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Alibaba sign outside the company’s office in Beijing on April 13, 2021.
Greg Baker/AFP via Getty Images
Chinese billionaire
Jack Ma
courted controversy last year when he criticized banking regulators, and then he disappeared from public life for weeks. Now, his fintech firm Ant Group may be making moves for him to part ways.
It was Ant Group that had to scuttle its highly anticipated $37 billion initial public offering in November after Ma’s critical comments rained regulatory scrutiny on Ant and Ma’s affiliated e-commerce giant
Alibaba.
Reuters reported on Monday that Ant is exploring options that would allow Ma to divest of his stake and give up control. Meetings with regulators signaled such a move could help lower the regulatory heat on Ant, Reuters said, citing people familiar with the regulators’ thinking.
The Wall Street Journal previously reported that Ma offered during a November meeting with regulators to hand over parts of Ant to the Chinese government.
Shares of Alibaba fell 1.6% on Monday and are up just 0.9% this year compared to the nearly 11% gain for the S&P 500.
A week ago, Ant Group said it will apply to become a financial holding company and restructure its operations amid China’s regulatory crackdown on internet companies.
Over the same weekend, Alibaba reached a $2.8 billion settlement with regulators, who have been investigating it for antitrust since last fall.
While a record amount, Wall Street analysts who follow the stock said it wouldn’t affect Alibaba’s financials and was “closure” for investors.
On Monday, Truist Securities analyst
Youssef Squali
lowered his price target on Alibaba to $315 but maintained a Buy rating.
The hefty settlement does not dampen the secular trends of the last few years: Consumers continue to use e-commerce sites in greater numbers and merchants have adjusted their business to take advantage of that.
It may help Ma and Alibaba move on from months of turbulence, however. Ant’s move to become a financial holding company could dampen its valuation if it tries to go public again.
Ma’s Ant stake in Ant could be sold to existing investors or to shareholders of Alibaba, Reuters reported, quoting a source with company ties. He could also transfer his stake to a Chinese investor affiliated with the state, a second source told Reuters.
The Reuters report said officials from the People’s Bank of China (PBOC), and financial regulator China Banking and Insurance Regulatory Commission (CBIRC) have held talks Ma and Ant separately since the beginning of this year, including discussing the possibility of Ma’s exit from the company.
The report quoted an Ant spokesman disputing that last point. “Divestment of Mr. Ma’s stake in Ant Group has never been the subject of discussions with anyone,” an Ant spokesman told Reuters.
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