Ant Financial, from the day of birth, seems to be accompanied by ups and downs, and the curse that violated the spirit of the contract has not been lifted.
More than two years after the IPO was stranded, as Ant Financial officially announced that Jack Ma had "withdrawn" and gave up his actual control of Ant Group, the elephant in ant skin seemed to be one step closer to returning to the capital market.
Prior to this, Ant Financial's 10 billion capital increase plan had been approved by the Chongqing Banking and Insurance Regulatory Bureau, and the registered capital expanded from 8 billion to 18.5 billion. The entry of state-owned assets and real industrial capital has made many people believe that the rectification and reform of Ant Group has initially been on the right track.
It has to be admitted that the era of belonging to the ant group is ending. Compared with the valuation of US$250 billion at the time of the Science and Technology Innovation Board, and US$313 billion at the time of its issuance, Ant Group, which has undergone several rounds of rectification, has sorted out and spun several of its businesses, and its business scale has shrunk significantly.
As of June 2022, Ant Group's valuation is only $70 billion.
Original sin: Controversial origin
It can be said that in the history of Chinese concept stocks, in the face of capital, the first crisis of trust came from Alipay.
At the end of 2004, Alipay was officially established within Alibaba as an independent department, and in May 2011, Alipay obtained the first "payment business license" issued by the central bank in China.
What the official website does not mention is that at the same time that this license was issued, Alipay's wholly-owned controlling shareholder Alipay, a wholly-owned subsidiary registered in the Cayman Islands, became Zhejiang Alibaba Commerce Co., Ltd., a domestic-funded company controlled by Jack Ma and Xie Shihuang, one of the eighteen arhats, and the predecessor of Ant Group officially became independent from Alibaba.
But Alipay's independence eventually turned into the biggest public relations crisis in the history of Jack Ma and Alibaba.
Previously, the Measures for the Administration of Payment Services for Non-Financial Institutions stipulated that "the business scope of foreign-invested payment institutions, the qualification requirements of overseas investors and the proportion of capital contributed shall be separately stipulated by the People's Bank of China and submitted to the State Council for approval". Compared with domestic investment, it is difficult for foreign investors to obtain payment licenses.
In 2005, Alibaba's Yahoo and SoftBank owned 39% and 29.3% of the shares, respectively, and Alipay was also controlled by foreign companies through the VIE structure. According to Yahoo's later statement, Alipay's shareholding change was not notified to Alibaba's board of directors and did not seek approval from the shareholders' meeting.
Hu Shuli, a well-known media personality, believes in the article "Why Ma Yun is wrong", "Ma Yun transferred the company's core assets into his own name without the consent of the two major shareholders of the group, and the transfer price was ultra-low and unfair, which seriously violated the contract between shareholders and between shareholders and management." ”
Mr. Ma later admitted that management shareholders unilaterally transferred Alipay's shares, but he said it was because shareholders were noncommittal and "someone has to come out and take responsibility and move things forward."
Stranded: The Darkest Hour of the Ant
Why is Jack Ma's relinquishment of control of Ant Financial so remarkable? At the heart of the controversial Shanghai Beach speech.
On October 25, 2020, Jack Ma's fierce ambition at the Bund Financial Summit made this trillion-level giant ship completely run aground on the beachhead.
"Banks should abandon pawnshop thinking"; "The Basel Accord, which emphasizes capital adequacy ratios, is just a club of the elderly", and "financial innovation has a price", which means that the regulation will be loosened for Ant Financial, which has suspended its listing.
Subsequent facts have also proved that this may be the most costly in Ma's decades-long speech history - on November 2, the four major financial departments interviewed executives of Ant Group; The next day, the CSRC suspended Ant Group's A+H dual listing.
No matter how many people's dreams of wealth and freedom are shattered, Ant Financial has also started several business divestitures so far. The elephant, once covered in ant skin, also underwent two years of self-dismemberment.
On April 12, 2021, the first version of Ant's rectification plan was officially launched, and each one hit the seven inches of Ant Group:
(1) Return to the origin of payment, improve transaction transparency, and strictly prohibit unfair competition.
(2) Operate personal credit investigation business with a license in accordance with the law, in accordance with laws and regulations, and protect the privacy of personal data.
(3) Establish financial holding companies in accordance with the law, strictly implement regulatory requirements, and ensure sufficient capital and compliance with related party transactions.
(4) Improve corporate governance and strictly rectify illegal credit, insurance, wealth management and other financial activities in accordance with the requirements of prudential supervision.
(5) Carry out securities fund business in accordance with laws and regulations, strengthen the governance of securities institutions, and carry out asset securitization business in compliance with regulations.
Half a year later, Ant's brand isolation was officially completed, and the "Huabei" and "Borrowing" originally owned by Ant became credit products under Chongqing Ant Consumer Finance, and the consumer credit brands issued by banks and other financial institutions were isolated as "credit loan" and "credit purchase", mainly fulfilling the third and fifth articles in the rectification plan; This year's adjustment of equity and corporate governance mainly implements Article 4.
In the prospectus on the eve of listing, the micro-loan business to which Huabei borrowed accounted for 39% of the revenue, and this part has been divested; Another key business, Yubao, both in terms of overall scale and rate of return, has declined for five consecutive years as of the first half of 2021, with a scale of less than 800 billion.
