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ISSUE 12


China’s ‘Fun Headlines’ App Considers IPO at $3 Billion Value


Qu Toutiao, a Chinese news and video aggregation mobile app, is weighing a U.S. initial public offering, people with knowledge of the matter said.


The Shanghai-based startup, whose name means “Fun Headlines,” is considering seeking a valuation of as much as $3 billion from the share sale, according to the people. It may list as soon as this year, they said, asking not to be identified because the information is private.


Qu Toutiao, which launched in June 2016, extracts content from online sources and media partners including the People’s Daily website, Beijing Times and financial news portal Hexun.com. It then repackages the news into customized feeds based on users’ interests and reading patterns.


The offerings from Qu Toutiao are often more light-hearted than rival news aggregation service JinriToutiao, which is one of China’s largest startups. JinriToutiao was valued at about $20 billion last year, a person with knowledge of the matter has said. Qu Toutiao has no connection to the more popular JinriToutiao, which translates as “Today’s Headlines” and is run by Beijing ByteDance Technology Co.


Deliberations on a potential listing of Qu Toutiao are at an early stage, and there’s no certainty they will lead to a transaction, the people said. A representative for Qu Toutiao declined to comment.


Chinese companies have priced $4.1 billion of first-time share sales in the U.S. over the past 12 months, data compiled by Bloomberg show. They have fallen an average 7.8 percent from their IPO prices since they started trading, according to the data, which are weighted by offer size.


Qu Toutiao, which operates as a mobile-only service, is popular among residents of so-called third- and fourth-tier Chinese cities, which are usually smaller and less prosperous than urban centers like Beijing and Shanghai, according to its website. It was used on 32.9 million unique devices in January, ranking 128th among all mobile apps available in the country, according to a report from industry consultancy iResearch.


By –Bloomberg



Europe’s Next Big IPO Is a $35 Billion Gamble on Blood Science


When the head of health care at Siemens AG went before investors in January with a sales pitch for the division’s initial public offering, he raced through a description of products like scanners and X-ray machines. Bernd Montag was out for blood.


The executive was on a mission to promote a new line of equipment to analyze medical samples, and his strategy to speak mostly about that business hammered home an important truth about Healthineers. The future success of the $35 billion company slated to make its trading debut on Friday rests partly on a bet it can gain heft in diagnostics, a market in which it has long struggled.


been preparing to sell shares in Healthineers for more than a year as Chief Executive Officer Joe Kaeser hives off divisions and chips away at the German engineering firm’s sprawling conglomerate structure. Yet the listing comes at a delicate time for the health-equipment maker because it’s just launched a new diagnostics brand called Atellica, aimed at replacing older products that have trailed the competition.


“The question is, does the market believe they can improve,” said Barclays analyst James Stettler. “2020 is when they really want to show the real growth and margin improvement. If you look at the time scale of the typical investor, it’s quite a while away.”


Failed for Years


The IPO value slipped from early estimates due to market volatility and uncertainty about how well Atellica will perform. An update Thursday on the stock sale seen by Bloomberg pointed to a likely price of 28 euros a share, meaning Siemens would raise 4.2 billion euros ($5.2 billion) after selling a 15 percent stake.


By its own admission, Siemens has failed for years to gain the upper hand in diagnostics, which makes up just over a third of Healthineers profit. “We didn’t have one streamlined platform. We didn’t have one competitive product,” Montag told analysts. “Sometimes we needed to offer several products, which made things complicated.”


Siemens first began moving aggressively into the market more than a decade ago when it made a rapid-fire string of acquisitions worth billions to gain a leading market share. In April 2006 it bought Diagnostic Products Corp. for about $1.86 billion and just two months later added Bayer AG’s diagnostics division for 4.2 billion euros, and then Dade Behring Inc. for about $7 billion. The frenzy ended with a big writedown in 2010 and fed into the ouster of former CEO Peter Loescher.


“They were left with three platforms, sub-scale and very hard to bring together,” Stettler said.


Meanwhile, rivals like Roche Holdings, Abbott Laboratories and Danaher Corp. were catching up. In 2007, Siemens had a diagnostics market share of 17 percent, compared to Roche’s 16 percent and Abbott’s 11 percent, according to a Siemens presentation. In 2015, Roche had climbed to 20 percent, Abbott stayed at 11 percent, while Siemens declined to 9 percent, according to a Roche report. Siemens says it now has 15 percent, without providing details about rivals.


