Alibaba (BABA) gains as China eases pressure on Ant Group

Shares of Alibaba (NYSE: BABA) are gaining in pre-market on Tuesday, trading up over 2.3%, after Reuters reported the Chinese government is set to lower the fine and downgrade the charges against Ant Group, the company's fintech arm, infamous for a highly publicized failed IPO back in 2020.

According to people familiar with the matter, Chinese authorities are now considering a fine of around $730M, over a quarter less than previously floated figure of $1B.

The regulators also reportedly plan to soften the charges against the company to "financial risks and operating certain business without proper licenses" vs prior allegations of "disorderly expansion of capital."

The resolution is expected to pave way for Ant Group to gain a long-sought financial holding company license, return to growth, and potentially plan for a new IPO.

Ant Group, owner of the world's largest digital payment platform Alipay, pursued a public listing back in 2020 - in what would've been the largest IPO at the time, the company intended to raise $34B at a valuation of over $300B. The plans ended abruptly, when the Chinese government halted the offering and commenced a "sweeping business overhaul."

The move is yet another sign of improving regulatory environment for Alibaba - just a few weeks ago the Chinese e-commerce giant said its intends to split the business into six units, and allow each one to pursue an IPO.

Shares of BABA are trading near $99 in pre-market, notably above the prior close of $96.42.

By Vlad Schepkov

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