Ant Group is exploring options for founder Jack Ma to divert his stake in the financial technology giant and relinquish control, as meetings with Chinese regulators told the company that the measure could help draw a line under the Beijing scrutiny of its business, according to a source familiar with the thinking of regulators and two people with close ties to the company.
Reuters reports for the first time details of the last round of meetings and discussions on the future of Ant de Ma’s control, exercised through a complicated structure of investment vehicles. The Wall Street Journal previously reported that Ma had offered at a November meeting with regulators to hand over parts of Ant to the Chinese government. https://on.wsj.com/2QvkHbc
Officials from the central bank, the People’s Bank of China (PBOC) and the financial regulator China Banking and Insurance Commission (CBIRC) held talks between January and March with Ma and Ant separately, where the possibility of departure of the tycoon from the company. , according to reports provided by the source familiar with the thinking of regulators and one of the sources with close ties to the company.
Ant denied that a divestment of Ma’s stake was under consideration. “The divestment of Mr Ma’s stake in Ant Group has never been the subject of discussions with anyone,” an Ant spokesman said in a statement.
Reuters could not determine whether Ant and Ma would proceed with a divestment option and, if so, which. The company hoped 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 entity, said one of the linked sources. business.
But the second source, also related to companies, said that during discussions with regulators, Ma was told that he would not be allowed to sell his stake to any nearby entity or individual, but should leave completely. Another option would be to transfer its stake to a state-affiliated Chinese investor, the source said.
Any move would need Beijing’s approval, both sources said with knowledge of the company’s thinking.
The accounts provided by the three sources are consistent in terms of the chronology of the evolution of the discussions over the past few months. As for the company, a source said Ma 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 departure about a couple of months ago. The source familiar with the regulators ’thinking said Ant had told officials during a meeting before mid-March that he was working on options.
The source familiar with regulators ’thinking has direct knowledge of the conversations between Ant and officials, while one of the sources with company ties has been informed about Ma’s interactions with Ant’s regulators and plans. The other has direct knowledge of Ant’s discussions about options. They asked for anonymity because of the sensitivity of the situation.
Ant’s spokesman did not provide any comment from Ma. Alibaba asked Ant. Jack Ma’s office did not respond to Reuters ’request for comments made through Ant. The Information Office of the Council of State, PBOC and CBIRC, also did not respond to requests for comment.
The high-stakes discussions come amid a renewal of Ant and a broader regulatory downturn on the Chinese technology sector that was launched following Ma’s public criticism of regulators in a speech in October. ‘last year.
Ma’s departure could help pave the way for Ant to reactivate plans to make himself public, which stalled after the tycoon’s speech, both sources close to the company said. Ant, who was on the verge of raising about $ 37 billion in what would have been the world’s largest initial public offering, aborted the plans the day after Ma’s November 2 meeting with regulators.
“TOO BIG FOR YOUR BRITISHES”
Since then, Beijing has unleashed a series of investigations and new regulations that have not only dominated the Ma empire, but have also toured the country’s technology sector, including other high-profile multimillion-dollar entrepreneurs.
For 56-year-old Ma, who also founded Alibaba and once commanded a cult-like reverence in China, the consequences have been particularly severe. The tycoon withdrew completely from public attention for about three months and has continued to keep a low profile after a brief appearance in January. Read more
China’s antitrust regulator fined Alibaba a record $ 2.752 billion on April 10 after an antitrust investigation found it had abused its dominant market position for several years. A couple of days later, the central bank asked Ant to become a financial holding company, putting it within the scope of the banking rules it had so far managed to avoid and allowing it to grow rapidly. Read more
“China still likes to promote its technology companies as world leaders as long as they don’t get too big for their misdeeds,” said Andrew Collier, CEO of Orient Capital Research.
CONTROL STAKE
Although Ma had already abandoned his corporate positions, he maintains effective control over Ant and a significant influence over Alibaba.
Although it only has a 10% stake in Ant, Ma exercises control over the company through related entities, according to Ant’s IPO brochure.
Hangzhou Yunbo, an investment vehicle for Ma, has control over two other entities that own a combined 50.5% stake in Ant, according to the brochure. Yunbo can decide all matters related to Ant and exercise the combined voting power of the three entities, as the pamphlet shows.
Ma has a 34% stake in Yunbo, according to the brochure.
One of the company-related sources said there was “a great chance” that Ma would sell her stake in Yunbo to leave Ant, paving the way for the major fintech technology to come close to completing its renovation and reactivate your quote.
Reuters was unable to contact Yunbo for comment. Ant did not comment on Yunbo’s behalf.
Our standards: the principles of trust of Thomson Reuters.