By developing its own platform with Atellica, the German supplier has changed tack. Sales of the products got underway late last year in Europe, the U.S., South America and Asia. The plan is to derive 90 percent of revenue from higher-margin reagents and other supplies used to prepare samples of blood, urine and tissue rather than the actual diagnostic machines. Montag has said Atellica will give Healthineers accelerating growth and higher margins over time.


’Mission-Critical’


“Atellica is claimed to be more efficient than its peers and is aimed at larger, automated labs,” Jefferies analyst Peter Reilly wrote in a note. Sales and margin goals make the business “potentially the largest single profit growth driver” at Healthineers.


The magnitude of the health-care company’s ambitions were outlined in the IPO prospectus. Healthineers wants to replace its legacy platforms within three or fours years, knowing that contracts with laboratories for these types of systems usually run between five and seven years. It will take “several years to achieve a sizable installed base,” the document states. As of the end of January, it had sold 110 analyzers, toward a goal to ship 7,000 by 2020.


Getting labs to switch over to new systems and equipment is the biggest part of the battle, with incumbents often starting in a position of strength. “As a lab director, changing a supplier can be a career-destroying event,” Stettler said. “It’s mission-critical.”


While Morgan Stanley analyst Ben Uglow said Atellica has “closed the gap” with competitors on performance in laboratories, he’s still not yet convinced it will allow Healthineers to regain lost market share because the costs of switching systems is so high.



By–Bloomberg



Dropbox raises IPO price range by $2 on strong demand


Cloud storage firm Dropbox Inc raised the price range for its initial public offering by $2 on Wednesday as investors bid strongly for the first big tech IPO this year ahead of final pricing expected on Thursday.


The company now expects the offering to be priced between $18 and $20 per share, up from its previous range of $16 to $18. The new price range suggests the company, co-founded by Andrew Houston and Arash Ferdowsi in 2007, could have a market capitalization of up to $8.7 billion based on a fully diluted share count and the IPO could raise up to $720 million.


“The initial file price range was quite conservative relative to the valuations placed on comparable firms, such as Box,” said Jay Ritter, an IPO expert and professor at the University of Florida.Despite the bump in price, Dropbox’s market cap is still below the $10 billion valuation that it commanded in a 2014 private funding round.


Dropbox’s IPO is being closely watched by the investment world to gauge market appetite for tech unicorns - young companies valued at more than $1 billion.The last big unicorn to go public was Snapchat-owner Snap Inc, whose shares have cratered since the company’s high-profile IPO last year. The stock closed a dollar below its IPO price of $17 on Tuesday.


Dropbox’s IPO comes on the heels of a strong market debut of cyber security firm Zscaler Inc, which had also raised the size and price of its offering.Music streaming service Spotify, valued at roughly $19 billion in the private markets, has also filed for a direct listing and will debut on the NYSE on April 3.


Dropbox’s increase in IPO price range bodes well for Spotify, said Michael Carvin, Chief Executive of personal finance technology firm SmartAsset. “They will be watching this closely as they look towards their own debut.”A direct listing lets investors and employees sell shares without the company raising new capital or hiring a Wall Street bank or broker to underwrite the offering.


In contrast, San Francisco-based Dropbox has hired JPMorgan and Goldman Sachs, among others, for its IPO.


The order book for the offering closes at midday on Wednesday and the pricing is expected on Thursday.


Sources told Reuters on Monday that the offering was oversubscribed.


The company has 500 million users and competes with Alphabet Inc’s Google, Microsoft Corp, Amazon.com Inc. Box Inc is its main rival.


The stock will start trading on the Nasdaq on Friday.


From – Reuters


Bayer wins EU approval for $62.5 billion Monsanto buy


German conglomerate Bayer won EU antitrust approval on Wednesday for its $62.5 billion buy of U.S. peer Monsanto, the latest in a trio of mega mergers that will reshape the agrochemicals industry.


The tie-up is set to create a company with control of more than a quarter of the world’s seed and pesticides market.


