Is Ant an overvalued giant?

SINGAPORE (May 28): Alibaba Group Holding’s Ant Financial Services Group is set to become the world’s most valuable fintech company. An upcoming fundraising of US$10 billion ($13.45 billion) — which, according to reports, has been oversubscribed — will value the company at US$150 billion, up from US$60 million just last year.

Unusual for such fundraising exercises are the stringent restrictions being imposed on potential investors. According to The Wall Street Journal, investors putting money into Ant have to agree not to invest in or raise their stakes in companies controlled by major online rivals such as Tencent Holdings, online retailer JD.com, food booking platform Meituan-Dianping and Pinduoduo, an online retailer catering to the lower-end market.

Such severe restrictions imposed on investors are rare; restrictions are usually imposed instead by investors to safeguard their investments. At most, some companies may impose minimum holding periods. But in Ant’s case, the restrictions attempt to limit potential investors’ investments in other online players. Even then, not all are Ant’s competitors, except for Tencent, whose WeChat Pay is a major rival to Ant’s Alipay payments system. The rest are e-commerce competitors to Alibaba, Ant’s parent.

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