Ant Group’s IPO plan under the spotlight after regulatory fine, share buy-back

In Ant’s latest share buy-back plan, the offered price represented nearly a 75 per cent discount on the estimated US$300 billion valuation from its first IPO attempt in 2020

The US$984.3 million fine imposed on Ant earlier this month was smaller than the US$2.8 billion antitrust penalty slapped on Alibaba in April 2021

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Signage at the Ant Group headquarters in Hangzhou, China, February 20, 2023. Photo: Bloomberg

Ann Caoin ShanghaiandTracy Quin Shanghai

Published: 11:00pm, 10 Jul 2023

The listing plans and revised valuation of Ant Group, the fintech giant founded by billionaire Jack Ma, have come under the spotlight after Beijing ended a two-and-half-year regulatory investigation by fining the company nearly US$1 billion.

While Ant has kept its cards close to its chest about plans to resume its listing, which was called off at the last minute after Ma made a controversial speech criticising China’s financial regulation in late 2020, Beijing’s pledge to “normalise” management of Ant and other fintech firms has fanned speculation that the obstacles for Ant’s IPO have been lifted.

“Ant might be reconsidering its listing plans after the crackdown ended,” said Bai Wenxi, chief economist at IPG China.

However, even if Ant is back on track to float shares in Hong Kong or Shanghai, its valuation would be significantly lower than October 2020, when the Alibaba Group Holding spin-off was aiming for a US$37 billion IPO, giving it an estimated valuation of US$300 billion.

In the latest share buy-back plan covering up to 7.6 per cent of its total equity, Ant’s offered price represented a nearly 75 per cent discount on the US$300 billion valuation. Alibaba, which owns the South China Morning Post and has a 33 per cent equity stake in Ant, said it was considering whether to take part in the repurchase plan.

Meanwhile, Ant’s fintech business, along with rivals like Tencent Holding’s fintech arm, are under stricter regulatory oversight, making it harder to grow the lucrative credit business and to earn high profit margins. Ant has also drifted further away from Alibaba in terms of data sharing, management and personnel to comply with Beijing’s requirements.