Issue 1

Dell returns to public markets with NYSE listing

Dell Technologies Inc returned to public markets on Friday, nearly six years after the company’s founder and Chief Executive Officer Michael Dell took it private in what was then the biggest buyout since the financial crisis of 2008. 

The computer maker is trading on the New York Stock Exchange under the symbol ‘DELL’, after it bought back shares that tracked the financial performance of software maker VMware, in which Dell held an 81 percent stake. The cash-and-stock deal was worth nearly $24 billion. Buying back the shares allowed Dell to bypass the traditional IPO process, which would likely have involved grilling by investors over the company’s $52.7 billion debt pile. Dell shares opened at $46 on Friday, marking its market valuation at $16 billion, as per Refinitiv data. 

The company was seen as a model of innovation in the early 2000s, pioneering online ordering of custom-configured PCs and working closely with Asian component suppliers and manufacturers to assure rock-bottom production costs. But it missed the big industry shift to tablet computers, smartphones and high-powered consumer electronics such as music players and gaming consoles later in the decade, and saw sales declining to a little over 10 percent in 2012’s fourth quarter on a fall in shipments. 

That forced Michael Dell to take the company off the public market, and look at acquisitions to transform his company from a PC manufacturer into a broader seller of information technology services, ranging from storage and servers to networking and cyber security. 

The strategy is in sharp contrast to that of rival HP Inc’s, which separated from Hewlett Packard Enterprise Co in 2016, based on the reasoning that two technology companies focused separately on hardware and services would be more nimble. But Dell’s strategy seems to be paying off, especially as corporates are increasingly turning to one-stop shops to help them manage their IT infrastructure on the cloud. Dell reported a 15 percent rise in revenue in its latest quarter, and said it expects total adjusted revenue in the range of $90.5 billion to $92 billion in 2019. 

The company currently holds 17 percent of the global PC market share year-to-date, behind rival HP Inc’s 23 percent and Lenovo Group Ltd’s 21 percent share, according to data from Canalys.

From – Deal Street Asia


VC firm BEENEXT eyes at least six investments in Indonesia in 2019

Singapore-based venture capital firm BEENEXT says it is looking to make a minimum of up to six investments in Indonesia in 2019 as it looks to tap new opportunities and entrepreneurial talent in the market. 

In an interaction with DEALSTREETASIA, BEENEXT operating partner Nao Ito said that the new deals will continue the firm’s active investments in a market where it has already backed nine companies. 

The firm, which also claims to have made six other investments in the country through affiliate entities, was an early backer of local unicorn Tokopedia. Other Indonesian startups in its portfolio include fintech firm Amartha and B2B marketplace Ralali. 

Over the past year, the VC firm has also managed to achieve notable exits from a couple of its investments, namely O2O commerce startup Kudo, which was acquired by ride-hailing giant Grab, and payments startup Midtrans, which was acquired by Grab’s rival Go-Jek. 

For its next investments, Ito said BEENEXT would particularly be on the look-out for companies operating in the healthcare and agriculture sector. “We have been interested in marketplaces, consumer tech, fintech and SaaS domain and would love to seek more investment opportunities in healthcare tech and agriculture tech as well,” he said. 

While BEENEXT will be flexible in investment ticket size for Indonesian companies, Ito said the firm will continue to enjoy injecting early capital into companies to support their development. “We are more than happy to participate in the journey from a very early stage, and trying to contribute to the founder with our experience in building and developing the various types of digital platform crossing the region as founder/entrepreneur by ourselves,” he said. 

BEENEXT was founded by Japanese entrepreneur Teruhide Sato, previously the chief executive of BEENOS who took it public on the Tokyo Stock Exchange’s Mothers market in 2004. At BEENEXT, Sato holds the position of managing partner, along with fellow Japanese investor Hironori Maeda. 

Despite boasting years of investment experience, BEENEXT only launched its first established fund last year after announcing it had spun off its $75-million-plus fund from Singapore P2 firm Gordian Capital. 

Since launching the fund, the VC firm has backed numerous companies in different markets, the latest being its investment in Indian micro-delivery startup Milkbasket and Vietnamese enterprise SaaS platform earlier this month.

From – Deal Street Asia

China National Tobacco plans HK offering for international unit

China National Tobacco Corp, a state monopoly that’s by far the biggest cigarette maker in the world, plans to list its international unit on the Hong Kong stock exchange even as pressure increases on the government to curb smoking. 

The unit, China Tobacco International Inc., is primarily responsible for procuring overseas tobacco leaf from countries like Brazil and Canada for the cigarette giant, which churns out four of every 10 sticks made in the world. 

The parent company may clock more profit than either HSBC Holdings Plc or Walmart Inc., according to a rare glimpse of financial data in 2012. The international unit accounts for a tiny portion of China Tobacco’s overall business, which has a bigger market share than the next five global tobacco companies combined. 

However, the listing represents a rare opening up of the state monopoly that’s facing growing domestic concerns over China’s high rates of cancer and smoking-related disease. China is the largest tobacco-consuming and manufacturing country in the world, and critics contend the government isn’t doing enough to prevent the spread of smoking because of the tax revenue it derives from the industry. 

