When will Ant Group crawl its way back to an eventual IPO?

On the second day of the Singapore Fintech Festival (SFF), a video of the Monetary Authority of Singapore’s (MAS) chief fintech officer Sopnendu Mohanty swiftly followed the opening remarks by its managing director, Ravi Menon. Born in East India, Mohanty spoke fluently in Mandarin: “I want to welcome everyone to this year’s fintech festival with an extra special touch — in your own language.”

Then, Chinese fintech giant Ant Group’s CEO and chairman, Eric Jing, said in perfect Hindi: “Namaste, I’m Eric Jing’s artificial intelligence (AI) avatar from the Ant Group, here to discuss technology’s superpower with Mr Mohanty. Isn’t technology wonderful to enable us to communicate globally?” Mohanty and Jing’s likeness then took turns introducing their panel in Japanese, Bahasa, and Filipino. 

The men’s newfound multilingual abilities undoubtedly showcased AI’s potential, the prevailing technology theme of 2023 and a central topic at this year’s SFF. However, behind the playful video loomed a larger issue over Jing’s head, one that Singapore is closely watching: When will Ant Group finally go public?

The world recalls when the fintech giant became the primary target at the onset of the Chinese authorities’ crackdown on major technology firms in 2020. Fueled by concerns that the country’s major Internet platforms were growing excessively large and powerful, Beijing aimed to regulate the industry by halting what would have been, and still is, the world’s largest IPO.

Ant Group was set to raise US$34.5 billion ($46.18 billion) in a dual IPO listing in Shanghai and Hong Kong, with a valuation of US$313.37 billion. Market watchers at that time said that this valuation stood larger than some of the biggest banks in the US, including Goldman Sachs and Wells Fargo. If the IPO were successful, it would put Ant ahead of a previous record holder, Saudi state-owned petroleum and natural gas company Saudi Aramco, at over US$29 billion. 

Alibaba and Ant founder Jack Ma’s speech at the October 2020 Bund Summit sealed the fate of the offering as he discussed the need to reform China’s financial system, a sentiment that appeared to displease Chinese authorities.

On Nov 2, Ma was summoned by Chinese authorities for questioning. The next day, the IPO of Alibaba’s fintech arm Ant Financial, which would have been the world’s largest then, was nixed. By late December, regulators had instructed Ant Group to restructure its operations to adhere to new anti-monopoly rules, shaving billions off its valuation.

Singapore’s investment in Ant has a direct relevance to the city-state. In 2018, Temasek Holdings and GIC participated in a Series C funding round for Ant Financial, raising US$14 billion. Other institutional investors joined the US dollar tranche, including Khazanah Nasional Berhad, Warburg Pincus, Canada Pension Plan Investment Board, Silver Lake, and General Atlantic.

Temasek reportedly bought shares in the finance company in 2018, valued at US$150 billion, according to an Ant prospectus in 2020. The sovereign wealth fund’s investment into Ant Group has been held up for three years until the firm’s recent proposed buyback this July. 

The offer of up to 7.6% of its equity interest at a price represents a group valuation of about CNY567.1 billion ($105.6 billion), meaning Ant Group’s valuation slashed by more than 70%. 

Most of the investors that had participated in the Series C funding round in 2018 opted not to participate in the buyback, while Temasek was set to “hold talks” with Ant Group to understand why a slashing of valuation occurred before it decided to participate. 

Temasek’s insistence on holding on to its investment in Ant Group was briefly articulated at the firm’s annual report briefing this July. Png Chin Yee, chief financial officer, said that the company was hopeful that the troubles in the Chinese tech sector were over after signs that a regulatory crackdown was ending. 

Png refers to a fine of CNY7.12 billion imposed on Ant Group by the People Bank of China in July and the approval from the government to expand its consumer finance business earlier in January. 

In the backdrop, Temasek reported its worst returns since 2016 for FY2023, which ended in March. The net value of its portfolio had dipped to $382 billion compared with being worth a record $403 billion in 2022, with a one-year total shareholder return (TSR) of negative 5.07% in this reporting period. The overall performance is to be seen in a global market uncertainty where most asset classes are down.

The state-owned investor is taking its bets on holding onto its faith in Ant. Png adds: “Ant still has got strong advantages. It has great technology and a great track record in innovation. So, once this is behind them, they can focus on stabilising and growing.”

At the SFF 2023, Ant Group appeared to be one of the most welcomed fintech giants by the city-state. Its booth, placed strategically at the entrance of the first of five halls, which attracted big financial institutions as its exhibitors, was difficult to miss. 

Singapore’s President Tharman Shanmugaratnam, Deputy Prime Minister Lawrence Wong, and Menon took turns touring the booth, which saw bustling foot traffic over all three days of the festival. Some visitors had undoubtedly hoped to redeem free bubble tea from the Alipay+ D-store booth, an all-in-one store solution for SMEs, but the personal visits from Singapore’s top men sent a signal. After all, besides the investments in Ant, one of its subsidiaries is also one of the two holders of the digital wholesale bank licences awarded by MAS in late 2020.

On stage, Mohanty and Jing rattled off effortlessly over a 30-minute fireside chat. The two men discussed how rosy the relationship between Singapore and the Chinese tech firm has been.

“I was in your headquarters a month back,” Mohanty begins. “If you don’t know Eric, and you walk into the Ant Group headquarters, it’s very hard to find Eric because he [blends in with the crowd]. He’s humble, cool, chilled out, and doesn’t act like a typical CEO. He’s part of the team, he’s like any other employee, you’re like a mini ant. How do you balance leadership and be part of this powerful Ant?”

Earlier in the week, Jing had announced the group’s ambition to deploy their global strategy out of Singapore, citing a “favourable and transparent policy environment” as a critical factor. The CEO, who had been an employee of Ant since 2007 and the previous CFO of Alipay, had chosen the city-state as its international headquarters, a move not so dissimilar to other Chinese technology companies who have tried to shake their Chinese origins to future-proof their businesses. 

Mohanty and Jing reviewed the fintech’s 4T internationalisation strategy — travel, trade, technology and talent — among other more lighthearted topics such as how the CEO manages his stress. But no discussion of going public was brought up. 

Towards the end of the fireside chat, Jing expressed his admiration for SFF’s appeal. He adds: “I’m amazed by this Singapore Fintech Festival. It’s such a great event. Walking into the hall, I felt so much energy and passion. How have you made that happen? How do you make such a global impact?” 

Mohanty replies: “We want to make a global impact, and we want to go to Africa. We want to go to other parts of Asia, Japan, Europe, and we want Ant to follow us on that journey.”