Singapore’s state-owned investor Temasek Holdings is said to be preparing to engage in talks with Ant Group to discuss the reasons behind the fintech giant’s surprise substantial valuation cut in its planned share buyback, according to a Bloomberg report.
Temasek chief investment officer Rohit Sipahimalani was quoted in the report as saying that the outcome of the talks will determine the state investor’s participation in the share buyback.
Ant Group last week announced a surprise buyback that values it at $78.54 billion, well below the $315 billion touted in an abandoned IPO in 2020, Reuters reported.
Temasek bought into Ant Group, an affiliate of Alibaba Group Holding Ltd., in 2018 when the fintech’s valuation stood at $150 billion. However, the recent proposed stock repurchase puts Ant’s value at a significantly reduced figure.
The buyback, which could account for up to 7.6% of Ant’s shares, comes after the company suffered a regulatory clampdown resulting in almost $1 billion in fines from Chinese authorities.
This regulatory action and the subsequent reduced valuation have culminated in a 70% drop from an estimated $280 billion market capitalization in 2020 before its IPO was shelved.
In the buyback, each investor would be allowed to sell up to 7.6% of their equity rather than cashing out completely, according to the Bloomberg report.
The development comes as Temasek Holdings posted a rare loss of S$7 billion ($6 billion) for the financial year ended March 31, 2023, compared with a profit of S$11 billion ($8 billion) in the previous fiscal, DealStreetAsia reported.
Its one-year total shareholder returns (TSR) as on March 31, 2023 also turned negative to –5.07% in Singapore dollar terms.
Temasek cited geopolitical tensions and tough macroeconomic conditions—rate hikes, US-China tensions, Russia-Ukraine war, protectionism as well as energy transition—as factors that led to higher costs of capital and weighed on capital flows.
“2022 has been the most challenging year for markets over the last decade. Against a backdrop of restrictive macro policy, lower growth, and a highly polarised geopolitical environment, the world is changing rapidly,” said Lim Boon Heng, chairman of Temasek Holdings in a company statement.