Jack Ma's Ant Shelves Employee Share Buyback Program Amid Regulatory Uncertainty: Report

Alibaba Group Holding Ltd’s BABA financial services arm Ant Group has shelved its share buyback program for current and soon-to-be-former employees due to ongoing regulatory uncertainty, Bloomberg reported Monday.

What Happened: Employees of the Jack Ma-founded company are stuck with shares that are difficult to value and even Ant itself is unable to determine their price, executives familiar with the matter told Bloomberg.

Bloomberg Intelligence analyst Francis Chan lowered the estimate for Ant’s valuation to less than $108 billion, which is 60% less than the level arrived at during the company’s now scuttled IPO. 

Alibaba shares traded 1.53% lower at press-time in Hong Kong.

Why It Matters: Many of the company’s 16,000 plus staff members were reportedly granted restricted stock options called Share Economic Rights which equal 5.53 shares.

These options made up a major chunk of total compensation for some employees and usually come with a four-year vesting schedule, noted Bloomberg.

The total amount of SERs stood at 114 million at the end of June, as per the company’s planned IPO their value would have been worth RMB  43 billion or $6.7 billion.

See Also: Why China Slashed Jack Ma's Ant IPO Hopes, Experts Explain

Employee morale has sunk at Ant and the company is expecting departures after it pays bonuses in April, according to Bloomberg sources.

Ant’s competitors have seen their share prices rise in the meanwhile with Tencent Holdings TCEHY up 16% in the past four months in Hong Kong trading and Meituan MPNGF up 25%.  

Ant Group Chairman Eric Jing had said the fintech giant would eventually go public and was working on a “short-term liquidity solution” for employees that would be effective April, as per a company memo, the Wall Street Journal reported Monday.

See Also: Ant Group Can Resume IPO Plans Once Problems Solved: Chinese Central Bank

The solution was likely to be a buyback program, people familiar with the matter briefed the Journal.

Price Action: Alibaba shares closed 1.64% higher at $241.69 on Monday and fell 0.27% in the after-hours trading. 

Photo courtesy: World Economic Forum via Wikimedia