Jack Ma officially gives up control of Ant Group, ‘Jack Ma era’ has ended?

According to Reuters, China’s Ant Group said on January 7 that founder Jack Ma will no longer control the Chinese fintech giant after the company’s shareholders agreed to make a series of adjustments. shares, causing him to give up most of his voting rights.

Jack Ma previously owned more than 50% of the voting rights in Ant Group but the changes will mean his stake drops to 6.2%, according to Reuters calculations.

Although Jack Ma only owns a 10% stake in Ant, an affiliate of e-commerce giant Alibaba Group Holding Ltd, he exercises control of the company through related entities, according to the statement. Ant Group’s IPO prospectus filed with exchanges in 2020.

The prospectus shows that the Hangzhou Yunbo company, an investment vehicle of Jack Ma, has control over two other entities that own a combined 50.5% stake in Ant Group.

Since July 2022, China’s tech billionaire Jack Ma has been planning to cede control of Ant Group, a fintech conglomerate closely linked to Alibaba, the e-commerce giant he founded.

The move would mark another major turning point in Ant Group’s restructuring and power shuffling since China canceled its $35 billion initial public offering nearly two years ago. .

In November 2020, Chinese authorities halted Ant’s IPO, which at the time would be the world’s largest public listing, and then required Ant to go through a “rectification” process forcing Companies are subject to the same financial regulations as those governing traditional banks.

Up to that point, Ant, like many other Chinese internet companies, had grown at breakneck speed in a relatively permissive regulatory environment. The company has created several billion-dollar fintech businesses, including Alipay, which dominates China’s mobile payments market in a monopoly shared with Tencent’s WeChat Pay; a money market fund that at one point became the largest fund in the world; and a thriving micro-lending business.

“The Jack Ma Era” End?

According to the Wall Street Journal, Ant Group started as an Alibaba payment processor, which Jack Ma, then the CEO of the e-commerce company, spun off in 2011. The event caused a stir. caused a big controversy because it was supposed to happen when Alibaba shareholders Yahoo and SoftBank were in the dark. Jack Ma justified the decision as necessary to secure a payment license to operate in China, which would not be granted if the company had foreign shareholders.

After that, the two “brothers” companies began a profit-sharing agreement, whereby Ant paid Alibaba “technology service fees and royalties” equivalent to 37.5% of pre-tax profits each quarter, until in 2018 when Alibaba acquired a 33% stake in Ant. The pair have been in symbiosis, with Ant’s Alipay app deeply integrated into Alibaba’s retail services suite and its financial services touted to business owners on Alibaba’s marketplaces.

Jack Ma began preparing for a gradual exit from Alibaba’s day-to-day operations nearly a decade ago and established a partnership structure to ensure a smooth succession across generations. He stepped down as CEO of Alibaba in 2013 and stepped down as chairman in 2019. The founder owned less than 5% of the e-commerce giant as of 2020.

But Jack Ma continues to be Ant’s largest shareholder. The company’s IPO prospectus from 2020 shows that the founder holds 50.52% of the company’s shares through an entity he controls.

In mid-2022, Ant Group notified regulators of Jack Ma’s intention to relinquish control as the company prepares to transform into a financial holding company. Regulators at the time did not ask for the change, but “wish the company well”.