China: Alibaba says it will not sell shares in Ant buyback

Hong Kong –

Chinese e-commerce giant Alibaba has said it has no plans to sell its one-third stake in financial technology firm Ant Group because it wants to keep a stake in an “important strategic partner.”

Alibaba Group Holdings said in a filing on Sunday that it will not participate in Ant’s share buyback program. This will allow shareholders to sell back up to 7.6% of their holdings at an unspecified price, valuing the company at RMB567.1 billion (US$78.8 billion).

Ant, which operates Alipay, one of China’s leading mobile payment services, has seen its valuation drop nearly 70% from around US$280 billion when it planned for a 2020 IPO. The plan was foiled by regulators who conducted an investigation into the company and fined the company nearly US$100 billion for violating laws and regulations in the payments sector.

Given Ant’s plummeting valuation, investors who sell shares in Ant are likely to get much less in return than they would in 2020.

“Considering that Ant Group continues to be an important strategic partner for Alibaba Group’s various businesses, Alibaba Group has decided not to sell shares to Ant Group pursuant to the proposed share buyback in order to maintain Ant Group’s shareholding,” Alibaba said in the filing.

Alibaba has previously said it may sell shares during the program. Singapore’s state-owned investment firm Temasek Holdings also said it was considering selling some of its shares.

Founded by Alibaba co-founder Jack Ma, Ant Group’s Alipay is the primary payment method for Alibaba’s Taobao and Tmall e-commerce platforms. It serves over 1 billion users.

Earlier this year, Alibaba split its operations into six business groups to improve shareholder value. The company plans to spin off these businesses and eventually make them publicly funded companies.

In May, Alibaba announced that its cloud unit, led by former Alibaba CEO Daniel Zhang, would go public within a year.

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