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ISSUE 13


Foxconn Unit to Buy Belkin for $866 Million in Brand Push


FIT Hon Teng Ltd., part of the contract manufacturing giant Foxconn Technology Group, agreed to buy Belkin International Inc. in the latest move by billionaire Terry Gou to expand in branded goods.


FIT will pay $866 million in cash for Belkin, a maker of Wi-Fi routers, mobile device chargers and keyboards, the company said in a filing to the Hong Kong stock exchange on Tuesday. The deal will give it access to strong research and development capacity with Belkin owning more than 700 patents, it said.


Gou, whose empire includes the main assembler of Apple Inc.’s iPhones, is seeking to expand beyond contract production to capture more of the value chain in branded groups. In 2016 he led a deal for control of Japan’s Sharp Corp. and he is also investing in artificial intelligence and big data.


“Belkin International is a world-recognized brand, with a wide range of offerings of consumer electronics products, services and solutions,” FIT said in the filing.


Belkin had sales of about $789 million in the fiscal year ended Sept. 30, FIT said. Shares of FIT were unchanged at HK$4.05 in Hong Kong.


By –Bloomberg



Grab Vanquishes Uber With Local Strategy, Billions From SoftBank


As Uber Technologies Inc. looked to conquer ride-sharing around the world, Grab was focused on serving the 620 million people that share its home in Southeast Asia.


Helped by the deep pockets of SoftBank Group Corp., Grab emerged the winner on Monday when Uber agreed to swap its business in the region for a 27.5 percent stake. The deal is a vindication for co-founder Anthony Tan’s strategy of tailoring services to local needs and working with incumbent taxi operators instead of against them.


With $4 billion raised from investors led by SoftBank, Tan has turned Grab into a ride-hailing juggernaut since it was born in a tiny Kuala Lumpur storage room about six years ago. Rich funding has helped him lure top talent and survive through the losses generated by a fierce battle with Uber to win over customers. Now the 36-year-old Harvard grad, who spurned the family’s automotive empire in Malaysia to strike out on his own, has emerged stronger as he turns to his other significant competitor in the region, Indonesia’s Go-Jek.


“Anthony is a great leader, someone that I’ve learned a lot from,” said Jeremy Kranz, head of the technology investment group at GIC Pte, Singapore’s sovereign wealth fund.


The deeply religious Tan, who still attends Bible study classes, started Grab in his native Malaysia. With Harvard classmate Tan Hooi Ling, he kicked off operations for what was then known as MyTeksi in Kuala Lumpur, allowing users to book cabs.


Grab later relocated to Singapore and now provides a host of services from Indonesia to Vietnam and the Philippines. The company is valued at $6 billion by CB Insights, making it the most valuable startup in Southeast Asia.

Along the way Grab has been picking up talent, from engineers to product developers, as its funding helped woo them from household names in the technology world.


“In Southeast Asia, one of the most difficult things to build is tech talent,” Tan said at the Money 20/20 conference this month. “We’ve been able to build tech talent from Google, Facebook, Twitter, Microsoft. We’ve been very blessed. With that, we could build great products.”


That includes Ming Maa, a former executive at Goldman Sachs Group Inc. and SoftBank, who was hired as group president in 2016 and oversees Grab’s fundraising, mergers and acquisitions and other strategic issues.


Still, it’s not a clean victory. Go-Jek remains a potent rival, particularly in Indonesia as it moves beyond just ride-sharing to real-world service such as food delivery and hairdressers on demand. Also, the U.S. company is getting a bigger slice of Grab than it did when it sold out in China. Uber got less than 18 percent of Didi Chuxing in that deal, although it did get 36.6 percent of Yandex when it retreated from Russia.


To some, Grab’s victory may also have been the result of pressure from SoftBank to consolidate a global ride-hailing empire and whittle down billions of dollars in losses.


“After investing $700 million in the region, we will hold a stake worth several billion dollars and strategic ownership in what we believe will be the winner in an important global region,” Uber CEO Dara Khosrowshahi said in a message posted on its website.


While Tan is the rare CEO to credit his success as part of God’s plan, others see more terrestrial reasons behind his rise.


“A lot of guys have the ability to succeed, but it’s people like Anthony who end up winning,” said Amit Anand, managing partner of Jungle Ventures in Singapore. “He comes from the ground up, and he never forgot what got him there, versus people who never had to hustle.”


As the company expanded, it tailored services for new markets. For Indonesia, it operates GrabBike in a country where many are comfortable traveling on a two-wheeler. In the Philippines, where Uber got into fights with regulators, Grab adopted a more cooperative approach.


“In online businesses, we would have expected big global players to dominate due to their scale of operations,” said Lawrence Loh, associate professor at National University of Singapore. “Uber’s sell-out suggests that the pendulum has swung towards the importance of business localization.”


Grab has also been effective at keeping its customers. Its reward program lets riders accumulate points that can be redeemed for everything from KrisFlyer miles, the frequent flier program of Singapore Airlines, as well as free rides to a Big Mac. In Indonesia, customers can cash them in for durian, the stinky fruit that’s popular in the region.


“Grab has done a great job building those proprietary linkages that make consumer experience more sticky, more consumer-centric,” Anand said. “Today, every great company has access to technology, people and capital. What keeps you ahead of the game is building those linkages that are difficult for other people to replicate.”


By–Bloomberg



China Renaissance Is Said to Seek H.K. IPO as Soon as This Year


China Renaissance, the boutique bank behind some of the country’s biggest deals, is seeking a Hong Kong initial public offering as soon as this year, people familiar with the matter said.


