HONG KONG – A number of global investors including Warburg Pincus and Canada Pension Plan Investment Board are opting out of Ant Group’s proposed share buyback after the Chinese fintech’s valuation was slashed by more than 70 per cent, according to people familiar with the matter.
Singapore sovereign wealth fund GIC and Carlyle Group are also among top foreign shareholders that are not participating in the buyback, the people said.
A few money managers, including Fidelity Investments and T. Rowe Price Group, have agreed to sell their shares, one of the people said.
Pension funds and private equity firms that took part in early funding rounds for Ant in 2018 face sizeable financial losses from the buyback after the company’s value plunged following its scrapped initial public offering (IPO) in 2020.
Asset managers are required to mark private assets to market prices to reflect fair value, though any loss would be on paper and could be reversed if Ant recovers.
The Mr Jack Ma-backed Ant in July proposed to buy back as much as 7.6 per cent of its shares, giving investors a chance to pare back exposure to the company that has been ensnared by a years-long regulatory crackdown.
The repurchase valuation of about 567.1 billion yuan (S$106 billion) is a massive decline from an estimated US$280 billion (S$375.5 billion) market capitalisation ahead of the planned IPO.
Representatives for Ant, Warburg, Carlyle, Canada Pension, GIC, Fidelity and T. Rowe Price declined to comment.
Global funds have grappled with how to assess their Ant investments, many made five years ago when the company was valued at about US$150 billion.
Other overseas backers included Silver Lake Management, Khazanah Nasional of Malaysia and Singapore’s Temasek.
E-commerce giant Alibaba Group Holding has decided not to sell any of its one-third stake in Ant, while Temasek has said it is seeking a better understanding of how Ant arrived at its repurchase valuation.
Some Chinese state-owned shareholders are planning to join the buyback, as they invested during the first two funding rounds when Ant raised at a reported valuation of about US$45 billion and US$60 billion respectively.
Ant’s early A-round of fund raising in 2015 included China’s national social security fund and China Development Bank Capital.
China Investment Corp and CCB International Holdings were among backers for its B-round the following year.
Chinese regulators are wrapping up a more than two-year crackdown on the country’s once-freewheeling technology giants after slapping more than US$1 billion of fines on Ant and Tencent Holdings in July.
Ant is also preparing to break off its international business, blockchain and database management services, people familiar with the matter have said.