Alibaba opts out of Ant Group stock buyback

Sign of confidence or … something bigger?

Alibaba will not participate in a planned share buyback of its fintech arm, Ant Group, according to a regulatory filing lodged with the Hong Kong Stock Exchange on Sunday.

"Given that Ant Group continues to be an important strategic partner to Alibaba Group’s various businesses, Alibaba Group has decided that it will not sell any shares to Ant Group under the proposed share repurchase, so as to maintain its shareholding in Ant Group," read [PDF] the filing.

The Chinese web giant holds a 33 percent stake in its 12-year-old spin-off.

The fintech operation announced in early July it would participate in a buyback that allows each investor to sell 7.6 percent of its stock. Big investors, including Singapore's sovereign wealth fund, Temasek, which has a portfolio over one-fifth Chinese-based, have been reported to be exploring the option as concerns linger over Beijing's internet crackdowns and the overall business environment.

The buyback announcement came weeks after one such crackdown – this time affecting web giants Ant Group and Tencent. Alibaba received a $984 million fine on behalf of Ant Group and an order to shut down its health insurance service, Xianghubao. The e-health provider was said to have broken multiple laws concerning insurance, investments, money laundering and more.

The buyback itself was supposed to help investors recoup cash following the issued fines, but – unfortunately for shareholders wanting out – the stock was valued at 70 percent of its level in 2020 when Ant Group almost floated.

That IPO was set to be the world's highest-valued IPO ever. That is, before it was kiboshed by Beijing. The cancellation was seen by many as retaliation for comments made by founder Jack Ma criticizing the government.

But the fine from Beijing was also viewed by many as a finale to the regulatory kerfuffle. Chinese authorities said last January they had "basically completed" their 14-platform business rectification campaign.

Jack Ma even reappeared last March after a curious absence that lasted more than one year.

Now that all seem to be in good graces with Beijing, there may be nothing left to do than speculate on whether Ant Group will reattempt an IPO.

Of course, major changes have occurred since 2020 – including Alibaba's decision to split into six companies, and a reshuffling of its executive leadership including its CEO. So the group is in a very different environment than it experienced three years ago. ®

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