[Asia Economy Reporter Cho Hyun-ui] Alibaba Group of China has relinquished management rights of Xiaopeng, known as the 'Tesla of China.'
According to local media Caixin on the 24th, the Hong Kong Stock Exchange announced that the electric vehicle startup Xiaopeng (Xpeng) passed the listing review the day before and released the initial public offering (IPO) prospectus.
While the specific timing and scale of the listing have not been announced, market attention focused on Xiaopeng's planned changes in corporate governance.
Xiaopeng's largest and second-largest shareholders are founder Chairman He Xiaoping (21.7%) and Alibaba affiliate Taobao (11.9%), respectively.
Xiaopeng, listed on the New York Stock Exchange, applies a dual-class voting rights structure. The shares are divided into three types: A, B, and C, with one share carrying 1 vote, 10 votes, and 5 votes respectively.
Currently, Chairman He Xiaoping holds B shares, and the second-largest shareholder Taobao holds C shares, but after the additional listing in Hong Kong, Taobao's C shares will be converted into A shares.
As the company's control weakens to about one-fifth, Taobao will also lose the appointment and dismissal rights for one director of Xiaopeng. In this case, Alibaba will effectively remain only as a financial investor and find it difficult to participate in management.
Xiaopeng explained this as a governance adjustment to comply with Hong Kong listing regulations, but it is pointed out as an unusual decision since Taobao appears to be relinquishing management rights without special compensation.
Alibaba participated as a major investor in Xiaopeng from the company's establishment through Taobao, and Xiaopeng received various support such as funding and technology from Alibaba. Chairman He Xiaoping is also a former Alibaba employee.
Alibaba's unusual relinquishment of dual-class voting rights came amid various pressures on the group after Jack Ma fell out of favor with Chinese authorities last year.
The Chinese government has been establishing order to prevent large internet companies from challenging the authority of the Party and the state, following Jack Ma's public criticism in October last year.
Alibaba has distanced itself from founder Jack Ma. Alibaba Vice Chairman Chai Chongxin, a co-founder, recently said in an interview with the U.S. economic media CNBC, "It is necessary to separate what happened to Jack (Ma) from what happened to our business."
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