February 9, 2023

Ant Group, one of China’s most influential fintech companies, said on Saturday that billionaire entrepreneur Jack Ma plans to relinquish control of the company.

Ma quit the company he founded following an unprecedented crackdown on big tech companies by the ruling Communist Party. Beijing has made Jack Ma’s Ant Group and its sister company, the e-commerce giant Alibaba, the crown jewels of his online empire, An early goal of a campaign to curb the power of internet giants.

Chinese officials forced Ant Group to cancel what was supposed to be a blockbuster 2020 initial public offering and later slapped Alibaba with a hefty $2.8 billion fine for abusing its dominance. Last year, Ant Group said it would make major changes to its business under government orders to address regulator concerns about unfair competition and the amount of user data it collects.

In recent years, under China’s top leader, Xi Jinping, Beijing has sought to tighten the state’s grip on the economy, including reining in the influence of tycoons who have amassed vast fortunes but are seen as crossing the line.

Once hailed as a success story in China, Ma has run into increasing trouble with the Chinese government, especially after he criticized China’s banking regulator in late 2019. He has largely disappeared from public view in recent years.

Ant Group said in the announcement On Saturday, Ma Huateng will no longer be the “controlling person” with a 34% stake in the company. Instead, he will become one of the top 10 shareholders.

The announcement described the move as part of a “corporate governance optimization” plan, but did not elaborate on when the changes would be completed, noting that they would not affect the company’s day-to-day operations. Under the current governance structure of Ant Group, Ma Huateng does not hold a management position.

Ant Financial’s flagship Alipay app is the main portal for more than 1 billion users in China who use it to pay for meals, make credit card purchases and save money. But its reach and scale have put it in the spotlight for Beijing as authorities scrutinize the fintech industry for potential risks to the country’s wider financial system. Then, in 2020, shortly before Ant was set to go public, regulators abruptly called a halt to its initial public offering, which at the time was estimated at $34 billion, would have been the largest ever.

It’s unclear how Ma’s exit from Ant Group might affect any plans by the fintech giant to resume its initial public offering. But it may be delayed because of listing requirements. HKEx requires a one-year waiting period after ownership changes; other markets require two to three years.

Ant Group has worked hard to restructure its company at the behest of Chinese authorities.Last month, regulators officially recognized A $1.5 billion capital increase in its consumer lending unit allowed a unit of the Hangzhou municipal government to become its second-largest shareholder. The capital increase overcame a key regulatory hurdle to allow it to issue up to 500 billion yuan ($73 billion) in consumer loans.

The approval is the latest sign that Beijing is preparing to ease its tough stance against internet companies in an effort to kick-start economic activity in 2023.

Li Qiang, the party’s new No. 2, urged cadres at an economic conference in December to “vigorously develop the digital economy” after a long and stringent “zero-Covid” lockdown and severe fines and regulations imposed on Ant Group and other tech giants. economy” to enhance global competitiveness.

Wang Zixu contributed research.

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