Global investors abandon Ant Group share buyback amid valuation plunge

CPPIB among global investors that decline Ant's buyback offer after the Chinese fintech’s valuation plummets

Global investors abandon Ant Group share buyback amid valuation plunge

Global investors, including Canada Pension Plan Investment Board (CPPIB) and Warburg Pincus, have chosen to pass on Ant Group's proposed share buyback following a drop of over 70% in the Chinese fintech's valuation, sources familiar with the matter revealed to Bloomberg.  

Carlyle Group Inc. and GIC Pte are among the investors abstaining from the buyback, as indicated by insiders who wished to remain anonymous due to the confidentiality of the matter. Financial managers, including Fidelity Investments and T. Rowe Price Group Inc., have also opted to sell their shares, one of the insiders told Bloomberg. 

Pension funds and private equity entities that participated in Ant's early funding rounds in 2018 are now facing substantial financial setbacks due to the company's devalued status, following the shelving of its initial public offering in 2020. Although asset managers are required to evaluate private assets based on market prices to ensure fair value, any losses incurred would be theoretical and could be reversed if Ant manages to stage a recovery. 

Ant Group, backed by Jack Ma, proposed a buyback of up to 7.6% of its shares last month, allowing investors an opportunity to reduce their exposure to the company amidst an enduring regulatory crackdown. The buyback valuation, approximately $79 billion, represents a staggering drop from the estimated $280 billion market capitalization forecasted prior to the intended IPO. 

Global investment funds have been grappling with the assessment of their Ant holdings, many of which were acquired five years ago when the company was valued at approximately $150 billion. Fidelity, headquartered in Boston, revised its estimated valuation for Ant to roughly $63.8 billion in November. 

Certain state-owned Chinese stakeholders are considering participation in the buyback, having invested during Ant's initial two funding rounds, where valuations were reported at approximately $45 billion and $60 billion respectively. 

Ant's initial A-round fundraising in 2015 involved China's national social security fund and China Development Bank Capital Co. Backers for its subsequent B-round the following year included China Investment Corp. and CCB International Holdings Ltd. 

E-commerce titan Alibaba has chosen not to divest any portion of its one-third stake in Ant, while Temasek expressed a desire to gain a clearer understanding of the rationale behind Ant's repurchase valuation.