Alibaba opts out of Ant Group stock buyback

The news comes following a regulatory filing recently lodged with the Hong Kong Stock Exchange.

According to the official filing, the decision came as Ant Group remains a crucial strategic partner for Alibaba Group's various ventures. Therefore, Alibaba Group has opted to refrain from selling any shares to Ant Group during the proposed share repurchase. This choice aims to uphold Alibaba Group's current stake in Ant Group and retain its shareholding position. Alibaba reportedly holds 33 % of the equity interest in the company.

The larger context

Prior to this news, in July 2023, Ant Group revealed plans to aid investors convert their shares into cash by allowing them a share buyback of 7.6% of the stock. Big investors in the group, such as Temasek, were purportedly exploring the option in light of Beijing's crackdowns on the country’s tech giants. At the time, the buyback was not seen as favourable, as it valued the company at 70% less than in the pricing of the 2020 IPO.

The initial buyback announcement was made after such a crackdown, at a time when Ant Group and Tencent were affected by the government’s actions. For instance, Alibaba received a USD 984 million fine on behalf of Ant Group, as well as an order to shut down Xianghubao, its health insurance service. The directive to close the e-health provider was issued as Xianghubao was suspected to have broken numerous laws related to investments, money laundering, and insurance, among others.

As previously reported, the buyback was meant to help investors recover money after the fines issued by the government. However, unfortunately for the shareholders who wanted to take advantage of this, the stock was valued at 70% of the level in 2020, when Ant Group almost floated. 

In 2020, the Chinese government derailed the USD 35 billion stock market debut of Ant Group. According to experts, had this gone through, it would have been the world’s largest IPO. At the time, the cancellation was interpreted by many as a form of retaliation against the comments made by the co-founder of the Alibaba Group criticising the government.

The combined USD 1.4 billion fines that Ant Group and Tencent recently received are considered an end to China’s crackdown, as the Beijing authorities reportedly move towards normalised supervision of the web giants. The end of the crackdown was confirmed by a government official.

Moreover, as it appears that the government views the representatives of the company in a favourable light, it is now being speculated that the Ant Group will reattempt an IPO.