The Chinese government is investigating how Jack Ma obtained fast-track approval for the listing of his Ant Group shares last year, according to people familiar with the matter cited by The Wall Street Journal on April 28, indicating that the crackdown on the billionaire is spilling over to state authorities.
At the same time, the investigation means the future of Ant Group and controlling shareholder Jack Ma still faces uncertainty. Ma will not be allowed to leave China until Ant Group completes the business overhaul required by regulators and this government investigation is over, people familiar with the matter said. The report said that since the Ant Group’s IPO was called off late last year, Xi has chaired back-to-back meetings at which he repeatedly stressed the need to prevent large tech companies from using their size, capital and vast amounts of data to engage in anti-competitive behavior. One of the focal points of that investigation is said to be the Shanghai Stock Exchange’s science and technology board, which was built at the height of the U.S.-China trade war to help Chinese tech companies raise capital to compete with their U.S. counterparts.
Before announcing the decision, Xi had discussed the STB plan with a handful of people, one of whom was Li Qiang, secretary of the Communist Party’s Shanghai Municipal Committee, the sources said. Li Qiang, a former Zhejiang provincial governor, has also been supportive of Jack Ma and his businesses. And Zhejiang is the home base of Ma’s business empire.
The report notes that in the eyes of China’s top leaders, Ant Group’s business model, a lending model driven by big data, could jeopardize China’s financial system, in part because its bank partners bear most of the risk. The Communist Party leadership is concerned that among those expected to benefit from the world’s largest IPO are well-connected individuals and institutions, some of China’s most influential political families and large state-owned funds.
The investigation therefore also examined how a range of state funds have invested in Ant Group, including massive sovereign wealth fund China Investment Corp. and China’s largest state-owned insurers such as China Life Insurance Co.
So far, including the Chinese central government and Shanghai’s securities regulator, the Shanghai municipal government, China Life and CIC, as well as Ant Group, have not responded to media inquiries in this regard.
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