China bring sad end to billionaire Jack Ma’s empire
One year ago, Jack Ma was the richest man in China. He was the creator of Alibaba – China’s largest tech company – and The Ant Group, the largest Fintech company in the world.
His corporate empire had reached private-sector superpower status; on a par with the Western FANG-giants. Alibaba alone was worth more than any U.S. company except for Apple, Amazon and Google.
Jack Ma was also a worldwide celebrity – the most famous living Chinese person. According to polls he was more well-known outside China than Xi Jinping.
Jack Ma was Jeff Bezos, Elon Musk and Bill Gates all rolled into one. He was the front-man for the new China. The abrupt reversal of his fortunes has been shocking to watch.
Ma’s assets have been stripped, shorn, and degraded (“rectified” is the English word often given as the translation for whatever verb in Chinese describes what Beijing is doing to his businesses).
The last-minute quashing of the Ant Group’s Initial Public Offering was the opening shot.
The offering would have set a world record. In fact, Alibaba’s IPO in 2014 had been the largest ever at that time. Ant’s was to have surpassed it by 40%.
The size of the deal itself doesn’t portray the scale of the financial phenomenon. The Ant IPO had become – by October 2020 – a true frenzy.
The share price on the private market ran up 50% ahead of the effective date; and the offering was said to have been 80 times oversubscribed. It was called a “a $3 trillion scramble.”
Jack Ma was triumphant. It would be, he said, “the biggest IPO in human history.
“Furthermore, for the first time ever, it is set in a city other than New York . . . A miracle is happening.”
The order book exceeded “the value of all the stocks listed on the exchanges of Germany.”
Then — Beijing killed the deal.
Following the IPO fiasco, regulators began to disassemble Ant. Its consumer financing business was set to be restructured, with new “partners.”
The central bank ordered Ant to form a separate financial holding company that would be subject to the kind of capital requirements applied to banks.
That could open a door for big state banks or other types of government-controlled entities to buy into the firm.
The government also had its eye on one of Ant’s most valuable assets – its data, derived from billions of consumer transactions it processes.
The tech-intensive analytics generated from this resource have been the basis of Ant’s competitive advantage over the less technologically sophisticated traditional banking sector in making consumer credit decisions.
Beijing aimed to “rectify” that, too.
Ant will also be required to break an “information monopoly” on the vast and detailed consumer data it has collected, the central bank said.
Hiving off the treasure trove of data on more than 1 billion people is a key part of Ant’s business overhaul in response to a regulatory crackdown.