Alibaba, Ant said to form oversight body to tighten control

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HONG KONG (March 8): Alibaba Group Holding Ltd and Ant Financial will establish a steering committee led by the e-commerce giant to spearhead joint business initiatives and ensure their long-term interests are aligned, according to people familiar with the matter.

China’s top online retailer and its biggest internet financial services giant will create a so-called “new economy body,” headed up by Alibaba Chief Executive Officer Daniel Zhang. Ant Financial Chairman Eric Jing will be his deputy, the people said. Its members will be tasked with ensuring both sprawling entities work together, and will hold executives accountable if they don’t, the people said, asking not to be identified talking about a private matter.

The move creates a high-powered team to stand watch over the financial and commerce empire founded by billionaire Jack Ma, and comes as Alibaba prepares to take a one-third equity stake in its affiliate. It will provide a forum for Alibaba to keep Ant aligned with its e-commerce business in the future, even after the financial firm goes public as anticipated. Zhang will succeed Ma as Alibaba chairman in September.

Ant Financial, estimated to be worth US$150 billion, is backed by some of the country’s most powerful financial institutions and is now making major strides abroad, hawking its Alipay system from Hong Kong to Brazil and sealing its biggest overseas acquisition. But Tencent Holdings Ltd has in recent years chipped away at its dominance in mobile payments at home, aided by its billion-strong WeChat social media platform. That loss of market share, coupled with the rise of apps such as Bytedance Ltd’s Douyin now competing for users’ attention, is undermining Ant’s bread-and-butter service.

The new oversight group won’t alter either companies’ financial and management structures, the people said. But the envisioned committee, numbering more than 10 people from key divisions within both firms, will serve as an overseer to ensure closer collaboration between the online emporium and the finance unit hived off about eight years ago. Representatives for Alibaba and Ant Financial did not respond to e-mailed queries for comment.

Alibaba has expanded from a marketplace for merchants to China’s biggest e-commerce platform, an empire that now spans grocers and on-demand food delivery to real estate auctions. Ant Financial, built on the Alipay unit that Alibaba owned before it was hived off, has blossomed from a mere payments business to wealth management, credit finance and China’s biggest money-market fund.

Alibaba has not held a stake in Ant Financial since Ma controversially spun out the business. However, the e-commerce giant said in February last year that it would buy 33% of Ant, helping clear the way for a potential initial public offering. A combined entity would be worth more than US$600 billion.

Alibaba said it would acquire new shares in its affiliate in exchange for intellectual property rights. While no cash is changing hands, Ant Financial — formally known as Zhejiang Ant Small & Micro Financial Services Group Co — would then end royalty payments to Alibaba.