Alibaba won't participate in Ant Group buyback

Alibaba will not participate in Ant Group’s recently announced share repurchase, the company disclosed in an SEC filing.

Why it matters: Rather than sell at a sharp discount to its last public valuation, Alibaba joins other large Ant Group shareholders planning to hold on to their stakes.

Context: This month, Ant Group proposed to shareholders that it would repurchase up to 7.6% of its equity interest at a price that valued the company at 567.1 billion yuan, or about $79 billion.

• The share buyback was announced one day after the company was fined 7.12 billion yuan, or about $1 billion, by Chinese regulators.
• The fine has revived hope for an eventual IPO for Ant, which had planned to go public in 2020 prior to the regulatory crackdown of the company.

Yes, but: The $79 billion valuation is a big step down from the more than $300 billion it would have been valued at in its abandoned IPO.

Between the lines: Alibaba, which holds 33% of Ant Group shares, is not alone in opting out of the share buyback.

• Hangzhou Junhan and Hangzhou Junao, which together hold more than 50% of Ant's shares on behalf of the company's executives and employees, also decided not to participate.
• Singapore state-owned investor Temasek, meanwhile, was reportedly holding talks with Ant Group to understand why it slashed its valuation before deciding whether to take part.

What they're saying: “Given that Ant Group continues to be an important strategic partner to Alibaba Group’s various businesses, Alibaba Group has decided that it will not sell any shares to Ant Group under the proposed share repurchase, so as to maintain its shareholding in Ant Group,” Alibaba said in its filing.