Ant Group, the fintech giant founded by billionaire Jack Ma, has announced a share repurchase plan aimed at replenishing its staff incentive pool and providing an exit option for some investors. The plan values the company at 567.1 billion yuan ($78.54 billion), representing a significant decrease from the over $300 billion valuation it held in mid-2020 before its planned IPO was halted.
Ant Group intends to repurchase up to 7.6% of its equity interest from all shareholders at a price that corresponds to the group’s valuation of approximately 567.1 billion yuan. The repurchased shares will be allocated to the company’s employee incentive plans, with the goal of attracting and retaining talented individuals. Additionally, the repurchase proposal will offer liquidity options for Ant Group’s investors.
Notably, Ant’s major shareholders, Hangzhou Junhan Equity Investment Partnership and Hangzhou Junao Equity Investment Partnership, have voluntarily chosen not to participate in the repurchase, according to the company’s statement.
The share repurchase plan follows a move by China’s central bank to fine Ant Group and its subsidiaries a total of 7.12 billion yuan. This development signifies the conclusion of a lengthy regulatory overhaul targeting fintech companies and serves as a crucial step in the broader crackdown on the country’s internet sector.
Ant Group, known for its popular mobile payment app Alipay and its presence in consumer lending and insurance product distribution, initiated a significant business restructuring in April 2021. The restructuring included transforming the company into a financial holding entity subject to regulations and capital requirements akin to those imposed on banks.
The penalty imposed on Ant Group by regulators sets the stage for the fintech firm to secure a financial holding company license, enabling it to focus on bolstering growth and potentially revive its plans for a stock market listing.
From a broader perspective, Ant Group’s fine signifies a pivotal moment in China’s ongoing crackdown on private enterprises within the technology sector. The crackdown commenced with the cancellation of Ant Group’s IPO in late 2020, which subsequently led to substantial losses in the market value of numerous companies.
In a related development, Chinese authorities announced fines against two Chinese banks, an insurer, and Tencent Holdings’ online payment platform Tenpay on the same day.
The People’s Bank of China (PBOC) stated that most of the significant issues surrounding the financial businesses of platform companies have been addressed, signalling a shift in regulatory focus from individual firms to the industry as a whole.
The regulatory actions taken against Ant Group and other entities reflect China’s efforts to regulate its internet sector and ensure financial stability. While these measures have had an impact on valuations and have been a source of turbulence for private enterprises, they are part of a broader drive to establish a more regulated and sustainable landscape in the long term.