Ant Group, the Chinese fintech giant, has announced a major restructuring of its shareholding structure in a move designed to make the company more transparent and diversified.
The overhaul dilutes the voting power of Ant Group’s founder, Jack Ma. It ends an acting-in-concert pact between Ma, Ant’s chairman Eric Jing, former CEO Simon Hu, and Alibaba Group Holding veteran Jiang Fang. This pact had given Ma 53.46% of the voting power in the company, the South China Morning Post reports.
Easing Curbs
The same report tells us that the restructuring is seen as a crucial step towards getting Ant Group’s much-anticipated initial public offering (IPO) back on track. The IPO was postponed in November 2020 amid regulatory scrutiny, and the restructuring is seen as a sign that the government has eased its curbs on China’s big technology platforms.
Following the shift, Ma will retain voting rights and economic interests in the company, according to Bloomberg. In a July filing, subsidiary Alibaba Group Holding Ltd. maintained that Ma “intends to reduce and thereafter limit his direct and indirect economic interest in Ant Group over time” to no more than 8.8%.
Ant Group has taken several steps since 2021 to restructure in an effort to distance itself from its parent company, Alibaba. The company has added a fifth independent director to its nine-member board, and certain executives have exited the Alibaba Partnership, a group of the most powerful executives within the company.
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A Closer Look
Reports tell us that the restructuring appears to have paid off, with the Chongqing branch of the China Banking and Insurance Regulatory Commission approving a capital expansion plan for Ant Consumer Finance in December. This was the first approval since Ant Group’s IPO was postponed.
In the latest restructuring, Ant Group says in an announcement that 10 Ant executives, including Ma, will end their acting-in-concert pact and become independent shareholders. This move is aimed at ensuring that no single shareholder has the power to control the outcome of general meetings or nominate the majority of the board of directors.
The restructuring is seen as a positive step for Ant Group, which has faced regulatory scrutiny and criticism over its business practices. In April 2021, Alibaba was hit with a record $2.8 billion penalty for breaching China’s antitrust rules, while Ant Group was told to correct non-competitive behavior surrounding its mobile payment platform, Alipay, and urged to enhance user data protection.
Despite the restructuring, it is not clear when Ant Group will be able to launch its IPO. Li Chengdong, head of the internet industry think tank Dolphin, said: “I don’t think Ant’s IPO would be imminent, as China puts the priority on gathering resources for the hi-tech sector, but it would be easier to allow an IPO if equity and control issues get resolved at Ant.”
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