Jack Ma To Cede Control of Ant Group To Escape China’s Regulatory Clampdown

Ma is currently touring Europe after going largely unnoticed from public view for the last two years.

Alibaba co-founder Jack Ma.

(Photo: Altered by The Quint)

Jack Ma, co-founder of Alibaba Group Holding Ltd, is planning to give up control of Ant Group, Wall Street Journal reported on Thursday, 28 July, following China’s regulatory clampdown that sunk its $37 billion Initial Public Offering (IPO) in 2020 and forced the restructuring of the financial technology behemoth.

Ma is currently touring Europe after going largely unnoticed from public view for almost two years, hinting at easing pressure from the Chinese government.

While this is not Ma's first trip outside China since he slammed Communist Party officials in 2020 over regulation of his fintech giant Ant Group Co, it is a drastic break from Ma being advised by the government to not leave the country.

This manoeuvre to save his empire comes after Alibaba shares briefly lost $26 billion just two months ago after a state media reported that authorities had imposed curbs on a person surnamed Ma. A following report had clarified that the name did not refer to the Chinese billionaire.

Giving Up Control

More importantly, Ant has also signaled to regulators that Ma intends to give up control over the company, according to people familiar with the matter, Bloomberg reported.

Another proposal under consideration involves transferring Ma's shares to other executives so the company can be overseen by a committee, one of the people reportedly said.

Alibaba also reiterated this week that Ma "intends to reduce and thereafter limit his direct and indirect economic interest in Ant Group over time" to a percentage that does not exceed 8.8 percent. Ma currently holds 50.52 percent voting rights in Ant.

Justin Tang, the head of Asian research at United First Partners, was quoted as saying, "A significant key man risk will be removed from the neck of Ant.”

Ant told regulators that Ma plans to cede control and could also transfer some of his voting power to other top executives, Wall Street Journal had reported earlier.

Meanwhile, the Alibaba's Hong Kong-listed shares fell 4 percent as of 9.49 am on Friday.

The developments are possibly a way to align with Chinese President Xi Jinping's vision of achieving "common prosperity" and to curb the "reckless" expansion of technology firms, Bloomberg reported.

In any case, even before Chinese regulators circled Ma’s companies, he had been distancing himself from the e-commerce giants Alibaba and Ant. He had stepped down as CEO of Alibaba in 2013 and then as chairperson in 2019.

In 2014, he had said that he intended to reduce his stake in Ant to no more than 8.8 percent and to donate 611 million shares to charity.