Ant, Jack Ma and the Battle for control

When will the Ant Group be able to enter the stock market? Estimates have continuously been pushed back for the past year. Investigation and battle are on the way.

Investigation and convocation

Even though the company of the founder of the Alibaba Group enjoys a lot of support in the highest spheres of government, it disturbs big interests. In mid-October, an investigation had been launched to assess investors’ conflicts of interest. Yesterday, a laconic communiqué from the regulatory authorities announced four bodies, the People’s Bank of China, the Banking and Insurance Regulatory Commission of China, the Securities Regulatory Commission of China, and the Administration of Foreign Exchange Management convened, 约谈, the three top executives of the group. No details emerged from the exchanges’ content, other than broad general statements indicating that the discussions addressed the health and stability of financial markets. What could be the reasons for this meeting?

Irregularities?

Checks may have revealed irregularities or practices that crossed the red line. But, as they are not severe, they trigger a simple summons to find a solution. Jack Ma had already received a summons in 2015 to ask him to be stricter and more active in the fight against copying on the group’s platforms.

The help for the big banks

Other hypotheses concern the aversion of the large banks to the Ant Group, which has taken a large share of the highly profitable online finance sector serving as intermediaries for small and medium financial institutions in the sector. The authorities need to protect these large public institutions.
Ali Pay markets a lot of financial products without going through the dinosaurs of the banking world. Ali Pay has a 21% market share in consumer credit. It is an intermediary that works with small banks, which do not have an extensive network to capture a large clientele. The company receives a commission. Besides, thanks to its various services and companies, including Taobao, the group collects a lot of information on these customers, both individuals and SMEs, and can quickly assess customer risk.
The central banks are also interested in attracting young people. The vast majority of their customers who visit the branches are older. But young people prefer online service, where Ant is strong. A piece of the cake escapes the big traditional banks.
The six big banks are public. It’s the State. The regulatory authorities have, according to Wang, the task of protecting them. With the money from the IPO, Ant will develop further, go into other niches, and occupy a more important position.

Interest groups 利益集团

The agreement that Jack Ma would have made with the interest groups of several political factions is essential to this point. He would have accepted to take a step back from Alibaba by taking a so-called retirement last year and by letting them have some capital; in exchange, he was allowed to put the part of the financial and technological service of Ant on the stock exchange. But the story gets more complicated when they discover later on that it is not Alibaba who controls Ant, but Jack Ma, through the companies he owns. Some observers, such as Wang Jian, think that the setbacks encountered by Ant come from this battle over control of the company, bathed in the perfume of go and chess (Chinese) strategy.

As usual

There is nothing new in the battle over China’s high-tech flagships, which must be in the nails and participate in the country’s rebirth while sharing the dividends of growth with power-related interest groups. Any irregularities serve as a pretext to tighten the screws.

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Sources :

罕见!证监会等四部门联合约谈马云、井贤栋等!央行、银保监会同日发布重磅文件,蚂蚁深夜回应

3 November 20202

Posted on Categories Finance

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