Alibaba’s (09988) fellow group Ant Group hit a snag in its IPO last November, and a number of financial services have to be overhauled after regulators stepped in. The regulator held several meetings with Ant Group and its founder Jack Ma earlier this year to discuss the plan for Ma to sell his shares and give up control of the group, but has not yet learned of the final resolution, the foreign news agency said, citing sources.
In fact, Alibaba announced earlier on April 12 that Ant Group had completed the study and formulation of the rectification plan, and the outside world continues to pay attention to the next progress. The latest reports from foreign media said that the People’s Bank of China and the Banking and Insurance Regulatory Commission held talks with Jack Ma and Ant Group between January and March to discuss the possibility of his withdrawal from the group. Earlier, it was also reported that the regulator hoped that Alibaba and others could “draw a clear line” with Jack Ma.
One of the sources said that Ant Group wants Ma to sell his shares to Ant or Alibaba’s existing investors, without involving any outside entities. The other source said that in discussions with regulators, Ma was told that he would not be allowed to sell his shares to any entity or individual close to him, and that he “must withdraw completely,” so another option would be to transfer his holdings to state-owned capital.
Both sources said any move would require Beijing’s approval. Ma reportedly met with regulators more than once before the Lunar New Year in early February, while Ant Group began studying options for Ma’s possible exit some months ago. The sources even said Ma’s exit could clear the way for Ant to restart its IPO plans.
Ants Group spokesman responded that no one at the company had discussed Ma’s stake sale. Ma, the People’s Bank of China and the CBI have not responded to media inquiries.
It is worth noting that according to the prospectus document when Ant went public, although Jack Ma is the actual controller, his name is not on the list of shareholders. The second largest shareholder is Hangzhou Junhan Equity Investment Partnership, accounting for 29.86% of the shares.
Ma’s control is achieved through Hangzhou Yunbo, which is also not on the list of shareholders. As a general partner and managing partner of both Hangzhou Junhan and Hangzhou Jun’ao, Yunpu Hangzhou can exercise shareholder rights on behalf of the latter two, i.e., a combined 50.5177% of Ant Group’s shares.
In Hangzhou Cloud Platinum, Jack Ma holds only 34% of the shares, while Ant Group Chairman Ji Xiandong, Chief Executive Officer Hu Xiaoming and Alibaba’s Jiang Fang each hold 22%. Ma and the other three shareholders signed a legal document such as a unanimous action agreement, which requires the approval of at least two-thirds of the voting rights held by shareholders when Hangzhou Yunpu exercises its shareholder rights over Ant Group, meaning that he has veto power; and once he exercises his veto power, other shareholders must vote in accordance with his decision. Therefore, Ma controls Hangzhou Junhan and Hangzhou Jun’ao through Hangzhou Yunpu, and eventually controls Ant Group.
Foreign media quoted a source connected with Ant Group as saying that the chances of Ma selling his stake in Hangzhou Yunpu are high.
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