Exclusive: A Chinese ant is exploring ways to get out of Jack Ma while Beijing raises pressure

Written by Julie Zhu

HONG KONG (Reuters) – Ant Group is exploring possibilities for founder Jack Ma to sell his stake in the financial technology giant and give up control, as meetings with Chinese regulators have signaled that the move could help draw the line under Beijing’s control. its business, according to a source familiar with the thinking of the regulator and two people closely associated with the company.

Reuters is reporting for the first time on the details of the latest round of meetings and discussions on the future of Maine’s control of Ante, which is being conducted through a complex structure of investment funds. The Wall Street Journal previously reported that Ma offered at a November meeting with regulators to hand over parts of the Ants to the Chinese government. https://on.wsj.com/2QvkHbc

Officials from the central bank, the National Bank of China (PBOC) and the financial regulator China Bank Banking and Insurance Regulatory Commission (CBIRC) held talks from January to March with Mao and Anta separately, discussing the possibility of the tycoon leaving the company. , according to reports provided by a source familiar with the regulator’s thinking and one of the sources closely associated with the company.

Ant denied ever considering selling Mai’s stake. “Taking away Mr. Ma’s stake in the Ant group has never been the subject of conversation with anyone,” an Ant spokesman said in a statement.

Reuters could not determine whether Ant and Ma would continue with the divestment option, and if so, by which. The company hoped Ma’s investment, worth billions of dollars, could be sold to existing investors in Ante or its e-commerce subsidiary Alibaba Group Holding Ltd without the involvement of any outside entity, one of the company-related sources said.

But another source, who also refers to connections with companies, said that Mau was told during talks with regulators that he would not be allowed to sell his share to any entity or individual close to him, but would have to leave completely instead. Another option would be to transfer his stake to a state-linked Chinese investor, the source said.

Every move would require Beijing’s approval, both sources said, knowing about the company’s thinking.

The reports provided by all three sources are consistent in chronological order as discussions have developed over the past few months. On the part of the company, one source said that Ma had met with regulators several times before the Chinese New Year, which was in early February. And another source said Ant started working on options for a possible Ma exit about a few months ago. A source familiar with the regulator’s thoughts said Ant told officials during a meeting sometime before mid-March to work on options.

A source familiar with regulators ’thoughts has direct knowledge of Ant and officials’ conversations, while one of the sources related to companies is familiar with Mao’s interaction with regulators and Ant’s plans. The other has direct knowledge of Ant’s options discussions. They requested anonymity because of the sensitivity of the situation.

A spokesman for Ant did not give any comments from Ma. Alibaba asked the questions to Ant. Jack Ma’s office did not respond to Reuters’ request for comment sent through Ant. The State Council Information Office, PBOC and CBIRC, also did not respond to requests for comment.

Discussions about the high stakes come amid a reshuffle of Ant and a broader regulatory crackdown on China’s technology sector that was launched after Maine’s public criticism of regulators in a speech last October.

The main outing could help clear Antu’s path to reviving public release plans, which stalled after the tycoon’s speech, both sources close to the company said. Ant, which was supposed to raise about $ 37 billion, which could be the world’s largest initial public offering, suspended plans the day after Ma’s meeting with regulators on Nov. 2.

‘TOO TOO FOR THEIR MUSHROOMS’

Since then, Beijing has launched a series of investigations and new regulations that not only took over Mao’s empire, but also affected the country’s technology sector, including other prominent billions of entrepreneurs.

For Ma (56), who also founded Alibaba and who once showed cult respect in China, the consequences were particularly severe. The tycoon withdrew from the public eye for about three months and continued to keep it a secret after a brief January appearance.

China’s antitrust regulator fined Alibaba a record $ 2.75 billion on April 10 after an antitrust investigation found it had abused its dominant market position for several years. A few days later, the central bank asked Ant to become a financial holding company, bringing it within the framework of banking rules it had so far managed to avoid and allowing it to grow rapidly.

“China still likes to promote its technology firms as global leaders until they become too big for their Brits,” said Andrew Collier, director of Orient Capital Research.

MANAGEMENT SHARE

Although Ma has previously left corporate positions, he retains effective control over Anta and significant influence over Alibaba.

Although it owns only a 10% stake in Ante, Ma controls the company through affiliated entities, according to Ante’s IPO prospectus.

Hangzhou Yunbo, an investment vehicle for Ma, has control of two other entities that own a combined 50.5% stake in Ant, the prospectus shows. Yunbo can decide on all issues related to Antu and exercise the combined voting power of the three entities, the prospectus shows.

Ma has a 34% stake in Yunbo, the prospectus shows.

One of the company’s liaison sources said there was a “big chance” that Ma would sell his stake in Yunbo’s capital to get out of Ant, which eventually paved the way for the fintech major to get closer to completing the renovation and reviving his list.

Reuters could not contact Yunbo for comment. Ant did not comment on behalf of Yunbo.

(Report by Julie Zhu of Hong Kong and Cheng Leng of Beijing; editing by Sumeet Chatterjee, Paritosh Bansal and Edward Tobin)

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