Ant Group, China’s largest e-commerce company Alibaba’s Fin-Tech, has begun to buy back its own shares.
Analysts say the move may be aimed at re-promoting the listing amid an analysis that regulations on Ant Group have ended due to the authorities’ fine of 7 billion yuan the previous day.
Ant Group said on the 8th, “We will purchase some of the existing shareholders’ shares with our own funds,” adding, “Considering market liquidity, the purchased stocks will not exceed 7.6% of the total stocks.”
Ant Group added, “Purchased stocks will be managed by entering an ‘incentive pool’ used to recruit talented people.”
“Hangzhou Junhan, a major shareholder, has decided not to respond to the stock purchase,” he said. “It is a promise and an expression of confidence for the long-term development of Ant Group.”
Stock purchases will follow market principles, he added. “We will ask prominent financial experts at home and abroad to set an appropriate purchase price.”
Ant Group’s estimated valuation of the purchased stake is 567.1 billion yuan, a 40% discount from the 2018 evaluation.
In this regard, Ant Group explained, “Considering the situation in which Chinese Internet companies’ valuation has fallen, it is a value that meets market expectations.”
On the previous day, Chinese financial authorities, including the People’s Bank of China, fined Ent Group and its affiliates 7.123 billion yuan for violating the People’s Bank of China Act and the Anti-Money Laundering Act.
It is the second-largest fine imposed on Chinese Internet companies after 8.026 billion yuan punitively imposed on Didi Chuxing, a car-sharing company that pushed ahead with listing in the U.S.
Ent Group immediately said, “We will be punished sweetly and firmly,” adding, “We will maintain our initial commitment, strengthen research and development (R&D), and strive to provide better services to the real economy.”
The imposition of the large fine has put an end to the authorities’ hitting of Ent Group, and observers say that the re-promotion of Ent Group listing will begin in earnest.
Some analysts say that Ant Group’s buy back of its own shares is also a measure to secure excellent manpower and enhance the value of the company before re-promoting the company’s disclosure.