Ma surrenders on Ant Financial. Smart move

Jack Ma may be blunt — his harsh criticism of China’s state-dominated banking system cost him a $34 billion blockbuster initial public offering in 2020. But he is not stupid.
The billionaire plans to cede control of Ant Group Co, a fintech affiliate of his e-commerce giant Alibaba Group Holding Ltd, the Wall Street Journal reported. He currently controls 50.52% of Ant, which would have been valued at more than $300 billion had it gone public.
Bankers hoping for a revival of Ant’s listing will be disappointed. A change in control means the fintech will have to wait a while before attempting to list again. China’s securities watchdog requires a timeout for companies that go through such big ownership changes.
Ma had previously held back from giving up control because he didn’t want to delay Ant’s plan for an IPO, according to the Journal. So it’s interesting to contemplate why he is changing his mind.
First of all, how much is Ant worth now? With its most profitable businesses gone — such as arranging consumer loans without putting in any capital itself — the unicorn has become a shadow of its past self. A year ago, Fidelity Investments cut the value of its Ant stake, reducing the company’s valuation to only $78 billion.
That might even be a generous estimate. If Ant was to go public
on Shanghai’s main board as a
financial holding company, it would be valued as a bank. In that case, Ant could be worth as little
as $29 billion, according to Bloomberg Intelligence.
Granted, Ma’s Ant stake still amounts to a lot of money. But it’s simply not worth all the scrutiny for a tycoon who’s already got billions — $37 billion according to the latest figure from Bloomberg Billionaire Index. Try as he might, Ma simply can’t move beyond his past. President Xi Jinping’s mantra of “common prosperity” — replete with warnings against “excessively high income” — has sparked
sharp questions about privilege and access.
One reason Xi quashed Ant’s IPO, according to the Journal, was the government’s growing unease over the company’s complex ownership — and the people who stood to gain the most from the blockbuster listing.
Ma has given away those prized Ant shares as tokens of friendship. For instance, through Yunfeng Capital, founded by Ma and Target Media’s David Yu, the billionaire had allowed his friends to invest in Ant early. One pal, nicknamed “a lot of money,” famously paid HK$42.2 million ($5.4 million) for Ma’s debut painting, a collaboration with a well-known Chinese artist. “A lot of money” would have been many times richer had Ant’s IPO gone ahead.

—Bloomberg