Ant Group’s IPO to spell bonanza for Silver Lake, Warburg and Carlyle

The mascot for Ant. Photographer: Qilai Shen/Bloomberg

A raft of U.S. private equity firms backed by the country’s largest endowment and pension funds stands to reap big gains from Ant Group’s highly anticipated initial public offering, even as U.S. lawmakers push funds to halt investments in China.

Silver Lake Management LLC, Warburg Pincus LLC, and Carlyle Group Inc. were the biggest U.S. backers in Ant’s latest funding round in 2018, investing at least $500 million each in the fintech giant, according to people familiar with the matter who asked not to be identified because the matter is private.

The funds invested in China’s biggest payments company when it was valued at about $150 billion. Bernstein estimates Ant’s now worth about $210 billion, which would generate a 40% return for the funds if they were to sell in the IPO at that valuation. The private equity investors will probably hold on to their stakes, betting on more gains, people familiar have said.

Ant and Silver Lake declined to comment in emailed statements. Representatives for Warburg Pincus and Carlyle declined to comment.

The investments are the latest example of a money trail that has fueled China’s biggest national champions and fattened the pockets of U.S. pension funds, ultimately benefiting American fire fighters and teachers. The investment model is now under siege as U.S. senators call for inspections to curtail U.S. pension fund support for Chinese tech companies, while Secretary of Sate Michael Pompeo is scrutinizing U.S. fund investments in the sector.

More than 90% of U.S. foundations and endowments have some exposure to China, mostly through a broad emerging markets strategy, according to a 2018 survey of 47 respondents by consultant NEPC.

Chinese tech companies secured a record amount of funding just before the trade war went into full swing last year. Some of the largest venture capital and private equity firms – including Hillhouse Capital, Warburg Pincus and Sequoia Capital – also raised billions of dollars from a clutch of high-profile U.S. pension funds.

Warburg Pincus’s China-Southeast Asia fund raised about $4.5 billion from pension plans in Ohio, Colorado and Florida last year. Carlyle’s Asia Partners V LP in 2018 added about $6.6 billion from pensions in Kentucky, New York State and California. Silver Lake Partners V LP, which secured $15 billion from pension funds including Washington State and Texas, has invested in Ant as well as Chinese tech companies including artificial intelligence giant SenseTime Group Ltd.

SZ DJI Technology Co. became the world’s biggest commercial drone maker with money from a venture firm whose investors include the Delaware Public Employees Retirement System and the State of Michigan Retirement System. ByteDance Ltd., the owner of TikTok, has benefited from capital raised via pension funds in New York and Oregon.

Among these private companies, Ant’s IPO has been the most anticipated for its sheer size. The company, controlled by billionaire Jack Ma, said last week it would pursue a simultaneous dual-listing in Hong Kong and on the Shanghai stock exchange’s STAR board. The Hong Kong share sale alone could raise about $10 billion, people familiar have said.

Ant raised about $14 billion in 2018 from backers including Singapore’s GIC Pte, Khazanah Nasional Berhad, Warburg Pincus, Canada Pension Plan Investment Board, Silver Lake, Temasek Holdings Pte and Carlyle Group.

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.