Alibaba says founders’ loans pose no risk as borrowings are easily manageable due to daily trading volume

Jack Ma, whose Alibaba stake stood at 4.8 per cent as of July 2020, no longer has any loans collateralised with shares, the company said

Joe Tsai, with a 1.6 per cent stake in the company, has collateralised loans that are ‘easily manageable’ in view of Alibaba’s trading volume

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Alibaba Group Holding’s senior executives Joe Tsai (left), Jack Ma (centre) and Daniel Zhang (second right) during a company event in 2018. Photo: Handout

Published: 12:33am, 3 Jul 2021Updated: 8:49am, 3 Jul 2021

Jack Ma, the founder of one of the largest publicly traded Chinese technology companies, has settled all the equity financing that involved the use of his stake in Alibaba Group Holding since its 2014 initial public offering (IPO) in New York, according to a company statement.

Ma, whose Alibaba stake stood at 4.8 per cent as of July 2020, no longer has any loans collateralised with shares of the Hangzhou-based company, according to the statement.

Joe Tsai, an Alibaba co-founder with a 1.6 per cent stake in the company, who is also the chairman of Alibaba’s wholly owned South China Morning Post, has collateralised loans that are “easily manageable in the context of Alibaba’s market capitalisation and trading volume”, the company said.

“Over the past three months, Alibaba stock has a combined average daily trading volume of approximately US$4 billion on the New York Stock Exchange and Hong Kong stock exchange,” according to the company’s statement . “The loans have prudent loan-to-value ratios to provide substantial cushion against triggering a margin call.”

Jack Ma, founder of Alibaba Group Holding, during the Tech for Good Summit in Paris in 2019. Photo: Reuters.

The statement was issued in response to a query by the Financial Times about collateralised loans by the two Alibaba founders and their affiliates.

“The fact that Jack and Joe borrowed from financial institutions using their Alibaba stock as collateral has been widely reported,” the company said, pointing to a September 2015 article by Bloomberg.

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