In January last year, another phenomenal product of Ant Group, the "mutual treasure" with hundreds of millions of users, was officially shut down, and the chips that Ant can use to make a large valuation become less and less.
Difference: Hundreds of billions of chips
A ship with a bumpy fate, but carrying the dreams of wealth of too many people.
From the formal establishment to the meeting of the science and technology innovation board, the reason why Ant can achieve a trillion valuation is only one aspect of the boost of business scale. The "sedan car" of the capital behind it may be the main reason.
According to enterprise investigation data, since July 2015, more than 20 institutions with different backgrounds have become primary market investors of Ant Group. In three years, Ant Group's valuation has ballooned from $45 billion to $150 billion, with a maximum single financing of $14 billion.
If calculated at the IPO valuation of $313 billion, if Ant Group is successfully listed, the floating profit of each investor will be no less than 8.5 times.
Previously, Alibaba's earnings report showed that Ant Group contributed 3.717 billion yuan in profit for the three months ended June 30, 2022, compared to 4.494 billion yuan in the same period last year. The performance impact of the divestiture is already beginning to be felt.
Different dollar funds do not agree on the valuation of ants. According to public reports, US mutual fund giant Fidelity Investments lowered the valuation of Ant Group to US$78 billion in June 2021; At the end of May 2022, Ant Group's valuation was lowered again to $70 billion. Before going public, Fidelity's valuation of ants was still $235 billion, and the valuation shrank by more than seventy percent.
BlackRock, which participated in the pre-IPO financing, was more optimistic, lowering its valuation of Ant Group to $151 billion in March 2022 from $174 billion in 2021, a reduction of just 13%.
Looking back at the time of the entry of US dollar funds, it can be seen that the reason why BlackRock's valuation of ants has been lowered is largely due to the background of investors. $151 billion is stuck at the penultimate valuation level of Ant. At Fidelity's latest valuation of $70 billion, all primary market investors who entered the market in 2018, including Alibaba, will suffer varying degrees of floating losses.
Taking the May 2018 pre-IPO round as an example, if the valuation of $150 billion at that time regressed to Fidelity's estimate of $70 billion, then $14 billion from more than a dozen foreign sovereign funds would shrink to about $6.53 billion. The original investment amount will be reduced by more than half.
After all, venture capital is different from lending, and Zheng Gang's example of tearing Lao Luo by hand has proved that without the corresponding repurchase obligation, these late-stage investors cannot legally demand that ants repay their investments.
From birth to listing, the grudge between Ant Financial and investment institutions seems to never stop.
Embarrassment: Who has the final say in the future
Everything eventually has to return to people, and for Ant Financial to rise again, team cohesion is an indispensable factor.
In the past two years, the management rectification of Ant Group has been non-stop - starting in January 2021, Yin Ming, vice president of Ant, has left; In early June 2022, Yang Xiaolei and Shi Meilun served as independent directors, and Hu Zuliu, founder and chairman of Primavera Capital, ceased to serve as an independent director; Jiang Fang no longer serves on the board of directors of Ant Group.
Now, Ant's management will no longer be an Alibaba partner.
If the previous management adjustment was to cut Ant Group and Alibaba, then the latest management adjustment aimed directly at Jack Ma.
At the beginning of this year, Jack Ma, Jing Xiandong, Hu Xiaoming and Jiang Fang terminated their concerted action relationship at the investment level of Yunbo; Jing Xiandong, Shao Xiaofeng, Ni Xingjun, Zhao Ying and Wu Minzhi will each hold 20% of the equity of Yunbo Investment through equity transfer. This means that Ma no longer has legal voting rights in Ant Group's management decisions.
According to the official announcement of Ant Group, after the completion of this adjustment, there will be no single shareholder or concerted actor to jointly control the company, and the era of words is a thing of the past for Ant Group.
Ant Group's actions in increasing capital and shares have also not stopped. Ant Consumer, established in June 2021, was established to undertake credit businesses such as Huabei and borrowing spin-offs. In the initial list of shareholders, the capital of entities such as CATL and Yuyue Medical is prominently listed.
In the capital increase plan of Chongqing Ant Consumption approved on December 30, Hangjin Mathematics and Chongqing Rural Credit Group, backed by state-owned assets, and A-share Sunny Optics, Transfar Zhilian and Boguan Technology are all new shareholders of this capital increase. At this point, the diversification of Ant Group's shareholder structure has become a foregone conclusion. Transparency and compliance will become the main theme of Ant's subsequent rectification.
According to the relevant issuance conditions of the China Securities Regulatory Commission and the Stock Exchange, the actual controller needs to remain unchanged for 3 years for the listing of A-shares on the Main Board, and the Science and Technology Innovation Board and Hong Kong stocks are two years and one year respectively. After the "withdrawal of the actual controller" at the beginning of the year, Ant wants to return to the IPO, and it will take more than a year at the earliest.
Jack Ma left, but where is the next Jack Ma? A leaderless company must have no direction, perhaps Ant Financial can also say that the system will eventually win, and the company relying on people will not go far.
In fact, is this really the case in China's business environment?
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Author / Hashi Sugi
Edit / Three Fires
Source / Lu Jiu Business Review