Ant Group’s Valuation Could Fall Further due to Chinese Antitrust Rules

According to new estimates from Bloomberg Intelligence, Ant Group’s valuation could be falling further with China’s new measures to curb market concentration in its online payments market.

This Jack Ma-owned fintech giant could be worth less than 700 billion yuan ($108 billion) under the draft proposals. According to Francis Chan, a senior analyst, it can potentially reduce the value of the Alipay service by 50%. Earlier this month, Chan reduced his valuation of Ant to less than 1 trillion yuan, from about 1.44 trillion yuan. In an investigation note, he wrote that Ant Group’s valuation might fall further. Particularly, if its payment unit becomes forced to split due to possible antitrust investigations by China’s central bank.

Ant’s revised estimate is very different from valuations that hit $320 billion before the company was forced to halt its record initial public offering in November. China’s strict measures forced Ma’s firm to withdraw the $35 billion IPO just days before it was listed on the Hong Kong and Shanghai stock exchanges.

Jack Ma’s company, the founder of Alibaba (Ant Group is a subsidiary of the Chinese giant), has multiple branches of services. They include platforms for financial institutions to market their products on them.

Until now, the operation was going from strength to strength. The operation had a huge demand, of 3 billion for placement of 34,500 million.

This figure made the IPO the largest in history. Moreover, it surpassed the 29.4 billion dollars of the Saudi oil company Aramco’s operation last December. It is still the largest operation of this type in history.

It is questionable whether Ant could relaunch its IPO this year

On Wednesday, China’s central bank said that any non-bank payments company with half the market share for online transactions, or two entities with a combined two-thirds share, could be subject to antitrust investigations.

If a monopoly is confirmed, the central bank may suggest that the cabinet imposed restrictive measures. Such as dividing the entity by type of business. The central bank said that companies that already have payment licenses would have a one-year grace period to comply with the new rules.

Alipay has close to 1 billion users and controls 55% of the mobile payments market. A breakout could cut its 600 billion yuan valuation in half, Chan said. He added that it is questionable whether Ant could relaunch its IPO this year.