Ant Group will lose its soul and value should Jack Ma surrender control: analyst

Published (HKT): 2021.04.20 06:40

The potential market value of China’s Ant Group will likely decline further should maverick founder Jack Ma divest his stake in the fintech giant and surrender control, said an analyst.

Speculation about Ant’s future comes after Reuters reported that the group was exploring options for Ma to step away following meetings with Chinese regulators during the first quarter of this year.

Although Ant denied the report, telling Reuters that “Divestment of Mr. Ma’s stake in Ant Group has never been the subject of discussions with anyone,” the market may still have reservations about Ant’s valuation should it attempt to revive its listing plans. These were derailed after Ma publicly criticized regulators last October.

“It would be like CK Hutchison Holdings without Li Ka-shing,” said Hong Kong-based Valuable Capital analyst Thomas Nip, comparing Ma’s presence at Ant to that of the city’s most iconic tycoon at the helm of his flagship company.

The restructuring of Ant under regulators’ scrutiny has already restricted Ma’s role and influence in the group, Nip noted. However, as the founder and the soul of Ant, Ma remained a chief protagonist in the group’s long-term development. Ma’s exit would be outside the market’s expectation and it would likely add an extra layer of uncertainty over Ant, he added.

This in turn would likely put pressure on the stock price of Alibaba Group, which is one of Ant’s major shareholders, Nip said. On the other hand, it would still be a good move to list Ant as the company has great potential, he said.

Should Ma surrender his control of Ant, the fintech giant will likely resume its listing process and create a positive impact on the share price of Alibaba, said another analyst, who did not want to be identified.

Regulating Ant and Alibaba was a positive move in the long run as they will “play by the rules,” the analyst said. “In fact, the financial system of Ant was similar to what Lehman Brothers was like before it crashed. The loose measures and governance on loans were shocking,” the analyst said.

Talks about Ma’s potential exit were held by the tycoon, Ant and officials from the central bank, People’s Bank of China, and the China Banking and Insurance Regulatory Commission between January and March, Reuters said, citing sources. The options raised included selling Ma’s stake to current investors in Ant or Alibaba.

But a complete exit — not allowing Ma to sell his stake to any individual or entity close to him — or letting a Chinese investor attached to the state take over the stake were also mentioned, the news wire reported.

Ma’s empire has been under regulators’ scrutiny since last October. Alibaba was fined a record US$2.75 billion by China’s antitrust regulator on April 10 for abusing its dominant market position.

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