Ant Group put forward the proposal at a price that represents a valuation of approximately 567.1 billion yuan ($78.48 billion), an Ant Group spokesperson told the Global Times on Saturday.
The proposal, which came after Ant was fined 7.12 billion yuan, is an independent commercial move and regular market operation to ensure a reasonable valuation that is conducive to its normalized financing in the future, experts said.
The valuation of the finance technology firm once hit $280 billion market capitalization for its halted initial public offering in late 2020.
Through the repurchase, a reasonable valuation has been attributed to the company, which is conducive to its normalized financing activities. Meanwhile, repurchases will cater for the liquidity needs of shareholders, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Saturday.
The repurchased shares will be transferred to Ant Group’s employee incentive plans to attract more talents. The proposal will also provide a liquidity option for investors, the company said in a statement.
US-listed shares of Chinese e-commerce retailer Alibaba rose 8 percent on Friday, while US-listed shares of Tencent rose 4.1 percent on Friday, reports said.
Chinese regulators on Friday announced a fine of 7.12 billion yuan would be handed to Ant Group and nearly the same amount issued to Tenpay under Tencent, while declaring an end to the rectification of most of the outstanding problems in the financial business of platform enterprises which first came to a head in November 2020.
Ant’s operating model has been clarified as a technologically innovative financial services company and has been valued accordingly, Dong said, adding that the business format of Ant was not clear when it initially applied for an IPO in 2020 leading to a widely held view that it was being overvalued.
Chinese authorities on Friday said that the rectification of major problems across large platform enterprises has been completed and the regulatory focus will be shifted from the centralized rectification to normalized supervision.
Financial products and services offered by platform economy enterprises have been transferred to normalized management. With the clearing of hidden risks in past operations, the operating stability of related companies is expected to increase, which is conducive to the further development of China’s platform economy and financial innovation, experts said.
China encourages the development of platform companies, and it is necessary to rectify irregular behaviors when needed. The result of not addressing these issues leads to poor consumer outcomes, Dong said, refuting the “tech crackdown” hype pushed by some in the foreign media.
(Global Times)
