Issue 37

Alibaba’s Jack Ma bids farewell to company with rock show

A tearful Jack Ma formally left Alibaba (BABA.N) on Tuesday, donning a guitar and a rock star wig at an event for thousands of employees of the e-commerce giant he founded 20 years ago in a small shared apartment in Hangzhou city in eastern China. 

During a four hour celebration in an 80,000-capacity stadium, Alibaba’s billionaire executive chairman delivered on his promise of a year ago to hand over to CEO Daniel Zhang. Costumed performers, some dancing to dubstep music and dressed in traditional Chinese dress, and singers paid tribute to Ma’s reputation for dressing up and performing at big events, entering to a parade of floats representing Alibaba divisions such as shopping site Tmall and payment service Ant Financial. 

“After tonight I will start a new life. I do believe the world is good, there are so many opportunities, and I love excitement so much, which is why I will retire early,” Ma told guests and employees. Ma was spotted at one point welling up with tears as staff put on skits and sang songs, prompting the topic “Jack Ma has cried” to trend on Chinese social media platform Weibo. 

Toward the end of the ceremony, Ma, co-founder Lucy Peng, and CEO of Alibaba’s technology committee Wang Jian donned rock star-style leather jackets and wigs to perform Chinese pop songs. They were joined by co-founder Joe Tsai dressed in Marilyn Monroe style white dress and a blonde wig. Zhang, also clad in rock star garb, then delivered a solo, having earlier said that Alibaba would keep investing in areas such as cloud computing. 

Ma’s exit comes as Alibaba has grown to become Asia’s most valuable listed company, with a market capitalization of $460 billion. It employs over 100,000 people, and has expanded into financial services, cloud computing and artificial intelligenceg. 

The company also said on Tuesday that it had adopted six new core values, among which one was a pledge to “respect the work-life balance decisions of every individual”, marking a step away from Ma’s recent comments urging tech company employees to work nights and weekends, which sparked a nationwide debate. 

Ma also told attendees that he hoped to see Alibaba shoulder more responsibility to improve society amid the sweeping changes brought about by technologies like big data and 5G. “It is not easy to be a strong company, but it is more difficult to be a good company,” he said. “A strong company is determined by its commercial ability, while a good company is responsible and kind.”

From – Deal Street Asia

A Thailand’s Central Retail targets to raise $2b in 2020 IPO

Central Group, one of Thailand’s biggest conglomerates, is targeting an initial public offering of its retail arm as soon as the first quarter of next year which could raise around $2 billion, according to people familiar with the matter. 

The IPO plan was pushed back from the last quarter of 2019 to allow the group to complete a restructuring involving Bangkok-based department store operator Robinson Pcl ahead of the proposed listing, said the people, who asked not to be identified as the discussions are private. 

At $2 billion, Central Retail Corp.’s planned offering would be the second-largest in Thailand on record after BTS Rail Mass Transit Growth Infrastructure Fund’s $2.1 billion listing in 2013, according to data compiled by Bloomberg. 

Another upcoming billion-dollar-plus IPO would be from billionaire Charoen Sirivadhanabhakdi’s property arm Asset World Corp., which is looking to raise as much as $1.5 billion this year. Central Group, which is controlled by Thailand’s Chirathivat family, said in July it would consolidate its retail arm operations in Thailand, Vietnam and Italy under a single listed entity. 

It is conducting a tender offer for the 46% of Robinson stock it does not already own. The closely-held conglomerate operates shopping malls under the Central and Central Embassy brands, as well as Zen men’s lifestyle stores and Supersports athletic equipment shops. 

Outside Thailand, it owns Italian department store La Rinascente, Danish retailer Illum, and it bought the Big C hypermarket chain in Vietnam in 2016. Deliberations of the proposed listing are ongoing and details, including timing and size, could still change, the people said. 

A representative for Central Group declined to comment. Companies have raised $720 million via first-time share sales in Thailand so far this year, up from $409 million a year ago, data compiled by Bloomberg show. A single deal, however, can move the needle dramatically. Thailand Future Fund‘s $1.38 billion offering last September took the total funds raised in the country to $2.76 billion in 2018.

From – Deal Street Asia

China’s appoints former CDH executive to oversee strategic investments

China’s second-largest e-commerce firm Inc has appointed Jason Hu, a former managing director at Chinese private equity firm CDH Investments, as head of strategic investment to oversee deals both at home and overseas. 

