”.
“It’s definitely a clear signal that the government has eased the curbs on China’s big technology platforms”, said Dai Ming, a fund manager at Huichen Asset Management in Shanghai. “We can also say that it is a step forward for Ant to resume its listing.”
Ant, based in the Zhejiang provincial capital of Hangzhou, has taken several steps since 2021 to restructure. The company plans to add a fifth independent director, making up more than half of the nine-member board. To further cleave itself from its parent Alibaba, certain executives have exited the Alibaba Partnership, a collection of the most powerful executives in the company. Alibaba owns the South China Morning Post.
“It looks like Jack Ma renounced his control of Ant, and it can open an opportunity for new investors to come in, which could be [either] state capital or other types of private equity”, said Li Chengdong, head of the internet industry think tank Dolphin. “I don’t think Ant’s IPO would be imminent, as China puts the priority on gathering resources for the hi-tech sector, but it would be easier to allow an IPO if equity and control issues get resolved at Ant”.
The 2020 suspension of Ant’s IPO, just 48 hours before trading was due to begin, was a watershed moment in the relationship between China’s regulators and the nation’s Big Tech companies, marking an end to the era of unchecked growth for some of the most valuable Chinese internet companies.
What is Jack Ma’s Ant Group and how does it make money?
China’s financial regulators demanded that the fintech giant followed the same rules as a conventional bank, such as having an adequate capital base and leverage ratio.
While Alibaba does not own Ant, Ma effectively controlled more than half of the voting rights of the fintech company via his acting-in-concert pacts and an entity called Hangzhou Yunbo Investment Consultancy.
The billionaire said he wanted to “reduce and thereafter limit his direct and indirect economic interest in Ant over time” to a percentage that doesn’t exceed 8.8 per cent, Alibaba said in a July 2022 filing.
In the latest restructuring, 10 Ant executives including Ma will control 53.46 per cent of ant through two entities called Junhan and Junao. Ma and four executives – Cyril Han Xinyi, Zhang Yu, Huang Chenli and Zhou Yun – will each hold 20 per cent equity interest of an entity that controls Junhan, ultimately owning 31.04 per cent of Ant.
Redefining fintech
Separately, Ant’s chairman Jing and four executives – Shao Xiaofeng, Ni Xingjun, Angel Zhao and Wu Minzhi – will each hold 20 per cent equity in an entity that controls Junao, which ultimately owns 22.42 per cent of Ant.
