Issue 2

Creador-backed Malaysian retailer Mr. D.I.Y. exploring $362m IPO

Malaysia-based home improvement retailer Mr. D.I.Y. is exploring an initial public offering to raise about 1.5 billion ringgit ($362 million), according to an industry source. 

The source said the retailer, backed by Malaysia-based private equity firm Creador, is considering listing the business in either Malaysia or Hong Kong, and the IPO could happen by the fourth quarter of this year. 

The development was first reported by Bloomberg, which said the IPO could value Mr. D.I.Y. at 10 billion ringgit. The report also added that the retailer is only looking to list its domestic operations. According to a Reuters report, Creador invested in the retailer in 2016. 

Founded in 2005, Mr. D.I.Y. has about 600 stores across Malaysia, Thailand, Indonesia and Brunei. In late 2018, it opened its first stores in Singapore and the Philippines. Several private equity-backed businesses in Malaysia are looking to go public this year, including QSR Brands (M) Holdings that operates KFC and Pizza Hut outlets in the region, which is backed by CVC Capital Partners. Affinity Equity Partners-backed poultry producer Leong Hup International Bhd is also looking to list on Bursa Malaysia soon. 

Based in Kuala Lumpur, Creador was founded by Brahmal Vasudevan, the former managing director of India-based PE firm ChrysCapital, in 2011. The firm focuses on long-term investments in growth-oriented companies in South and Southeast Asia and has made over 31 investments across Malaysia, Indonesia, the Philippines, Vietnam and India. 

It currently boasts an AUM of $1.4 billion. In Malaysia, Creador has invested in local fashion brand Bonia Group, credit firm CTOS Holding, specialty bakery Bake With Yen, as well as pharmacy chain BIG Pharmacy. DEALSTREETASIA had earlier reported that Creador is currently raising its fourth vehicle, which has a hard cap of $550 million. 

It recently secured $50 million from existing investor Asian Development Bank (ADB), bringing the total amount raised so far to $533 million, already exceeding its initial target of $500 million. The fund is expected to hit its final close by early February. 

Creador had earlier exited its investment in Malaysian payments company GHL Systems Bhd, selling its stake to Actis and generating a 2.8x return an IRR of 40 per cent in Malaysian ringgit terms or a 2.1x return and an IRR of 27 per cent in US dollar terms.


From – Deal Street Asia


Vietnam’s Viettel in talks to buy stakes in Malaysian, Indonesian telcos

Vietnam’s largest telecommunication company, Viettel, is seeking to double its five million subscribers in Myanmar by the end of the year, its president and chief executive officer Le Dang Dung told Reuters an in interview on Friday. 

Viettel, whose $1.22 billion unit Viettel Global Investment is trading on the Unlisted Public Company Market, has also shown interest in investing in North Korea and Cuba. “The growth seen in Myanmar is rare in the telecom market,” Dung told Reuters at his office in Hanoi. “We still have room to grow there”. 

Myanmar, where Viettel and its local partners launched a $1.5 billion 4G network in June last year has emerged as one of the most promising markets for the company, Dung said. The Mytel network, jointly developed by Myanmar National Holding Public Ltd and Star High Public Co Ltd, has amassed around five million subscribers, a figure which Dung said he expects to double by the end of this year. 

Viettel is also in talks to buy stakes in existing telecommunication firms in Malaysia and Indonesia, Dung said, without giving further details due to the sensitivity of the deals. The company will be the first to develop a 5G network in Vietnam, Dung said, in anticipation of rapid development of data services. 

He said Viettel had earmarked $40 million for the development of its own 5G chipset, but was also considering using technology from Ericsson and Nokia. The military-run firm, formally known as Viettel Group, has around 60 million subscribers in Vietnam and over 30 million users across 10 other countries – predominantly in Asia and Africa. 

The company is also in talks to buy a 20 percent stake in a European mobile carrier, Dung said, without elaborating. Dung said Viettel plans to stop expanding its investment in the African market, however, where the company has struggled to make a profit due to poor economic growth. Closer to home, Viettel is looking to invest in North Korea, said Dung, where Koryolink – a joint venture between the North Korean state and Egypt’s Orascom Investment Holdings – has amassed millions of subscribers since its 2008 launch. 

