Shares of e-commerce giant Alibaba Group gained in Hong Kong trading as well as in pre-market activity on the NYSE following the announcement that Jack Ma, its co-founder, and executive chairman, is giving up control of its sister concern Ant Group Co., Ltd.
Ma, who also founded Ant Group, currently controls nearly 53 percent of the fintech major through his direct stake and by acting in concert with other shareholders.
However, following the planned changes in its governance structure, the Chinese billionaire will control just over 6 percent of Ant Group, which runs Alipay, the main online payment system in China.
In a statement, Ant Group announced changes in its Corporate Governance as its major shareholders and beneficiaries informed intend to adjust the company’s upper-tier shareholding structure.
The company said that on January 7, it received a notice for the shareholding structure adjustment from Hangzhou Junhan Equity Investment Partnership and Hangzhou Junao Equity Investment Partnership, which hold an aggregate of 53.46 percent of the shares of Ant Group. Ma currently controls 34 percent of the two holding companies and indirectly controls the voting rights of 53.46 percent of Ant Group.
Following the planned changes, its major shareholders, including Ma, agreed to act together no longer to exercise voting rights but to vote independently. The shareholding structure will change, but shareholders’ economic interests will not change, the company noted.
Ma and his five partners each will hold 20 percent of one holding company, Hangzhou Junhan, which owns 31.04 percent of Ant Group. With this, Ma will only hold about 6 percent of Ant.
Ant Group has been undertaking several initiatives since 2021 to achieve long-term sustainable development.
The latest changes are part of the firm’s ongoing restructuring, which is nearing completion after two years.
The restructuring has been driven by Chinese authorities after the company was forced to drop its IPO plan, which was considered then to be the highest IPO in history.
In 2020, Ant Group’s plan to go public in dual listing on the Shanghai and the Hong Kong stock exchanges was canceled at the last minute after Chinese authorities cited major regulatory issues. The move came after Ma criticized China’s regulators and financial sector, saying traditional banks had a pawn-shop mentality.
Months after blocking Ant Group’s IPO, China also fined Alibaba $2.8 billion for alleged anti-competitive business practices.
In Hong Kong, Alibaba shares closed Monday’s trading at HK$110.40, up 8.66 percent. In pre-market activity on the NYSE, BABA shares were gaining around 5 percent to trade at $112.80.
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