Ant Group Photo:VCG

China's leading fintech company Ant Group on Saturday announced to repurchase 7.6 percent of its own shares after being fined 7.12 billion yuan ($994 million) by Chinese regulators. 

As the latest news is deemed by market as a "turning point" for the country's platform-based enterprises to embark on a wave of fast and standardized growth with potential risks being largely defused, Alibaba and Tencent both saw their share prices jump on Friday.

Financial products and services offered by platform companies have returned to normalized management. With the clearing of hidden risks, the operating stability of the platform companies will ramp up, which is conducive to the further development of China's platform-based economy and financial innovation, experts said.

Ant Group put forward the shares buyback proposal at a price that indicates Ant's total valuation at 567.1 billion yuan, an Ant Group spokesperson told the Global Times on Saturday.

The proposal, which came after Ant was fined 7.12 billion yuan for operational irregularities in the past years, is deemed a normal market operation to ensure a reasonable company valuation that sets the basis for a possible IPO financing in the future, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times.

The valuation of the fintech giant once reached as high as $280 billion in capitalization in 2020.

Chinese regulators on Friday announced a fine of 7.12 billion yuan would be handed to Ant Group and nearly the same amount issued to Tenpay under Tencent.

Since November 2020, from the perspective of strengthening supervision in accordance with the law and diffusing financial risks, the regulators have supervised and guided Ant Group, Tencent and other platform companies to comprehensively rectify their violations of laws and regulations in financial activities, the People's Bank of China, the central bank, said in a statement.

At present, most of the outstanding problems in the financial businesses of platform enterprises have been rectified. The focus of the supervisors has shifted from promoting the centralized rectification to regular supervision, the central bank said.

In response to the penalty, Ant said in a statement that "[it] will comply with the terms of the penalty in all earnestness…and will continue to enhance its R&D capabilities to better serve and create greater value for the physical economy, especially for consumers and small businesses."

Tencent vowed to deepen law-based compliance and sustainable operations, take serving the physical economy and the people as the source, and effectively integrating social responsibility into business operation.

China encourages the development of platform companies, and it is necessary to rectify irregular behaviors when needed. The result of not addressing those issues would lead  to poor consumer outcomes, Dong said, refuting the "tech crackdown" hype aired by foreign media.

Global Times