Fidelity cuts Ant Group's valuation in half to $144 billion after regulatory crackdown in China

Fidelity cuts Ant Group's valuation in half to $144 billion after regulatory crackdown in China
Jack Ma, executive chairman of the Alibaba Group.Mark Schiefelbein/AP Photo
  • Fidelity cut Ant Group's implied valuation to $144 billion from $300 billion, according to regulatory filings.
  • The decline in valuation comes after China imposed a regulatory crackdown on the fintech giant.
  • Fidelity initially invested in Ant Group in June 2018 at a $150 billion valuation.
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China's regulatory crackdown of Ant Group in recent months has led Fidelity to cut its implied valuation of the fintech giant in half, according to regulatory filings first seen by The Wall Street Journal.

Fidelity's implied valuation of Ant Group fell to $144 billion from $295 billion, according to the filing. Fidelity first invested in Ant Group in June 2018 at a valuation of $150 billion. The implied valuation represents a massive drop from last year's expected IPO valuation of more than $310 billion. Fidelity isn't the only US money manager that invested in Ant Group prior to its IPO. BlackRock and T. Rowe Price invested between $200 million and $500 million in Ant Group as well.
Ant Group owns Alipay, a mobile payments app that handled $17 trillion worth of payment transactions last year and has seen explosive growth as it combines a number of financial offerings into a single app.

But China pulled the public debut of Ant Group days before its expected IPO in November following critical comments of international financial regulations from billionaire founder Jack Ma.

Since then, Ant Group has been subject to increased regulatory scrutiny as it competes against legacy financial institutions that are subject to higher capital requirements. Ant Group said it would apply to become a financial holding company overseen by the People's Bank of China to help ease regulatory pressures.

The regulatory scrutiny of Ant Group has also spread to Jack Ma's Alibaba, which was hit with a record $2.8 billion fine last month in an anti-monopoly probe.

"Alibaba accepts the penalty with sincerity," the company said in a statement regarding the record fine. Alibaba owns about a third of Ant Group. A Reuters report from last month suggested that Jack Ma is in talks give up his stake in Ant Group, which could help lessen regulatory scrutiny by the Chinese government. But an Ant Group spokesperson issued a statement to the outlet, saying Ma's exit "has never been the subject of discussions with anyone."