Jack Ma’s ceding of control of Ant could signal Big Tech tensions are easing

The move is seen by analysts as a fresh sign that the Chinese government is ending its tough regulatory campaign against the country’s Big Tech firms.

Jack Ma’s decision to relinquish absolute control of Ant Group marks a key step forward in the fintech group’s restructuring process and an easing of tensions between Beijing and China’s Big Tech companies, analysts say.

While the planned voting rights changes at Hangzhou Junhan and Hangzhou Junao, the two vehicles which jointly hold 53.5 per cent of Ant Group, do not change Ant Group’s existing ownership, Ma will see his voting power diluted so that no single shareholder will have control of Ant. Ant is a fintech spin-off from Alibaba Group Holding, which also owns the South China Morning Post.

The move, which comes two years after a mega initial public offering plan by Ant in Shanghai and Hong Kong was called off at the last minute, is seen as a fresh sign that the Chinese government is ending its regulatory campaign against the country’s Big Tech firms. Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said in an interview with the official Xinhua news agency over the weekend that the regulatory “rectification” of financial platforms “has basically completed”.

Alibaba’s share price gained 9 per cent on Monday in Hong Kong to close at HK$110.4.

Alibaba’s chairman and chief executive Daniel Zhang Yong said in an interview with the state television that Alibaba is happy to see Beijing’s recent support for the platform economy, and that the company will focus more on integration of the real and digital economies in the year ahead.

“For Alibaba, we are very happy to see expectations for the platform economy raised … such as how the platform economy can lead development, create jobs, and compete internationally,” Zhang said in an interview with CCTV over the weekend. Zhang did not mention Ant Group or Alibaba founder Jack Ma.

Wang Pengbo, senior financial analyst at consultancy BoTong Analysys, said the voting rights changes are a big development in Ant’s restructuring.

“A company structure with more diversified voting rights is more stable, and good for Ant’s long-term development,” Wang said. “It paves the way for it to go public in future … although a listing in the immediate future is very unlikely.”

Ant has said it has no plans to resume its IPO process for now. “Ant Group has been focusing on its business rectification and optimisation, and does not have a plan for an IPO,” the company said on Monday.

After a change in control, China’s domestic A-share market requires companies to wait three years before listing in the market. Shanghai’s Nasdaq-style STAR market requires two years, and Hong Kong requires a one-year wait for a similar change.

John Dong, a securities lawyer at Joint-Win Partners in Shanghai, said the change in Ant’s ultimate control is a positive step for the fintech group to win regulatory approval. “Going public is not the priority, what’s more important is whether and how they can continue doing business,” Dong said.

Felix Liu, a UBS Securities analyst, said at a briefing in Shanghai on Monday that China’s internet sector is “positively positioned” for 2023 as three major hurdles – macroeconomic headwinds, domestic regulatory pressure and US scrutiny of Chinese tech stocks – are all expected to ease.

Liu said regulation of China’s Big Tech sector is normalising. He did not mention Ant specifically.

The 2020 suspension of Ant’s IPO, just 48 hours before trading was due to begin, was a watershed moment in the relationship between China’s regulators and the nation’s Big Tech companies, marking the end of an era of unchecked growth at some of the most valuable Chinese internet companies.

Ma has kept a low profile after an October 2020 speech in which he accused Chinese regulators of stifling innovation. In September, he was seen in Japan looking into the technology of fish farms. More recently, he has been seen in Thailand, according to a social media post by a local restaurant owner.

The corporate ties between Ant and Alibaba, both founded by Ma, have been diluted amid an ongoing restructuring at the fintech group. The top executives of Ant, including chairman Eric Jing, chief technology officer Ni Xingjun and president of its international business group Angel Zhao Ying, have all quit Alibaba’s partnership structure.

Last year, the two companies also agreed to terminate a data sharing agreement and to “negotiate the terms of data sharing arrangements on a case-by-case basis and as permitted by applicable laws and regulations”.
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