Billionaire Jack Ma to leave command of company that controls Alipay

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Billionaire Jack Ma, founder of Ant Financial Group, will give up his control of the company. The decision comes amid a siege by the Chinese government to the country’s large technology companies.

Ant operates the Alipay payments app, ubiquitous in China and the largest in the world, with more than 1 billion users. The company also offers loans and insurance.

The company reported this Saturday (7) that Ma and other owners of a large part of the shares agreed to no longer act as a group when voting. It also announced the appointment of a fifth independent director to the board, which has eight members. Thus, independents will be in the majority.

A former English teacher, Ma owned more than 50% of the voting shares. With the changes, it should now have 6.2%, according to Reuters calculations.

Ma only owns a 10% stake in Ant, but controlled the company through related entities, according to the IPO prospectus filed in 2020. Hangzhou Yunbo, an investment vehicle of Ma, controlled two other entities and together amounted to 50, 5% stake in Ant.

Ant planned to make a $37 billion IPO in November 2020, which would be the world’s biggest yet. The process, however, was canceled at the last minute, which led to a forced restructuring of the technology company, which culminated in Ma’s loss of power.

The IPO was suspended days after the billionaire publicly criticized Chinese regulators in a speech. Since then, his empire has come under heavy government scrutiny and undergoing restructuring. It has appeared little since the regulatory restrictions were adopted.

Ma is worth an estimated $24.9 billion, according to Forbes, making him the 59th richest person in the world. He got rich after creating the e-commerce website Alibaba.

“Jack Ma’s departure from Ant, a company he created, shows the determination of the Chinese leadership to reduce the influence of large private investors,” says Andrew Collier, director of Orient Capital Research. “This trend will continue to erode the most productive parts of the Chinese economy,” he says.

“At least Ant investors can [agora] have some time for an exit after a long period of uncertainty,” said Duncan Clark, president of investment advisory BDA China.

While some analysts say a change in leadership could clear the way for the company to resume its IPO, the announced changes are likely to result in additional delays due to regulations.

China’s domestic stock market requires companies to wait three years after a change in control to be listed. On the Shanghai stock exchange focused on technology companies, the wait is two years. In Hong Kong, one year.

Ma’s takeover comes as Ant is close to completing a two-year restructuring process over regulatory concerns. Chinese authorities are considering imposing a fine of more than $1 billion on the company, according to Reuters, for possible breaches of the country’s rules.

The expected fine is part of an unprecedented crackdown by the Chinese government against tech giants that has slashed hundreds of billions of dollars in market value and hit revenues and profits.

But in recent months, Chinese authorities have been softening the tone of the restrictions, amid efforts to stimulate a $17 trillion economy that has been hit hard by the effects of the pandemic.

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