Jack Ma relinquishes control of Ant Group

Jack Ma relinquishes control of Ant Group

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Chinese billionaire Jack Ma will cede control of Ant Group, the fintech firm announced on Saturday as its founder continues his retreat from his online businesses following Beijing’s tech crackdown.

According to Ma’s calculations, his voting rights will shrink from over 50 percent to 6.2 percent an explanation from the online payment and credit provider. The proposed change of control, first announced last July, would help ease the company out of the limbo it has experienced since a intended November 2020 IPO was postponed at the last minute.

A change of control kicks off the period where Ant has to wait a year before attempting a new listing in Hong Kong, or two years for the high-tech board STAR in Shanghai. However, the schedule could be delayed if other regulatory requirements are not met.

Ma also co-founded leading e-commerce company Alibaba and spun off the Ant payments business from it in 2011. Ma’s status in the companies has been in jeopardy since he delivered an ill-timed speech criticizing Chinese regulators and the country’s state-owned banks on the eve of Ant’s IPO.

The speech prompted President Xi Jinping to force Ant’s delisting and sparked a regulatory crackdown on the country’s biggest tech giants. Ma was forced to withdraw from the limelight. He is increasingly spending his time outside of China, most recently living in Tokyo for many months.

The changes introduced mean Ant will not have a final controller, the company said, adding that independent directors – which include Laura Cha, chair of the Hong Kong Stock Exchange – would make up more than half of the board.

“As a result of the adjustment, Ant Group’s shareholder structure will become more transparent and diversified, which will facilitate the company’s steady development,” it said, adding that the changes would not affect day-to-day operations.

Ant has been forced to restructure over the past two years and pending issues include further strengthening the capital base of its consumer credit unit, acquiring the appropriate licenses for its credit scoring unit and approving its plan to transform into a financial holding company.

Analysts said the change of control would mark a significant step forward in the “rectification” process required by China’s top financial regulators.

Li Chengdong, head of internet think tank Haitun, said the handover of control likely indicates a conclusion to Ma’s and the fintech group’s regulatory investigations.

“The next step is to talk about IPO, but the chances of that are probably not high in the mainland, Hong Kong is more likely because domestic regulators prioritize ‘hard-tech’ IPOs and still don’t encourage fintech groups “, he said .

Duncan Clark, founder of Beijing-based BDA Consultancy, said the government was working to regain control of the sector. “Jack giving up control is probably the highlight of the campaign,” he said. “The need to restore investor confidence and boost growth probably outweighs everything now.”

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