The fintech behemoth Ant Group unveiled a share repurchase plan on Saturday, valuing the company at $78.54 billion, as management looks to replenish its pool of employee incentives and let certain investors cash out following a regulatory makeover of the company.
Prior to the company’s IPO being cancelled later that year, it signified a significant decline from the $300 billion-plus value assigned to it in mid-2020.
An offer to repurchase up to 7.6% of its stock interest at a price that corresponds to a group valuation of roughly 567.1 billion yuan was made by Ant to all of its shareholders, the company claimed.
“In order to retain and recruit top talent, the repurchased shares will be deposited into Ant Group’s employee incentive plans. Investors in the company will also have a liquidity alternative through the repurchase proposal, it added.
The business also stated that two of Ant’s largest shareholders, Hangzhou Junhan Equity Investment Partnership and Hangzhou Junao Equity Investment Partnership, have freely chosen not to take part in the repurchase.
Hanyang Wang, an analyst at 86Research, said that because the buyback price is greater than many institutions’ internal values, she believes that some institutions will decide to take part.
Nevertheless, starting a stock repurchase also subtly alerts investors that there is little chance of a quick IPO comeback.
China’s central bank announced on Friday that financial regulators would fine Ant and its affiliates a total of 7.12 billion yuan. This action put an end to a protracted regulatory overhaul of the fintech company and was a crucial first step in bringing the country’s internet sector under control.
It is believed that Ant’s punishment will make it easier for the fintech company to obtain a financial holding company licence, concentrate on accelerating expansion, and eventually resurrect its hopes for a stock market offering.
Jack Ma, a multibillionaire, founded Ant, which runs companies that include consumer loans, insurance product distribution, and China’s most popular mobile payment app, Alipay.
In April 2021, Ant began a massive business restructuring that involved reorganising as a financial holding company, putting it under the same regulations and capital requirements as banks.
Ant’s fine represents a significant step towards the end of China’s brutal crackdown on private enterprises, which began with the cancellation of Ant’s IPO in late 2020 and resulted in the market value of multiple companies being reduced by billions.
Additionally, two Chinese banks, an insurance company, and Tencent Holdings’ online payment service Tenpay were also hit with fines by Chinese authorities on Friday.
According to the People’s Bank of China (PBOC), the majority of the significant issues affecting platform companies’ financial enterprises have been resolved, and authorities will now turn their attention away from particular firms and towards the broader regulation of the sector.
