PBOC Restructures Ant Group: Jack Ma to Lose Control

BBC | Tom Espiner | Jan 8, 2023

Unsplash Go to Li Yangs profile China - PBOC Restructures Ant Group:  Jack Ma to Lose Control

Image: Unsplash/Li Yang

The billionaire founder of Ant Group, Jack Ma, is to give up control of the Chinese fintech giant after a regulatory crackdown, and will own just 6% (down from over 50%) after restructuring.

  • 2 year forced restructuring and $1B fine: Ant Group runs Alipay, the main online payment system in China, which has eclipsed cash, cheques and credit cards.  Mr Ma directly and indirectly controls more than 50% of Ant Group.  However, after the changes in governance structure, he will control just over 6%, according to an Ant Group statement.
    • Chinese authorities are poised to impose a fine of more than $1bn on the firm, according to the Reuters news agency.

See:  PBOC to Fine Ant Group $1 Billion as Part of Regulatory Overhaul

  • The IPO that never happened:  In November 2020 Ant's £26bn stock market flotation, which would have been the world's largest, was cancelled at the last minute.  At the eleventh hour Chinese authorities cited "major issues" over regulating the firm.
    • Some analysts saw it as an attempt by the Chinese government to humble a company that had become too powerful and a leader who had become too outspoken.
    • The regulatory intervention came after Mr Ma had told a financial conference that traditional banks had a "pawn-shop mentality". He also lauded the merits of the digital banking system, and stressed that future lending decisions should be based on data, not collateral.
  • However, the authorities have softened their tone recently amid efforts to bolster the Chinese economy, which has been hit by the Covid pandemic.

See:  Galloway: Life Expectancy – China Pulls Ahead of the U.S.

Andrew Collier, managing director of Orient Capital Research:

Jack Ma's departure from Ant Financial, a company he founded, shows the determination of the Chinese leadership to reduce the influence of large private investors.  This trend will continue the erosion of the most productive parts of the Chinese economy.

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