Ant Group Announces Share Buyback as China Concludes Crackdown

**Jack Ma-Backed Ant Group Proposes Share Buyback Plan**

Ant Group Co., backed by Jack Ma, is planning to buy back up to 7.6% of its shares in an effort to retain talent and offer investors an opportunity to reduce their stakes amid a regulatory crackdown. The proposed repurchase would value Ant Group at approximately 567.1 billion yuan ($78.5 billion), significantly lower than its 2020 market capitalization of $280 billion for the scrapped initial public offering (IPO). This move comes as Chinese regulators conclude a two-year crackdown on the country’s technology giants. Ant has undergone an overhaul mandated by Beijing, impacting its profitability and growth.

**Investors Provided the Option to Sell Equity**

Under the buyback plan, each investor has the option to sell up to 7.6% of their equity instead of completely cashing out. This allows Ant to focus on building its business while also addressing investor concerns and attracting new talent. The repurchased stock will be transferred to the company’s staff incentive plan. Shareholders, including overseas minority shareholders, may take this opportunity to reduce their stakes as Ant’s profit growth has significantly slowed down.

**Major US Backers in Ant Group’s Funding Round**

Key investors in Ant Group’s funding round include Silver Lake Management LLC, Warburg Pincus LLC, Carlyle Group Inc., Singapore’s GIC Pte, Khazanah Nasional Berhad, Canada Pension Plan Investment Board, and Temasek Holdings Pte.

**Repurchase Plans and Commitment from Limited Partners**

To enhance the company’s capital strength, Ant intends to transfer the repurchased stock to the staff incentive plan. The individual limited partners, consisting mostly of Ant executives, have voluntarily decided not to sell their shares back to Ant due to their long-term commitment to the company. These limited partners have also committed to retaining the two dividends in 2022.

**Removal of Regulatory Overhang**

Chinese financial regulators, led by the central bank, fined Ant and its affiliates a total of 7.12 billion yuan, concluding a two-year probe into the company. Ant affiliate Alibaba Group Holding Ltd. and Tencent Holdings Ltd. soared in New York trading following the news. By relaxing curbs on Ant, regulators would signal their support for the industry and potentially revive the company’s IPO plans.

**Ant’s Overhaul and Jack Ma’s Return**

Ant co-founder Jack Ma returned to China in March after an extended period of traveling overseas. The government convinced Ma to come back to showcase their support for private entrepreneurs. Ma had previously ceded control of Ant in January, holding about 6.2% of voting rights. The Communist Party chief of Hangzhou city praised Ant for abiding by the party’s leadership, emphasizing cooperation between the fintech company and local government departments.

**Regulatory Changes and Ant’s Future**

Chinese regulators abruptly halted Ant’s IPO over two years ago, leading to the implementation of new rules on the company. These rules included folding all financial units into a holding company and opening up the payments app to competitors. Ant is also developing large-language model technology to compete in the field of artificial intelligence. The company significantly increased its spending on research and development in this area last year.

By addressing investor concerns, attracting talent, and navigating regulatory changes, Ant Group aims to rebuild its business operations and potentially resume its IPO plans in the future. This proposal to repurchase shares demonstrates the company’s commitment to adapting to the evolving regulatory landscape while maintaining its financial strength and growth potential.

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