“We first sought permission from North Korea to build a mobile network there in 2010,” he said. “But we’re still waiting for sanctions to be lifted and for the country to open its market to foreign investors”.

From – Deal Street Asia

Thai Digest: PTT unit to take over Glow Energy;
TMB, Thanachart Bank in merger talks

PTT Group’s Global Power Synergy has secured the approval to acquire a 69.11 per cent interest in Glow Energy, the Thai unit of French energy major Engie while Thanachart Bank and TMB Bank are in talks for a merger. 

PTT’s $4b acquisition of Glow Energy approved 
The Thai energy watchdog has approved the $4-billion takeover of Glow Energy Plc by state-owned PTT Group’s Global Power Synergy (GPSC), on the new condition that the deal would not result in an electricity monopoly in the country. 

The Energy Regulatory Commission had rejected the acquisition proposal twice earlier. 
However, it has granted permission last week, given that Glow must sell Glow SPP1 to a third party before or at the same time as the merger between Glow and GPSC materialises. 

Glow’s major shareholder, French power firm Engie, has entered into an agreement with GPSC for that amendment to the 69.11 per cent share sale, SET-listed Glow said in a filing. 

“Any adjustment of GPSC’s tender price of Glow’s shares will be disclosed by GPSC to investors,” it added. 

Glow SPP 1 provides 110 MW of electricity to the Electricity Generating Authority of Thailand under the Small Power Producer programme. The Glow demineralised water plant, starting commercial operation since 1999, is capable of producing a total of 120 cubic metres per hour of demineralised water. 

The initial merger proposal had been submitted in June 2018, with estimation of the transaction amounting to $4 billion. It was then dismissed two times in October and December. Glow said it recorded a net profit of 6.52 billion baht in the first nine months of 2018. 

Thanachart Bank, TMB in talks for merger 
In a consolidation move in the financial services space, Thanachart Bank and TMB Bank are examining the options of a merger, local media reported. 

The local finance ministry might also put fresh funding in TMB following the merger, to retain its 25.9 per cent stake, the Bangkok Post cited Prapas Kong-Ied, general director of the State Enterprise Policy Office (Sepo).

The finance ministry is currently the largest shareholder in TMB. 

The lender also counts Dutch bank ING as a significant shareholder with a 25 per cent interest. 

Meanwhile, Thanachart Capital has 51 per cent in Thanachart Bank, and Canada’s Bank of Nova Scotia owns the rest. 

Thanachart Bank and TMB are sixth and seventh largest banks in terms of total assets in Thailand, home to around 2,000 banks. 

Thailand has been encouraging local bank consolidation in a bid to create strong banking institutions in competition with global banks. 

In April 2018, the cabinet approved policies on tax deduction and exemption for merged banks. 

Krung Thai Bank was also said to be keen on acquiring TMB. The merger talks between TMB and Thanachart Bank is expected to conclude in January.


From – Deal Street Asia

Japan outpaces China in overseas M&As clocking record $191b worth deals in 2018

Japan outmuscled China to dominate mergers and acquisitions in Asia last year, and with companies in possession of more than $890 billion in cash, the spending spree is likely to continue in 2019. 

Japanese companies announced more than 1,000 offshore acquisitions totaling a record $191 billion last year, led by Takeda Pharmaceutical Co.’s blockbuster takeover of Shire Plc, according to data compiled by Bloomberg. The last time Japan overtook China by that measure was in 2012. 

Faced with a shrinking population and stagnant economy, Japanese businesses have been increasingly looking overseas as trade-war tensions depress stock prices and bolster the value of the safe-haven yen. 

Combine that with the massive war chest that Japanese firms from SoftBank Group Corp. to Toshiba Corp. have amassed, and bankers are preparing for a prosperous year. Japanese companies are poised to have the “biggest year ever” in terms of the number of offshore deals, Koichiro Doi, JPMorgan Chase & Co.’s Japan M&A head, said in an interview. 

The U.S. will be the most sought-after destination, partly because it’s the largest market that’s growing, according to Doi, who said 2018 was the busiest year he’s had in his two-decade-long career. 

