Ant Group, the highest valued financial technology company, may reportedly face a loss of around USD 140 billion in valuation after its massive stock debut was halted by the Chinese government.

If Ant Group’s USD 280 billion pre-IPO valuation is reduced, the company would essentially be less worth that it was a couple of years, sources claimed. For those uninitiated, the fintech giant had secured funds from some of the largest investment firms such as Temasek Holdings Pte, Silver Lake Management LLC and Warburg Pincus LLC.

In fact, the reduced valuation will also lower the fees for investment banks including China International Capital Corporation. Moreover, it provides the company with less weight while carrying out acquisitions in its efforts to expand beyond its Chinese base.

However, the Chinese officials had halted the Ant Group’s USD 35 billion share sale just as it was about to go public in Hong Kong and Shanghai.

According to reliable sources, the stalled IPO has compelled Ant Group to look for more capital and seek for national licenses in order to operate in China, which may inevitably result in loss of company’s valuation by almost a half. Regardless, the regulatory details are still at an early stage and can change in the upcoming months.

Singapore-based Head of Financials at Aletheia Capital Sanjay Jain mentioned in a comment that Ant Group’s price to earnings ratio could reduce by 10 times its lending profits, which is half of the previously assigned target. He added that the new price will put the financial technology giant in line with the valuation of better ranking banks.

Sources with knowledge of the matter stated that Ant Group could face around 25-50% loss in valuation, it its pre-IPO price ratio reduces to the level that of major global banks. At present, Ant’s stock value is worth 4.4 times to that of its book value.

Source Credits –

https://www.bloombergquint.com/business/ant-group-s-stalled-ipo-seen-slashing-its-value-by-140-billion