Ant Group, the Chinese fintech giant, announced on Saturday that its founder Jack Ma will no longer control the company after shareholders agreed to a series of changes that will result in Ma giving up most of his voting rights.
This move follows a regulatory crackdown that disrupted Ant’s planned $37 billion IPO in late 2020 and led to a restructuring of the firm. The changes to voting arrangements may be considered a “change-of-control” event under A share and/or Hong Kong listing rules, which could further delay Ant Group’s IPO process, according to Weiheng Chen, Partner and Head of Greater China Practice at law firm Wilson Sonsini in Hong Kong.
The departure of Ma from Ant Group, which he founded, demonstrates the determination of the Chinese leadership to reduce the influence of large private investors and continues the erosion of the most productive parts of the Chinese economy, according to Andre Collier, Managing Director of Orient Capital Research in Hong Kong. Collier added that, despite official comments, Ant Group posed little risk to the financial system and was effective in arranging loans for small businesses, a key driver of economic growth.
Duncan Clark, Chairman of investment advisory firm BDA in Beijing, commented that the fact that Ma is no longer the controlling shareholder of Ant Group is significant and could pave the way for an IPO, provided that the issue of oversight and ownership of data is also resolved. Clark added that, with the Chinese economy in a volatile state, the government is seeking to signal its commitment to growth, and the tech and private sectors are crucial to this. He noted that Ant Group investors can now have a timeline for an exit after a period of uncertainty.
Overall, the changes at Ant Group come as the Chinese government continues its efforts to tighten regulation and oversight of the country’s fast-growing tech and internet sectors. In addition to the regulatory crackdown on Ant Group, the Chinese government has also implemented new rules for internet lending, and has taken steps to increase its control over the operations of tech giants such as Tencent and Alibaba, which are both major shareholders in Ant Group. The government’s efforts to rein in the tech sector have sparked concerns about the potential impact on innovation and economic growth in China.
