Carlyle, GIC skip Ant’s buyback after valuation slumps 70%

A NUMBER of global investors including Warburg Pincus and Canada Pension Plan Investment Board are opting out of Ant Group’s proposed share buyback after the Chinese fintech’s valuation was slashed by more than 70 per cent, according to people familiar with the matter.

Carlyle Group and GIC are also among top foreign shareholders that are not participating in the buyback, the people said, asking not to be identified because the matter is not public. A few money managers, including Fidelity Investments and T Rowe Price Group, have agreed to sell their shares, one of the people said.

Pension funds and private equity firms that took part in early funding rounds for Ant in 2018 face sizeable financial losses from the buyback after the company’s value plunged following its scrapped initial public offering in 2020.

Asset managers are required to mark private assets to market prices to reflect fair value, though any loss would be on paper and could be reversed if Ant recovers.

Jack Ma-backed Ant last month proposed to buy back as much as 7.6 per cent of its shares, giving investors a chance to pare back exposure to the company, which has been ensnared by a years-long regulatory crackdown.

The repurchase valuation of about 567.1 billion yuan (S$106.2 billion) is a massive decline from an estimated US$280 billion market capitalisation ahead of the planned initial public offering.

Representatives for Ant, Warburg, Carlyle, Canada Pension, GIC, Fidelity and T Rowe Price declined to comment.

Global funds have grappled with how to assess their Ant investments, many made five years ago when the company was valued at about US$150 billion. Other overseas backers included Silver Lake Management, Khazanah Nasional of Malaysia and Singapore’s Temasek Holdings.

Boston-based Fidelity cut its estimated valuation for Ant to about US$63.8 billion in November.

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Some Chinese state-owned shareholders are planning to join the buyback, as they invested during the first two funding rounds when Ant raised at a reported valuation of about US$45 billion and US$60 billion respectively. 

Ant’s early A-round of fundraising in 2015 included China’s national social security fund and China Development Bank Capital. China Investment Corp and CCB International Holdings were among backers for its B-round the following year.

Chinese regulators are wrapping up a more-than-two-year crackdown on the country’s once-freewheeling technology giants, after slapping more than US$1 billion of fines on Ant and Tencent Holdings in July.

Ant is also preparing to break off its international business, blockchain and database management services, people familiar with the matter have said.

E-commerce giant Alibaba Group Holding has decided not to sell any of its one-third stake in Ant, while Temasek has said that it is seeking a better understanding of how Ant arrived at its repurchase valuation. BLOOMBERG