Jack Ma to Step Down as Chairman of Ant Group

Jack Ma is giving up his controlling stake in Ant Group, as the billionaire further retreats from his online empire following China's unprecedented tech crackdown. This move will allow Ma to focus on his philanthropic endeavors and other business interests.

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The company is giving 10 people, including the founder, management and staff, voting rights independently, effectively removing Ma's control of Ant, according to an announcement on Saturday. The adjustment won't change economic interests of any shareholders.

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Since giving a speech that criticized Chinese regulators on the eve of the scuttled Ant listing in 2020, Ma has mostly disappeared from public view. Many of his peers have relinquished their formal corporate roles and increased donations to charity to align with President Xi Jinping’s vision of achieving “common prosperity.”

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Since then, Ant has focused on improving its business operations to meet regulatory requirements. It has increased its capital base for its consumer loan affiliate, and taken steps to create firewalls in its ecosystem. This is necessary to prevent Alipay users from being directed to services like wealth management and consumer lending.
Hong Kong stocks are loving the approval for Ant Group's fundraising. This comes as a huge relief for the company, which has been under immense pressure since the beginning of the year. The fundraising will help Ant Group to shore up its finances and continue its operations.

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The change of control could mean that Ant will have to wait longer for a much anticipated resumption of its initial public offering. Companies can't list domestically on the country's so-called A-share market if they have had a controller change in the past three years. For Hong Kong's stock exchange, this waiting period is one year.
Ma's fintech giant was on track to conduct the world's biggest listing in 2020, challenging the nation's biggest state lenders, before it was derailed by a crackdown from regulators.

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Ma will still hold voting rights and economic interests in the company following the change. In a filing in July, affiliate Alibaba Group Holding Ltd. reiterated that Ma “intends to reduce and thereafter limit his direct and indirect economic interest in Ant Group over time” to a percentage that doesn’t exceed 8.8%. However, Ma will remain on the board of directors and continue to be involved in the company's strategic decisions.

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After the adjustment, Ma will have approximately 6.2% of the voting rights, according to Bloomberg calculations. Ant's board will be made up of a majority of independent directors after the company introduces a fifth one, the company said in a statement. The Chinese government's multi-year crackdown has had a major impact on the country's internet sector, with far-reaching consequences for global investors. This new reality has forced China's tech leaders to rethink their growth strategies, and has created a new landscape for the country's private sector.

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Ant's consumer lending affiliate recently received regulatory approval for a capital injection of 10.5 billion yuan ($1.5 billion). This signals progress in the company's restructuring and removes a hurdle as it seeks to obtain a financial holding license. Based on Bloomberg calculations, the company could issue 400 billion to 500 billion yuan in loans after the changes.