SHANGHAI/HONG KONG--Ant Group's founder Jack Ma will give up control of the Chinese fintech giant in an overhaul that seeks to draw a line under a regulatory crackdown that was triggered soon after its mammoth stock market debut was scuppered two years ago.
Ant's $37 billion IPO, which would have been the world's largest, was cancelled at the last minute in November 2020, leading to a forced restructuring of the financial technology firm and speculation the Chinese billionaire would have to cede control. While some analysts have said a relinquishing of control could clear the way for the company to revive its IPO, the changes announced by the group on Saturday, however, are likely to result in a further delay due to listing regulations.
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 Nasdaq-style STAR market, and one year in Hong Kong.
A former English teacher, Ma previously possessed more than 50% of voting rights at Ant but the changes will mean that his share falls to 6.2%, according to Reuters calculations. Ma only owns a 10% stake in Ant, an affiliate of e-commerce giant Alibaba Group Holding Ltd, but has exercised 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, had control over two other entities that own a combined 50.5% stake of Ant, the prospectus showed.
Ma's ceding of control comes as Ant is nearing the completion of its two-year regulatory-driven restructuring, with Chinese authorities poised to impose a fine of more than $1 billion on the firm, Reuters reported in November. The expected penalty is part of Beijing's sweeping and unprecedented crackdown on the country's technology titans over the past two years that has sliced hundreds of billions of dollars off their values and shrunk revenues and profits.
But Chinese authorities have in recent months softened their tone on the tech crackdown amid efforts to bolster a $17-trillion economy that has been badly hurt by the COVID-19 pandemic. "With the Chinese economy in a very febrile state, the government is looking to signal its commitment to growth, and the tech, private sectors are key to that as we know," said Duncan Clark, chairman of investment advisory firm BDA China.
"At least Ant investors can (now) have some timetable for an exit after a long period of uncertainty," said Clark, who is also an author of a book on Alibaba and Ma.
