The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Robyn Mak

HONG KONG, April 29 (Reuters Breakingviews) - Ant 688688.SS is returning to Hong Kong. Five years after regulators derailed the fintech group's blockbuster initial public offering in the city, the Jack Ma-founded outfit is taking control of a local retail brokerage. Beijing has yet to give its blessing for the $80 billion payments-to-wealth management group to revive any listing plans but this may be a first step to a full comeback after a painful downsizing.

The small $362 million acquisition marks the company's first foray into the securities brokerage business. As part of the deal, a vehicle owned by Ant will buy a nearly 51% stake in Bright Smart Securities & Commodities 1428.HK from the company's chair. Revenue and earnings are shrinking at Ant's target which is lagging in a fiercely competitive sector against slick rivals including $9 billion Futu. As the owner of super-app Alipay, Ant looks well-placed to revamp Bright Smart's portal to appeal to a younger demographic.

What Ant gets is a bit fuzzy. It's entering the market as investors rediscover some appetite for Chinese equities; Hong Kong's benchmark Hang Seng Index is up 10% this year and two stock listings launched in the city on Monday. The ultimate prize may be the mainland's $1.7 trillion brokerage industry. To access that, Ant will need to apply for or acquire a separate Chinese license. The Bright Smart acquisition gives the Alibaba-backed 9988.HK fintech giant a chance to dip its toe into stock trading in the meantime.

Either way, the purchase led by new CEO Cyril Han marks the start of a fresh chapter. Ant was a prime target in Beijing's crackdown on the "reckless expansion of capital". Today the fintech group, which in 2023 offered to buy back some shares at roughly a quarter of its touted $300 billion-plus IPO valuation, resembles less of a bank and acts more like a middleman connecting users with financial products and services. It folded its once fast-growing consumer lending operations into an entity it only owns 50% of, for example.

Bright Smart's stock has surged 70% above the price Ant is paying for its stake, perhaps reflecting investors' hope that the deal will pave the way for a so-called backdoor listing for the buyer. That seems like some wishful thinking. For now, Ant is only starting on a long march.

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CONTEXT NEWS

China's Ant Group has offered to buy a 50.55% stake in Hong Kong-based brokerage Bright Smart Securities & Commodities from the company's chair, according to a stock exchange filing on April 25.

As part of the deal, Ant will pay roughly HK$2.81 billion ($362 million) for the stake, representing a 23.8% premium to the stock's 60-day average price. Ant intends to maintain Bright Smart's stock exchange listing and will focus on growing the target's business.

(Editing by Una Galani and Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on MAK/ robyn.mak@thomsonreuters.com))