Alibaba Founder Jack Ma Set To Cede Control In Ant Fintech Venture — Will Shelved IPO Be Revived?

Benzinga · 01/07/2023 21:27

Alibaba Group Holding Limited (NYSE:BABA) founder Jack Ma is reportedly planning to give up control of the e-commerce giant’s Ant Financial sister company.

What Happened: Ma’s 10% stake in Ant will drop to 6.2% under the proposed plan, Reuters reported. His related entities also have equity interests in Ant, which together give him a controlling stake in the fintech company, that will change as part of the overhaul, the report said.

The development could pave the way for Ant to revive its shelved initial public offering, analysts said, according to Reuters.

Ant initially filed for an ambitious $37 billion IPO in 2020, hoping to list its share on both the Shanghai and Hong Kong stock exchanges. In China, the stock was to be listed on the STAR Market, which is similar to the Nasdaq exchange in the U.S. The Shanghai stock exchange later announced the suspension of the IPO on the grounds that the company does not meet the conditions for listing or information disclosure requirements, given significant issues such as the changes in the financial technology environment.

The shelving of the IPO was seen as the government’s move to clamp down on high-profile companies in a bid to rein them in and check their growth. Regulators also wanted Ant to organize itself as a financial holding company, which would bring it under additional regulatory scrutiny and stricter capital control norms.

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What’s Next: The company has announced a corporate restructuring initiative, including the formation of new committees and adjustment to voting rights.

Earlier this week, Ant reportedly received regulatory approval to raise about $1.5 billion in cash for its consumer lending arm.  It recently announced an executive change and updated its marketing guidelines to comply with consumer-protection rules.

The change in the controlling structure, however, could delay the IPO due to listing regulations, which dictate that companies wanting to list on the domestic A-share market should wait for three years after a change in control, Reuters said. The waiting period is two years to list on the STAR market and one year for the Hong Kong Stock Exchange.

Alibaba closed Friday’s session 2.70% higher at $107.40, according to Benzinga Pro data.

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Photo: courtesy of Nærings- og fiskeridepart on flickr