Driven by shifting weather patterns, competition in grain exports and a faltering global farm economy, Dow and Dupont, and ChemChina and Syngenta had earlier led a wave of consolidation in the sector.


Both deals secured EU approval only after the companies offered substantial asset sales to boost rivals.


Environmental and farming groups have opposed all three deals, worried about their power and their advantage in digital farming data, which can tell farmers how and when to till, sow, spray, fertilize and pick crops based on algorithms.


The European Commission said Bayer addressed its concerns with its offer to sell a swathe of assets to boost rival BASF, confirming a Reuters story on Feb. 28.


“Our decision ensures that there will be effective competition and innovation in seeds, pesticides and digital agriculture markets also after this merger,” European Competition Commissioner Margrethe Vestager said in a statement.


“In particular, we have made sure that the number of global players actively competing in these markets stays the same.”


Vestager said the Commission, which received more than a million petitions concerning the deal, had been thorough by examining more than 2,000 different product markets and 2.7 million internal documents to produce a 1,285-page ruling.


The U.S. Justice Department, which is also reviewing the merger, said in a statement on its website that it would press on with its review and that the market in the two regions was quite different.


“While genetically modified seeds are largely prohibited in Europe, they are widely used throughout the United States,” the department noted. “The Antitrust Division of the Department of Justice continues to examine the effects of the proposed transaction on American farmers and consumers.”


China has given conditional approval to the Bayer and Monsanto deal, which has won a green light in Brazil. It is currently being reviewed by Russian antitrust authorities too.


Australia said on Thursday it would not oppose the deal following the divestment commitment.


Bayer has already reached a deal to sell certain seed and herbicide assets for 5.9 billion euros ($7.2 billion) to BASF and to give it a license to its global digital farming data. It will also divest its vegetable seeds business to BASF.


The Commission is due to rule on the BASF deal by April 16.


Online campaigns group Avaaz criticized the EU approval.


“This is a marriage made in hell. The Commission ignored a million people who called on them to block this deal, and caved in to lobbying to create a mega-corporation which will dominate our food supply,” Avaaz legal director Nick Flynn said.


U.S.-incorporated Avaaz, funded by its members, is active in climate change, poverty, conflict and corruption issues.


The Greens grouping in the European Parliament echoed the sentiment, saying smaller players in the agriculture industry needed to be helped too.


“The agriculture industry is already far too concentrated, giving a handful of massive firms a stranglehold on food production. Merging two of the biggest players only makes a bad situation worse,” Greens spokesman Bart Staes said.



From – Reuters



TPG targets $11B fund, launches healthcare vehicle


TPG Capital has reportedly set an $11 billion fundraising goal for its eighth flagship vehicle, a follow-up to TPG Partners VII, which closed on $10.5 billion less than two years ago. At the same time, the private equity heavyweight will attempt to raise $2.5 billion for a healthcare sidecar fund, per reports, believed to be the firm's first pool of capital completely dedicated to the space. A TPG spokesperson declined to comment.


The healthcare sidecar would come after a year in which TPG executed its most healthcare investments in recent history, according to the PitchBook Platform, with nine completed transactions. That accounted for more than 26% of TPG's total activity, by far the biggest annual share of any year in the past decade.


So far, the firm's been keeping it up in 2018. Last month, TPG completed a take-private buyout of Exactech, a developer of orthopedic implant devices and other surgical instruments, in a transaction valued at $737 million. That was the firm's most expensive move in the space in more than five years, again per PitchBook data. But it won't hold the title for long: In December, a consortium including TPG agreed to buy healthcare services provider Kindred Healthcare for about $4.1 billion.


With an intensifying focus on healthcare, TPG is following larger private equity trends. The sector accounted for just shy of 15% of all private equity activity in the US last year, representing the largest share of any year in the past decade. In 2008, healthcare investments accounted for just 11.4% of all deals.


It was in that same 2008 year that TPG raised $19.8 billion for its sixth flagship fund, one of several huge funds put together immediately before the financial crisis. The reported target of the firm's latest flagship vehicle would seem to indicate a continued step-down in size for the series. It would also continue a run of several funds in the past two years to reach the $10 billion mark, including major vehicles from Apollo Global Management, Silver Lake and KKR.



From – PitchBook



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