Billionaire Jack Ma plans to give up control of Ant Group Co., the fintech giant and affiliate Alibaba Group Holding Ltd., people familiar with the matter said. BABA, 9988.HK, abbreviated as: Alibaba) is one of the efforts to cut, more than a year before, Chinese regulators put extreme pressure on Ant Group.

In 2020, authorities halted Ant Group’s proposed IPO of more than $34 billion at the last minute and forced the tech company to revamp and reorganize into a financial holding company regulated by the People’s Bank of China. As the reform progresses, Ant Group is taking the opportunity to reduce the company’s reliance on Jack Ma, the founder of Alibaba.

Reducing his ownership could delay Ant’s potential IPO restart by a year or more. China’s securities regulations require companies that have recently undergone a change of control to suspend public listings.

Jack Ma is not an executive or director of Ant Group, but he is significant at the company and currently controls a 50.52% stake in Ant Group through an entity he dominates. He could relinquish his control by transferring some of his voting power to other Ant executives, including Chief Executive Eric Jing, after which they would jointly control the company, some of the people said.

Ant Group told regulators that Jack Ma intends to cede control as the company prepares to transform into a financial holding company, people familiar with the matter said. Regulators did not demand the change, but gave their approval, these people said. When Ant Group applies to become a financial holding company, it needs to describe its ownership structure.

The People’s Bank of China has not formally accepted Ant Group’s application to become a financial holding company. Any change of control is unlikely to materialize until the restructuring of Ant Group is complete.

Ant Group
Anti-corruption agency intervenes in investigation

Now, even more terrifying for a Chinese billionaire is the involvement of anti-corruption watchdogs. Earlier this year, the Central Commission for Discipline Inspection and other agencies participated in an investigation into Ant Group’s business dealings with financial institutions and state-owned enterprises, Bloomberg News reported.

Ants will inevitably have inextricable business dealings with state-owned enterprises. The company once arranged consumer loans for state-owned enterprise banks and may also sell sizable asset-backed securities to state-owned asset management companies.

Anyone handling government money today needs to be extra careful because the penalties will be severe. Lai Xiaomin, the former chairman of Huarong, was executed for accepting 1.8 billion yuan in bribes. Hu Huaibang, former party secretary and chairman of China Development Bank, was sentenced to life imprisonment for accepting bribes.

At the same time, prolonged coronavirus restrictions are weakening household finances, and Chinese consumers may no longer be good borrowers. Some owners of unfinished properties also refuse to pay their mortgages. What if their personal loan starts to default? Will Ant be liable for bad debts of state-owned banks?

From this perspective, who is willing to act as the facade of the ants? Anyway, Jack Ma is gone, a vacation in a superyacht is much more beautiful than this.