Hu, who joined the company in late July, was also named vice president reporting directly to Chief Strategy Officer Jon Liao. Filling the newly created role will beef up’s investment arm which has long been dwarfed by in-house deal teams at bigger rival Alibaba Group Holding Ltd as well as tech peer Tencent Holdings Ltd. has been seeking to diversify its business to deal with slowing growth in China’s broader e-commerce sector by venturing into areas such as offline stores, and investing in artificial intelligence to improve logistics and advertising capabilities. 

The Beijing-based e-commerce firm has made about 50 investments at home and overseas over the past five years, showed data from Refinitiv. High-profile deals include a minority stake in London-based retailer Farfetch Ltd, and investments in Chinese luxury e-commerce platform Secoo Holding Ltd and apparel retailer Vipshop Holdings Ltd. Prior to joining, Hu, who began his career as a consultant with Bain & Company, held senior roles in investment management at PE firms CDH and Cathay Capital. 

At CDH, he was involved in investments in domestic couriers Deppon Logistics Co Ltd and Yimidida, and footwear retailer Belle International. A spokesman at said Hu’s appointment “further strengthens the company’s deep bench of investment and strategy leadership for continued growth”. Reuters reported Hu’s role earlier on Wednesday citing sources. 

The spokesman later confirmed that Hu had been appointed as head of strategic investment. International’s president, Winston Cheng, who was responsible for the company’s overseas business including investments, left in September last year. Vice President Chang Bin, who mainly oversaw the company’s domestic investments, took up a new role in September last year to lead’s own-brand business, in particular, “Made by JD” or Jing Zao in Chinese. 

Made by JD launched early last year offering household basics as varied as hair dryers and suitcases, with the goal of competing with manufacturers that sell products through the country’s e-commerce platforms. CSO Liao had been overseeing strategic investments until Hu’s arrival, said a person with direct knowledge of the matter, who was not authorized to speak to the media and so declined to be identified. 

The appointment comes after a troubled time for Chief Executive Richard Liu was accused of rape last year in the United States, with investigations ending in December without charge. He denied wrongdoing. The company also laid off staff earlier this year amid slowing e-commerce growth, though analysts regarded its cost-cutting measures as a reason behind better-than-expected second-quarter earnings.

From – Reuters

GIC-led consortium invests $500m in Vietnamese conglomerate Vingroup

Singapore’s sovereign wealth fund GIC has led a consortium to invest $500 million in the retail business of Vietnamese behemoth Vingroup, according to an announcement. 

The consortium has acquired a minority stake in VCM Services and Trading Development Joint Stock Company, a unit of Vingroup that was recently established to oversee its operations of supermarket and convenient store chains. Following the transaction, Vingroup will continue to be the controlling shareholder of VCM, GIC said in a statement. 

“As a long-term investor, GIC is confident in the growth outlook for disposable incomes and household consumption in Vietnam,” it added. Last month, Vingroup split VinCommerce, the former entity that ran its retail business, into P&S Trade and Investment JSC and Adayroi Commerce and Service Development JSC. Adayroi is Vingroup’s e-commerce venture. 

In conjunction with the split, Vingroup also set up VCM to indirectly hold shares in VinCommerce. According to business registration documents, Vingroup owns 64.3 per cent in VCM, while another 14.57 per cent is owned by two individuals. As a result of the restructuring, VCM is currently the parent firm of Vinmart and Vinmart+ retail stores. 

Vingroup had as many as 114 VinMart supermarket outlets and another 1,990 stores of the minimart concept, Vinmart+, as of 31 July 2019, according to its brochure. The $17.4-billion Vietnamese company has grown its retail chains both organically and inorganically. Prior to the current investment, GIC pumped in $853 million in VinHomes in 2018, as part of the property developer’s IPO transaction. 

GIC has been increasingly evincing interest in Vietnam. It has so far made investments in companies such as Masan Group, Vietjet, Vinamilk, FPT and PAN Group. Meanwhile, Vingroup said it has raised a total of $6.9 billion through 15 transactions since 2013, including both equity investments and loans. 

