An estimate by US asset management company Fidelity Investments halves the rating of Alibaba’s financial arm, Ant Group, the owner of the Alipay payment app.
The fall of a financial titan
While Alibaba’s financial subsidiary signed almost the largest initial public offering in history in November 2020, valued at $ 315 billion, the Chinese government’s suspension of the transaction was a cornerstone. Since then, the Ant Group’s rating has fallen. In March 2021, fintech investors estimated the Ant Group at 200 billion. This time after Wall Street JournalFidelity Investments, which owns shares in the conglomerate, is all the more stringent the group estimates at $ 144 billion.
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This decline can be explained by the reorganization of the activities of the Ant Group, the organizational restructuring of the company, an antitrust investigation that resulted in a record fine, or the temporary disappearance of its founder Jack Ma. This is partly due to Beijing’s desire to access the large amount of Ant Group data. Alipay is used by over a billion users for good reason. The application was processed between June 2019 and 2020 Transactions valued at over $ 17 trillion. In addition, the Ant Group offers various products such as insurance contracts, mutual funds and loans that have damaged the banking system. A series of financial activities that lead to a reduction in the restructuring imposed.
In the long term, the Ant Group will remain interesting for investors
It is therefore these elements that have led Fidelity Investments to revise Alibaba’s financial position downwards. These Loss of value is not necessarily inevitable, neither for the American company nor for Jack Ma’s. Stock exchange activities are characterized by fluctuationsThe Ant Group could just as easily be upgraded or devalued. “” The valuation of shares in unlisted companies is subject to a high degree of judgment “Notes Murray Grenville, CEO of the Sterling Valuation Group holding company, who believes so.” If the goal posts have changed … this must be taken into account in the assessment “.
A new IPO project would head in the direction of re-evaluation, but given the context that the Ant Group is facing in China, it would likely happen within a few years. However, this does not scare all investors: ” You are aware of the risk of investing in Ant, but long-term investors are focused on the company’s prospects for the years to come. Says a spokesman for Fidelity Investments.
For the asset management company, this decline in the Ant Group’s valuation is unlikely to have any material impact. Fidelity’s investments in pre-IPO companies represent a tiny fraction of the wealth management company’s funds. Three years ago, Fidelity had invested $ 238 million. A tip for the company, which had assets under management of 2,600 billion euros in 2018 The echoes.