The number of purchases is bound to increase from industrial, consumer and technology firms, but Japan Inc. is unlikely to spend as much in aggregate, or pull off a deal the size of Takeda’s this year, Doi said. Takeda’s purchase of Shire, scheduled for completion this week, was the world’s largest takeover announced last year but it may soon be trumped by Bristol-Myers Squibb’s recent agreement to acquire Celgene Corp. 

Japanese businesses have long been looking to expand overseas through acquisitions but their track record, in terms of M&A prowess, hasn’t been too flattering. In the 80s, as soaring stock prices fueled hubris, Japan Inc. snapped up everything from the iconic Rockefeller Center in Manhattan to California’s Pebble Beach golf course and Vincent Van Gogh’s Sunflowers painting. 

Sony Corp. and Panasonic Corp. bought Hollywood studios. Many of those investments ended up being sold at a fraction of their cost after the country’s asset bubble burst. Then there were the acquisitive years at the turn of the century, when buyers including phone-operator NTT DoCoMo Inc., Toshiba and Nomura Holdings Inc. splashed out on overseas trophies such as AT&T Inc.’s wireless unit. 

The result was billions of dollars in writedowns and a gun-shy approach to foreign deals. There are signs that Japan has learned from its mistakes as Japanese acquirers are striking harder bargains. 

Last year, they typically paid about 23 percent more than market value, the lowest premium since 2013, according to data compiled by Bloomberg. Also, there’s only so much cash companies can hoard before coming under fire from investors. 

“Japanese corporations are getting pressure from shareholders to spend money more efficiently,” said Akifusa Takada, head of the M&A practice at the Baker McKenzie law firm in Tokyo. “Not many Japanese companies are very willing to distribute cash to shareholders as dividends. They see these fund as resources to expand business overseas.” Companies sitting on excess cash are now more likely to become a target for activist investors so there’s an incentive for boards to spend surplus funds on takeovers, said Zuhair Khan, an analyst at Jefferies Japan Ltd. 

Among last year’s targets was Toshiba Corp., which was urged by hedge fund King Street Capital Management to buy back $10 billion of stock. At $892 billion, cash and cash equivalents at non-financial companies listed on the Nikkei 225 Stock Average have surged from $690 billion in three years, Bloomberg data show. 

There are plenty of sellers to choose from. Once-mighty General Electric Co. continues to sell assets, while Chinese conglomerates such as HNA Group Co. and Anbang Insurance Group Co. are unwinding their empires after the government began cracking down on capital outflows by targeting the country’s most prominent acquirers. 

Healthcare remains a hot sector, even after the Takeda-Shire deal. Bristol-Myers’ bid for Celgene may fuel more consolidation in the sector, according to analysts. Then there are falling share prices, which may fall further yet. 

Concerns about global growth this year have taken hold as China’s economy slows and the U.S.-China trade war drags on. Indexes from Asia to Europe have slumped, while U.S. stocks in 2018 had their worst year since the financial crisis. 

That’s good news for Japanese companies looking for acquisitions, according to Jefferies’ Khan. “It could be a very good year for overseas M&A,” said Khan. “To the extent there’s a pullback in valuation multiples, it’ll make overseas M&A much easier.”


From – Deal Street Asia

Alibaba Group acquires German startup Data Artisans

China’s Alibaba Group Holding has acquired German data analysis firm Data Artisans, the Berlin-based startup said, in a deal reported to be worth around 90 million euros ($103 million). 

The transaction marks the first full takeover by a Chinese company on Berlin’s growing startup scene. In the last significant deal, Alibaba’s rival Tencent Holdings participated in a $160 million funding round for online bank N26 in March 2018. 

Data Artisans CEO Kostas Tzoumas said Alibaba would also invest an undisclosed sum in the company to develop Apache Flink, its open-source software that can process large data volumes, and to expand into new business areas. 

The price of the deal was reported to be 90 million euros in the media, including German newspaper Handelsblatt. 

Data Artisans declined to comment on the purchase price. Alibaba, which competes with e-commerce group, has been a customer of Data Artisans since 2016. 
The German company, which was founded in 2014, also serves clients including Netflix and Uber . “Typical use cases include live fraud detection, direct interaction with internet users and real-time financial transactions,” said Tzoumas. 

Alibaba said this week it was deepening its partnership with Data Artisans and collaborating to develop software that can process large amounts of data.


From – Deal Street Asia
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