Ant Group launches $6 billion buyback after regulatory action ends

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Jack Ma’s Ant Group has launched a share buyback plan, valuing the fintech giant at about 70 percent below its proposed initial public offering price in 2020.

The company offered to buyback up to $6 billion of shares at a valuation of $78.5 billion, a day after Chinese financial regulators fined the company nearly $1 billion to end a years-long investigation.

Chinese financial regulators imposed a fine of Rmb7.1bn ($984mn) on Ant on Friday. His “reform” campaign has allowed rivals and state-owned companies to take over half of Ant’s profitable lending business, while the assets of its flagship money market fund have halved from their peak. The government has also sought control over its vast store of user data.

Ant’s restructuring began in November 2020 after Ma criticized regulators and the country’s state-owned banks in a speech days before the fintech group’s planned listing.

The official response to Ma’s speech fueled Beijing’s campaign to rein in the influence of corporate titans. Ma disappeared from public view for most of the time and went to Japan for some time.

“Most of the outstanding issues for financial platforms have been rectified,” the central bank and securities regulator said in a statement on Friday. He said his focus has now shifted to “normally monitoring” groups such as Ant and Tencent.

Ant was fined for a number of breaches, with its Alipay digital payments unit fined nearly Rmb3bn for clearing, due diligence and consumer protection defaults.

“We will take the terms of the penalty seriously and conscientiously and will continue to enhance our compliance administration,” Ant said in a statement on Friday.

Tencent’s Tenpay was also fined nearly Rmb3bn, according to a statement from the central bank, accusing the payments group of “endangering the prudent operation of the payments industry”.

Earlier this year, Ma gave up control of Ant, which he spun off from Alibaba in 2011. According to two people close to the financial regulator, his retreat helped him and Ant to weather the worst.

The people said an investigation Beijing launched against Ent and officials linked to its listing effort and shareholding structure also ended without finding anything incriminating to Ma.

Meanwhile, since Beijing began its tech crackdown, officials have grown concerned that domestically harassing China’s fintech giants will affect their global operations. “They have done a much better job of expanding abroad than state-owned banks,” said a person close to the financial regulator.

Ma is now making frequent trips to mainland China and giving low-key appearances at Alibaba, where he has returned to help pilot the ecommerce giant. Alibaba shares rose nearly 6 percent in New York trading on Friday.

Ant will be able to resume efforts to be publicly listed sometime next year, but regulators did not clarify the status of its credit scoring venture, which is to be controlled by state-owned conglomerates, nor the financial holding. Licensed to operate as a company.

“Only after these actions are completed can Ant really get back on track for normal business,” said Dong Zimiao, financial regulation expert at Merchants Union Consumer Finance.

Ant said its two controlling shareholders – investment groups consisting mostly of Ant executives – would not sell the buyback. The company said it will allocate the repurchased stock to its employee incentive program.

With additional reporting by Nian Liu in Beijing and Eleanor Olcott in Hong Kong