Colin Zheng Huang, founder of the high-flying Chinese online shopping company Pinduoduo, is stepping down as chief executive and has reduced his personal stake in the company by roughly $14.3bn.
“I will take a step back from day-to-day management of the company’s operations and work with the relevant teams and the board on our long-term strategy and corporate structure,” Mr Huang said in a statement.
In a filing to the US Securities and Exchange Commission, Pinduoduo disclosed that the number of shares held by Mr Huang, either directly or through offshore trusts that he controls, had fallen by 665m since March 31, equivalent to 13.9 per cent of the total shares.
In a letter to employees, Mr Huang said the “founding team” of Pinduoduo had contributed 113.5m shares to the “Starry Night” charitable trust. At the time of the company’s initial public offering in 2018, Pinduoduo said 2.4 per cent of the company’s shares would be put in a charity to support employees with emergency needs and promote corporate social responsibility.
Mr Huang said another 371m of his shares would be transferred to the Pinduoduo Partnership, which he said would advance long-term scientific research and use a portion to incentivise the future management team. As of April, the managing committee of the partnership was made up of only Mr Huang and new chief executive Chen Lei.
The rest of the shares representing the reduction in Mr Huang’s stake, roughly 180m, worth some $3.8bn, was not mentioned.
After the reduction, Mr Huang still owns 29.4 per cent of the company, and has shares that control 80.7 per cent of Pinduoduo’s voting rights, down from 88.4 per cent. Pinduoduo did not immediately respond to a request for comment.
The company’s share price has more than doubled since March but the company has faced concerns over its large subsidies to shoppers and the concentration of power around Mr Huang, who until Wednesday served as chief executive, chairman and effectively its chief financial officer.
Pinduoduo appointed Chen Lei, its chief technology officer, as chief executive. Mr Chen was a classmate of Mr Huang’s at the University of Wisconsin-Madison and worked alongside him on several ventures including gaming studio Xinyoudi.
“Chen Lei, our new CEO, is a key member of our founding team at PDD and has been heavily involved in the operational decisions at PDD,” said Mr Huang.
Mr Huang founded Pinduoduo in 2015 and will remain its chairman and in full control with a majority of voting power.
Pinduoduo’s market value has risen to above $100bn in recent weeks as investors bet on its rapid growth.
The company also said it had appointed a new vice-president of finance, Ma Jing, who comes to the company from luxury conglomerate Chanel’s China business, where he held finance-related roles.
“For our senior finance role, the most important things we look for are integrity and skillsets,” said Mr Huang. The company did not immediately say if Mr Ma would begin to certify its financial results, nor explain why he did not receive the title of chief financial officer.