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Why would a company with such massive revenue need to bring in so much external capital? Wouldn't the current stakeholders be better off keeping more of the pi

by skohan 8y ago

Why would a company with such massive revenue need to bring in so much external capital? Wouldn't the current stakeholders be better off keeping more of the pie?

adventured 8y ago
Keep in mind $9 billion in sales is not quite massive revenue in the pool that Ant is now swimming. Their financial footing is not nearly so large as their scale of processing, they've only begun generating meaningful profit in the last year or two. Google is at $110 billion in sales, JP Morgan is at $94 billion, those are massive. The dilution of current stakeholders is intentional. I believe it was required by Chinese authorities (my speculation). I've been following Ant / Alipay with curiosity ever since Jack Ma stole it from Softbank and Yahoo (along with the rest of Alibaba shareholders). There have been a lot of bizarre things done with the company over time. Jack Ma for example gave himself the large majority share of ownership in the spun off entity, and then proceeded to voluntarily debase his ownership dramatically with no compensation. And now, having screwed Alibaba over with the Ant Financial spin out, Alibaba was recently forced by Jack Ma to buy a chunk of Ant again (33% of it). My guess on some of these choices, is that it's about nationalism (taking Ant away from foreign owners of Alibaba) and the requirement by Chinese authorities that Jack Ma not have too much power (and that Ant's ownership not be so concentrated in general). If he had held onto the stolen position in Ant Financial + his stake in Alibaba, he'd be closing in on the world's richest person title (~$100b in Ant, ~$30b in Alibaba + cash). That's a spotlight you do not want right now if you're under Xi. I'm certain the Chinese authorities do not want one person owning the majority control of something like Ant Financial, given its size and importance to the economy. There's no other rational reason for Ma to have voluntarily given up so much ownership in Ant, he's shrinking himself as a target (plausibly he was given no choice; I suspect it was always the plan from the moment Ant was taken from Alibaba). Or put it simply: Ant may end up being worth several hundred billion dollars. Imagine Jack Ma owning 2/3 of something worth $400 billion. Now picture the target on his back, that would go along with such power and control over the Chinese economy. It'd be Jack Ma vs Xi, and Jack Ma would lose; a very dangerous game to play if you're a simple civilian. Better to stay smaller and get to continue doing what you want to do (operate Alibaba and Ant), by giving up some power, ownership, and not being in any way perceived as a meaningful threat to the authorities and their absolute control.
- baybal2 8y ago
  >JP Morgan is at $94 billion By the way, their C-Suite has just been to China to attend a humiliating "Handshaking Ceremony" with some "serious official"
- baybal2 8y ago
  >Or put it simply: Ant may end up being worth several hundred billion dollars. Imagine Jack Ma owning 2/3 of something worth $400 billion. Now picture the target on his back, that would go along with such power and control over the Chinese economy. It'd be Jack Ma vs Xi, and Jack Ma would lose; a very dangerous game to play if you're a simple civilian. Better to stay smaller and get to continue doing what you want to do (operate Alibaba and Ant), by giving up some power, ownership, and not being in any way perceived as a meaningful threat to the authorities and their absolute control. For a Westerner, you seem to be rather perceptive of such things. The wording for "instant billionaires" among CCP members is "the new class." It doesn't take long to guess that they freaking hate and loath anybody passing as a successful person and Jack Ma is the prime example of one. Just how full of bile they are.

by skohan 8y ago

Why would a company with such massive revenue need to bring in so much external capital? Wouldn't the current stakeholders be better off keeping more of the pie?

adventured 8y ago

Keep in mind $9 billion in sales is not quite massive revenue in the pool that Ant is now swimming. Their financial footing is not nearly so large as their scale of processing, they've only begun generating meaningful profit in the last year or two. Google is at $110 billion in sales, JP Morgan is at $94 billion, those are massive. The dilution of current stakeholders is intentional. I believe it was required by Chinese authorities (my speculation). I've been following Ant / Alipay with curiosity ever since Jack Ma stole it from Softbank and Yahoo (along with the rest of Alibaba shareholders). There have been a lot of bizarre things done with the company over time. Jack Ma for example gave himself the large majority share of ownership in the spun off entity, and then proceeded to voluntarily debase his ownership dramatically with no compensation. And now, having screwed Alibaba over with the Ant Financial spin out, Alibaba was recently forced by Jack Ma to buy a chunk of Ant again (33% of it). My guess on some of these choices, is that it's about nationalism (taking Ant away from foreign owners of Alibaba) and the requirement by Chinese authorities that Jack Ma not have too much power (and that Ant's ownership not be so concentrated in general). If he had held onto the stolen position in Ant Financial + his stake in Alibaba, he'd be closing in on the world's richest person title (~$100b in Ant, ~$30b in Alibaba + cash). That's a spotlight you do not want right now if you're under Xi. I'm certain the Chinese authorities do not want one person owning the majority control of something like Ant Financial, given its size and importance to the economy. There's no other rational reason for Ma to have voluntarily given up so much ownership in Ant, he's shrinking himself as a target (plausibly he was given no choice; I suspect it was always the plan from the moment Ant was taken from Alibaba). Or put it simply: Ant may end up being worth several hundred billion dollars. Imagine Jack Ma owning 2/3 of something worth $400 billion. Now picture the target on his back, that would go along with such power and control over the Chinese economy. It'd be Jack Ma vs Xi, and Jack Ma would lose; a very dangerous game to play if you're a simple civilian. Better to stay smaller and get to continue doing what you want to do (operate Alibaba and Ant), by giving up some power, ownership, and not being in any way perceived as a meaningful threat to the authorities and their absolute control.

baybal2 8y ago
>JP Morgan is at $94 billion By the way, their C-Suite has just been to China to attend a humiliating "Handshaking Ceremony" with some "serious official"
baybal2 8y ago
>Or put it simply: Ant may end up being worth several hundred billion dollars. Imagine Jack Ma owning 2/3 of something worth $400 billion. Now picture the target on his back, that would go along with such power and control over the Chinese economy. It'd be Jack Ma vs Xi, and Jack Ma would lose; a very dangerous game to play if you're a simple civilian. Better to stay smaller and get to continue doing what you want to do (operate Alibaba and Ant), by giving up some power, ownership, and not being in any way perceived as a meaningful threat to the authorities and their absolute control. For a Westerner, you seem to be rather perceptive of such things. The wording for "instant billionaires" among CCP members is "the new class." It doesn't take long to guess that they freaking hate and loath anybody passing as a successful person and Jack Ma is the prime example of one. Just how full of bile they are.