Alibaba's Jack Ma intends to relinquish control of Ant Group
It comes during a period of tightening financial regulation in China
Chinese billionaire Jack Ma plans to cede control of fintech behemoth Ant Group, which owns brands like AliPay, Alibaba and WorldFirst.
According to The Wall Street Journal, Ant Group is seeking to distance itself from Alibaba, which Ma founded, following prolonged pressure from Chinese regulators.
Ma has been reorganising his vast e-commerce and fintech empire for some time, in the aftermath of a widespread regulatory crackdown on China's fintech sector that began in 2020. In October that year Chinese authorities put a stop to Ant's planned IPO, which was estimated to be worth $37 billion and would have been the biggest in history.
The regulators subsequently ordered that Ant go through a 'rectification' process, putting the company under the same financial oversight as regular banks.
The authorities said Ant should 'return to its roots in payments and bring more transparency to transactions.' In addition, the firm was asked to obtain licences for its credit business and to safeguard the privacy of its customers' data.
Ant was forced to create a financial holding company, while also restructuring its credit, insurance, wealth management, and other financial businesses.
Up until that moment, Ant had been expanding rapidly under relatively lax regulatory conditions, like many other Chinese internet firms.
According to The Journal, Ma could cede control of Ant by giving part of his voting power to other executives, including CEO Eric Jing.
Ant's IPO prospectus filed in 2020 showed Ma has a 10% stake in the firm, although he wields influence through related entities. His investment vehicle, Hangzhou Yunbo, controls two other entities that together possess a 50.5% stake in Ant.
Ant has notified authorities of Ma's plan. While regulators didn't demand the move, they have approved it.
The Chinese tech sector has been subjected to tremendous regulatory pressures over the last 18 months. Shares of Alibaba lost almost half their value last year, amid worries about potential delistings in the United States and strict antimonopoly regulations in China.
Ma is currently the target of government action that seems to be intended to weaken the influence and the power of the firms he owns and operates. More than 90% of Chinese consumers regularly use AliPay.
Ma has had full control over Ant since he separated its precursor assets from Alibaba more than a decade ago. The company's value was projected to exceed $300 billion had it gone public.
Ma's decision to reduce his shareholding could delay any plans to resurrect Ant's IPO by at least a year. Companies in China that have recently undergone a change in control are required to wait before listing their shares publicly.