Overview

Ant Group on Saturday announced a share repurchase plan that values the fintech giant at 567.1 billion yuan ($78.54 billion). The move aims to replenish its staff incentive pool and allow some investors to exit after the company faced regulatory fines.

Downfall in Value

Ant Group’s valuation has sharply fallen from over $300 billion in mid-2020 before its planned IPO was canceled.

Repurchase Plan

The company has proposed to repurchase up to 7.6% of its equity interest from shareholders at a price that represents a group valuation of approximately 567.1 billion yuan. The repurchased shares will be transferred into Ant Group’s employee incentive plans to attract talent and provide a liquidity option for investors.

Shareholder Decision

Ant’s major shareholders, Hangzhou Junhan Equity Investment Partnership and Hangzhou Junao Equity Investment Partnership, have voluntarily decided not to participate in the repurchase.

Regulatory Fine

China’s central bank has fined Ant and its subsidiaries a total of 7.12 billion yuan, marking the end of a long regulatory overhaul of the company and a crucial step towards concluding the crackdown on the country’s internet sector.

Business Restructuring

In April 2021, Ant began a sweeping business restructuring, transforming itself into a financial holding company to comply with regulations and capital requirements similar to banks.

Positive Implications

Ant’s penalty clears the path for the company to secure a financial holding company license, focus on growth, and revive its plans for a stock market listing.

Broader Impact

The fine on Ant signifies progress in China’s crackdown on private enterprises, which started with the cancellation of Ant’s IPO and led to significant market value losses for several companies. Chinese authorities also announced fines against two banks, an insurer, and Tencent Holdings’ online payment platform Tenpay.

Regulatory Outlook

The People’s Bank of China (PBOC) stated that most of the issues with platform companies’ financial businesses have been resolved. Regulators will now shift from focusing on specific firms to the overall regulation of the industry.