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Fidelity, BlackRock Cut Fintech Giant Ant’s Valuation Lower

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(Bloomberg) -- Fintech giant Ant Group Co.’s valuation was trimmed again by global investors who bought private shares ahead of its suspended initial public offering.

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Boston-based Fidelity Investments cut its estimate for Ant to $70 billion at the end of May, according to Bloomberg calculations based on filings. That’s down from $78 billion in June last year, and $235 billion just before Ant’s IPO was torpedoed by regulators in November 2020.

BlackRock Inc. lowered the value to $151 billion as of March from $174 billion, while T. Rowe Price Group Inc. trimmed it to $112 billion as of May, compared with $189 billion last year.

The woes for Ant and its investors are adding up. The company’s profit fell 17% for the March quarter amid an ongoing yearslong regulatory overhaul. The $150 billion price tag marks an important threshold since investors including Warburg Pincus, Canada Pension Plan Investment Board, Silver Lake and Temasek Holdings Pte were said to have invested in Ant at that price four years ago.

Ant declined to comment in an emailed statement. BlackRock and T. Rowe Price also declined to comment. Fidelity and Baillie Gifford didn’t immediately respond to a request for comment.

The Hangzhou-based firm has been restructuring its operations to meet a list of demands from Chinese regulators over the past year, including beefing up capital, curbing consumer lending, and shuffling its management. Billionaire Jack Ma is considering ceding his control of 50.52% voting rights in the firm, people familiar have said.

In a filing in July, Alibaba Group Holding Ltd. reiterated that Ma “intends to reduce and thereafter limit his direct and indirect economic interest in Ant Group over time” to a percentage that does not exceed 8.8%.

Ant Chairman Eric Jing said last year that the company would eventually go public, but as of June the company said it had no plans to initiate an IPO yet.

China’s campaign to rein in its tech businesses kicked off with snuffing out Ant’s planned $35 billion initial public offering. The crackdown snowballed into an assault on every corner of China’s technosphere as Beijing seeks to end the domination of a few heavyweights and create a more equitable distribution of wealth.

As part of the government-ordered restructuring, Ant has ramped up its capital base to 35 billion yuan ($5.2 billion). It’s building firewalls in an ecosystem that once allowed it to direct traffic from Alipay, with a billion users, to services like wealth management, consumer lending and delivery services.

Consumer loans jointly made with banks have been split from Ant’s Jiebei and Huabei brands. Assets under management at its proprietary money-market fund Yu’ebao -- once the world’s largest -- dropped about 35% from a peak in March 2020 to 813 billion yuan as of June.

Alibaba removed Ant executives from its important partnership committee, a group of people who can nominate the majority of the board.

Ant has yet to apply for a financial holding company license to be regulated like a bank -- a major move widely seen as an indication on whether it has satisfied Beijing’s requirements and that may set the stage for a resumption of its share sale.

(Updates with details about Ant’s IPO in eighth graph. A previous verion of this story corrected the name of Baillie Gifford)

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