After a regulatory crackdown, Ant Group’s billionaire founder, Jack Ma, will relinquish control of the Chinese fintech giant. According to Ant Group, no one will have complete control following the shift.
Mr. Ma, who was formerly known for his flamboyance, has been rarely seen in public since criticizing China’s financial sector in 2020. As a result of the criticism, Ant Group’s proposed stock market floatation was abruptly canceled. Ant Group operates Alipay, China’s most popular online payment system, which has surpassed cash, checks, and credit cards. Mr. Ma, a former English teacher who established e-commerce behemoth Alibaba, owns more than 50% of Ant Group, both directly and indirectly. However, following the changes in governance structure, he will control slightly more than 6%.
Ant’s £26 billion stock market float, which would have been the world’s largest, was canceled at the last minute in November 2020. At the eleventh hour, Chinese officials claimed “major issues” with the firm’s regulation. Some experts regarded it as the Chinese government’s attempt to humble a firm that had grown too powerful and a leader who had grown too outspoken.
Mr. Ma had told a banking conference that traditional banks had a “pawn-shop mindset,” prompting the regulatory intervention. He also praised the benefits of the digital banking system, emphasizing that future lending choices should be based on data rather than collateral. Mr. Ma has a stake in Ant and acts in cooperation with other shareholders to control it. However, Ant stated that shareholders had agreed to no longer vote collectively and would instead vote independently. The ownership structure will also shift. Ant stated that the economic interests of shareholders would not alter.
“Jack Ma’s departure from Ant Financial, which he founded, demonstrates the Chinese leadership’s intention to limit the power of huge private investors,” said Andrew Collier, managing director of Orient Capital Research. This trend will exacerbate the deterioration of the Chinese economy’s most productive sectors.
According to Reuters, Ant Group is reaching the end of a two-year restructuring prompted by regulators, and Chinese officials are prepared to levy a fine of more than $1 billion on the company. The predicted penalty is part of a massive crackdown on China’s technology behemoths over the last two years, which has reduced their values by hundreds of billions of dollars and reduced revenues and earnings.
However, the authorities have recently tempered their tone in order to support the Chinese economy, which has been harmed by the Covid epidemic.