‘Important strategic partner’: Alibaba holds on to its Ant Group stake, declining to partake in fintech giant’s shares buy-back

“Ant Group continues to be an important strategic partner to Alibaba Group’s various businesses,” Alibaba says

The proposed buy-back would have valued the operator of the Alipay payment service at about 567.1 billion yuan, a 70-per cent discount to its pre-IPO value in 2020

2-MIN READ2-MIN

Published: 9:30pm, 23 Jul 2023

Alibaba Group Holding said it would hold on to its stake in Ant Group, declining to partake in a share buy-back plan proposed by the world’s largest fintech and online payments company.

“Ant continues to be an important strategic partner to Alibaba Group’s various businesses,” the parent of this newspaper said in a statement on Sunday to the Hong Kong stock exchange. “Alibaba has decided that it will not sell any shares to Ant under the proposed share repurchase, so as to maintain its shareholding.”

Ant, fined 7.123 billion yuan (US$984.33 million) more than two weeks ago by the People’s Bank of China (PBOC), appears to be turning the chapter on nearly three years of regulatory scrutiny since its US$37 billion stock sale was foiled in November 2020.

Alibaba, with 33 per cent interest in Ant Group, is “showing its confidence in Ant and sending a message to encourage other investors to take the long-term view,” said Louis Tse Ming-kwong, managing director of Wealthy Securities in Hong Kong. “Ant will seek to list again, while China’s government has shown support to privately owned enterprises, which encourage shareholders to put their weight behind [it].”

A shareholders meeting on Sunday approved Ant Group’s plan to buy back up to 7.6 per cent of its equity interest from investors. Repurchased shares would be transferred into Ant’s employee incentive plans, according to an exchange filing on July 9.

The proposed buy-back – which did not specify a price – would have valued the operator of the Alipay cashless payment service at about 567.1 billion yuan, according to a July 9 filing by Hangzhou-based Alibaba.