Exclusive Chinese Ant Explores Ways To Leave Jack Ma



Ant Group is exploring options for founder Jack Ma to divest his stake in the fintech giant and relinquish control, as meetings with Chinese regulators have signaled the company the move could help draw a line under Beijing’s control of its activities, according to a source familiar with thinking regulators and two people with close ties to the company.

Reuters is first reporting details of the latest round of meetings and discussions about the future of Ma’s control over Ant, exercised through a complex structure of investment vehicles. The Wall Street Journal previously reported that Ma proposed in a November meeting with regulators to hand parts of Ant over to the Chinese government.

Officials from the central bank, the People’s Bank of China (PBOC) and the financial regulator China Banking and Insurance Regulatory Commission (CBIRC) held talks between January and March with Ma and Ant separately, where the possibility of the exit of the company tycoon was discussed. , according to testimony provided by the source familiar with the thinking of regulators and one of the sources with close ties to the company.

Ant has denied that any divestment of Ma’s stake was ever considered. “The divestment of Mr. Ma’s stake in Ant Group has never been discussed with anyone,” a spokesperson for Ant said in a statement.

Reuters could not determine whether Ant and Ma would proceed with a divestment option, and if so, which one. The company was hoping that Ma’s billion-dollar stake could be sold to existing investors in Ant or its e-commerce subsidiary Alibaba Group Holding Ltd without involving any outside entities, said one of the sources with information. links with the company.

But the second source, also with corporate relations, said that during discussions with regulators, Ma was told that he would not be allowed to sell his stake to any entity or individual close to him, and that he should rather leave completely. Another option would be to transfer its stake to a state-affiliated Chinese investor, the source said.

Any move would require Beijing’s approval, said the two sources with knowledge of the company’s thinking.

The accounts provided by the three sources are consistent in terms of the chronology of the development of the discussions over the past few months. On the business side, a source said Ma had met with regulators more than once before the Chinese New Year, which took place in early February. And the second source said Ant started working on options for Ma’s possible release about two months ago. The source familiar with the thinking of regulators said Ant told officials at a meeting before mid-March that she was working on options.

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

The spokesperson for Ant did not provide any comment from Ma. Alibaba referred questions to Ant. Jack Ma’s office did not respond to 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 talks come amid an overhaul of Ant and a broader regulatory crackdown on China’s tech industry that was sparked after Ma’s public criticism of regulators in a speech in October last year.

Ma’s exit could help pave the way for Ant to revive his intention to go public, which was blocked after the mogul’s speech, the two sources close to the company said. Ant, which was set to raise around $ 37 billion in what would have been the world’s largest initial public offering, scrapped plans the day after Ma’s Nov. 2 meeting with regulators.

“ TOO BIG FOR THEIR BRITCHES ”

Since then, Beijing has unleashed a series of investigations and new regulations that have not only held back Ma’s empire, but also swept away the country’s tech sector, including other top billionaire entrepreneurs.

For Ma, 56, who also founded Alibaba and once commanded a sectarian reverence in China, the consequences have been particularly dire. The mogul completely retreated from the public eye for about three months and continued to keep a low profile after a brief appearance in January.

China’s antitrust regulator fined Alibaba a record $ 2.75 billion on April 10 following an antimonopoly investigation that found it had abused its dominant market position for several years. Days later, the central bank asked Ant to become a financial holding company, which puts it under banking rules it had managed to avoid so far and allowed it to grow rapidly.

“China always likes to promote its tech companies as world leaders as long as they don’t get too big for their panties,” said Andrew Collier, managing director of Orient Capital Research.

CONTROLLING PARTICIPATION

Although Ma previously stepped down as a company, he retains effective control over Ant and significant influence over Alibaba.

While he only owns a 10% stake in Ant, Ma exercises control over the company through related entities, according to Ant’s IPO prospectus.

Hangzhou Yunbo, an investment vehicle for Ma, controls two other entities that hold a combined 50.5% stake in Ant, the prospectus says. Yunbo can decide all matters relating to Ant and exercise the combined voting power of the three entities, the prospectus says.

Ma owns a 34% stake in Yunbo, the prospectus says.

One of the sources with ties to the company said there was a “great chance” that Ma would sell her stake in Yunbo to leave Ant, ultimately paving the way for the fintech major to move closer to finalizing. its overhaul and the relaunch of its listing.

Reuters could not reach Yunbo for comment. Ant did not comment on Yunbo’s behalf.

Our Standards: Thomson Reuters Trust Principles.


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