Temasek seeks talks with Ant on buyback valuation
TEMASEK Holdings is set to hold talks with Ant Group to understand why it slashed its valuation before it decides whether to take part in a planned share buyback, according to chief investment officer Rohit Sipahimalani.
Temasek bought shares in the Alibaba Group Holding -affiliated finance company in 2018, when it was valued at US$150 billion, according to an Ant prospectus in 2020. Ant’s planned repurchase of stock announced on the weekend would value the company at about 567.1 billion yuan (S$105.6 billion).
“With the recent developments around Ant, a line in the sand has been drawn and that should be good for the company,” Sipahimalani said in an interview, adding Ant was holding talks with all major holders. “Investors have to make their own call whether they need the liquidity or where they see the outlook for the business.”
Alibaba had earlier said it was considering participating in a proposed Ant buyback. The fintech giant plans to repurchase as much as 7.6 per cent of its shares after being ensnared by a years-long regulatory crackdown that culminated last week with a fine of almost US$1 billion from Chinese regulators. The buyback valuation is almost 70 per cent lower than an estimated US$280 billion market capitalisation in 2020 before it scrapped an initial public offering.
Temasek is among holders of Ant’s private shares. Each investor would be allowed to sell up to 7.6 per cent of their equity rather than cashing out completely, Bloomberg News has reported.
Global investors are trying to decide whether the political and consumer challenges facing companies in China are a buying opportunity or substantial risk to their portfolio. About 22 per cent of the Singaporean firm’s net portfolio value is based in China, making it a key concern.
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Temasek on Tuesday warned of an uncertain road ahead as it chalked up its worst showing in seven years. The investor with S$382 billion in assets posted a decline of 5.1 per cent for the fiscal year ended March 31.
The firm has continued to back Chinese companies this year, adding to holdings in US-listed shares of Alibaba and its rival e-commerce provider JD.Com Inc during the first quarter of 2023, according to 13F filings.
That’s despite Sipahimalani warning that key sectors in China are facing major challenges, from consumer sentiment to the property sector. China’s benchmark CSI 300 is among the worst-performing indexes in Asia-Pacific this year, prompting foreign funds to cut exposure as the economy weakens and relations with the US remain tense.
“I think it’s going in one direction only – I don’t think that’s going to reverse,” Sipahimalani said of the growing geopolitical tensions between the US and China. Temasek favours companies with access to large domestic markets that aren’t caught in the cross-hairs. “That’s just sensible investing right now,” he told Bloomberg Television. BLOOMBERG
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