Ant Group Founder Jack Ma Will Relinquish Control

One of China’s most influential fintech companies, Ant Group, said on Saturday that billionaire entrepreneur Jack Ma planned to relinquish control of the company.

Mr. Ma’s withdrawal from the company he founded comes after the ruling Communist Party carried out an unprecedented crackdown on Big Tech. Beijing had made Mr Ma’s Ant Group and its sister company, e-commerce giant Alibaba, the crown jewels of its online empire, early targets of the campaign to curb the power of internet giants .

Chinese authorities had forced Ant Group to cancel what would have been a successful initial public offering in 2020 and later fined Alibaba a hefty $2.8 billion for abusing its dominance. Last year, Ant Group announced it would undertake a major government-ordered business overhaul to address regulators’ concerns about unfair competition and the amount of user data it collects.

Under Xi Jinping, China’s top leader, Beijing has sought to exert greater state control over the economy in recent years, including reining in the influence of tycoons who have amassed enormous wealth but have overtaken their limits.

Mr Ma has previously been hailed in China as a model of success, but he has faced growing problems with the Chinese government, particularly after criticizing the country’s banking regulators in late 2019. In recent years he has largely disappeared from public view.

Ant Group said in an announcement on Saturday that Mr. Ma would no longer be the “controlling person” who owns 34% of the company’s shares. Instead, he would be one of the top 10 shareholders.

The announcement, which described the move as part of a ‘corporate governance optimization’ plan, gave no details on when the changes would be finalized and noted that they would not affect operations. daily business. Under Ant Group’s current governance structure, Mr. Ma does not have a leadership role.

Ant’s flagship Alipay app is a major portal for more than a billion users in China who use it to pay for meals, shop on credit and build savings. But its influence and size have made it a concern for Beijing as authorities scrutinize the fintech industry for potential risks to the country’s broader financial system. Then, in 2020, shortly before Ant’s IPO, regulators abruptly halted its initial public offering, estimated at the time at $34 billion, in what would have been the biggest IPO ever. recorded.

It was not immediately clear how Mr. Ma’s withdrawal from the Ant Group might affect any plans the fintech giant might have to resume its initial public offering. But it will likely be delayed due to registration requirements. The Hong Kong Stock Exchange requires a one-year waiting period after a change in ownership; other markets require two or three years.

Ant Group has made efforts to restructure its businesses in accordance with the requirements of the Chinese authorities. Regulators last month approved a plan to raise $1.5 billion in capital for its consumer finance unit, allowing a branch of the Hangzhou government to become its second largest shareholder. The capital raise overcomes a key regulatory hurdle, allowing it to issue up to 500 billion yuan, or $73 billion, of consumer loans.

The approval was the latest indicator that the Chinese government is ready to ease its hardline stance on internet companies in a bid to revive economic activity in 2023.

After a prolonged period of strict “zero Covid” lockdowns and stringent fines and regulations against Ant Group and other tech giants, Li Qiang, the Communist Party’s new No. 2 official, urged executives during a an economic meeting in December to “vigorously develop digital”. economy” and improve their global competitiveness.

Zixu Wang contributed to the research.