Jack Ma's exit would smooth Ant’s IPO march

By
Alibaba Group's Jack Ma
Alibaba Group co-founder and executive chairman Jack Ma attends the World Artificial Intelligence Conference (WAIC) in Shanghai, China, September 17, 2018. REUTERS/Aly Song/File Photo - RC22LV9JON9W

July 29 (Reuters Breakingviews) - A charismatic founder walking away is usually a bad sign for a company hoping to go public. For China’s Ant, though, it would be a relief. Chinese technology icon Jack Ma is planning to give up control of the financial technology giant, according to the Wall Street Journal. That would build on Ant's ongoing restructuring efforts to placate the officials who derailed its $37 billion float two years ago.

Ma's exit would benefit Ant and shareholders. Even though he holds no executive or board positions, the billionaire effectively controls the company through an indirect 50.5% stake housed in two limited partnerships where he wields outsized influence, according to Ant's 2020 IPO documents. It's not clear how Ma will relinquish control or who will take over, but ditching that structure should give investors and regulators much-needed clarity on decision-making at the top.

Based on existing rules, a change of control plus restructuring would push back the timeline for Ant's revived listing by several years. On the other hand, it’s unlikely authorities would ever give their blessing with the tycoon still in charge, given Ma's strained relations with Beijing.

Broadly, this will bolster Ant's ongoing efforts to clean up its corporate governance. Key to that is simplifying the fintech group's messy ties with Alibaba (9988.HK), also founded by Ma, which retains a one-third stake. Ant executives recently stepped down from the Alibaba Partnership, a controversial body that can nominate the majority of the e-commerce group's board.

Other changes, including an overhaul in its consumer credit business, should help put Ant back in the good graces of regulators, who have yet to approve the company's application to become a financial holding company. That would clear the path to public markets.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

CONTEXT NEWS

Alibaba founder Jack Ma plans to give up control of financial technology company Ant, the Wall Street Journal reported on June 28, citing sources.

Ma indirectly holds 50.52% of Ant. He may relinquish control by transferring some of his voting power to other Ant executives, the report added.

Column by Robyn Mak in Bangkok. Editing by Pete Sweeney and Katrina Hamlin

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Robyn Mak joined Reuters Breakingviews in 2013. Previously, she was a Research Associate for the Global Policy Programs at the Asia Society in New York where she focused on US-Iran relations, US-Myanmar relations and sustainability issues in Asia. She has also worked as a researcher at the Carnegie Endowment for International Peace in Washington DC and interned at several consulting firms, including the Albright Stonebridge Group. She holds a masters degree in international economics and international relations from the Johns Hopkins School of Advanced International Studies and is a magna cum laude graduate of New York University.

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