title iconGiving up his power gets Jack Ma out of Beijing's crosshairs

As the entrepreneur steps down from a business empire that had made him one of China's most powerful people, Jack Ma is taking a weeks-long tour in Europe after nearly disappearing from public view for almost two years.

Bloomberg and local news outlets reported that Alibaba Group Holding Ltd's co-founder, 57, visited restaurants in Austria, toured a Dutch university to learn about sustainable agriculture, and docked his yacht in Mallorca.

Even though this is not Ma's first trip outside China since he criticized CPC officials over the regulation of his fintech giant, it represents a significant shift from the days when the government urged the billionaire not to leave the country. According to state media reports, authorities had imposed curbs on a Ma-surnamed individual less than two months ago, indicating investors' concern about the tycoon's fate.

Alibaba shares briefly dropped $26 billion as a result. As a result of subsequent information, the report appeared to refer to someone else. As a result of making many concessions to the government, Ma has been able to escape the dog house.

The company overhauled operations to comply with tighter controls following the torpedoing of Ant's IPO in 2020 and has talked regularly with the central bank about "rectifying" operations.

As Ant's success grew in the early years, the dominance of large state-backed banks was threatened. A source familiar with the matter says Ant also verbally communicated Ma's intention to cede control to regulators for years. Ma's shares are being considered for transfer to other executives so the company can be governed by a committee, according to one source.

The Chinese company reiterated this week that Ma intends to gradually reduce his direct and indirect economic interests in Ant Group to less than 8.8%. As of January 22, 2016, Ma owns 50.52% of Ant Group's voting rights. "

Ma ceding control would remove a significant key man risk from Ant," said Justin Tang, UFP's Asian research head. Attempts to reach Ant, Alibaba, and Ma's foundation were not successful. An inquiry faxed to China's central bank was not responded to.

Ant informed regulators earlier that Ma might give up control and delegate some of his voting power to other top executives, according to The Wall Street Journal. As of 9:49 a.m. on Friday, Alibaba's Hong Kong-listed shares were down 4%.

Because Ma hasn't been deeply involved with Ant for years, giving up control of the company would cause little disruptions to daily operations, people familiar with the matter said, requesting anonymity.

As Ant was separated from Alibaba in a complex transaction to minimize conflicts with Chinese regulations, Ma initially had majority vote control. In pursuing "common prosperity," Ma could align his companies with the goals of President Xi Jinping, whose watchdogs have pledged to curb technological firms' "reckless" expansion.

China's private sector policy has become one of the most closely watched developments on global markets in recent years, with some observers calling it uninvestable.

He had been distancing himself from e-commerce giants Alibaba and Ant even before he drew the ire of Chinese regulators. Ma stepped down from his role as CEO of Alibaba in 2013, and then as chairman of Alibaba in 2019. According to him, he plans to donate 611 million shares to charity after reducing his Ant stake to no more than 8.8% in 2014.

There is a possibility that Ant's highly anticipated IPO could be delayed due to the ownership changes. According to China's securities regulations, A-share companies can't list on the market if the controlling shareholder has changed in the past three years.

There is a two-year waiting time for the Nasdaq-like STAR market, whereas Hong Kong has a one-year wait time. "Though Ant will be required to wait for this change, it will make little difference because the weak markets will prevent Ant from wanting to be listed," Tang said.

A key step for Ant to move forward in its quest to go public is to have the central bank accept its application for a financial holding license. An analysis of Ant's projected worth shows that it has fallen from $300 billion to $180 billion since regulators curbed its most profitable divisions, including consumer lending. A June estimate by Bloomberg Intelligence analyst Francis Chan estimated Ant's worth at $64 billion.

A major part of Ant's restructuring includes increasing its capital to 35 billion yuan and building firewalls in a system that once enabled it to get traffic from Alipay, with a billion users, to services like wealth management and consumer loans. The company's Yu'ebao money-market fund, once the world's largest, dipped by about 35% to 813 billion yuan as of June.

The company's chairman Eric Jing said last year that Ant would eventually go public, although Ant said in June it has no plans for a public offering. As Jian Shi Cortesi, investment director at GAM Investment Management, said, Jack Ma already did not hold any titles in Alibaba. I do not see this affecting the company's operations significantly. As a result, investors will focus more on the company's development rather than on Jack Ma.