qi
Qi07f0d4@90200·Jul 13

977 days after the IPO collapsed, Ant Group’s rectification boots finally landed.

On the evening of July 7, the People's Bank of China, the State Administration of Financial Supervision, and the China Securities Regulatory Commission jointly announced that most of the outstanding problems in the financial business of platform companies have been rectified, and announced administrative penalties for some platform companies. Among them, Ant Group and its subsidiaries imposed fines (including confiscation of illegal income) of 7.123 billion yuan.

On July 8, Ant Group announced that it will repurchase no more than 7.6% of the shares of existing shareholders. The repurchase price corresponds to the company's valuation of approximately 567.1 billion yuan. This valuation has shrunk by 70% compared with the listing price valuation, and Ant buyback needs to use about 43.1 billion yuan of its own funds.

The joint announcement of the financial supervision department pointed out that the focus of the work of the financial management department has shifted from promoting the centralized rectification of the financial business of platform companies to normalized supervision.

By surgically cutting the business and structure, the uncertain factors lingering over Ant Group have been eliminated one by one, and there are more speculations in the market about Ant’s re-listing.

Whether Ant has a buyback plan for employees has not been disclosed, but the value of employee options has shrunk significantly.

According to Ant’s previous prospectus information, the scale of incentive plans awarded to Ant employees has reached 137.7 billion yuan. Based on the 16,660 employees at the end of June, the per capita incentives for Ant employees reached 8.27 million yuan. With the housing price of 29,000 square meters in Hangzhou at that time, you can buy a big house of 280 square meters.

Those Ant employees who were one step away from wealth freedom, how far are they from realizing wealth freedom now?

Post by @90200.lens
  • qi
    Qi07f0d4@90200·Jul 13

    Ant’s valuation has shrunk by 70% compared with the listing price

    The author learned that after Ant went public and pressed the pause button, shareholders' dissatisfaction was also growing day by day, and some shareholders privately expressed their desire to withdraw. But how to reasonably value the current ants has become difficult.

    The first round of domestic financing of Ant Group was carried out from June to August 2015. At that time, 12 investors including the National Social Security Fund, New China Life Insurance, China Pacific Life Insurance, and Primavera Capital participated. The post-investment valuation was about 260 billion yuan.

    Since then, Ant has gone through several rounds of financing, and its valuation has soared. By the time of the C round of financing in July 2018, the valuation had increased to 960 billion yuan. In addition to the original shareholders continuing to follow the investment, there are also international well-known capitals such as the Singapore Government Investment Corporation, Khazanah Holdings, Warburg Pincus, Canada Pension Fund Investment Corporation, and Temasek.

    By October 2020, when Ant confirmed its listing price, its total market value had reached 2.1 trillion yuan, and its valuation had soared 7 times in five years. In addition, investors in the secondary market are enthusiastic about new ventures, and it is expected that there will be several daily limit after Ant goes public.

    It has been 8 years since the earliest shareholders participated in the financing, and it has been 5 years since the latest batch of external shareholders invested. The cost of capital and time for shareholders is huge, but the timetable for listing and exiting is still unclear.

    This also affects the attitude of subsequent new shareholders to a certain extent. For example, on December 24, 2021, China Cinda Assets disclosed that it planned to participate in the capital increase plan of Ant Consumer Finance, but it was released half a month later. A year later, Ant Consumer Finance completed the capital increase plan, but the new registered capital of 10.5 billion yuan has shrunk by more than half compared with the previous plan, and the size of shareholders has also decreased, from a financial central enterprise to a local state-owned asset.

    The valuation of Ant’s repurchase of 567.1 billion yuan this time is about 40% lower than the valuation of the C round of financing, and it has shrunk by about 73% compared to the valuation of the listing price.

    According to "Lanwan Finance", BlackRock Group lowered Ant's valuation to US$110.6 billion at the end of September last year. T. Rowe Price lowered its valuation to $56.8 billion at the end of November last year.

    The valuation given by BlackRock has shrunk by about 62% compared with the listing price, while the valuation given by Twentieth Group has shrunk by more than 80% compared with the listing price. Ant’s repurchase price in this round is lower than BlackRock’s expectations, but better than Twentieth Group’s expectations.

    Regarding the determination of the repurchase price, Ant Group stated that this repurchase follows market-oriented principles. According to market practice, well-known investment banks at home and abroad were hired as financial consultants, and the pricing was carried out according to the valuation report issued by them.

    According to the "China Securities Journal", the latest valuation of Ant Group by international investment institutions such as BlackRock, Fidelity, and Puxin Group is between 400 billion yuan and 700 billion yuan, and the valuation of 567.1 billion yuan is at the median level. , in line with market expectations. On the one hand, in recent years, the stock prices of similar listed companies such as Alibaba and Tencent have fallen sharply, which can be referred to as the decline in the valuation level of the target. On the other hand, after more than two years of rectification, Ant Group has gradually strengthened its financial attributes, and it should be valued according to the positioning of financial institutions to a greater extent.

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