Ant's valuation dives 60pc to 700b yuan amid clamp

Business | Bloomberg and Avery Chen 22 Jan 2021

Ant Group's valuation may be cut by more than 60 percent under new measures proposed by China to curb market concentration in its online payments market, according to new estimates from Bloomberg Intelligence.

Jack Ma's fintech giant may be worth less than 700 billion yuan (HK$839.98 billion) under the draft proposals, which could reduce the value of Ant's Alipay service by half, according to senior analyst Francis Chan.

"Ant Group's valuation may plunge further if its payment unit is forced to break up due to potential anti-trust probes by China's central bank," Chan wrote in a research note.

The revised estimate for Ant is a far cry from valuations that ran as high as US$320 billion before the company was forced to scrap its US$35 billion initial public offerings in November.

China's central bank said on Wednesday that any non-bank payment company with half the market share for online transactions, or two entities with a combined two-thirds share could be subject to antitrust probes.

If a monopoly is confirmed, the central bank can suggest the cabinet impose restrictive measures including breaking up the entity by its business type. Firms already with payment licenses would have a one-year grace period to comply with the new rules, the central bank said.

Alipay, with about 1 billion users, controls 55 percent of the mobile payments market. A breakup could reduce its 600 billion yuan valuation in half, Chan said, adding it's questionable whether Ant can relaunch its IPO this year.

Alibaba (9988), which holds a stake in Ant, fell 2.5 percent in Hong Kong yesterday.

The tech giant yesterday declined market rumors that founder Jack Ma Yuan will donate 10 percent stakes in Alibaba to the Zhejiang government as part of the Social Security Fund.

Separately, China Youran Dairy is to raise US$500 million in a Hong Kong listing this quarter, IFR reported. And Suzhou Basecare Medical Corporation is planning to kick off Hong Kong IPO next Monday to raise at least US$200 million.

In other news, private equity fund Snow Lake Capital splashed at least HK$680 million to buy Strawbear Entertainment (2125) on its trading debut.

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