Ant Group Announces Share Repurchase Plan, Valuing the Fintech Giant at $78.54 Billion

In a move to replenish its staff incentive pool and allow some investors to exit following a regulatory overhaul, Ant Group revealed a share repurchase plan that values the company at 567.1 billion yuan ($78.54 billion). This marks a significant decline from the more than $300 billion valuation attributed to the company in mid-2020 before its planned IPO was suspended.

Ant Group proposed repurchasing up to 7.6% of its equity interest, with the repurchased shares intended for transfer into the company’s employee incentive plans to attract talent. Additionally, the buyback proposal provides a liquidity option for the company’s investors. Notably, Ant’s major shareholders, Hangzhou Junhan Equity Investment Partnership and Hangzhou Junao Equity Investment Partnership, have voluntarily decided not to participate in the repurchase.

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The buyback price exceeds valuations made by many institutions, indicating a potential participation by some investors in the repurchase, according to analysts. However, the stock buyback announcement also suggests that a short-term recovery for Ant’s IPO is unlikely.

Recently, China’s central bank announced fines totaling 7.12 billion yuan for Ant and its subsidiaries, signifying the conclusion of a years-long regulatory overhaul. This development paves the way for Ant to secure a financial holding company license, focus on bolstering growth, and revive its plans for a stock market listing. Ant, founded by billionaire Jack Ma, operates Alipay, China’s widely used mobile payment app, as well as various consumer lending and insurance distribution businesses.

The fine imposed on Ant, along with fines against other financial institutions, represents a key step in China’s regulatory crackdown on private enterprises and the broader technology sector. The scrutiny began with the suspension of Ant’s IPO in late 2020, leading to substantial market value losses for several companies. Chinese authorities have stated that most of the significant issues related to financial businesses of platform companies have been rectified, signaling a shift towards comprehensive industry regulation.

It is worth noting that Ant Group has a stake in Telenor Microfinance Bank in Pakistan, which operates the popular mobile financial service, Easypaisa. The latest developments surrounding Ant Group’s regulatory situation could have potential implications for its ventures in Pakistan and the operations of Easypaisa.