On July 7, Chinese financial regulators handed Ant Group a significant penalty, issuing fines totaling 71.23 billion yuan (around $10.9 billion). They ordered Ant Group to shut down its "Xianghubao" business for its regulatory violations and lawfully compensate consumers for their losses.
Over the past three weeks, Ant Group has made numerous moves, including stock repurchases, personnel changes, and even preparing for a potential IPO restart.
Stock Buyback
The day after the announcement of the fine, Ant Group made a new move. In an effort to continuously attract talent by replenishing its employee incentive pool, and to further meet shareholders' liquidity needs, Ant Group announced that it would use its own funds to repurchase some of its shares from existing shareholders. The proposed repurchase ratio would not exceed 7.6% of the total shares. The buyback price points to an estimated value of the Ant Group of around 567.1 billion yuan (approximately $87.2 billion).
This move by Ant Group is based on autonomous decision-making and is a regular operation in the capital market. On one hand, repurchasing shares to replenish the employee incentive pool promotes the company's long-term sustainable development. On the other hand, as it's been five years since the latest funding round, the dividends distributed last year and the current buyback can somewhat satisfy shareholders' liquidity needs.
It should be noted that major shareholders Junhan and Junao opted not to participate in the repurchase, reflecting their confidence in the future development of the business.
Alibaba later officially announced that Ant Group's proposed stock buyback of no more than 7.6% had been approved by the shareholder general meeting, and that the company had decided not to sell its shares.
Alibaba stated in the announcement, "Given that Ant Group continues to be an important strategic partner for various Alibaba Group businesses, Alibaba Group has decided not to sell any shares to Ant Group in this proposed buyback, thus maintaining its shareholding in Ant Group."
Personnel Changes
On July 14, the Chongqing Banking and Insurance Regulatory Bureau approved Jin Xiaolong's qualifications to serve as chairman of Ant Consumer Finance (Ant Financial).
Public information shows that Jin Xiaolong is also a senior vice president of Ant Group and the party committee secretary and chairman of MYbank. Jin Xiaolong succeeded Huang Hao, who formerly held the position of chairman of Ant Consumer Finance and once served as the president of MYbank.
With his qualifications approved, Jin Xiaolong officially took the helm from Huang Hao, becoming the second leader of Ant Consumer Finance.
At the same time, there were also adjustments to the board of directors of Ant Consumer Finance. Huang Hao, Shao Wenlan, and Jiang Li exited their positions, while Jin Xiaolong was added as chairman, Zhou Shengxue, Zhang Jianguang, and Sun Yang were added as directors, and Qian Jun was added as an independent director.
On July 21, Ant Group announced an upgrade to its international business organization, appointing senior vice president Yang Peng as president of Ant Group's International Business Division. He will report to the chairman and CEO, Jing Xiandong.
Paving the Way for an IPO?
According to media sources, Ant Group is planning a restructuring, shedding some non-core businesses to pave the way for a Hong Kong IPO.
These insiders indicate that Ant Group is considering separating its blockchain, database management services, and international businesses from its main entity, which will apply for a financial holding license on the mainland. Once Ant Group completes the restructuring and obtains the financial holding license, it can list in Hong Kong, unlike before when it sought to list in both Hong Kong and Shanghai.
According to reports, this plan has been informed to some shareholders, but the restructuring plan is not yet finalized and may change.
People close to the regulators expressed that whether Ant Group restarts its IPO needs to be lawful and compliant, and the company would also judge based on its internal situation and the external market. From what is understood recently, in the short term, the possibility of Ant Group re-listing is not large.
However, some market insiders believe that Ant Group, accepting its penalty, is determined to get back on track. From the currently disclosed information, this punishment could help Ant Group improve its corporate governance, strengthen risk management, and increase its overall compliance level. The progress of its application for setting up a financial holding company and applying for credit business licenses may be accelerated.
