It is not unusual for CEOs to take a break from the public eye and rejuvenate. However, in the case of Chinese billionaire Jack Ma, Asia’s wealthiest individual, that “leave” dragged on for longer and was likely an unwilling one as the tech mogul butted heads with the Communist Party.
After nearly three months of total absence under intense government scrutiny, Ma has resurfaced after reportedly reaching a deal with China's regulators on restructuring his business empire.
According to a Bloomberg report citing people familiar with the matter, the country's regulators have agreed on a restructuring plan with Ant Group, China's biggest payments provider.
Ma’s business will combine all its business segments, including its technology offerings in blockchain and food delivery, into a financial holding company. To satisfy a requirement by regulators, Ant Group was previously planning to make one of its subsidiaries, Zhejiang Finance, a financial holding company.
Turning the fintech giant into a financial holding company will make it subject to capital requirements similar to those for banks. In other words, Ant will now be overseen by China's central bank.
The deal with regulators on reshaping Ant Group could clear a path to its initial public offering, but it might take some time to organize and also might have reduced price tag as the valuation on technology companies are much higher than on financial ones.
Ma, the co-founder and former chairman of the technology firm Alibaba and Ant Group, most visibly fell out of favor with China’s Communist Party leadership in late October, when he publicly criticized banking policy.
Back then, Ma boldly delivered a speech criticizing national regulators, saying “Chinese finance has no system”. Further, he compared lending practices to a “pawn shop mentality”.
His statement unleashed a backlash from the highest levels, beginning with the regulators’ quashing of Ant’s IPO just a day before it was to happen and new draft micro-lending rules designed to put Ant in its place.
The Wall Street Journal reported that Chinese President Xi Jinping personally halted the Ant’s $35 billion initial public offering.
China’s markets watchdog has also opened a probe into Jack Ma’s Alibaba and its key competitor TenCent business practices concerning potentially anticompetitive behavior.
The authorities also ordered Ma’s other online financial company, Ant Group, to more or less figure out a way to become less of a threat.
The shares of major technology companies in the country have fallen sharply following the probe announcement, with Alibaba, Tencent and JD.com losing around $200 billion in value.
In the meantime, Ma was replaced with another Alibaba executive and his photo removed from the website. Until last week, for the past three months he has not appeared in public or been heard from. He failed to appear at several economic meetings where he has always been a frequent speaker. There were also reports that he had been warned in early December not to leave the country.
By Michael Kern for Safehaven.com