The company is seeking a valuation of $1.5 billion to $2 billion, the people said, asking to not be identified as the details are private. China Renaissance declined to comment.


Founded in 2004 by Bao Fan, a former banker at Morgan Stanley, China Renaissance’s deals include the 2015 merger of Didi and Kuaidi to create the country’s biggest ride-hailing firm. In that deal, it worked for both sides and took fees from each. It was also the matchmaker for Meituan and Dianping, which merged at a $15 billion valuation in the same year.


The bank also worked as an adviser to JD.com Inc. when it sold a stake to Tencent Holdings Ltd.


Tencent-Backed Meituan Is Said to Seek an IPO at $60 Billion


From – Bloomberg


Singapore Sees Asia as a Growth Favorite Amid Trade War Fears


Asia remains a growth favorite for businesses and investors even if tensions between the U.S. and China escalate into a full-blown trade war, according to Singapore’s Economic Development Board.“Singapore is very fortunate, Asian countries in general are very fortunate because we are in the middle of a growth engine,” Beh Swan Gin, chairman of the EDB, said in an interview with Bloomberg Television’s Haslinda Amin on Tuesday.


“Asia is somewhat insulated from this -- not totally of course -- but it can provide upside that can mitigate some of the downside if indeed there is a major dispute between the U.S. and China,” he said.


The city state is taking stock and planning for the worst after the world’s two biggest economies exchanged blows last week, with U.S. President Donald Trump promising tariffs on $50 billion of Chinese imports on top of steel and aluminum duties. China responded with penalties on $3 billion of U.S. imports.


The two sides are now engaged in negotiations that Beh said could create a “much more level playing field across the world.” He said it’s still too early to say whether the dispute will result in a trade war and businesses that he’s spoken to, as part of the EDB’s role to attract more investment to Singapore, are adopting a “wait-and-see” approach.


Trade Dependence


For Singapore, a deterioration in those talks could imperil an already more tempered growth path for 2018 after strong global trade last year propelled the economy to its fastest pace of expansion since 2013.


The city state is dependent on trade, amounting to 212 percent of its gross domestic product as of 2016, according to World Bank data. That compares with a world average of 42 percent. China is Singapore’s top goods trading partner, with a 14.2 percent share, while the U.S. is the fourth-biggest at 8.3 percent.



Beh sees reasons around the region to remain upbeat: growing demand in China, Southeast Asia and in India. Japan, Australia and New Zealand remain solidly pro-trade, he said, helping to accelerate regional trade deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership that was signed March 8.


Beh said the rising trade frictions should be seen in the context of the U.S.’s different approach in dealing with disputes.


“We’re all talking about escalating tensions, indeed, but it’s part of the negotiations,” he said. “And there’s no question that the current approach by the White House is one where they’re prepared to raise the stakes in the negotiating stance, and it’s much more played up in the public than it used to be, but that’s a matter of style.”


U.S. Taxes


While the U.S. and China do battle on the trade field, Singapore is seeing a gradual broadening out of manufacturing gains it enjoyed in 2017. And while certain areas of Singapore’s economy might see tougher competition overseas, that’s more a long-term story of globalization than a response to trade-war tension, Beh said.


He identified the pharmaceutical industry as one area where new investments might crop up on American shores rather than in Singapore, particularly given recent U.S. tax policy changes that enhance competitiveness.


“Many companies are now digesting the tax changes in the U.S. and re-looking at how they may or may not want to change their supply chains around the world,” Beh said.


But he doesn’t see that threatening Asia’s long-term attractiveness for companies, and Singapore’s role as a leading base of those activities.


“The vast majority are here today because of the growth in Asia, the opportunities in Asia,” Beh said. “That’s not going to go away, and you have to be in Asia to serve these opportunities.”


From – Bloomberg



Carlyle launches $12.6B mega-deal with AkzoNobel


When private equity firms have money, they're going to spend it. So with dry powder piling up across the industry, it only makes sense that some of the industry's biggest names continue to strike 11-figure deals.


The latest example is The Carlyle Group, which has agreed to lead a group that also includes sovereign wealth fund GIC in the acquisition of the specialty chemicals business of AkzoNobel for €10.1 billion (about $12.6 billion). The pact follows a long-running sale process for AkzoNobel, as the after-effects of a rejected $27.6 billion takeover offer from PPG Industries last year continue to play out.


Carlyle had no shortage of competition for the chemicals business, as Apollo Global Management, Bain Capital and Advent International were also reportedly among the bidders. Another connection exists between those four firms: All recently raised or are raising massive new pools of capital.


As of earlier this month, Carlyle had collected $15.6 billion for its seventh flagship buyout fund, according to an SEC filing. Last summer, Apollo raised $24.7 billion for the largest buyout fund in history. Bain Capital closed a $9.4 billion vehicle last September, and Advent gathered $13 billion for its latest flagship fund in 2016.


Plenty of other firms are raising money, too. One result has been a rise in deals worth more than $10 billion. Only five such deals were completed worldwide between 2013 and 2015, according to the PitchBook Platform. Last year brought seven $10 billion-plus transactions, meanwhile, and three such moves have already been announced in 2018.


Those latest moves have been across a variety of sectors, indicating the trend of mega-deals isn't isolated to any certain industry. The AkzoNobel unit is a supplier of chemicals, while other targets include the financial and risk unit of Reuters—which Blackstone has agreed to buy in a $20 billion deal—and Dr Pepper Snapple, the beverage conglomerate that JAB and BDT Capital Partners agreed to add on to Keurig Green Mountain earlier this year for a reported $21 billion.


From – PitchBook




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