Ant valuation seen falling to US$29b after turning into financial holding firm

Hong Kong

ANT Group Co's valuation could plummet to as low as US$29 billion after becoming a financial holding company that's regulated more like a bank, according to Bloomberg Intelligence.

The regulatory clampdown could push Ant's revenue growth to the low teens compared with 30 per cent in November, dragging down profit prospects, analyst Francis Chan wrote in a report on Tuesday. Ant's valuation could drop to a range of US$29 billion to US$115 billion, from US$320 billion previously, he forecasts.

Ant's valuation could come to resemble those of banks and other mainstay financial institutions, Mr Chan said. The fintech company is facing curbs on all fronts, from online lending to payments, wealth management and insurance.

The company's consumer lending units Huabei and Jiebei could suffer with their links being removed from Alipay, which has a billion users, Mr Chan said.

Ant will face more restrictions accessing and using personal information via credit investigations, he added. The company also needs to lower the balance of its Yu'ebao wealth management service, which plunged 18 per cent in the first quarter.

"Ant Group's future as China's fintech giant could be characterised by diminished greatness, with or without Jack Ma," said Chan. Mr Ma currently holds a controlling stake in the company.

If Ant is seen like a traditional lender, even a fast-growing one such as China Merchants Bank Co, its valuation might not stretch beyond 487 billion yuan (S$99.5 billion) to 492 billion yuan, Mr Chan said. In the downside scenario, the market may assess Ant similar to the MSCI China Financials index, which implies a value of 186 billion yuan to 245 billion yuan. BLOOMBERG