Issue 17

Malaysia to revive $34b transport hub project initiated by 1MDB in 2011

Malaysia is reviving a property and transport hub worth 140 billion ringgit ($34 billion) started by troubled state fund 1MDB, adding to the list of projects the government is resuming. The cabinet agreed to reinstate the Bandar Malaysia project in an April 17 meeting, Prime Minister Mahathir Mohamad said. 

The project will be developed with its original partners, Iskandar Waterfront Holdings Sdn. and China Railway Engineering Corp, which own a 60 percent stake in the joint venture with the rest owned by the government, he said. 

The country has brought back large state projects after embarking on budget-reduction measures last year. Earlier this month, Malaysia struck a deal with China to resume the East Coast Rail Link at a lower cost, with the government seeking to further reduce the price tag, Mahathir said. Bandar Malaysia, conceived under 1MDB, was announced in 2011 by former leader Najib Razak, who now faces multiple charges linked to the scandal-ridden state fund. 

It was set to become a transport hub for the now-suspended high-speed rail connecting Singapore to Kuala Lumpur, as well as the Malaysian capital’s commuter lines and major highways. As 1MDB’s finances worsened in 2015, the state fund signed a deal to sell 60 percent of the project to China Railway and Iskandar Waterfront. 

Bandar Malaysia was canceled by the previous administration in 2017, and not by Mahathir. The revived project will include 10,000 affordable home units and prioritize local content in the construction process, Mahathir said. China Railway and Iskandar Waterfront must make a 500 million-ringgit payment within 60 days of the project’s reinstatement, he said. 

Shares of Iskandar Waterfront City Bhd. surged 19 percent to the highest level since April 2018 as of the close in Kuala Lumpur.


From – Deal Street Asia


Pinterest, Zoom Video debuts set pace for unicorns’ IPO race

Pinterest Inc. and Zoom Video Communications Inc. hit the public markets Thursday in soaring debuts, setting the pace for other so-called unicorns racing toward initial public offerings. 

Zoom’s dizzying ascent — its shares rose as much as 83 percent before closing up 72 percent — left founder and Chief Executive Officer Eric Yuan lamenting the high price and the pressure it puts on the company. 

That concern arose despite Yuan becoming a billionaire three times over as the video-conferencing company soared to a value of $15.9 billion after its $751 million IPO. Just two years ago, Zoom was valued at only $1 billion in a private funding round. “The price is too high,’’ Eric Yuan said in an interview with Bloomberg TV. 

“Today, wow, there’s a big pop. It is out of our control.’’ Pinterest, the digital-scrapbooking site whose advertisers seek to reach purchase-minded consumers, raised $1.4 billion in its IPO, second only to Lyft Inc. for U.S. IPOs this year. 

Along with Texas oil explorer Brigham Minerals Inc.’s $261 million listing and offerings by two smaller companies, Wednesday was the biggest day of the year for IPOs, with more than $2.7 billion in new shares sold. 

Like Zoom, Pinterest priced its shares above its marketed range and began trading Thursday, closing its first day up 28 percent. Brigham Minerals trailed those two with a merely solid 11 percent gain for the day. The strong showing by Pinterest and Zoom signals continuing investor thirst for new stocks amid a surge of unicorns — startups valued at $1 billion or more — going public. 

Other high-profile companies with plans to go public or considering it include Uber Technologies Inc., Slack Technologies Inc., Postmates Inc., Palantir Technologies Inc. and Airbnb Inc. 

Uber Ahead 

Ride-hailing global behemoth Uber is preparing what will likely be the year’s biggest IPO in the U.S. It will seek to raise about $10 billion in May in a listing valuing it at about $100 billion, people familiar with its plans have said. 

“Today’s opening pop in the shares of Zoom and Pinterest suggests that investors are not looking at ‘risky’ unicorns as a group, but instead are valuing each company on their merits,” Alejandro Ortiz, principal analyst at SharesPost Inc., said in a emailed statement. 

