Jack Ma Avoids Beijing's Punishment By Yielding Power In His Companies

Jack Ma, the 57-year-old co-founder of Alibaba Group Holding Ltd., has had to make significant concessions to get out of the dog house in Beijing, Lulu Yilun Chen and Abhishek Vishnoi reported for Bloomberg.

Photo Insert: In a filing this week, Alibaba reiterated that Ma “intends to reduce and thereafter limit his direct and indirect economic interest in Ant Group over time” to a percentage that does not exceed 8.8%.

After regulators torpedoed Ant’s hotly anticipated initial public offering in 2020, the firm overhauled operations to comply with tighter controls and have discussed regularly with the country’s central bank how to “rectify” operations.

In its early years, Ant’s success in services like digital payments and money market deposits threatened the dominance of major state-backed banks.

One proposal under consideration involves transferring Ma’s shares to other executives so the company can be overseen by a committee, one of the people said.

In a filing this week, Alibaba reiterated that Ma “intends to reduce and thereafter limit his direct and indirect economic interest in Ant Group over time” to a percentage that does not exceed 8.8%.

Ma currently holds 50.52% voting rights in Ant. “A significant key man risk will be removed from the neck of Ant” if Ma cedes control, said Justin Tang, the head of Asian research at United First Partners.

The Wall Street Journal reported earlier that Ant told regulators Ma intends to give up control and could transfer some of his voting power to other top executives.

The Communist Party’s evolving stance toward the private sector has become one of the most closely watched developments in global markets in recent years, with some observers going as far as to call China’s sprawling internet sector uninvestable.

Even before Ma drew the ire of Chinese regulators, he had been distancing himself from the twin empires of e-commerce giant Alibaba and Ant.

Ma stepped down as CEO of Alibaba in 2013 and then as chairman in 2019. He said as early as 2014 he intended to reduce his stake in Ant to no more than 8.8% and he intends to donate 611 million shares to charity.

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