24 October 2016
Pony Ma has long realized that one should never become complacent in the technology sector. Photo: HKEJ
Pony Ma has long realized that one should never become complacent in the technology sector. Photo: HKEJ

Why Tencent boss Pony Ma donated 100 million shares

In listed companies with strong profits and good corporate governance, the boss is usually trying his or her best to make money for small shareholders.

Over the last decade, this has been particularly true of Pony Ma Huateng of Tencent Holdings Ltd. (00700.HK).

Tencent’s share price has surged more than 20-fold since 2006, and all its shareholders are happy.

However, they became a bit concerned when Ma significantly reduced his stake in Tencent recently.

The firm’s founder announced Monday that he will donate 100 million shares, worth more than US$2 billion, to a new charity fund.

That represents about 12 percent of his total holdings.

In the meantime, Ma sold 25.94 million shares in four straight sessions starting April 12, pocketing a total of HK$4.2 billion (US$541 million).

His stake in the company declined from 9.09 percent early this month to 7.75 percent, which is still worth around HK$118 billion.

Nevertheless, Tencent’s share price remained steady following the news, in a sign that investors don’t expect the donation and share sales to have a significant impact.

Ma started to sell some of his Tencent shares in 2005, two years after the firm went public in Hong Kong.

He has roughly halved his stake from nearly 14 percent.

Tencent’s stock price has been taking off recently on robust earnings growth and remained above HK$160, the price on April 7, late Thursday afternoon.

Despite the limited immediate impact on the share price, small shareholders might worry about the firm’s long-term prospects.

Ma and Alibaba Group Holding Ltd.’s Jack Ma Yun are considered as the most powerful business leaders in China’s internet sector.

But they have very different characteristics.

Jack Ma shows he still has high ambitions for Alibaba as well as its financial unit, Ant Financial Services Group.

By contrast, Pony Ma, an IT engineer in his early career, is far less ambitious. 

He is widely known for his heightened sense of crisis.

Pony Ma once said he was afraid he would fall behind world developments in the internet after just one night’s sleep.

The fear of technological disruption by “change that occurs in one second” has long kept him up at night.

He revealed that Tencent might have gone out of business if he had not made a quick decision, within a few hours back in 2011, to develop WeChat, the firm’s wildly popular instant messaging platform.

“One or two months could have changed everything,” he said.

In that sense, the internet industry is very cruel.

One wrong step or moving just a bit too slowly could destroy a giant company.

Tencent now has a market value of HK$1.5 trillion, which Pony Ma admits is something he never expected.

That’s why he sold a big chunk of his shares at HK$60 back in 2011.

This article appeared in the Hong Kong Economic Journal on April 21.

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist

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