2023-07-10 02:14:08
Shares of Alibaba Group in Hong Kong opened 5.5% higher on Monday after China fined its subsidiary Ant Group $984 million for violating laws and regulations, fueling hopes that the Year-long regulatory crackdown on fintech has come to an end.
On Saturday, Ant Group announced a share buyback that values the company at $78.54 billion, well below the $315 billion announced in an abandoned IPO in 2020, but which provides cash to investors.
E-commerce giant Alibaba, which created Ant 11 years ago and has a 33% stake, said on Sunday it was considering participating in the takeover.
The rise in Alibaba’s share price outpaced the 2% gain in Hong Kong’s Hang Seng index early in the day on Monday.
U.S.-listed shares of Alibaba rose 8% on Friday after the announcement of the sanction, one of the largest ever imposed on an internet company in China.
Ant and its subsidiaries violated laws and regulations in areas such as corporate governance, consumer protection of financial products, payment and settlement activities, and anti-money laundering obligations. money, the People’s Bank of China said.
Ant said on Saturday it was offering all of its shareholders to buy up to 7.6% of its equity stake at a price that represents a group valuation of around 567.1 billion yuan ($78.54 billion). dollars).
This is a hefty 75% discount to the $315 billion 2020 valuation for what was expected to be the world’s largest IPO, had it not been halted last minute by the Chinese regulatory authorities.
Ant’s finalization of the penalty is seen as paving the way for it to obtain a financial holding license, increase its growth rate and relaunch its IPO project.
However, analysts question the advisability of such an introduction in the near future.
“According to the company, the reason for the takeover is to provide liquidity to existing investors and to attract and retain talented people through employee incentives,” said Oshadhi Kumarasiri, an analyst at LightStream Research who publishes articles on Smartkarma.
“Ant could have achieved both of these goals through an IPO….That means the IPO is essentially put on hold.” ($1 = 7.2205 Chinese yuan renminbi) (Reporting by Scott Murdoch in Sydney and Donny Kwok in Hong Kong; Writing by Anne Marie Roantree, Muralikumar Anantharaman and Jamie Freed)
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