Sources said the Chinese company Ant is exploring Jack Ma’s exit as Beijing piles up to pressure


Hong Kong: Ant Group is exploring options for founder Jack Ma to give up his stake in the fintech giant and cede control, as meetings with the company’s Chinese regulators indicated the move could help draw a line under Beijing’s oversight of its business, according to a source familiar with the thinking of the regulators and two people. Close relationship with the company.

China’s Ant group is exploring options for founder Jack Ma to give up its stake in the fintech giant and cede control, according to sources. Photo Credit: Agence France-Presse

Reuters is for the first time reporting details of a recent round of meetings and discussions about the future of some takeover of Ant, which is done through a complex structure of investment vehicles. The Wall Street Journal reported earlier that what was offered at the November meeting with regulators was to hand over parts of Ant to the Chinese government.

Ant denied that Ma’s investment withdrawal was ever under consideration. “The withdrawal of ownership of Mr. Ma’s stake in Ant Group has never been the subject of discussions with anyone,” an Ant spokesman said in a statement.

Reuters was unable to determine if Ant and Ma will proceed with the divestment option, and if so, which one. A source with ties to the company said the company had hoped to sell a stake, which was worth billions of dollars, to existing investors in Ant or its e-commerce affiliate Alibaba Group Holding Ltd without involving any outside entity.

But the second source with ties to the company said that during discussions with the regulators, Ma was told that he would not be allowed to sell his stake to any entity or individual close to it, and would instead have to exit altogether. Another option, the source said, is to transfer its stake to a Chinese investor linked to the state.

Both sources familiar with the company’s thinking said any move would need Beijing’s approval.

The accounts provided by all three sources are consistent in terms of timeline of how discussions have evolved over the past few months. On the company side, one of the sources said that he had met with the organizers more than once before the Chinese New Year, which was in early February. The second source said that Ant began working on potential exit options for Ma about two months ago. The source familiar with the regulators’ thinking said Ant told officials during a meeting sometime before mid-March that he was working on options.

The source familiar with the thinking of the regulators has first-hand knowledge of the conversations between Ant and the officials, while a source with ties to the companies was briefed on Ma’s interactions with the regulators and Ant’s plans. The other has first-hand knowledge of Ant’s discussions about options. They requested anonymity due to the sensitivity of the situation.

Ant’s spokesman did not make any comments from Ma.

Alibaba referred questions to Ant. Jack Ma’s office did not respond to a Reuters request for comment via Ant. The State Council Information Office, PBOC and CBIRC, also did not respond to requests for comment.

The high-stakes discussions come amid a renewal of Ant and a wider regulatory crackdown on China’s tech sector that began after Ma’s public criticism of regulators in a speech he gave in October of last year.

Both sources close to the company said an exit could help pave the way for Ant to revive plans for its public offering, which were stalled after the billionaire’s speech. Ant, which was on the verge of raising an estimated $ 37 billion in what would have been the largest IPO in the world, had aborted plans the day after some November 2 meeting with the organizers.

Since then, Beijing has launched a series of new investigations and regulations that not only curbed an empire but also engulfed the country’s tech sector, including other prominent billionaire entrepreneurs.

For Ma, the 56-year-old who also founded Alibaba and once enjoyed cult-like reverence in China, the consequences were particularly dire. The billionaire completely withdrew from the public eye for three months and continued to keep out of sight after a brief appearance in January.

China’s Antitrust Authority imposed a record fine of $ 2.75 billion on Alibaba on April 10 after an antitrust investigation found that it had abused its dominant market position for several years. Two days later, Ant was required by the central bank to become a financial holding company, which brought it subject to the scope of banking rules that it had so far avoided and allowed it to grow rapidly.

“China still loves to promote its technology companies as global leaders as long as they don’t get too big for their children,” said Andrew Collier, managing director of Orient Capital Research.

Take control of the share

Although he has previously resigned from positions within the company, he maintains effective control over Ant and has a huge influence over Alibaba.

While he only owns 10% of Ant shares, Ma exercises control of the company through the related entities, according to Ant’s IPO prospectus.

The prospectus shows that Hangzhou Yunbo, Ma’s investment vehicle, controls two other entities that own a combined 50.5% stake in Ant. The release prospectus shows that Yunbo can decide all matters related to Ant and wield the combined voting power of the three entities.

The prospectus shows that he owns 34% of the shares in Yunbo.

A source with ties to the company said there is a “great opportunity” to sell its stake in Yunbo to exit Ant, eventually paving the way for the main fintech to move closer to completing its renewal and reviving its listing.

Reuters was not able to reach Yeonbo for comment. Ant did not submit a comment on Yunbo’s behalf.

More to track …
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