Fidelity halves its valuation of Ant Group shareholding

Embattled Chinese online platform's restructuring as a financial holding company could dent its appeal to investors, analysts say

Fidelity halves its valuation of Ant Group shareholding
A sign marks a Fidelity Investments office in Boston. File photo by Reuters 

(ATF) US asset management giant Fidelity Investments has halved the valuation of its shares in Ant Group, the embattled Chinese financial technology company, a report on Monday said.

The valuation for the Jack Ma-founded company, was downgraded to $144 billion at the end of February, sharply down from $295 billion in August 2020, according to The Wall Street Journal.

Fidelity was among a small group of global investors that bought into Ant three years ago and the revaluation comes as the asset manager has offered an otherwise upbeat assessment of its China operations.

“China remains underpinned by strong economic growth, as well it’s first-in first-out status as the major economy in the world to return to pre-pandemic normalcy," Catherine Yeung, investment director at Fidelity International, said.

"Mutual fund investors globally are underweight China, so there remains a lot of opportunities to the upside in the longer-term for equity markets,” she added. “Driving the yield increase is the expectation that global growth rates and inflation will pick up."

IPO CANCELLED

The Ant revaluation comes six months after the company's $37 billion initial public offering (IPO) in Shanghai and Hong Kong, which would have been the largest in the world, was cancelled soon after Ma made a speech in Shanghai in which he called for reform of China's regulatory system.

Since then, Ant is restructuring to become a financial holding company, which analysts say could dent Ant's appeal to investors. Fidelity's reported valuation would not have taken into account the impact of Ant Group's restructuring announced in April.

In May 2018, Fidelity invested about $238 million in Ant on behalf of various funds, according to Ant's IPO prospectus, in a round that valued the company at about $150 billion.

Reuters reported in March that some of Ant Group's global investors valued the company at about $200 billion based on its 2020 performance, considerably less than the $315 billion valuation touted ahead of its listing.

ASIA BOOST

Separately, Fidelity is seeking to boost its Asia recruiting by targeting experienced professionals looking to return to work in investment management after an extended career break.

Known as the Returner Programme in Asia Pacific, the initiative is looking to hire people with a background in equity research, multi-asset, fixed income investing, product development or sustainable investing.

This initiative follows a UK pilot programme under which 20 returners were hired in mid-senior level roles in investment management over four years. They had an average 7-year career gap away from investment.

Fidelity has said it aims to have a 45% female board by 2024, and 35% of global senior management roles to be held by women, up from 31.5%.

With reporting by Reuters

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