Breakingviews

Chinese online broker concentrates power

2 minute read

The logo of housing platform Beike, owned by KE Holdings, is seen at the World Artificial Intelligence Conference (WAIC) in Shanghai, China, July 8, 2021. REUTERS/Yilei Sun

Register now for FREE unlimited access to reuters.com

HONG KONG, July 30 (Reuters Breakingviews) - China's answer to Zillow has decided to keep control concentrated after its legendary founder Zuo Hui's unexpected passing in May. Ke's (BEKE.N) top shareholder, a company controlled via a trust of the Zuo family, has transferred its class B shares, representing nearly 80% of voting rights, to an entity originally affiliated with him. That gets around a rule that such a transfer outside the family would automatically downgrade his weighted stake to ordinary shares. Long-serving Chief Executive Peng Yongdong and an executive director on the partnership will inherit Zuo’s votes.

Dual-share structures, banned in China for a long time, led many Chinese entrepreneurs to list in New York where they are common . They protect founders interests and give them latitude to think long-term – but also enable abuse. Ke claims that this move will enable the company to preserve Zuo’s vision. But it can do that without granting managers with small economic stakes outsized power. Ke's shares have already fallen 60% this year, and a wave of Chinese delistings and take-privates may be building. The online real-estate broker, caught in two simultaneous crackdowns on internet and property companies, might be preparing to make decisions ordinary shareholders won’t like. (By Yawen Chen)

On Twitter http://twitter.com/breakingviews

Register now for FREE unlimited access to reuters.com

Capital Calls - More concise insights on global finance:

Microsoft deal will help Oyo check in like Airbnb

read more

Supply chain woes trip solid U.S. economic growth read more

China IPO boom is becoming a game of two halves read more

Aussie pharmacies roll up for competing M&A doses read more

Citizens provides U.S. bank merger template read more

Register now for FREE unlimited access to reuters.com
Editing by Pete Sweeney and Katrina Hamlin

Breakingviews
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

More from Reuters