BEIJING • Mr Jack Ma's Ant Group plans to offer zero-interest loans to employees who own illiquid stock options, seeking to boost morale after the company's landmark initial public offering (IPO) was suspended last November, sources familiar with the matter said.
The loans will be backed by eligible employees' restricted stock options, which will be valued at levels calculated after a 2018 funding round, the sources said, asking not to be identified as they were discussing private information.
This will allow Ant to give staff access to liquidity without requiring the company to establish a more up-to-date valuation for its shares.
The options, known as share economic rights (SERs), with each representing 5.53 shares, will be priced at 195 yuan (S$40), or 35.26 yuan a share, in line with an internal buyback price from 2018, the sources said. Ant was valued at US$150 billion (S$199 billion) at the time.
Ant's executives are trying to halt a potential exodus of staff, who had expected a windfall with the company just days away from listing in Shanghai at a US$280 billion valuation.
Chairman Eric Jing assured employees last month that the company would eventually go public, and promised a "short-term liquidity solution" that would take effect this month.
Details of the loan programme will probably be announced in the next few days, the sources said. Ant declined via e-mail to comment.
The company suspended its share buyback programme for current and departing staff last year to prepare for its IPO.
It needs to compete for talent with China's other technology behemoths, including Tencent Holdings, which has seen its shares climb as Ant battles a regulatory overhang.
The future of Mr Ma's company - and its valuation - has been shrouded in uncertainty as regulators sort through details of a fintech industry overhaul that abruptly halted Ant's US$35 billion IPO.
The company has since committed to drastically revamping its business and seen its chief executive Simon Hu exit.
Early investor Warburg Pincus marked down the valuation of the fintech giant to a range of US$200 billion to US$250 billion at the year end, sources have said.
That is a fall from its peak valuation but better than estimates by Bloomberg Intelligence, which now sees Ant dropping to US$29 billion to US$115 billion after it becomes regulated more like a bank.
Many of Ant's employees have been granted restricted stock options that account for a significant portion of total compensation for some staff.
These options are usually subject to a four-year vesting schedule, with 25 per cent free from the lock-up upon the first anniversary and 25 per cent every year thereafter.
Before Ant's buyback programme was halted, departing employees would sell shares back to the company at a valuation in line with its most recent funding round, while existing employees could participate in periodic buyback rounds, people familiar with the matter said.
Outstanding SERs totalled 114 million at the end of last June, according to the latest data disclosed by Ant. If valued at the company's planned IPO price last November, they would have been worth 43 billion yuan in total.
BLOOMBERG
