HONG KONG/BEIJING (REUTERS) – Jack Ma plans to cede control of Ant Group, the Wall Street Journal reported on Thursday (July 28), after a regulatory crackdown that scuppered its US$37 billion (S$51 billion) initial public offering (IPO) in 2020 and led to a forced restructuring.

While the Chinese billionaire only owns a 10 per cent stake in Ant, an affiliate of Alibaba Group Holding, he exercises control over the company through related entities, according to Ant’s IPO prospectus filed with the exchanges in 2020.

Hangzhou Yunbo, an investment vehicle for Mr Ma, has control over two other entities that own a combined 50.5 per cent stake of Ant, the prospectus showed.

The Journal said, citing unnamed sources, that Mr Ma could cede control by transferring some of his voting power to Ant officials including chief executive Eric Jing.

Ant has informed regulators of Mr Ma’s intention as it prepares to restructure into a financial holding company, the report said, adding regulators didn’t demand the change but have given their blessing.

In April last year, Reuters reported that Ant was exploring options for Mr Ma to divest his stake in Ant and give up control.

The discussions at that time came amid a revamp of Ant and a broader state clampdown on China’s technology sector that was set in motion after Mr Ma’s public criticism of regulators in a speech in October 2020.

Ant’s IPO, which would have been the world’s largest, was derailed days after the speech and Mr Ma’s sprawling empire has been under regulatory scrutiny and going through a restructuring since then.

Ant operates the world’s largest and China’s ubiquitous mobile payment app Alipay, which has more than 1 billion users.

Once outspoken, Mr Ma has kept an extremely low public profile as regulators reined-in the country’s technology giants after years of a laissez-faire approach that drove breakneck growth.

“It’s been on the cards for a while,” said Danni Hewson, financial analyst at AJ Bell.

“There will be some who will think that potentially this clears the way for Ant to put the past few years behind it and try to get out on the front foot. There will be others who will be deeply concerned about what comes next because Jack Ma has been such a powerhouse.”

A change in control at Ant could slow plans to revive its long-sought IPO, the Journal reported, as China’s domestic A-share market requires companies to wait three years after a change in control to list.

The wait is two years on Shanghai’s STAR market, and one year in Hong Kong.