Jack Ma-Backed Ant Group Buys Back Shares at 70% IPO Value – Carlyle Group (NASDAQ:CG), Tencent Holdings (OTC:TCEHY)

Billionaire Jack Ma-supported Ant Group Co. plans to buy back as much as 7.6% of its shares to retain talent and offer an exit to investors who have been affected by the company’s regulatory hurdles.

According to a report from Bloomberg on Friday, Ant Group publicly declared its plan to buy back its shares, which would lead to an estimated valuation of around $78.5 billion. The valuation reflects a significant decline of nearly 70% compared to the company’s $280 billion market cap during its IPO, which was eventually abandoned in late 2020.

The shares bought back will be used for Ant̵[ads1]7;s employee incentive program, aimed at attracting top talent.

According to a company statement, the individual limited partners of two entities that make up the majority of Ant’s shareholders – mostly made up of Ant executives – have voluntarily decided not to sell shares back to Ant because of the long-term commitment to the company.

Chinese regulators are ending a two-year crackdown on the country’s once freewheeling tech giants after fining more than $1 billion on Ant and Tencent Holdings Ltd. (OTC:TCEHY) on Friday, Bloomberg reported.

See also: Once touted as the biggest IPO of all time, Alibaba’s Fintech affiliate Ant Financial suffers 63% profit decline

Ant Group completed the restructuring process imposed by Beijing, adversely affecting profitability and hindering growth for a platform that included sectors such as lending, insurance and asset management.

The buyback represents a “good opportunity for investors to get some money back as Ant’s profit growth has slowed considerably,” said Francis Chan, an analyst at Bloomberg Intelligence, adding that foreign minority shareholders could use this opportunity to reduce their stakes.

Prominent American investors, such as Silver Lake Management LLC, Warburg Pincus LLC and Carlyle Group Inc. (NASDAQ:CG), played a major role in the funding round. Key contributors included GIC Pte, Khazanah National Berhad, Canada Pension Plan Investment Board and Temasek Holdings Pte.

At the beginning of March, Jack Ma returned to China after a long period of overseas travel. The government encouraged his return to the mainland to demonstrate their support for private entrepreneurs.

Over two years ago, Chinese regulators suddenly halted Ant Group’s IPO, causing significant disruption in global capital markets, the outlet reported. Since then, the fintech giant, which operates in various sectors including consumer loans, wealth management and online payments, has been subject to new regulations.

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Photo: Ministry of Industry and Fisheries via flickr