Ant Group Announces Share Repurchase Plan Following Regulatory Fine
Ant Group, the prominent Chinese fintech giant, revealed its intention to repurchase shares on Saturday as part of its strategy to retain talent and offer an exit to investors following a regulatory transformation within the firm. Ant Group proposed a repurchase plan to all shareholders, aiming to acquire up to 7.6 percent of its equity interest. The price for the repurchase reflects a group valuation of approximately 567.1 billion yuan ($78.53 billion). The repurchased shares will be utilized for Ant Group's employee incentive plans in order to attract talented individuals. Additionally, the repurchase proposal will provide liquidity options for the company's investors, according to the official announcement.
The share repurchase plan follows a substantial fine imposed on Ant Group by Chinese financial authorities, amounting to 7.12 billion yuan. The fine was a result of violations in areas such as corporate governance, financial consumer protection, payment and settlement business, and anti-money laundering obligations. Ant Group was also required to halt operations of its crowdfunded medical aid service, Xianghubao, and compensate users.
Ant Group affirmed its compliance with the penalty terms and expressed its dedication to enhancing compliance governance with utmost seriousness and sincerity.
On the same day, another technology giant, Tencent, faced a penalty of 2.99 billion yuan for regulatory violations related to its payment services, as stated by the People's Bank of China (PBOC), the country's central bank. Tencent responded to the penalty by asserting its belief that financial regulators will shift toward "normalized regulation" and concentrate on supporting and encouraging platform companies in their financial inclusion efforts. The company stated that it does not anticipate any significant adverse impacts resulting from the fine.
The PBOC emphasized that numerous issues in platform companies' financial operations have been rectified. Going forward, financial regulators will shift their focus from specific companies to comprehensive industry regulation.
Following the news of the penalties, shares of Tencent and Alibaba, an affiliate of Ant Group, experienced a surge in New York trading. Alibaba's U.S.-listed stock reached a high of over 9 percent before closing 8 percent higher, while Tencent witnessed a 4.1 percent increase.