Jack Ma Escapes Beijing’s Crosshairs By Giving Up His Power

Jack Ma escapes Beijing's crosshairs by giving up his power

Jack Ma has no management titles at Ant

Jack Ma is on a week-long tour of Europe after being largely out of public view for nearly two years. most powerful people.

The 57-year-old co-founder of Alibaba Group Holding Ltd. has turned up in restaurants in Austria, visited a university in the Netherlands to learn about sustainable agriculture and docked his yacht off the Spanish island of Mallorca, according to Bloomberg reports. and local media.

While it’s not Ma’s first trip outside of China since he criticized Communist Party officials over the regulation of his fintech giant Ant Group Co. in 2020, it’s a big change from the time the billionaire was advised by the government. not to leave the country. As a sign of how wary investors had been about the tycoon’s fate two months ago, Alibaba shares briefly lost $26 billion after a state media reported authorities had imposed restrictions on a person named Ma. Later information made it clear that the report referred to someone else.

Ma has had to make significant concessions to get out of the government dog house. After regulators torpedoed Ant’s long-awaited IPO in 2020, the company has revised operations to meet tighter controls and regularly discussed with the country’s central bank how to “settle” its operations. In the early years, Ant’s success in services such as digital payments and money market deposits posed a threat to the dominance of major state-backed banks.

Ant has also verbally signaled to regulators that Ma plans to relinquish control of the company, according to people familiar with the matter, adding that they’ve been relaying those plans to officials and the central bank for years. One pending proposal involves transferring Ma’s shares to other executives so that the company can be monitored by a committee, one of the people said.

In a filing this week, Alibaba reiterated that Ma “intends to reduce and thereafter limit its direct and indirect economic interest in Ant Group over time” to a rate no higher than 8.8%. Ma currently holds 50.52% voting rights in Ant.

“Significantly significant male risk will be removed from Ant’s neck” if Ma hands over control, said Justin Tang, the head of Asian research at United First Partners.

Representatives of the Ant, Alibaba and Ma Foundation did not immediately respond to requests for comment. China’s central bank did not respond to a faxed request for comment.

The Wall Street Journal previously reported that Ant told regulators that Ma plans to relinquish control and transfer some of his voting rights to other top executives. Hong Kong-listed shares of Alibaba fell 4% at 9:49 a.m. Friday.

Ma has no management titles with Ant and giving up control of the company would cause little disruption to day-to-day operations as he hasn’t been closely involved with the case for years, people familiar with the case said, asking for unnamed when discussing private information. Ma originally ended up with a majority vote when Ant was separated from Alibaba in a complex transaction aimed at minimizing conflict with Chinese regulations.

Ma’s decisions may now be a way to align with President Xi Jinping’s vision of achieving “common prosperity.” His companies are trying to meet the demands of China’s watchdogs, which have pledged to curb the “reckless” expansion of tech companies.

The Communist Party’s shifting attitude towards the private sector has become one of the most closely monitored developments in global markets in recent years, with some observers going so far as to make China’s sprawling internet sector uninvestable.

Even before angering Chinese regulators, Ma had distanced himself from the twin empires of e-commerce giant Alibaba and Ant. Ma stepped down as CEO of Alibaba in 2013 and then as chairman in 2019. He said as early as 2014 that he plans to reduce his stake in Ant to no more than 8.8% and that he plans to share 611 million shares. to donate to a good cause.

The ownership changes could delay the revival of Ant’s long-awaited IPO. China’s securities regulations state that companies cannot list on the A-share market if the controlling shareholder has changed in the past three years. The Nasdaq-esque STAR market has a two-year waiting period, while Hong Kong’s is one year.

“While there will be a wait for Ant with this change, it will matter little as the weak markets mean Ant is in no rush to be listed,” Tang said.

Ant is currently awaiting central bank approval to review its financial holding license application, an important step for the company to move forward with any opportunities to go public.

Once valued at $300 billion, Ant’s projected value has plummeted after regulators curtailed the operations of the company’s most profitable units, including consumer loans. Bloomberg Intelligence analyst Francis Chan estimated in June that Ant is worth about $64 billion.

As part of Ant’s restructuring, the company has increased its capital base to 35 billion yuan ($5.2 billion) and moved to build firewalls in an ecosystem that once allowed traffic from payment platform Alipay, with a billion users, to services. such as asset management and consumer loans.

The assets under management of its own money market fund Yu’ebao – once the world’s largest – fell about 35% from a peak in March 2020 to 813 billion yuan in June.

While Ant said in June it has no plans to launch an IPO, company chairman Eric Jing said last year it would eventually go public.

“Jack Ma didn’t already have a title in Alibaba. I don’t see that this has a big impact on the business of the company,” said Jian Shi Cortesi, investment director at GAM Investment Management in Zurich. But it will lead to “investors focusing more on developing the company rather than focusing on Jack Ma.”

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