Source:
https://scmp.com/tech/start-ups/article/2189236/alibaba-ant-financial-form-oversight-body-tighten-control
Tech

Alibaba, Ant Financial to form oversight body to tighten control

  • The steering committee led by the e-commerce giant will spearhead joint business initiatives
  • It will also provide a forum for Alibaba to keep Ant Financial aligned with its e-commerce business

Alibaba Group Holding and Ant Financial Services will establish a steering committee led by the e-commerce giant to spearhead joint business initiatives and ensure their long-term interests are aligned, according to people familiar with the matter.

China’s top online retail services provider and its biggest internet financial services giant will create a so-called new economy body, headed by Alibaba chief executive Daniel Zhang Yong. Ant Financial chairman Eric Jing will be Zhang’s deputy, the people said.

This body’s members will be tasked with ensuring both sprawling entities work together, and will hold executives accountable if they do not, the people said, asking not to be identified talking about a private matter.

The move creates a high-powered team to stand watch over the financial and commerce empire founded by billionaire Jack Ma, and comes as Alibaba prepares to take a one-third equity stake in its affiliate.

It will also provide a forum for Alibaba to keep Ant Financial aligned with its e-commerce business in the future, even after the financial firm goes public as anticipated. Zhang will succeed Ma as Alibaba chairman in September.

Ant Financial, estimated to be worth US$150 billion, is backed by some of the country’s most powerful financial institutions and is now making major strides abroad, hawking its Alipay system from Hong Kong to Brazil and sealing its biggest overseas acquisition.

Ant Financial Services, backed by some of China’s most powerful financial institutions, is now making major strides abroad, hawking its Alipay system from Hong Kong to Brazil. Photo: Bloomberg
Ant Financial Services, backed by some of China’s most powerful financial institutions, is now making major strides abroad, hawking its Alipay system from Hong Kong to Brazil. Photo: Bloomberg

Tencent Holdings, however, has in recent years chipped away at Alipay’s dominance in mobile payments at home, aided by its billion-strong WeChat social media platform. That loss of market share, coupled with the rise of apps such as ByteDance’s Douyin now competing for users’ attention, is undermining Ant Financial’s bread-and-butter service.

The new oversight group will not alter either companies’ financial and management structures, the people said. But the envisioned committee, numbering more than 10 people from key divisions within both firms, will serve as an overseer to ensure closer collaboration between the online emporium and the finance unit hived off about eight years ago.

Representatives for Alibaba and Ant Financial did not respond to emailed queries for comment.

Alibaba has expanded from a marketplace for merchants to China’s biggest e-commerce platform, an empire that now spans grocers and on-demand food delivery to real estate auctions. Ant Financial, built on the Alipay unit that Alibaba owned before it was hived off, has blossomed from a mere payments business to wealth management, credit finance and China’s biggest money-market fund.

Alibaba has not held a stake in Ant Financial since Ma controversially spun out the business. But the e-commerce giant said in February last year it would buy 33 per cent of Ant Financial, helping clear the way for a potential initial public offering. A combined entity would be worth more than US$600 billion.

Alibaba said it would acquire new shares in its affiliate in exchange for intellectual property rights. While no cash is changing hands, Ant Financial – formally known as Zhejiang Ant Small & Micro Financial Services Group Co – would then end royalty payments to Alibaba.

New York-listed Alibaba is the parent company of the South China Morning Post.