Ant's valuation could dive to US$29b at worst

Ant Group's valuation could plummet to as low as US$29 billion (HK$226.2 billion) from US$320 billion previously, after becoming a financial holding company that's regulated more like a bank, according to Bloomberg Intelligence.

The regulatory clamp could push Ant's revenue growth to the low teens compared with 30 percent in November, dragging down profit prospects, analyst Francis Chan wrote in a report yesterday. Ant's valuation could drop to a range of US$29 billion to US$115 billion, he forecasts.

Ant's valuation could come to resemble those of banks and other mainstay financial institutions, Chan said. The fintech company is facing curbs on all fronts, from online lending to payments, wealth management and insurance.

The company's consumer lending units Huabei and Jiebei could suffer with their links being removed from Alipay, which has a billion users, Chan said.

Ant will face more restrictions accessing and using personal information via credit investigations, he added. The company also needs to lower the balance of its Yu'ebao wealth management service, which plunged 18 percent in the first quarter.

"Ant Group's future as China's fintech giant could be characterized by diminished greatness, with or without Jack Ma Yun," said Chan. Ma currently holds a controlling stake in the company.

Earlier this month, Alibaba (9988), the backer of Ant Group, was fined a record 18.2 billion yuan, or 4 percent of 2019 sales, after an anti-monopoly probe found it abused its market dominance.

China's government has expanded its antitrust crackdown beyond Jack Ma's technology empire, launching an investigation into suspected monopolistic practices by food-delivery behemoth Meituan (3690) on Monday. Nomura estimates Meituan would be fined 4.6 billion yuan, representing about 4 percent of its net cash balance.

In other news, Guangzhou R&F Properties (2777) is planning to spin off its property management business in Hong Kong as soon as the third quarter, aiming to raise between US$500 million to US$700 million, Reuters' IFR reported.

And Tencent (0700)-backed social media and e-commerce startup Xiaohongshu, or "Little Red Book," is planning a US initial public offering that could raise up to US$1 billion, according to IFR.