Shares of Alibaba Group (NYSE: BABA) jumped 4.54% on Monday after the company announced that it would not sell any shares in financial technology company Ant Group’s buyback program.
Alibaba, holding a significant one-third share in Ant Group, clarified that it values the latter as an “important strategic partner” and aims to maintain its shareholding.
The decision was disclosed in a filing submitted by Alibaba Group Holdings on Sunday, where the company clarified that it would not participate in the Ant share buyback program. It allows shareholders to sell back up to 7.6% of their holdings at an unspecified price, valuing Ant Group at 567.1 billion yuan ($78.8 billion).
Ant Group, known for operating China leading mobile payments service, Alipay, has witnessed a 70% fall in its valuation from about $280 billion ($38.9 billion) since its IPO planning in 2020. The IPO was halted due to regulatory intervention, and the company was fined approximately $100 billion for violating payment sector laws and regulations.
Due to the substantial drop in the Ant valuation, shareholders who opt to sell their shares back to Ant will likely receive considerably less than they would have received in 2020.
“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 to maintain its shareholding in Ant Group,” Alibaba said in the filing.
Formerly, Alibaba had hinted at the possibility of selling shares during the buyback program. In addition, Singapore state-owned investment firm Temasek Holdings also expressed interest in potentially selling some of its shares.
Ant Group Alipay, founded by Alibaba co-founder Jack Ma, is the primary payment method on Alibaba Taobao and Tmall e-commerce platforms, catering to over a billion users.
Alibaba recently restructured its businesses into six groups to increase shareholder value. Furthermore, it has plans to spin off these businesses into separate entities, potentially going public to raise funding.
In May, Alibaba said its cloud unit, headed by former CEO, Daniel Zhang, is expected to list within a year.