Alibaba Group founder Jack Ma revealed details of its internal partnership structure on Tuesday, ratcheting up pressure on Hong Kong regulators as they grapple with the ecommerce giant’s initial public offering plans. The two sides are debating the ability for Alibaba to list in Hong Kong and, at the same time, allow its “partners” — a group of founders and senior employees — to keep control over the makeup of its board.
Hanging in the balance for Hong Kong is the highly anticipated offering, which could be the largest technology IPO since Facebook’s $16-billion listing last year.
Ma sent a company-wide email on Tuesday, formally announcing for the first time details of the partnership model and explaining the importance of maintaining the system. The contents of the email were confirmed by an Alibaba spokesman. Alibaba wants to keep key decisions with its partners by giving the group made up of 28 senior employees the right to nominate a majority of its board.
Regulators in Hong Kong, however, are concerned the structure would give too much voting power to Alibaba’s founders and senior managers and not enough to outside investors.
The partnership was designed to “safeguard the culture of innovation” and protect the company from the “temptation to seek short-term gains”, Ma said. The partnership is not aimed “to exert greater control over the company”, he wrote.
Ma’s comments add pressure on the Hong Kong regulators to allow Alibaba Holding to list with its partnership scheme in place. The company has been lobbying regulators to allow the company to keep the partnership system intact after its planned IPO, but the company’s efforts have so far met with resistance, according to Hong Kong media reports.