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Ant Group IPO Set for Further Delay as Jack Ma Plans to Give Up Control

Ma’s retreat comes after Beijing derailed Ant’s blockbuster IPO almost two years ago, and demanded the group restructure.

Jack Ma

Jack Ma is planning to give up control of Ant Group, a change that would further delay the Chinese financial technology giant’s plans to launch an initial public offering.

Ma’s retreat comes after Beijing derailed Ant’s blockbuster IPO almost two years ago, and demanded the group restructure its operations.

That moment also led the billionaire entrepreneur to pull back from public view, as Beijing moved to rein in the influence of its corporate titans and launched a wider crackdown on tech.

The “rectification” process overseen by the Chinese central bank has forced Ant to revamp its business by selling stakes in top performing units such as lending and credit scoring to other groups, including state-owned companies, as well as shrink some of its operations like a proprietary money market fund which was once the world’s largest.

Ma, 57, has been considering giving up control for several years and Ant broached the change in conversations with regulators as early as last year, according to people briefed on the matter.

But relinquishing control for Ma would require Ant to hold off on restarting an IPO for at least one year and potentially as long as three, depending on where the group eventually chooses to sell shares. Companies need to wait up to three years to list in the mainland if changes are made to their controlling shareholder, while Hong Kong requires a year-long hiatus.

The Wall Street Journal, which first reported the plan, said Ant had informed regulators of the pending change as part of its application to convert into a financial holding company, which was submitted earlier this year.

The People’s Bank of China has not yet approved the application and reports last month that Ant was nearing completion of its “rectification” were met with furious denials by unnamed officials speaking to Chinese state media.

Ant’s IPO suspension in November 2020 set off a broad regulatory crackdown on Chinese tech groups, including billions in fines for Ant sister company Alibaba over monopolistic practices and demands that ride-hailing group Didi give up its US listing.

It also forced Ma, China’s most high profile and dynamic entrepreneur, to retreat into the shadows as Beijing took aim at his empire and channels of influence. His prized business school in Alibaba’s hometown of Hangzhou was barred from enrolling new students and the city’s communist party secretary was removed on corruption charges, a scandal which also implicated Ant.

Ma’s move to give up control could be done through changes to a voting agreement struck in the run-up to Ant’s planned Shanghai and Hong Kong dual offering. At the time, Ma turned over shares in the group’s controlling shareholder Hangzhou Yunbo to top lieutenants including then chief executive Simon Hu, chair Eric Jing and Jiang Fang, an Alibaba co-founder and Ant director.

The changes left Ma with a 34 percent stake in Yunbo and each of his lieutenants with a 22 percent share, but the parties also entered into an agreement that granted Ma voting control over Yunbo.

Ant did not immediately respond to a request for comment.

From Financial Times

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