Chinese billionaire Jack Ma plans to cede control of Ant Group, the Wall Street Journal reported, after a regulatory crackdown that scuppered its $37 billion IPO in 2020 and forced a restructuring of the financial technology behemoth.
While Ma only owns a 10 percent stake in Ant, an affiliate of Alibaba Group Holding Ltd., he exercises control over the company through related entities, according to Ant’s IPO prospectus filed with the exchanges in 2020.
Hangzhou Yunbo, an investment vehicle for Ma, has control over two other entities that own a combined 50.5 percent stake in Ant, the prospectus showed.
The Journal said, citing unnamed sources, that Ma could cede control by transferring some of his voting power to Ant officials including Chief Executive Eric Jing.
Ant has informed regulators of Ma’s intention as it prepares to restructure into a financial holding company, and that regulators didn’t demand the change but have given their blessing.
Shares in US-listed e-commerce giant Alibaba slipped 1.2 percent to $101.51 in premarket trade after briefly jumping higher.
In April last year, Reuters reported that Ant was exploring options for Ma to divest his stake in Ant and give up control.
The discussions at that time came amid a revamp of Ant and a broader state clampdown on China‘s technology sector that was set in motion after Ma’s public criticism of regulators in a speech in October 2020.
Ant’s IPO, which would have been the world’s largest, was derailed days after the speech, and Ma’s sprawling empire has been under regulatory scrutiny and going through a restructuring since then.
Ant operates the world’s largest and China’s most ubiquitous mobile payment app, Alipay, which has more than 1 billion users.
Once outspoken, Ma has kept an extremely low public profile as regulators reined in the country’s technology giants after years of a laissez-faire approach that drove breakneck growth.
“It’s been on the cards for a while,” said Danni Hewson, financial analyst at AJ Bell.
“There will be some who will think that potentially this clears the way for Ant to put the past few years behind them and try to get out on the front foot. There will be others who will be deeply concerned about what comes next because Jack Ma has been such a powerhouse.”
The Journal reported that a change in control at Ant could slow plans to revive its long-sought IPO, as China’s domestic A-share market requires companies to wait three years after a change in control to list.
The wait is two years on Shanghai’s STAR market, and one year in Hong Kong.
Earlier this week, Alibaba’s annual report revealed that Ant executives are no longer part of the Alibaba Partnership, a body that can nominate the majority of the e-commerce giant’s board, as the pair decouple to appease regulators.
Ant and Alibaba are also untangling their operations from each other and independently seeking new business.
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