Alibaba’s Jack Ma richest man in China
Aug 28 2014 , Hong Kong
Ma also owns 48.5 per cent of Zhejiang Ant Small & Micro Financial, a closely held entity that operates Alipay.
Ma is $5.5 billion richer than Ma Huateng, the founder of Tencent Holdings, China’s largest Internet company by market value. Robin Li, founder of search engine Baidu, ranks No. 3 in China.
“Wealth creation in China has been quite rapid, particularly among entrepreneurs who have created businesses that benefit from China’s burgeoning middle class,” said Tony Hsu, a Shanghai-based portfolio manager at Dalton Investments.
Alibaba, which plans to sell shares on the New York Stock Exchange next month, may set its IPO value at $154 billion, according to the average estimate of five analysts surveyed by Bloomberg in July. Ma owns 8.8 per cent of the company. After subtracting the 1.5 per cent controlled by SymAsia Foundation, his charitable organisation, Ma’s interest in the company is valued at $11.3 billion.
The same analysts said Alibaba’s post-listing valuation could be as much as $200 billion.
The Hangzhou, China-based company has a value of $25 billion, based on the average estimate of seven analysts surveyed by Bloomberg News.
The billionaire’s stake in Small & Micro is expected to dilute to no more than 8.9 per cent in three to five years by selling new shares or distributing stock to employees, the company said in an August 12 filing with the US Securities and Exchange Commission. Ma won’t realise any economic benefit from these transactions, the filing said.
Alibaba also is entitled to acquire as much as a third of Small & Micro, according to the filing, though the e-commerce company can’t assure investors it will receive the approval from Chinese regulators for the transaction.
Ma is credited with the full stake in Small & Micro. Six of seven analysts surveyed said his net worth should be calculated based on his current interest and adjusted as his stake changes. Based on the planned dilution of Ma’s holdings, the analysts said the valuation should be discounted by as much as 15 per cent, giving his stake a value of $10.3 billion.
Jim Wilkinson, a spokesman for Alibaba, disputed the rationale for giving Ma 48.5 per cent of Small & Micro because it eventually will be diluted and the billionaire will receive no personal economic benefit along the way.
Nigel Davis, principal lecturer in the University of Hong Kong’s law department, said Ma’s plan to pare down his stake in the IPO prospectus may not be legally binding because it’s “a statement of future intention, not of current fact.”
Ma’s fortune could increase further once China’s biggest e-commerce company starts trading, RHB Research Institute's Li Yujie said.