Lyft Fears 

Fears that Lyft’s sagging stock — it’s fallen 19 percent from its $72 IPO price — would bode poorly for other unicorns appear to have been overblown, Ortiz said. At its highest price on Thursday, Zoom briefly overtook the market valuation of Lyft, which ended Thursday at $16.7 billion. 

The jump Zoom’s shares put its valuation above that of Pinterest, with $12.9 billion, and Tradeweb Markets Inc., which raised $1.1 billion in the third-biggest U.S. listing this year and is now valued at about $8.7 billion. 

Whether Zoom and Pinterest can hold on to their debut gains will be determined beginning Monday, when the market reopens after the Good Friday holiday and the weekend. Unlike most of tech unicorns that have gone public or plan to this year, Zoom has made a profit. 

It reported net income of $7.6 million for the year ended January on revenue of $331 million, compared with a loss of $3.8 million a year earlier on revenue of $151 million. 

Zoom’s financials are “one of the most impressive’’ ever seen by D.A. Davidson in an IPO filing, analyst Rishi Jaluria wrote in a note to clients in March. He said at the time that he wouldn’t be surprised if it reached a valuation of $10 billion to $15 billion on its first day as a public company. 

‘Stay Humble’ 

Yuan, Zoom’s CEO, said that he thinks that the San Jose, California-based company can live up to the hype. “The market opportunity is huge, over $40 billion,’’ Yuan said. “As long as we stay humble, continue working as hard as we can to keep delivering happiness to our customers, I think it will be OK in the long run." 

Zoom’s offering was led by Morgan Stanley, JPMorgan Chase & Co., Goldman Sachs Group Inc. and Credit Suisse Group AG. The stock is trading on the Nasdaq Global Select Market under the ticker ZM. 

Pinterest, whose IPO was led by Goldman Sachs, JPMorgan and Allen & Co., trades on the New York Stock Exchange under the symbol PINS. The San Francisco-based company operates in a crowded digital marketing space, where Google and Facebook Inc. get the lion’s share of ad dollars. 

Pinterest has taken a slow and steady approach to growth and making money from the service, compared with the faster expansion rates of Facebook, Twitter Inc., and Snap Inc. when they went public. Like many of its unicorn peers going public, Pinterest faces the challenge of becoming profitable while still growing. 

Growth, Losses 

Pinterest said in its IPO filing that it now reaches more than 250 million monthly active users globally. The company had about $756 million in revenue from online advertisements in 2018, a 60 percent growth rate that accelerated from the previous year. Its net loss shrunk to $63 million in 2018 from $130 million in 2017. 

Pinterest has a key advantage in competing for advertising dollars, Chief Executive Officer Ben Silbermann said Thursday in an interview. Unlike other sites, Pinterest users typically are looking to eventually buy what they are searching for, which lines up with what advertisers want, he said. 

Most of its user growth, though, is coming from international markets, where the average revenue per user is much lower than in the U.S. In 2018, more than 80 percent of new users were from outside the U.S., however, they generated about 25 cents per person compared with $9.04 for those based in the U.S. 

“We’re going to continue to invest for the long term,” he said. “We’ve shown really good margin improvement over the last few years. My eye is always on what’s going to make Pinterest great three years, five years, 10 years from now. That’s going to be how we continue to run the business.”

From – Deal Street Asia

Thailand’s CP Foods to buy Canadian pork producer HyLife for $372m

Thai agricultural conglomerate Charoen Pokphand Foods (CPF) will acquire Canadian pork producer HyLife Investments Ltd for C$498 million ($372.7 million), according to a disclosure to the Stock Exchange of Thailand on Monday. 

The acquisition will be made through its subsidiary, CPF Canada Holdings Corp. Currently, HyLife Investments owns a 50.1 per cent interest in HyLife Group Holdings, which runs a vertically integrated farm-to-food pork production business, while Japan’s Itochu holds the remaining 49.9 per cent. 

HyLife operates a processing plant in Canada and two in Mexico. Through its partnership with Itochu, it has become a major exporter of fresh chilled pork products to Japan. CPF said the acquisition will provide it with access to a cost-efficient pork production base and the opportunity to expand into Japan and North America. 

