Chinese billionaire Jack Ma will relinquish control of fintech giant Ant Group as part of an adjustment of its shareholding structure, according to an announcement Saturday by the company. No single shareholder will hold sole or joint control after this adjustment takes effect, the statement added.
Ma owned or controlled over half the voting rights in Ant via acting-in-concert agreements and two entities at the time of its 2020 IPO prospectus; after adjustment his stake will fall to just over 6%.
Founder & CEO
After cofounding Alibaba in 1999, Jack Ma amassed a $454 billion empire and became one of the world’s wealthiest men. A former English teacher expanded into financial technology when he founded Ant Group in 2014 which operates digital payments platform Alipay and consumer lending services. Since China’s unprecedented tech crackdown began in 2021 however, Ma has gradually been retreating from his online empire by relinquishing control of some of its units.
Ant has announced an adjustment to its voting rights structure, with shareholders, including Ma, agreeing it must change for regulatory reasons and without altering economic interests of any shareholders. According to an announcement published Saturday morning, these changes will reduce Ma’s voting rights from 50.1% through Hangzhou Yunbo and two other entities to 6.2% – down significantly since his control of more than 50% previously existed via Hangzhou Yunbo and two other entities, according to Ant’s statement.
Ant is changing its operations to suit Chinese regulators after its plans for an initial public offering were cancelled in 2020. Chief executive Jack Ma made headlines for criticizing China’s banks as state-run pawnshops in an address, prompting officials to block it and fine Alibaba an unprecedented $2.75 billion penalty.
Multiple units within the company are currently undergoing restructuring to conform with new regulatory demands, including increasing capital for consumer finance businesses. One consumer lending affiliate of the company received approval to increase its registered capital by 10.5 billion yuan, giving it more space to issue loans and possibly leading to its classification as a financial holding firm, meaning it would need to be regulated like traditional banks.
Ant has shown no indication it plans on resuming its IPO; Chinese securities regulations mandate companies wait at least three years if listing domestically, two if debuting in Hong Kong. Ma has since made himself scarce at public events; rarely seen among prominent Chinese business figures other than charity events.
Founder & Chairman
Jack Ma revolutionized Chinese commerce after cofounding Alibaba e-commerce company in 1999 and transformed it into a $454 billion empire, changing how Chinese shoppers shop online. Additionally, in 2014 he expanded their reach further through founding Ant Group as its subsidiary. According to Bloomberg Billionaires Index he currently ranks amongst one of the richest individuals with an estimated net worth of approximately $42 billion.
He left as CEO in 2013 and retired as Chairman in 2019, and since has gradually relinquished control to his siblings as Alibaba prepares for an anticipated initial public offering (IPO).
Ant’s management has recently implemented several changes designed to placate regulators. They include streamlining business operations and creating firewalls within its ecosystem that once allowed traffic from Alipay with over one billion users to services such as wealth management and consumer lending. Furthermore, they increased capital for Chongqing Ant Consumer Finance unit and obtained approval to increase an existing capital increase there.
Ma controlled nearly 100% of voting rights at his affiliate unit until now; now shareholders of that affiliate will have more autonomy when casting votes independently of Ma. As part of this adjustment, his voting rights will drop by roughly 6.2% according to a company statement on Saturday but this won’t alter his economic interests in the firm.
Ma is using his vote reshuffle with Ant as part of a plan to gradually cede control of one of the world’s most valuable technology companies, which remains one of its core markets. Ant has yet to receive an authorization to become a financial holding company which would enable regulation more like that found at banks.
Ma has kept to himself since Ant’s failed stock market flotation, only occasionally appearing at charity events and traveling overseas for trips abroad. Recently however, Beijing authorities loosened their grip on this giant internet sector by authorizing Ant’s consumer finance arm to raise 10.5 billion yuan in fund raise.
CEO & President
Ant Financial’s shareholders have approved adjustments that will see Ma relinquish most of his voting rights, according to an announcement released by the firm on Saturday. Following regulatory scrutiny that prevented its planned $37 billion initial public offering in 2020, their control has slipped away from them and their CEO.
Ma, who was teaching at the time of his startup’s founding in 1994, has since become one of China’s most revered business magnates with stakes in Alibaba and Alipay – the world’s leading digital payments platform. However, his statements against state banks as “pawnshops” as well as accusations that regulators impede growth have drawn much criticism from Beijing authorities.
China’s ruling Communist Party has engaged in an unprecedented crackdown against technology giants over recent years, cutting billions off their values and revenues and profits. Ma’s resignation from Ant shows the state is determined to curb large private investor influence according to Andrew Collier of investment advisory firm Orient Capital Research.
Ant’s domestic IPO may become even harder after this decision as its financial regulations would become equivalent to those applied by its peers if it relists on any domestic markets (A-share market in Singapore; two years for Shanghai’s STAR market).
Ant has announced changes designed to bring it in line with new rules, enabling it to expand consumer loan services. Chongqing Ant Consumer Finance was set up in 2021 as an entity within Ant specifically dedicated to handling consumer lending businesses; recently received approval from China Banking and Insurance Regulatory Commission to increase registered capital by 10.5 billion yuan ($1.5 billion).
CFO & COO
Chinese tech billionaire Jack Ma is handing control of Ant Financial over to Alibaba Group founder Jack Ma, marking one of the biggest shakeups at this fintech giant since Chinese regulators stopped its planned $37 billion IPO and subjecting it to traditional bank regulations.
Restructuring Ant is seen as a signal from Chinese authorities that they are relaxing their hold over the internet industry, opening the way for its IPO which would become one of the world’s largest. Unfortunately, when this will take place is currently unknown due to Beijing listing rules which mandate lengthy rectification processes following major shareholder changes.
Ma, who owns 50 percent of Ant through several investment vehicles, will still hold substantial economic interests but his voting rights won’t exert as much sway over its direction. According to filings made by Ant, nine other major shareholders will no longer vote together and instead exercise them independently – this move reducing Ma’s stake from 50.5% down to 6.2% of total voting rights according to an IPO prospectus filed in 2020.
Ma’s decision to change his company’s shareholding structure will enable it to meet regulatory requirements by expanding consumer finance business in line with regulatory requirements. Recently approved was increasing registered capital from $1.2 billion to approximately 2.7 billion allowing more consumer loans and improving credit access for more people. This move marks another step in an aggressive fundraising effort by Ma to comply with government requirements to revamp all his businesses.
This move will give the Chinese government a stake in the fintech giant, further aligning it with Beijing’s policy goals. Restructuring will require transforming it into a financial holding firm subject to similar regulations as traditional banks; raising capital from foreign investors may be required as its domestic funding sources become restricted due to these new regulations.
