After a surprise pullout last year, a second listing attempt by Ant Group proves to be difficult in its own ways with continued regulatory challenges, a weaker valuation outlook and no timeline in sight. finews.asia reviews the fintech giant’s major pre-IPO hurdles.
Earlier this week, Ant chairman Eric Jing told employees hoping to cash out their holdings that an IPO would eventually occur, according to a report by Alibaba-owned «SCMP» citing unnamed sources.
Jing also said the firm was planning a short-term liquidity solution in the interim for its staff in the interim, starting in April. While an optimist may see this as bridge capital for an imminent listing, a pessimist could see this as a write-off to buy time. Either way, no smooth ride is expected for Ant’s second listing attempt.
No Timeline in Sight
While both Ant’s Jing and senior officials like People's Bank of China (PBoC) governor Yi Gang signaled renewed hopes for a listing, neither has provided a timeline.
The former’s short-term liquidity move signals that there is no immediate IPO solution.
On the other hand, the restructuring is expected to take some time with the listing revival «not within the scope of the high-level government agenda right now», according to a report which highlighted greater focus by Beijing on Ant's shareholders which include prominent princelings such as Jiang Zhicheng, grandson of the former Chinese leader Jiang Zemin.
Data Dispute
In the latest regulatory development, the PBoC was reportedly «unhappy» with Ant over its limited sharing of user data with Beijing.
According to current and ex-employees of Ant, this was due to privacy laws and a very small number of users who have given their approval to share data. It fears that adopting stricter policies, such as making approvals mandatory in order to access services, could lead users to flee the platform.
Interestingly, former PBoC officials also noted that the central bank lacked the expertise and technology to make use of the data.
Valuation Cut
Even if a listing can get off the ground, Ant faces significant cuts to its valuation due to the various regulatory changes that have constrained market access and increased capital costs, ultimately leading the firm to restructure into a financial holding firm.
U.S. asset manager Alliance Bernstein has cut its valuation estimate for Ant from its original level of over $300 billion to $230 billion due to curtailed growth, with more downside potential. Bloomberg estimates claim that valuation could fall to as low as $108 billion.
Return to the Top
In the latest Hurun wealth rankings, Jack Ma (estimated net worth of $55 billion) lost his title of China’s richest to Zhong Shanshan ($85 billion), controller of bottled water firm Nongfu Spring and vaccine maker Beijing Wantai Biological Pharmacy Enterprise as «China’s regulators reined in Ant Group and Alibaba on anti-trust issues».
After holding on to the throne in the 2019 and 2020 list, Ma fell three positions to the fourth rank – an ominous number in Chinese culture as it is nearly homophonous with the word for «death».
Time will tell if Ma will make up the $30 billion difference and return to the top or if the clampdown will continue and curb his empire’s growth.