Alibaba’s billionaire co-founder Jack Ma raised some serious concerns about his well-being after he disappeared from the public eye after China crack – downed on his business empire.
The fifty-six-year-old business tycoon went missing and has not been seen in the public arena since he spoke at a Shanghai forum in late October last year, where he had openly criticized China’s financial regulators, resulting in his disappearance for more than two months. The rumors got stronger after he missed a previously scheduled appearance on TV on a show that he was to judge.
This fulled reports that Jack Ma may have been “captured” or “taken” by the Chinese authorities since he had openly criticized the Chinese Government and a typical China response to any discretions against the Government.
However, David Faber of CNBC reported that the billionaire founder was not missing but was actually lying low and purposefully avoiding being seen in public.
Following the reports of Jack Ma’s disappearance, it had led to Alibaba’s stock to plummet more than 3% on Monday; however, after it was reported that he was not missing but voluntarily taking a sabbatical from the pubic eye, Alibaba’s stock jumped as much as 5% on Tuesday.
Jack Ma’s tactics are in response to Ant Group and Alibaba having come under increasing pressure from the Chinese Authorities on alleged irregularities in Ant Group and Alibaba’s financial transactions.
Ant Group had a planned IPO in November 2020 that had caused a huge furor in the financial markets, with many looking forward to the IPO.
However, the IPO was stalled at the last moment after the Chinese Government amped up its regulatory pressure on the fintech giant. The Chinese Government’s move was seen as a massive blow to Ant Group and Alibaba even as the potential investors looking forward to the IPO had to take – U-turn and return disappointed.
Both companies currently face challenges in the form of new rules and regulations put by the Chinese Authorities that can alter the basis of the very business model that the companies follow.
The Chinese Authorities’ clampdown came days after Ma had openly criticized China’s financial regulatory system and stressed the need for more friendly regulations for fintech companies.
He had ventured to dismiss China’s global financial regulations and had compared them to “an old peoples’ club” and said that “we can’t use yesterday’s methods to regulate the future.”
The statement led to Chinese authorities not only launching a probe into the e-commerce giant’s seller exclusivity tactics, but the company is now being probed for antitrust violations.
The regulators ordered fintech Ant to change its lending and other consumer finance businesses, including the creation of the holding company to meet capital requirements.
Ant Group’s equity investments in dozens of companies have also come under the Chinese regulator’s scanners. They have been considering ordering the firm to divest some of those investments.
Alibaba plans a US$5 Billion bond in January.
The steps taken by the Chinese Authorities on Alibaba Group have not stopped Jack Ma from strategizing his business moves. Alibaba Group plans to raise US$5 Billion through the sale of a US dollar-dominated bond this month as per sources this amid the ongoing probe by the Chinese Authorities.
The source added that depending on the response from the investors, the e-commerce giant plans to use the proceeds, which could be as high as US$8 billion, towards general corporate expenditure.
The Bond sale plan, the timeline has not been finalized yet. It may be subject to changes even as the comments came through unidentified sources.
If Alibaba’s international Bond Offering comes through, it would be the group’s third; it had earlier in 2014 sold a US$8 Billion bond and again in 2017 a US$7 Billion tranche.
With the latest Bond Offering, Alibaba is set to join a slew of Asian companies that have taken advantage of cheaper borrowing costs and abundant liquidity in the global markets in recent months.
Last year companies sold as much as US$363.2 billion worth of US dollar bonds in the Asian markets, which is 9 percent more than a year earlier and the highest value to date.
Investor Confidence and Response
The Bond sale is definitely a litmus test of the investor sentiments since the probe by the Chinese Regulators on Ant Group and Alibaba has led to investor sentiments as cautious towards the two companies.
In order to regain the trust and the enthusiasm of the investors, Jack Ma will be forced to make some sort of public appearance to give the investors the confidence such that the bond is well received in the market.
According to analysts, this is a well-timed Bond Offering as Alibaba has roughly US$10 Billion worth of long–term debt due in November, and thus makes sense for the company to refinance it. However, the Bond offering is being seen more as a move to instill confidence in the company after the crackdown by the Chinese Regulators.