It banked a whopping $1 billion from South Korea’s SK Group, selling only a 6 per cent stake. Before that, Hanwha Asset Management invested $400 million in Vingroup’s convertible preference shares, while Warburg Pincus pumped in $300 million in its mall operator Vincom Retail. 

The Vietnamese business giant recorded 61.3 trillion dong ($2.64 billion) in revenue in 1H2019, which matched the volume of the same period last year, but its net profit reached 3.35 trillion dong, up nearly 90 per cent. 

Originally a real estate firm, Vingroup has expanded into various businesses such as retail, education, entertainment to automobile and technology. Its recent activities include launching Vingroup Ventures, a $100-million venture capital arm, and partnering with Japan’s Fujitsu and American telecom major Qualcomm to produce 5G smartphones.

From – Deal Street Asia

Grab said to be in talks to merge Indonesian payment firms to overtake Gojek

SoftBank-backed ride hailer Grab is in talks to merge OVO, an Indonesian digital payments firm in which it owns shares, with an Ant Financial-backed local peer to build heft and power ahead of archrival Gojek, people familiar with the matter said. 

A deal would see Singapore-based Grab buy a majority interest in Ant-backed DANA from Indonesian media conglomerate Elang Mahkota Teknologi (Emtek) and merge it with OVO, they said. It could help OVO-DANA dominate Gojek in Indonesia’s multi-billion dollar online payments market. 

OVO and Gojek have been vying for the top spot in payments since 2018, with DANA not far behind. Grab and Gojek are the top-two startup brands in Southeast Asia, valued at $14 billion and $10 billion, respectively, according to sources. They compete in a host of areas including financial services, e-commerce, ride-hailing and food delivery. “It’s part of the Grab-Gojek battle,” one of the sources said. 

The plan also points to intensifying competition in Indonesia’s digital payments industry that is seeking to piggyback on the country’s booming e-commerce market and its 260 million people. Grab and OVO declined to comment, while DANA said it does not comment on market rumours. The people declined to be named as the talks are private and remain at an early stage. 

Emtek, Ant Financial, and SoftBank did not immediately respond to requests for comment. It was not immediately clear how much a deal would be worth. Finance Asia, citing sources, put OVO’s latest valuation at $2.9 billion. DANA’s valuation could not be immediately determined. The overall structure of the deal would need to be negotiated with the country’s central bank due to foreign ownership restrictions, the sources said. 

Grab‘s exact ownership of OVO could not be ascertained but sources said it owns a sizable stake. Emtek currently owns over 50% of the company that owns DANA, which was formed in 2017 through a tie-up with Ant. The talks for a merger follow SoftBank Group Corp’s announcement in July it will invest $2 billion in Indonesia through Grab. 

SoftBank, Grab‘s biggest shareholder, supports the proposal, sources said. The plan was discussed with top Indonesian officials when the Japanese investment firm’s CEO Masayoshi Son visited Jakarta in July, a source with knowledge of those discussions said. 

“Son is in favour,” the person said. 

Ant’s angst. 

SoftBank is a key link Grab has been leveraging to expand in the region, with Grab founder Anthony Tan using the connection to convince Indonesian e-commerce firm Tokopedia, backed by SoftBank and Chinese . 

Tokopedia said it does not comment on rumours. But Ant Financial, a financial services affiliate of Alibaba, has reservations about the deal due to differences over valuations and as it also wants to take a lead in digital payment expansion in the region, the sources said. Ant also fears the deal may unsettle similar payment partnerships it has with local partners in Malaysia, Thailand and the Philippines, they said. 

Companies find the Indonesian market for digital payments promising. More than half of Indonesians don’t have bank accounts, and they increasingly use smartphones for transactions. Local payment firms have attracted huge interest from foreign tech giants whose expansion drive in Indonesia has been deterred by tough licensing regulations. 

Reuters reported last month that Facebook Inc’s messenger service WhatsApp is in talks with multiple Indonesian digital payment firms to offer their mobile transaction services. OVO, also owned by Indonesian conglomerate Lippo, is the official payments partner of Grab in the country, while Gojek has backing from strategic investors such as Alphabet Inc’s Google and Visa. 

DANA, originally created to be embedded in the once massively popular chat app Blackberry Messenger in 2017, is one of several digital payment firms Ant has stakes in Asia including India’s Paytm and Thailand’s TrueMoney.

From – Deal Street Asia
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