China’s Ant Group could go public before 2021 closes out, although the tech giant’s valuation is anticipated to be reduced by as much as 60 percent to roughly $120 billion, Bloomberg reported, citing a report from Bernstein analysts led by Kevin Kwek.
Aside from a slashed valuation from its $320 billion value last year, Ant could be faced with adding another 30 billion yuan ($4.7 billion) to 40 billion yuan of funds into its new consumer finance division to support credit growth, the analysts indicated in the June 17 report from Sanford C. Bernstein & Co.
“The consumer finance unit could see its take rate — revenue as percentage of average loan balance — increase by 0.5 percentage points to 3.5 percent by 2025, as the company issues more credit using its own capital and generates more interest income,” Kwek said, according to Bloomberg.
Ant’s consumer finance unit will be responsible for providing 30 percent of the funds for co-loans. Kwek said in the report that at 10 times leverage of its registered capital, co-loans will be capped at 266 billion yuan, Bloomberg reported.
Ant Group had been planning to go public in November 2020, but its $35 billion dual IPO in Hong Kong and Shanghai was halted by the Chinese government. Wang Wenbin, China’s foreign ministry spokesman, said at the time that the move was intended to maintain market stability and “protect investors’ interests.”
Founder Jack Ma met with regulators in China sometime in February and hashed out a restructuring agreement. The new financial holding company structure is subject to the same regulations and capital requirements as a bank.