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The “short-term liquidity solution” will be a program that presupposes buying back some of the Ant Group employees’ shares.
Chinese online payments company Ant Group has said it is looking for a “short-term liquidity solution” to help its employees monetize shares after its cancelled initial public offering (IPO). According to the company’s executive chairman Eric Jing, the solution will take effect in April. Besides, in a post on the internal website, Ant Group’s leader promised the company would eventually go public.
The “short-term liquidity solution” will be a program to buy back some of the employees’ shares. The company’s employees had previously received share-based compensation. From 2017 to June 2020, Ant Group paid out 15 billion yuan in share-based compensation, equivalent to $2.3 billion at current exchange rates. And many of the employees expressed frustration on social media for not being able to sell their shares after Ant Group cancelled its IPO because of Chinese regulators.
Ant Group Cancelled IPO
Ant Group decided to go public back in 2020. Its IPO was supposed to take place In November 2020. Notably, the public listing was scheduled to take place simultaneously on the Hong Kong and the Shanghai Stock Exchanges. Notably, it would become the largest IPO in history.
In October, several days before the IPO date, the company recorded a huge retail investors bid of $3 trillion which equals the Gross Domestic Product (GDP) of the United Kingdom. As we reported, nearly 1.5 million retail investors trooped into the market to invest about $167.7 billion equivalent to HK$1.3 trillion at that time.
Two days before the IPO, Chinese authorities warned the company on restrictions of capital and leverage. Besides, China Securities Regulatory Commission summoned Ant Group controller Jack Ma, CEO Simon Hu, and executive chairman Eric Jing. As a result of the issues with Chinese regulators, both the Hong Kong Stock Exchange and the Shanghai Stock Exchange suspended the IPO.
Since then, Jack Ma has been in talks with regulators over the restructuring plans. In particular, it would address such issues as corporate governance, setting up a financial holding company, and the payment businesses.
Currently, Ant Group is working on shifting to a financial holding company structure.
In response to employees’ questions about Ant’s future, executive chairman Eric Jing said:
“The company will certainly become a public company. I’m always fully confident in that.”
“This rectification won’t make Ant weak, but will make us healthier, with a greater stage for growth.”
He also promised to review the staff incentive programs and roll out some measures to help solve their financial problems.