Meanwhile, HyLife will benefit from leveraging CPF’s connections, customer base and distribution network in China and the United States to increase its sale volume in those markets, it added. HyLife reported total revenue of C$745 million ($557.53 million) and a net profit of C$88 million ($65.86 million) for the fiscal year 2018. 

CPF said it will use internal cash and external financing to fund the acquisition. It had earlier bought US frozen-food producer Bellisio Parent for $1 billion in 2016.

From – Deal Street Asia

Gaw Capital, Beyond Ventures lead $14.9m funding in Chinese startup

Chinese food delivery management startup Candao has raised 100 million yuan ($14.9 million) in a Series A round of funding led by Hong Kong-based real estate private equity firm Gaw Capital and venture capital firm Beyond Ventures. 

In a statement issued on Thursday, Gaw Capital said that Chinese mobile internet-focused investment fund MFund also participated in the round. Candao plans to use the capital to strengthen research and development and explore the application of technologies such as artificial intelligence to its platform. 

Founded in April 2014, the Guangzhou-based startup provides a one-stop solution to Chinese restaurants, helping them with software-as-a-service (SaaS) delivery management systems, distribution systems and business data analysis centres. 

As of March 2019, the startup claims to have served over 200 restaurant brands, including Haagen-Dazs, Burger King, Papa John’s and Costa. It currently provides services to nearly 30,000 offline restaurants in over 300 cities in China, with over 1.4 billion yuan ($209 million) in month gross merchandise volume. 

“The food delivery sector is booming in China….however, many F&B operators are still lagging behind on the resources to deal with the new technology ecosystem, which makes Candao an ideal, easy one-stop platform for them,” said Gaw Capital managing principal and China head Humbert Pang. 

Founded in 2005, Gaw Capital has raised five commingled funds with an investment focus on Greater China and Asia Pacific. Commingled fund refers to a portfolio comprising assets from several accounts that are blended together. Gaw also manages value-add/opportunistic funds in Vietnam and the US, a pan-Asia hospitality fund and a UK creative office vehicle. As of the end of 2018, it had $18.2 billion in assets under management. 

The firm is eyeing a final close for its $2 billion sixth opportunity fund by the first half of this year. Gaw Capital has already achieved the first close of the fund at $1.3 billion and secured another $650 million for a sidecar vehicle. 

Meanwhile, Hong Kong-based Beyond Ventures was founded in 2017 by Chinese-based investment firm Hony Capital, Hong Kong VC firm e-Garden Ventures and several local serial entrepreneurs. It has invested 240 million yuan ($35.8 million) across 13 companies including Chinese AI startup SenseTime, DNA-testing startup Prenetics, CMOS chipmaker SmartSense Tech, taxi-hailing app HKTaxi and e-commerce platform YOHO.

From – Deal Street Asia

Grocery delivery startup HappyFresh raises $20 million Series C for regional expansion

Indonesia-headquartered grocery delivery startup HappyFresh has secured a $20-million Series C funding round led by South Korea’s Mirae Asset-Naver Growth Fund. 

Other investors participating in the round include Line Ventures, Singha Ventures, and Grab Ventures, the company said in a statement. 

The proceeds from the round will be used to help the company expand into new markets in Southeast Asia and develop its technology. It also looks to grow its data science and omnichannel tech teams. 

Founded in 2015, HappyFresh today claims to be the number one online grocery company in Southeast Asia, with active operations in Indonesia, Malaysia, and Thailand. 

The startup raised a $12 million Series A round in September 2015, led by Vertex Ventures and Sinar Mas Digital Ventures (SMDV), and joined by a host of other investors including Beenext, Ardent Capital and 500 Startups. 

This was followed by an undisclosed Series B funding round led by Samena Capital a year later. 

Last year, DEALSTREETASIA reported that Southeast Asian ride-hailing major Grab had acquired a minority stake in HappyFresh. The report was confirmed soon after by Grab that said the move was part of its ambition to become a one-stop “super app” for users in Southeast Asia. Its grocery delivery service, dubbed GrabFresh, was launched in partnership with HappyFresh last year.

From – Deal Street Asia
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