Alibaba co-founders Jack Ma and Joseph Tsai are reportedly pledging their shares in the Chinese e-commerce giant in exchange for significant loans from global banks.
The two tech billionaires have pledged their shares to banks including UBS, Credit Suisse, and Goldman Sachs, according to a «Financial Times» report citing company documents.
The shares pledged were made by offshore companies controlling more than half of Ma and Tsai’s stake in Alibaba – 5.8 percent as of December valued at $35 billion – through the documents did not disclose the number of shares pledged.
The share-backed loans mark a stark contrast with Jack Ma’s positioning just nine months ago when he was originally due to be a beneficiary of Ant’s listing before Beijing stepped on the brakes for what would have been the world’s largest IPO in history.
Since then, regulators have ordered heavy restructuring for Ant while Alibaba saw its share prices drop one-third alongside a $2.8 billion fine in April over monopolistic practices.
Ma and his affiliates currently do not have any loans outstanding collateralized by the company’s shares. Tsai’s outstanding share-backed loans were easily manageable with prudent loan-to-value ratios to provide a substantial cushion against a potential margin call.