Ant reportedly finding ways for Jack Ma to sell stake

HONG KONG • Ant Group is exploring options for founder Jack Ma to divest his stake in the financial technology giant and give up control, as meetings with Chinese regulators signalled to the company that the move could help draw a line under Beijing's scrutiny of its business.

This is according to a source familiar with regulators' thinking and two people with close ties to the company.

Reuters is for the first time reporting details of the latest round of meetings and the discussions about the future of Mr Ma's control of Ant, exercised through a complicated structure of investment vehicles.

The Wall Street Journal previously reported that Mr Ma had offered in a November meeting with regulators to hand over parts of Ant to the Chinese government.

Officials from the People's Bank of China - the central bank - and financial regulator China Banking and Insurance Regulatory Commission held talks between January and last month with Mr Ma and Ant separately, where the possibility of the tycoon's exit from the company was discussed, according to accounts provided by the source familiar with the regulators' thinking and one of the sources with close ties to the company.

Ant denied that a divestment of Mr Ma's stake was ever under consideration.

"Divestment of Mr Ma's stake in Ant Group has never been the subject of discussions with anyone," an Ant spokesman said in a statement.

Reuters could not determine whether Ant and Mr Ma would proceed with a divestment option, and if so, which one.

The company hoped Mr Ma's stake, worth billions of dollars, could be sold to existing investors in Ant or its e-commerce affiliate Alibaba Group Holding without involving any external entity, one of the sources with company ties said.

But the second source also with company connections said that during discussions with regulators, Mr Ma was told that he would not be allowed to sell his stake to any entity or individual close to him, and would instead have to exit completely.

Another option would be to transfer his stake to a Chinese investor affiliated with the state, the source said.

Any move would need Beijing's approval, both sources with knowledge of the firm's thinking said.

The accounts provided by all the three sources are consistent in terms of the timeline for how discussions have evolved over the past few months.

On the company side, one source said Mr Ma met regulators more than once before the Chinese New Year, which was in early February.

And the second source said Ant started working on options for Mr Ma's possible exit about a couple of months ago.

The source familiar with the regulators' thinking said Ant had told officials during a meeting some time before the middle of last month that it was working on options.

The high-stakes discussions come amid a revamp of Ant and a broader regulatory clampdown on China's technology sector that was set in motion after Mr Ma's public criticism of regulators in a speech in October last year.

Mr Ma's exit could help pave the way for Ant to revive plans to go public that stalled after the tycoon's speech, both sources close to the company said.

REUTERS