Hamish Douglass’ ‘disappointment’ at blocked ANT Group IPO

Magellan China Alibaba

5 March 2021
| By Laura Dew |
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Alibaba founder Jack Ma made his “greatest mistake in history” by making critical comments days before the listing of ANT Group, according to Magellan chief investment officer Hamish Douglass.

ANT Group, the financial arm of Alibaba, had been due to IPO in October 2020 but was cancelled at the last minute after regulatory hurdles.

It had been set to the largest IPO in the world at US$34.5 billion but it was speculated that Chinese Premier Xi Jinping personally ended the deal after comments by founder Jack Ma which prompted regulators to take a deeper look at ANT. Ma then went into hiding and was not seen in public until February 2021 and shares in Alibaba had fallen 20.6% over the six months to 02 March.

Douglass said Magellan, which held Alibaba as the largest weighting in its Magellan Global fund, had been set to be the 12th largest shareholder in ANT Group if the IPO had gone ahead.

“We had increased our share before the IPO as it had gone up in value and we had planned to trim it back again after the IPO. We think the risks were priced into the share price. We are very disappointed and there is a lot of disappointment and anger out there, people think this should never have happened,” he said.

“ANT Group will still be a good business but the fintech arm will be less profitable and that was a big driver of growth.”

Commenting on Ma’s actions, he said the founder had “made the greatest mistake in history”. It is speculated Ma was critical of the Chinese Communist Party after comments criticising global banking standards and the Chinese regulatory system.

“Jack Ma has made the greatest mistake in history and will lose a lot of his personal wealth because of this. The Chinese Communist Party will come down very hard [on those who criticise it]. Xi Jinping had no choice but to punish him, it was inevitable it would happen after those comments,” Douglass said.

The Magellan Global fund lost 6.9% over one year to 31 January, 2021, according to FE Analytics, versus returns of 3.1% by the global equity sector within the Australian Core Strategies universe.

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