Monday, May 3, 2021

China Takes "Flash out of Pan" for Ant Financial


ZeroHedge reported Fidelty wrote down its Ant Group holdings after the Chinese government held up a planned IPO.

At a $144 billion valuation, Fidelity is signaling to investors that it believes Ant is worth less now than it was three years ago - now that the hope of a exit to China's army of retail investors has been forestalled, perhaps permanently - when Fidelity first purchased its stake. This roughly squares with what analysts have warned, as many have pointed out that Beijing's crackdown will put a lid on Ant's potential growth and profitability.

WSJ also pointed out that the $144 billion number represents "a big comedown from last August, when Fidelity's marks pinned the company's valuation at $295 billion, the filings showed.

The Carlyle Group invested in Ant Group the same time as Fidelity (three years ago).  The postponed IPO valuation was $315 billion.  Warburg Pincus valued Ant at $220 billion at the end of 2020.  A fall to $144 billion could cause lots of pain for the greed and leverage boys.

Former Carlyle co-CEO and seeker of Virginia's Republican gubernatorial nomination Glenn Youngkin is worried that President Biden's proposals will produce a "flash in the pan" economy.

Ant's valuation soared from $150 billion to $315 billion in a few short years.  Youngkin would have been ecstatic to monetize that flash rise.  

Fidelity wrote down its stake to below its initial investment.  Will Carlyle and company do the same?  How much hot air will come out of the PEU balloon?