Ma makes most of pre-IPO freedom

Source:caixin.com Published: 2014-4-16 21:33:02

Within a month of e-commerce giant Alibaba Group saying on March 16 it would launch an IPO in the US, founder Jack Ma Yun made two big moves. First, he acquired Hengsheng Group for 3.3 billion yuan ($530 million), becoming the largest shareholder of Hundsun Technologies Inc, a supplier of financial software and subsidiary of Hengsheng Group. Then on April 8, Ma said he would buy a 20 percent stake in Wasu Media Holding Co Ltd for 6.5 billion yuan. Both investments were made by companies Ma controls.

Is he making the most of Alibaba's remaining freedom to do the things that would not be so easy with the US Securities and Exchange Commission (SEC) watching?

Theoretically, the SEC is very relaxed about what public companies do as long as they disclose information completely and clearly. Investors are left to deal with the consequences of their informed decisions.

If a transaction at a public company gives related persons any significant material interest directly or indirectly, then the company must disclose the transaction to the SEC.

If Alibaba had already been listed, either on the NASDAQ or the New York exchange, would Ma have been able to make the deals? Yes, but at a high cost.

The author is Zhang Jinshu, a Caixin columnist.



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