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Calvin Choi controls AMTD Digital, the world’s hottest stock right now, through a web of companies. Forbes estimates his holdings make him Asia’s sixth-richest person, at least on paper, but few think it’s worth anywhere near that much or think it will hold up.
By Zinnia Lee, John Kang and Robert Olsen
Hong Kong banker Calvin Choi appears to have amassed an immense fortune at record speed. Less than a month after the 43-year-old listed his AMTD Digital on the New York Stock Exchange, his stake in the digital financial services firm has skyrocketed 14,000% for reasons his firm can’t explain. Now his holdings appear to be worth as much as $36.8 billion—based on AMTD Digital’s stock price at Wednesday’s close. But his stake in AMTD IDEA, which is AMTD Digital’s parent company, is worth below $500 million, illustrating just how out of whack the stock’s insane valuation is at the moment.
A spokesperson for holding company AMTD Group was able to confirm Choi’s shareholdings, but declined to comment on the market values of those holdings. AMTD Digital is a thinly traded stock, and yet the company’s market cap now stands at a whopping $203 billion. That gives the company a price-to-sales ratio of 8,077, whereas Robinhood Markets has a P/S ratio of only 2.73.
Comparisons are being drawn to meme stocks that gain a cult-like following of investors who collectively influence the price of shares, but it’s unclear if that’s the case here: “It’s a combination of a few things—a small float, some likely short interest and now the meme stock angle,” explains Brendan Ahern, chief investment officer at China-focused ETF provider KraneShares.
Remarkably, for a company that’s now bigger than the likes of Walt Disney and Morgan Stanley by market cap, AMTD Digital said it has just 50 employees across offices in Hong Kong and Singapore as of February. And its financial performance fails to support its huge market cap. For the 2021 fiscal year ended in April, AMTD Digital reported a 16.9% increase in revenue from a year earlier to HK$195.8 million (about $25.2 million) and a 8.9% rise in profit to HK$172.5 million, partially a result of gains it booked from equity investments in private companies.
Choi, a former UBS managing director, effectively controls AMTD Digital through a web of companies. His wholly-owned company, Infinity Power Investments, holds a 20.4% stake in AMTD Digital’s parent company, AMTD IDEA (also goes by the name AMTD International), but has majority voting power (51.3%) through Class B stock. AMTD IDEA itself owns 88.7%, including all the Class B shares, of AMTD Digital.
Shares of AMTD IDEA, which is dual-listed on the New York Stock Exchange and the Singapore Exchange, also soared. Its stock price more than tripled since Monday and boasts a market cap of $2 billion as of Wednesday’s close. According to Forbes’ estimates, Choi’s stake in AMTD IDEA would be worth about $480 million on paper. Another method of calculating his paper net worth is using his indirect stake in AMTD Digital that’s worth $36.8 billion—making him the sixth-richest person in Asia on Forbes’ Real-Time Billionaires Rankings, surpassing Hong Kong’s richest man Li Ka-shing and Tencent’s Ma Huateng—if prices hold steady. AMTD Digital shares plummeted 34.5% on Wednesday.
When asked to comment on Choi’s net worth calculation, a spokesperson for AMTD Group, which effectively controls AMTD IDEA through a 32.5% equity stake, said, “We see no problem of such calculations but want to kindly remind you that AMTD Group, operating our IDEA strategy, owns more businesses other than AMTD IDEA and AMTD Digital.” Choi declined to comment further through the same spokesperson.
AMTD Group was cofounded by Li Ka-shing’s CK Hutchison and the Commonwealth Bank of Australia back in 2003 to provide financial services. AMTD Group, whose name stands for “add, minus, times, divide,” was later controlled by the private equity arm of Morgan Stanley until 2015.
In a statement on Thursday, Li’s CK Group said it had sold a majority of its shares in AMTD Group nearly ten years ago. The company also said that it is currently in talks with AMTD Group to offload its remainly shares of less than 4% in the firm. CK Group added that it has no representatives on the board of AMTD Group, nor is it involved in any way in its operations.
Early backers of AMTD IDEA include Xiaomi, Morgan Stanley Private Equity Asia and Sun Hung Kai & Co.
Choi, whose career includes previous stints at PwC Hong Kong and Citigroup, joined AMTD Group in 2016 as chairman and CEO. The Hong Kong citizen, who returned from Canada with a bachelor’s degree in accounting from the University of Waterloo, told state news agency China News Service three years ago that he had wanted to build “an investment bank of Chinese people” and help China’s enterprises expand globally. That’s when Choi started to expand AMTD Group’s business to investment banking, asset management, insurance brokerage and others.
Choi launched AMTD IDEA amid a company restructuring in 2019. AMTD IDEA bills itself as Asia’s leading investment bank and has underwritten 54 initial public offerings, mostly for Chinese companies that were listing in Hong Kong and the U.S. Some of its prominent clients include smartphone maker Xiaomi and delivery behemoth Meituan. However, nearly 90% of the U.S. IPOs the firm underwrote had collapsed, Hindenburg Research said in a 2021 research. AMTD IDEA is currently one of the companies at risk of being delisted from the U.S. stock exchange for failing to be inspected by the country’s audit watchdog for three consecutive years.
Despite doubts and criticisms, AMTD IDEA has attracted major investors like Century City International Holdings, the property and hotel company owned by members of Hong Kong’s billionaire Lo family. Other early backers include Xiaomi, Morgan Stanley Private Equity Asia, Sun Hung Kai & Co and David Chu, the chairman and CEO of property developer Far East Consortium, according to a 2019 prospectus.
AMTD Digital was also launched in 2019 and the company says it operates as an “one-stop digital solutions platform.” The company markets one of its core businesses, the SpiderNet Ecosystem Solutions, as a “super connector and digital accelerator” for Asia-based enterprises. According to AMTD Digital’s prospectus, the SpiderNet Ecosystem is principally a membership fee scheme that provides clients access to investors, business executives and academic professionals.
Other businesses of AMTD Digital include a virtual bank jointly developed with Xiaomi, investments in startups, partnership with financial conferences like the World’s Economic Forum and the Singapore Fintech Festival, as well as investment in movie productions.
Having spent more than two decades in the financial industry, Choi has raised a few eyebrows for some of his work practices. Hong Kong’s Securities and Futures Commission has recently ordered to ban Choi from the industry for two years after he failed to report potential conflicts of interest to UBS during his time serving the investment bank. Choi has sought an appeal.
The banking veteran had also been accused of financial frauds. China Minsheng Investment Group had in 2020 alleged AMTD Group for misappropriating the funds it entrusted to the Hong Kong-based firm for investments, reported Chinese financial magazine Caixin. The early business partner of AMTD Group had reportedly decried Choi with banners in Hong Kong’s Central business district. Choi had denied the accusation in a response to Chinese state media Ta Kung Pao and said at the time he would reserve the right to take legal action.
So far, these hurdles did not slow down Choi’s ambitions to build an even bigger business. AMTD Group said it is now establishing a presence in the metaverse—the digital realm where people can interact virtually. The company has recently acquired French fashion magazine L’Officiel, which said it will launch a virtual world on metaverse platform the Sandbox.
“Over the past few years, I have encountered countless opportunities, as well as countless challenges, especially doubts and incomprehensiveness from the outside world,” Choi wrote in a statement around the time of China Minsheng Investment Group’s accusations. “There are those who are envious and jealous, those who are detached and snide, and those who maliciously defame.”
“Entrepreneurs, however, must maintain that development is essential,” he added, “And persist in daring to experiment, daring to pioneer, leading reform with breakthrough ideas.”
— With assistance by Jane Ho.