Jack Ma-Backed Ant Group To Buy Back Shares At 70% Lower Valuation Than At IPO

Billionaire Jack Ma-backed Ant Group Co. is planning to buy back as much as 7.6% of shares to retain skilled individuals and offer an exit to investors who have been impacted by the company's regulatory obstacles.

According to a report by Bloomberg on Friday, Ant Group publicly declared its plan to repurchase its shares, which would lead to an estimated valuation of around $78.5 billion. The valuation reflects a substantial decline of nearly 70% compared to the company's market capitalization of $280 billion during its IPO, which was ultimately abandoned in late 2020. 

The shares that are repurchased will be utilized for Ant's staff incentive program, aimed at attracting top-notch talent.

According to a company statement, the individual limited partners of two entities that form the majority of Ant's shareholders — mostly comprised of Ant executives — have voluntarily decided not to sell shares back to Ant out of the long-term commitment to the company. 

Chinese regulators are wrapping up a two-year crackdown on the country's once-freewheeling technology giants after slapping more than $1 billion of fines on Ant and Tencent Holdings Ltd. TCEHY on Friday, Bloomberg reported. 

See Also: Once Touted Biggest IPO Of All Time, Alibaba’s Fintech Affiliate Ant Financial Suffers 63% Profit Decline

Ant Group completed the restructuring process mandated by Beijing, adversely affecting profitability and hindering growth for a platform that encompassed sectors such as lending, insurance and asset management.

The buyback represents a "good opportunity for investors to get some money back as Ant's profit growth has slowed down significantly," Francis Chan, an analyst at Bloomberg Intelligence, said, adding that minority overseas shareholders could take this opportunity to reduce their stakes.

Prominent U.S. investors, such as Silver Lake Management LLC, Warburg Pincus LLC and Carlyle Group Inc. CG, played a major role in the funding round. Notable contributors also included GIC Pte, Khazanah Nasional Berhad, Canada Pension Plan Investment Board and Temasek Holdings Pte.

In early March, Jack Ma returned to China after an extended period of traveling abroad. The government encouraged his return to the mainland to demonstrate their support for private entrepreneurs.

Over two years ago, Chinese regulators suddenly halted Ant Group's IPO, causing significant disruptions in global capital markets, the outlet reported. Since then, the fintech giant, which operates in various sectors, including consumer lending, wealth management and online payments, has been subjected to new regulations.

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