Ant, the business that runs the well-known digital payment system Alipay, has been compelled to alter its operations. The operations were changed due to a government crackdown that started with Beijing cancelling the firm’s massive IPO.
Chinese businessman Jack Ma is the co-founder of the Alibaba Group. The Alibaba-affiliated company announced it would end agreements that had allowed Ma to hold a dominant position within Ant Group’s corporate governance structure.
The outspoken entrepreneur previously possessed more than 50 per cent of voting rights at Ant. However, he was not on the company’s board of directors or involved in day-to-day operations.
Ma influenced Ant Group through a handful of investment vehicles that owned a combined 50.5 per cent stake in the fintech giant. Ant announced that Ma and nine other business leaders and staff members would now be able to vote, according to an agreement they had each made separately.
Ant was scheduled to go public in 2020, but Chinese officials prevented it from doing so at the $34 billion mark, which would have been the biggest initial public offering in history.
Ma previously vanished from public view following a conflict with the Chinese government in 2019 over his criticism of the country’s banking authorities.
Ma’s voting authority over the company will be removed by Ant Group, and voting privileges will be distributed to 10 people. Ma, who previously held 53.46 per cent of the vote, will now have just 6.2 per cent of the vote.
According to Reuters, after implementing the business’s adjustments over the weekend, Ma will hold 6.2 per cent of Ant Group shares. After calling China’s banks “state-owned pawnshops” in a speech in Shanghai in 2020.
Ma incurred the wrath of the Chinese government just before Ant was about to make an IPO that was anticipated to raise a record $34 billion. Chinese officials then forced Ant to reduce its commercial operations and blocked the upcoming IPO.
The business was specifically mandated to return to its origins as a payment provider. Following an antitrust probe on suspected monopolistic tactics by the firm, authorities penalised Ma’s other company, Alibaba, $2.8 billion a year later.
According to Andrew Collier(managing director of OCR), “Jack Ma’s resignation from Ant Financial, a firm he established, illustrates the intention of the Chinese authorities to diminish the power of significant private investors.”
The most productive sectors of the Chinese economy will continue to deteriorate due to this tendency.
Ant Group emphasised that the modifications won’t impact the business’ routine operations even though the release didn’t mention their completion. The action was thought to be required to restart the company’s IPO.
According to Dai Ming, a fund manager at Huichen Asset Management in Shanghai, “it’s absolutely a clear signal that the government has lifted the limitations on China’s main technological platforms.”
Dai Ming made the statement to the South China Morning Post. “We may also conclude that Ant’s decision to restart its listing is a step forward.”