As SoftBank Group continues to reduce its stake in Alibaba through forward contracts, in the early years of 2024, it was discovered that Jack Ma has replaced SoftBank as Alibaba's largest shareholder.
Having invested in Alibaba for over a thousand times, Sun Zhengyi gained the most well-known "investment godfather" identity and also created a legendary investment partner in the history of technology, Jack Ma and Sun Zhengyi. At its peak, SoftBank, the largest shareholder, held approximately 34% of Alibaba's shares, valued at $58 billion. Afterwards, SoftBank embarked on a path of reducing its holdings in Alibaba.
How did Jack Ma and Sun Zhengyi gradually distance themselves behind SoftBank bidding farewell to Alibaba's largest shareholder?
The intersection of two people occurred at the beginning of the century. In 1999, Ma Yun gathered in Hangzhou Lakeside Garden to hold the "Eighteen Arhat" Entrepreneurship Mobilization Meeting, which officially opened the starting point of Ali's business empire. At this conference, Alibaba's vision and mission have taken shape, aiming to become the world's largest e-commerce platform founded by Chinese people. To outsiders, this is undoubtedly a fantasy. Before meeting Sun Zhengyi in 2000, Jack Ma was rejected at least 40 times in Silicon Valley.
Recalling his meeting with Sun Zhengyi in the future, Jack Ma once joked that the two fell in love at first sight. In just 6 minutes, he won the favor of Sun Zhengyi, "He is probably the most courageous investor in the world. There are not many people in this world who have the courage he has."
From Sun Zhengyi's perspective, the entrepreneurs from China in front of him neither talk about business models nor ask for money, only talk about their own vision. Sun Zhengyi said, "I can feel his determination and passion, and after 5 minutes, I said I understand. You want to change the world." Their style began to emerge from here.
Four years later, SoftBank decided to invest another $40 million and hold a 28% stake in Alibaba.
In October 2005, Sun Zhengyi became a director of Alibaba. In May 2007, Jack Ma was also invited to become the 10th director of SoftBank Group, participating in the decision-making of major events between both parties. Before both sides officially stepped down from their board seats in 2020, Jack Ma served on the SoftBank board for 13 years, while Sun Zhengyi served on the Alibaba board for 15 years.
For over a decade, the path of cooperation between the two sides has not always been smooth sailing, and Jack Ma once had an opinion on Sun Zhengyi's unwavering commitment. For example, in 2011, Ma Yun decided to nationalize Alipay, which had experienced several rounds of negotiations with the shareholder Softbank Yahoo. It was not until after many negotiations to redistribute profits that he was able to settle.
Overall, Sun Zhengyi has hardly had direct involvement in Alibaba's business management, and even publicly supported the partnership system designed by Alibaba to protect management rights.
With the growth of Alibaba's business empire and the huge returns on investment, Sun Zhengyi's decisive move made it one of the most successful investments in the history of global popularity. In 2014, when Alibaba was listed on the New York Stock Exchange, SoftBank Group's stake in Alibaba was valued at $58 billion, a 2900 fold increase.
As of December 31, 2019, almost half of SoftBank Group's pre tax profits came from Alibaba, with a quarter coming from the revaluation of Alibaba's listing value in Hong Kong in November 2019- Sun Zhengyi made a fortune.
Sun Zhengyi has repeatedly stated to the public that he will hold equity in Alibaba for as long as possible. But what he didn't expect was that SoftBank's crisis was quietly approaching.
In the spring of 2020, SoftBank suddenly announced that it would sell $41 billion worth of assets, including $14 billion worth of Alibaba stocks. The previous year, SoftBank's Vision Fund recorded an investment loss of $17 billion due to WeWork's disastrous defeat, Uber and Slack's bloody IPO, and OneWeb's bankruptcy. Sun Zhengyi's bold and decisive actions benefited him from Alibaba and also caused him to lose a lot of money.
Amidst a wave of questioning, Sun Zhengyi began raising funds to repurchase stocks and reduce debt, in order to resolve the situation and alleviate investor concerns. Although SoftBank also reduced its holdings in Alibaba in 2016 and gained Jack Ma's understanding, "I am proud that investors can cash out to solve their financial needs. My relationship with Sun Zhengyi has not changed, and we talked on the phone almost every two to three days."
But the scale of holdings reduction in 2020 is no longer on the same level as four years ago. As of the end of June 2022, SoftBank has secured financing from Alibaba's stock worth 5.36 trillion yen, equivalent to 54% of Alibaba's shares held by Sun Zhengyi. Afterwards, Alibaba and its partners continued to repurchase stocks to ensure the management's shareholding ratio.
It can be said that the "small boat of friendship" between Jack Ma and Sun Zhengyi has not completely overturned, but has undergone natural changes as their respective career paths develop.
At the end of 2019, Jack Ma expressed his desire to fully retire from the front line of business and focus on his desired career. In May 2020, he officially submitted his resignation report to SoftBank Group. As the influence of Alibaba and Jack Ma continues to increase, the relationship between Sun Zhengyi and Jack Ma has also undergone a transformation from investors and beneficiaries to equal partners.
In a conversation at the University of Tokyo in December 2019, the host asked Jack Ma if Sun Zhengyi's investment 19 years ago had played the role of a "mentor" to some extent. Sun Zhengyi quickly answered and shook his head, denying, "I am not Jack Ma's mentor."
Sun Zhengyi described his relationship with Jack Ma on the scene as follows: "We talk about what we believe, we exchange ideas, we discuss how to change people's lives. Jack Ma said that the two have long been friends and partners, and both believe in the future." Obviously, the two are now in an equal relationship.
One month after Jack Ma submitted his resignation report, on June 25, 2020, Sun Zhengyi announced at the annual shareholder meeting of SoftBank Group that he would withdraw from the board of directors of Alibaba Group from today. After twenty years of mutual achievement, the two completed their mutual retreat, and thus their intersection in business gradually became distant.
Today, according to Morgan Stanley's data, SoftBank Group has reduced its stake in Alibaba through forward contracts, with its shareholding ratio dropping from around 7% in December 2022 to around 2% in March last year, and then to less than 0.5% in May last year.
In fact, there is a significant difference in personality and work style between Jack Ma and Sun Zhengyi. Jack Ma has a distinctive martial arts aura, emphasizing that "at this moment, it's none other than me" and also emphasizing the merits, defenses, and principles in Chinese tactics. And Sun Zhengyi always appears ambitious, willing to take risks, and even acting alone and authoritarian, like a reckless and stubborn teenager.
I don't know how much commercial differences will affect their relationship, but Sun Zhengyi has emphasized to the public that he has a good relationship with Jack Ma and they will be lifelong friends.