Chinese tycoons Jack Ma and Joe Tsai have pledged part of their combined $35bn (£25bn) stake in Alibaba in exchange for large loans from investment banks.
The share pledges, which were made to lenders including UBS, Credit Suisse and Goldman Sachs, were made by offshore companies that control half of the two billionaire’s stake in the ecommerge giant, which totalled 5.8 per cent in December.
The amounts of the share pledges were not disclosed but the pair have repeatedly borrowed against their stock since Alibaba’s US listing in 2014, according to documents seen by the Financial Times.
Share pledges allow banks to accept stock as collateral for loans but the borrower retains ownership of the shares.
Ma and Tsai, who are Alibaba’s two largest shareholders, have used the loans to access vast fortunes tied up in shares.
According to the report, Tsai’s Gulfstream 650ER private jet is mortgaged to Credit Suisse.
The Swiss bank, which oversaw the company’s IPO, also lent to a shell company linked to Ma’s purchase of a mansion in Hong Kong and a new plane the same model as Tsai’s.
Alibaba said Ma did not have any outstanding loans borrowed against its stock while Tsai’s outstanding loans were “easily manageable” with “prudent loan-to-value ratios to provide [a] substantial cushion against triggering a margin call”.
The company added that share pledges were “ordinary financial planning to provide liquidity and diversification without having to sell shares in Alibaba”.