Ant Group currently focuses on developing its business including adding a fifth independent director, making significant changes in the shareholding structure, and changing the voting rights of major shareholders.
Ant Group, the affiliate company of the Chinese conglomerate Alibaba Group, announced its plans to advance corporate governance as the declaration of Jack Ma’s decision to cede control of the company came in on Saturday. The company currently focuses on developing its business including adding a fifth independent director, making significant changes in the shareholding structure, and changing the voting rights of major shareholders.
Jack Ma renounces control of Ant Group
Chinese billionaire Jack Ma will no longer control Ant Group after the shareholders try to restructure the shareholding form of the company, according to the official statement released on Saturday. Ma had almost 50% voting rights at Ant through Hangzhou Yunbo and other entities and his share is expected to fall to 6%.
The move, according to the company statement, was aimed at being more transparent and diversified, retaining the nature of the economic interest of the shareholders.
The voting rights revamp came after Chinese regulators pulled the plug on Ant’s $37 billion IPO in November 2020, ordering the company to reorganize its business. Ant’s consumer finance unit applied for an expansion of its registered capital from $1.2 billion to $2.7 billion as a part of the revamp, gaining the approval of the China Banking and Insurance Regulatory Commission.
Ma’s ceding of control comes as Ant is nearing the completion of its two-year regulatory-driven restructuring, with Chinese authorities on the brink to levy a fine of around $1 billion on the firm.
No plans for IPO
Ant Group has also revealed its plans not to launch an Initial Public Offering (IPO) according to the reports. “Ant Group has been focusing on its business rectification and optimization, and does not have a plan for an IPO,” stated the company spokesperson. The company’s $37 billion IPO, considered to be the world’s largest, was canceled in November 2020, which led to the forced restructuring.
The company would go public but had no plans to initiate an IPO yet during last year and reiterated the same during Ma’s receding of the company’s control. Ant has been altering its business to meet the demands of China’s watchdogs, who have vowed to reduce the uncontrolled push of technology firms into finance.
According to the current changes, the voting rights will be shifted to the shareholders which also includes the founder and representatives now voting individually. The two investment firms will separately exercise voting rights after the necessary modifications.
Jack Ma will control 31 percent of Ant’s shares together with four shareholders by holding 20 percent of the equity interest in the investment firms. After the revamp no shareholder will have complete control over the Ant Group. The individual members or shareholders cannot control or nominate the majority of Ant’s board of directors.
The independent directors, according to the company statement will consist of a majority and some members have exited Alibaba Group, to improve the management of Ant and aim to strengthen its independence from Alibaba Group.
Ant is valued at $280 billion before the IPO according to its stock pricing and with the regulations imposed on the company, a continued reduction in the use of technology firms in finance. The company reached an estimate of $70 billion, which is a reduced value from the earlier estimates. Shares of Ant-linked firms rose after Jack Ma gave up control of the company. Ali Baba Group Holdings shares rose to 8.7%.