20 years of building a fortune, Jack Ma is almost empty: Not only is it divided into 6, Alibaba will gradually have to reduce its ownership in all subsidiaries.

Bloomberg reported that Alibaba Group will consider gradually giving up control in key businesses after it completely restructures and splits into six companies.

Specifically, this week Alibaba announced plans to split its $250 billion empire into six companies — a historic restructuring that will bring e-commerce, media and cloud computing into one. independent units to operate more autonomously and move towards IPO. CEO Daniel Zhang on Thursday declined to give details on the specific time of the plan and said it depends on market conditions.

Alibaba’s board of directors will initially still control each of the six companies after the split, but in the future they will gradually reduce their role. CEO Zhang told analysts in a meeting that the goal of this is for board members to become asset or capital backers rather than meddle in the businesses of subsidiaries. .

The biggest overhaul in Alibaba’s history could serve as a model for a broader tech sector reshuffle. If successful, Beijing will achieve its goal of reducing increasingly powerful private companies while freeing up shareholder value.

“This is a game changer in raising the expectations of other companies,” said Tom Masi, director at GW&K Investment Management. If it aligns with the government’s direction, and shareholders respond positively, then other companies can follow this path.”

Mr. Masi said Tencent Holdings Ltd. is probably the leading candidate, as this corporation has many units capable of operating independently. Shares of Tencent traded in the US rose as much as 7.3% on March 28. Online retailer JD.com Inc. is also planning to list shipping units. Meanwhile, technology company Baidu Inc. has businesses ranging from online search engines to self-driving cars.

Alibaba’s capitalization has risen more than $30 billion since Tuesday’s split announcement, fueling a rally for other Chinese tech stocks.

The 20-year scheme collapsed

Since the scandal of founder Jack Ma in October 2020, Alibaba has fallen into the sights of the authorities. At the time, he called for reforms to the “innovation-suppressing” system and likened global banking regulations to “old people’s clubs”. According to some sources, after this speech, the billionaire was summoned to a closed meeting on November 2, 2020 with the Central Bank of China and three other top financial regulators. Since then, disasters began to strike.

Not long after, the Chinese government ordered the suspension of the initial public offering (IPO) of Ant Group, the financial technology arm of Alibaba. The company is expected to have a valuation of more than $300 billion if it goes public. Authorities also ordered Ant Group to scale back its operations and launch an antitrust investigation into Alibaba.

Jack Ma mysteriously disappeared from the reality show “Africa’s Business Heroes” just before the finale in November 2020. His photo also disappeared from the show’s jury website. An Alibaba spokesman said the billionaire was no longer on the jury due to “schedule conflicts”.

In April 2021, Alibaba was fined $2.8 billion by China’s National Market Administration (SAMR) for violating antitrust laws. Not long after, Alibaba also resigned as President of Hupan University, the elite business school he founded and joined to manage in 2015. As noted by Bloomberg in October 2021, Alibaba’s market capitalization has increased. “evaporated” $ 344 billion just a year after Jack Ma’s speech.

At the same time, Jack Ma’s whereabouts became a hot topic of discussion. No one knows exactly where Jack Ma is and what he does, he almost “disappears” on all fronts.

Recently, after months of reclusive travel everywhere, Jack Ma returned to Alibaba headquarters in Hangzhou to solve the remaining problems. Soon after, this e-commerce empire announced it was splitting into 6 companies to facilitate the initial public offering (IPO).

Source: Bloomberg