Last year, lawmakers in China’s National People’s Congress called for higher taxes on cigarettes to deter smoking among the young. The international business to be floated recorded revenue of HK$5.1 billion ($651 million) for the nine months ended in September, a 21 percent drop from the same period last year, according to pre-listing documents issued Wednesday. 

It had a gross profit margin of 5.8 percent, down from 6.5 percent a year earlier. The unit derives revenue primarily from a fixed markup of 6 percent it applies to the overseas tobacco leaf supply when selling to domestic cigarette manufacturers. 

It also has full control of cigarette exports — sold primarily in duty-free locations overseas to Chinese tourists — and domestic-grown tobacco leaf from provinces including Yunnan and Sichuan. In May, it started a business exporting Chinese-made heat-not-burn tobacco devices, the document said. In 2016, the industry contributed profit and tax of 1.1 trillion yuan ($160 billion), according to China Tobacco’s website. 

The monopoly otherwise doesn’t publish financial data voluntarily. In 2012, a bank that it was buying a stake in released figures that showed the cigarette giant had sales of 770.4 billion yuan and net income of 117.7 billion yuan in 2010. CICC and China Merchants Securities are joint sponsors of the proposed IPO.

From – Deal Street Asia

Indonesia’s Go-Jek extends Singapore service to cover entire city

Having recently rolled out its beta app for a limited service area operation in Singapore, Indonesian unicorn Go-Jek will be extending its ride-hailing services to the whole of the city-state from January 2, 2019. 

“This means that users will be able to use Go-Jek to take rides anywhere in Singapore,” the company said in a statement. Go-Jek added that the island-wide roll-out is part of its continued beta phase for Singapore, which started in November. It will also see the continued partnership with Southeast Asia’s largest lender DBS, which has seen DBS/POSB Bank customers enjoying priority access to the app. 

As of the end of December 2018, Go-Jek’s beta app in Singapore has been downloaded over 50 million times. In November, the startup had said it expects to fully launch in Singapore by early 2019. Unlike its expansion into other Southeast Asian markets, Go-Jek has entered Singapore using its own entity and brand, without the use of a local affiliate. 

Go-Jek’s operations in Vietnam, which kickstarted in September last year, is carried out under the local brand Go-Viet. Similarly in Thailand, where it recently launched its beta app, Go-Jek operates through its local affiliate GET WIN. After Vietnam, Singapore and Thailand, the Philippines is expected to be the next target market for Go-Jek. 

However, the company’s efforts in the Philippines hit a roadblock after the country’s transportation authority rejected its application, citing an existing moratorium on accrediting transport network companies. Go-Jek is reportedly finalising a $2-billion funding round to boost its international expansion plans. 

Meanwhile, its arch-rival Grab is said to be raising a $5-billion funding round, much larger than a previously announced $3-billion target. The Singapore-headquartered ride-hailing firm had last announced a $150-million investment from Japan’s Yamaha Motor Co. Ltd, as part of its ongoing Series H funding round.

From – Deal Street Asia

Reliance Industries arm to acquire renewable energy firm Kanoda for $10.8m

Indian conglomerate Reliance Industries Ltd has agreed to acquire 88 per cent stake in renewable energy services firm Kanoda Energy Systems Pvt. Ltd for Rs 75 crore (about $10.8 million) in an all-cash deal. 

The investment, which is likely to be completed by March 2020, was made through its wholly-owned subsidiary Reliance Industrial Investments and Holdings Ltd, according to a filing to the stock exchanges. The acquisition will help Reliance Industries’ initiatives to use renewable energy sources, the filing added. 

Founded in 2007, Kanoda Energy has presence in solar advisory, product design and technology validation and recently forayed into engineering, procurement & construction (EPC) and operation and maintenance (O&M) of solar photovoltaic (PV) systems. Its turnover stood at Rs 10.54 crore in 2017-18, as against Rs 1.63 crore in the previous year. 

The renewable energy space has been going through a phase of consolidation with smaller companies looking to exit the industry due to low tariffs, stiff competition and lack of access to cheap funds. It was recently reported that CDC Group Plc, the UK government’s development finance institution, was looking to raise around $100 million by selling a stake in Ayana Renewable Power, its renewable energy platform recently launched in India. 

Prior to that Canadian pension fund manager Caisse de depot et placement du Quebec (CDPQ) announced in October that it has increased its stake in NYSE-listed Azure Power Global Ltd. to 40 per cent by infusing $100 million in the company’s recent capital raising. Reliance Industries, which gets a majority of its revenue from its energy business, has been actively acquiring stakes in smaller companies across sectors.
Most recently it picked up 5.56% in UK-based blockchain startup Vakt Holdings Ltd for $5 million, prior to which it acquired a substantial stake in media startup New Emerging World of Journalism (NEWJ) for over $10 million. It also acquired a 12.7 per cent stake in US-based SkyTran,SkyTran Inc., a US venture-funded technology company that develops personal rapid transit systems. 

In September, it put in $8 million more in US-based artificial intelligence firm Netradyne, while in June last year, it agreed to acquire Radisys Corporation, a US-based open telecom platform solutions provider, for $75 million.

From – Deal Street Asia
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