After spending the last few months selling down some of his stake in Alibaba, China’s e-commerce king is now set to be crowned as the new prince of fintech, as Ant Group nears an initial public offering in Shanghai and Hong Kong.
Jack Ma has cashed out of more than $6.1 billion of Alibaba stock in the eight months since the company launched its secondary listing in Hong Kong. As of July 2, he still held 4.8% of Alibaba’s shares but that was down from 6.1% last November, company filings show. Alibaba executive vice chairman Joseph Tsai reduced his own stake over the same period, selling shares that were worth $3.3 billion as of last week.
Analysts have been trying to interpret the divestments at a time when other tech tycoons have been reducing their holdings too. Earlier this month we wrote about how Colin Huang, the founder of e-commerce newcomer Pinduoduo, was stepping down as its chief executive officer, and disposing of about $14 billion of shares in the process (see WiC503). There have been sales from senior leaders at Tencent as well, including Pony Ma, who sold stock worth about $810 million over the first half of this year.
One view is that the sales were well timed because Covid-19 has driven consumers online in unprecedented numbers, prompting an unexpected climb in share prices at companies with digital business models. Yet e-commerce chiefs like Daniel Zhang, Alibaba’s CEO, are saying that the changes in consumer behaviour are likely to be permanent and that the best of the online platforms will perform just as strongly when the pandemic is finally over. If that turns out to be right, it will be harder to classify Ma’s divestments as a sell signal, although the counterargument is that China’s economy may not recover as quickly as the optimists hope, crimping consumer spending in general.
Ma had also signalled that he would be reducing his stake in Alibaba, telling the New York stock exchange in April last year that he planned to sell up to 21 million shares over the following 12 months to support his philanthropic efforts.
That charitable activity will have accelerated this year as a result of the pandemic: for instance, Ma has donated millions of units of personal protective equipment to hospitals around the world to help in the fight against the virus.
The divestments come at a time when Ant Group – in which Alibaba has an ownership stake of about a third – is heading for a blockbuster IPO. The news on Monday was that it wants a valuation of more than $200 billion in two listings on the Hong Kong and Shanghai bourses in the next few months. Ma has given up some of the potential gains because of his reduced number of Alibaba shares. But he still owns close to 9% of Ant’s equity, so he is hardly missing out on the feast.
Ant Group started out as Alipay, China’s leading digital payments app, before growing into the fintech arm of the Alibaba Group. Ma still controls about half of the voting interest. In May the company changed its name to Ant Group as part of a bid to de-emphasise its financial roots. The plan is to generate most of its revenues from technology service fees, rather than proprietary financial services. That includes partnerships with a wider range of third-party vendors like hotels and restaurants.
Ant says it decided on the dual listing because it wants to sell shares in markets where investors are familiar with its product offering. It also relies on Chinese accounting standards in its financial reporting, something that will no longer be allowed for Chinese companies on US bourses. Hence commentators are talking about the IPO as another sign of the separation of the US and Chinese financial markets, following the exits of a number of Chinese firms this year like NetEase (see WiC499). But the debut actually sends a slightly different message in delivering one of the world’s largest IPOs (potentially its biggest) but without their being a role for the American stock markets.
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