HONG KONG (Reuters) – Ant Group is exploring options for founder Jack Ma to divest its stake in financial technology giant and relinquish control, as meetings with Chinese regulators have signaled to the company that the move could help chart a deal. lines under Beijing’s control of his business, according to a source familiar with the thinking of regulators and two people with close ties to the company.
Reuters reports for the first time details of the last round of meetings and discussions about the future of Ant’s control over Ma, exercised through a complicated structure of investment vehicles. The Wall Street Journal previously reported that Ma offered at a November meeting with regulators to hand over parts of Ant to the Chinese government. on.wsj.com/2QvkHbc
Officials from the central bank, the People’s Bank of China (PBOC) and the China Banking and Insurance Regulatory Commission (CBIRC) held talks between January and March with Ma and Ant separately, discussing the possibility of the tycoon leaving the company. , according to accounts provided by the source familiar with the thinking of regulators and one of the sources with close ties to the company.
Ant denied that a divestment of Ma’s stake would ever be considered. “The divestment of Mr Ma’s stake in the Ant Group has never been the subject of talks with anyone,” an Ant spokesman said in a statement.
Reuters could not determine whether Ant and Ma would continue with a divestment option and, if so, which. The company hopes that the billion-dollar Ma share could be sold to existing investors in Ant or its e-commerce affiliate Alibaba Group Holding Ltd without involving any external entity, said one of the sources.
The second source, also with the company’s connections, said that during discussions with regulators, Ma told him that he would not be allowed to sell his stake to any entity or close person and instead , will have to leave completely. Another option would be to transfer its stake to a Chinese state-affiliated investor, the source said.
Any move would require Beijing’s approval, both sources said, with knowledge of the company’s thinking.
The accounts provided by all three sources are consistent in terms of the timing of developments in recent months. From the company, a source said that Ma met with regulators several times before the Chinese New Year, which took place in early February. And the second source said that Ant started working on options for Ma’s possible exit a few months ago. The source, familiar with the regulators’ thinking, said Ant told officials during a meeting shortly before mid-March that he was working on options.
The source familiar with regulators’ thinking has direct knowledge of the conversations between Ant and officials, while one of the sources with links between companies was informed about Ma’s interactions with regulators and Ant’s plans. The other has direct knowledge of Ant’s discussions about options. They asked for anonymity because of the sensitivity of the situation.
Ants spokesman did not comment on Ma. Alibaba asked Ant questions. Jack Ma’s office did not respond to Reuters’ request for comments from Ant. Also, the Information Office of the Council of State, PBOC and CBIRC, did not respond to requests for comment.
High-stakes talks are taking place amid the revival of the Ant and a wider reduction in regulation of China’s technology sector, which was set in motion by Ma’s public criticism of regulators in a speech last October.
Ma’s exit could help clear the way for Ant to revive plans to go public, which stalled after the tycoon’s speech, both sources close to the company said. Ant, who was on the verge of raising about $ 37 billion in what would have been the largest initial public offering in the world, disrupted plans the day after Ma’s November 2 meeting with regulators.
“Too big for their lighters”
Since then, Beijing has launched a series of investigations and new regulations that have not only taken over Ma’s empire, but have also swept through the country’s technology sector, including other high-ranking billionaire entrepreneurs.
For 56-year-old Ma, who also founded Alibaba and once ordered worship in China, the consequences were particularly severe. The tycoon completely withdrew from the public eye for about three months and continued to keep a low profile after a brief appearance in January.
China’s antitrust regulator fined Alibaba a record $ 2.75 billion on April 10, following an antitrust investigation that found it had abused its dominant market position for several years. A few days later, Ant was asked by the central bank to become a financial holding company, bringing it under the scope of banking rules that it has managed to avoid so far and allowed it to grow rapidly.
“China still likes to promote its technology companies as global leaders, as long as they don’t become too big for their powers,” said Andrew Collier, CEO of Orient Capital Research.
CONTROL BET
Although Ma has previously relinquished corporate positions, he retains effective control over Ant and a significant influence over Alibaba.
While holding only a 10% interest in Ant, Ma exercises control over the company through its affiliates, according to the IPO prospectus Ant.
Hangzhou Yunbo, an investment vehicle for Ma, has control of two other entities that hold a combined 50.5% stake in Ant, the prospectus shows. Yunbo can decide all aspects related to Ant and can exercise the combined voting power of the three entities, the prospectus shows.
Ma owns a 34% stake in Yunbo, according to the prospectus.
One of the company’s liaison sources said there was a “big chance” that Ma would sell its stake in Yunbo to get out of Ant, eventually paving the way for major fintech to near the completion of the revival and revival of its listing. .
Reuters could not reach Yunbo for comment. Ant has not commented on Yunbo.
Report by Julie Zhu in Hong Kong and Cheng Leng in Beijing; Editing by Sumeet Chatterjee, Paritosh Bansal and Edward Tobin