The backstory: It's been a rocky road for China's largest fintech company, Ant Group, and its founder, Jack Ma. Back in November 2020, the company planned a hyped-up initial public offering (IPO) worth US$37 billion, which was set to be the largest ever. But just two days before it went live, it was postponed as regulators launched a wide crackdown across several sectors, one being Big Tech. (It probably didn't help that Ma had picked a fight with regulators a week earlier in a speech.) They wanted the company to restructure its business and follow the same rules as traditional banks.
Shortly after, its parent company Alibaba was hit with a record US$2.8 billion penalty after an anti-monopoly investigation. Ant Group also had to fix non-competitive behavior involving its mobile payment platform, Alipay, as well as improve user data protection. In December 2020, regulators told the billionaire to scale back his empire.
The development: Now, Ant Group has announced some changes to comply with these new regulations. As part of the restructuring, Ma will no longer have control over Ant Group. Shareholders agreed to reshape the shareholding structure, according to a statement from the company. The restructuring will reduce Ma's voting rights to 6.2%, down from the over 50% he had before. The changes are meant to make Ant Group's shareholder structure "more transparent and diversified."
“The main result of the Adjustment will be to change the exercise of voting rights of Ant Group’s major shareholders, from Mr. Jack Ma exercising voting rights jointly with persons acting in concert, to each of ten individuals (including the founder, representative of our management and employees) exercising their voting rights independently,” the statement from Ant Group explained on its new shareholder structure.
“Jack Ma’s departure from Ant Financial, a company he founded, shows the determination of the Chinese leadership to reduce the influence of large private investors,” said Andrew Collier, managing director of Orient Capital Research.
“It looks like Jack Ma renounced his control of Ant, and it can open an opportunity for new investors to come in, which could be [either] state capital or other types of private equity,” said Li Chengdong, head of the internet think tank Dolphin. “I don’t think Ant’s IPO would be imminent, as China puts the priority on gathering resources for the hi-tech sector, but it would be easier to allow an IPO if equity and control issues get resolved at Ant.”
“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.