(Reuters) - China's Ant Group (HK:6688) has announced a surprise share buyback that values the fintech giant at $78.5 billion, well below the $315 billion touted in an abandoned IPO in 2020, in a move that may let some investors exit.
The announcement came after China's financial regulator on Friday fined the Alibaba (NYSE:BABA) Group affiliate $984 million for violating laws and regulations, a move seen by many industry observers as a sign that a regulatory crackdown on the country's technology sector is over.
Here is what people are saying about the news:
GARY NG, ASIA PACIFIC SENIOR ECONOMIST AT NATIXIS IN HONG KONG:
"The major pressure that a lot of these companies have been facing is really this bad sentiment. There are a few things that have changed from last Friday. The first is that some companies have been fined a significant amount but I think that offers, like a certain comfort to the market that possibly this regulatory tightening is actually getting to the end or basically cannot be worse than before.
"And second, of course, we're talking about the share buyback plan. I think that also helps boosting the sentiment of the share price."
KENNY NG, SECURITIES STRATEGIST AT CHINA EVERBRIGHT SECURITIES IN HONG KONG:
"Ant Group has announced a repurchase plan, which reflects a significant decrease in the company's valuation compared to its previous preparation for IPO. However, this news did not cause a drop in Alibaba's stock price, but instead showed a clear upward trend. This is believed to be mainly due to the fact that the People's Bank of China imposed a fine of 7.123 billion renminbi on Ant Group and its subsidiaries last Friday, and investors anticipate that the regulatory crackdown on Alibaba that has lasted for several years is coming to an end.
"Looking back over the past few years, Alibaba's stock price has experienced a significant decline, mainly due to concerns in the market about the negative impact of industry regulation on the company. If investors can eliminate their concerns about this aspect of Alibaba, it will help the company's stock price rebound in the future."
DICKIE WONG, EXECUTIVE DIRECTOR AT KINGSTON SECURITIES IN HONG KONG:
"Their share prices have strongly rebound today mainly driven by the expectation that regulatory pressure from mainland government will ease. Ant Group is on the right track to achieve their final target of an IPO."
SUMEET SINGH, DIRECTOR AT AEQUITAS RESEARCH IN SINGAPORE WHO PUBLISHES ON SMARTKARMA:
"I don't think the valuation drop is going to hamper their chances of going public, it's a different company now with changed profitability and growth dynamics. In addition a lot of other tech darlings have also corrected by a lot over the past two years, so they aren't alone. With the regulatory episode now behind it investors can be a little more certain that it won't face another regulatory headwind anytime soon."
OSHADHI KUMARASIRI, ANALYST AT LIGHTSTREAM RESEARCH IN COLOMBO:
"This means IPO is essentially put on hold. According to the company, the reason for the buyback is providing liquidity to existing investors and attracting and retaining talented individuals through employee incentives. Ant could have achieved both these objectives through an IPO."