HONG KONG/BEIJING (REUTERS) - Billionaire Jack Ma plans to cede control of Ant Group, the Wall Street Journal (WSJ) reported on Thursday (July 28), after a regulatory crackdown that scuppered its US$37 billion (S$51 billion) initial public offering (IPO) in 2020 and led to a forced restructuring.
While Mr Ma owns only a 10 per cent stake in Ant, an affiliate of Alibaba Group Holding, he exercises control over the company through related entities, according to Ant's IPO prospectus filed with the exchanges in 2020.
Hangzhou Yunbo, an investment vehicle for Mr Ma, has control over two other entities that own a combined 50.5 per cent stake of Ant, the prospectus showed.
The newspaper said, citing unnamed sources, that Mr Ma could cede control by transferring some of his voting power to Ant officials including chief executive Eric Jing.
Ant has informed regulators of Mr Ma's intention as it prepares to restructure into a financial holding company, the report said, adding that regulators did not demand the change but have given their blessing.
In April last year, Reuters reported that Ant was exploring options for Mr Ma to divest his stake in Ant and give up control.
The discussions at the time came amid a revamp of Ant and a broader state clampdown on China's technology sector that was set in motion after Mr Ma's public criticism of regulators in a speech in October 2020.
Ant's IPO, which would have been the world's largest, was derailed days after the speech and Mr Ma's sprawling empire has been under regulatory scrutiny and going through a restructuring since then.
Ant operates the world's largest and China's ubiquitous mobile payment app, Alipay, which has more than one billion users.
Once outspoken, Mr Ma has kept an extremely low public profile as regulators reined in the country's tech giants after years of a laissez-faire approach that drove breakneck growth.
"It has been on the cards for a while," said AJ Bell financial analyst Danni Hewson. "There will be some who will think that, potentially, this clears the way for Ant to put the past few years behind it and try to get out on the front foot. There will be others who will be deeply concerned about what comes next because Jack Ma has been such a powerhouse."
A change in control at Ant could slow plans to revive its long-sought IPO, WSJ reported, as China's domestic A-share market requires companies to wait three years after a change in control to list.
The wait is two years on Shanghai's tech-focused Star Market, and one year in Hong Kong.
Earlier this week, Alibaba's annual report revealed that Ant executives are no longer part of Alibaba Partnership, a body that can nominate the majority of the e-commerce giant's board, as the pair decouple to appease regulators.
Ant and Alibaba are also untangling their operations from each other and independently seeking new business, Reuters reported last month, citing sources.
