After completing the requisite financial restructuring, Ant Group is poised to initiate a share buyback using its own capital to supplement its employee incentive pool and meet shareholders' liquidity needs, as per reports from The Securities Times. The share repurchase, approved by Ant Group's board and submitted to the shareholder meeting for review, will not exceed 7.6% of the total share capital.
Ant Group stated that the buyback will be carried out according to market principles. To determine a fair repurchase price, the company employed renowned domestic and foreign investment banks as financial consultants. The pricing was based on their provided valuation report.
According to the repurchase plan, the valuation of Ant Group at the buyback price is estimated to be about RMB 567.1 billion (about $78.53 billion). This is approximately a 40% decrease compared to the estimated value of RMB 960 billion during the Series C funding round in 2018. Given the current low valuations of domestic internet companies, this drop is in line with market expectations.
On the evening of July 7, financial regulators announced that they had successfully advanced the financial business restructuring of platform companies, shifting their focus to routine regulation. Ant Group has also completed its restructuring, moving into a new phase of development.
The shares repurchased by Ant Group will be transferred to the employee equity incentive pool. Like many internet companies, Ant introduced an employee stock ownership plan in its early start-up phase. Ant Group mentioned that using the repurchased shares to supplement the employee incentive pool will help attract top talent and enhance the company's ability to serve finance and the real economy with technology. In the past two years, Ant Group has continued to increase its investment in research and development, seizing new opportunities in the intelligent era with a 2022 R&D investment of RMB 20.4 billion.
Another consideration for the buyback is to meet shareholders' liquidity needs. As per public information, Ant Group has been providing viable liquidity solutions for its shareholders in appropriate ways, having already implemented two dividends by the end of 2022. With this buyback initiative, all shareholders can voluntarily choose whether to participate within the repurchase ratio.
Additionally, Ant Group disclosed that shareholders of Hangzhou Junhan and Hangzhou Juna, due to their long-term commitment and confidence in the company's development, have voluntarily opted out of participating in the buyback. Previously, these shareholders also pledged to retain corresponding dividends at the Junhan and Juna levels during Ant Group's two dividend distributions. This was aimed at enhancing their financial strength and the company's capital supplementation ability, demonstrating their faith in Ant Group's long-term development.
