(CTN News) – Alibaba will not participate in a planned share buyback of its fintech arm, Ant Group, according to a regulatory filing made to the Hong Kong Stock Exchange on Sunday.
In light of the fact that Ant Group remains an important strategic partner for Alibaba Group’s various businesses, Alibaba Group has decided that it will not sell any shares to Ant Group under the proposed share repurchase, in order to maintain its stake in Ant Group, according to the filing [PDF].
In its 12-year-old spin-off, Alibaba holds a 33 percent stake in the Chinese web giant.
The fintech operation announced in early July that it would take part in a buyback program that would allow investors to sell 7.6 percent of the company’s shares.
There are reports that big investors, such as Singapore’s sovereign wealth fund, Temasek, which has over one-fifth of its portfolio in Chinese companies, are exploring the possibility of investing here as concerns linger over Beijing’s crackdowns on the internet and the general state of the economy.
Several weeks ago, Ant Group and Tencent were the subject of one such crackdown – this time, targeting the two giants of the web.
As a result of Alibaba’s partnership with Ant Group,
Alibaba was fined $984 million and ordered to shut down Xianghubao, its health insurance service.
It was alleged that the e-health provider had violated a number of laws relating to insurance, investments, money laundering, and many other things.
With Ant Group’s buyback, investors were supposed to recoup cash as a result of the fines issued, but despite the buyback, Ant Group’s stock price was only 70 percent of its level when it almost floated in 2020, which was unfortunate for shareholders.
A world record was expected to be set with that IPO. Previously, it had been kiboshed by Beijing. It is widely believed that the cancellation was a retaliation for comments made by founder Jack Ma criticizing the government.
Nevertheless, many viewed the fine from Beijing as a conclusion to the regulatory saga. Last January, Chinese authorities announced that their 14-platform business rectification campaign had been “basically completed.”
Interestingly, Jack Ma reappeared last March after a longer-than-usual absence.
There may be nothing left to do but speculate on whether Ant Group will resubmit for an IPO now that all appears to be in good order with Beijing.
A number of changes have occurred since 2020, including Alibaba’s decision to split into six companies, as well as a change in its executive leadership, including its CEO. Therefore, the group is operating in a very different environment than it did three years ago.