Issue 37

Twitter alum to join TPG amid PE's push into Asia

If a recent rush of fundraising dollars is any indication, some of private equity's biggest names could have newfound interest in Asia. Two recent personnel moves from industry heavyweights are the latest signs that a push into the region could be underway.

One of those heavyweights is TPG, which on Wednesday named Shailesh Rao the head of operations in India and Southeast Asia for both TPG Growth and The Rise Fund, a recently formed arm focused on impact investing. Rao has been a senior advisor to TPG since last year, and before that he spent four years leading international operations at Twitter and another seven years in various roles at Google and YouTube. 

Led by TPG Growth managing partner Bill McGlashan, The Rise Fund launched nearly two years ago with the goal of combining societal good with standout returns. While its current portfolio centers on healthcare, education and fintech, a press release announcing Rao's addition indicated that he may foster an increased presence in the wider tech sector. Rao will collaborate in the region with Puneet Bhatia and Ganen Sarvananthan, the co-managing partners of TPG Capital's overall Asia operations.

The Carlyle Group, meanwhile, has made a notable addition of its own, bringing on Vikram Nirula as a managing director on its Asia private equity team. Nirula will be based in Mumbai and focus on his area of expertise—striking new deals in India. Before joining Carlyle, Nirula spent nearly two decades at India's True North Managers, where he made investments in the country's consumer, retail, industrial and financial services spaces. 

Nirula's addition comes two and a half months after Carlyle closed its fifth flagship Asia fund on $6.55 billion, by far its largest effort in the region. It also comes in the wake of a pair of notable departures from Carlyle's Asia team. Former managing directors Shankar Narayanan and Devinjit Singh reportedly both left the firm during the first half of 2018 with the intent of setting up their own shops focused on India's middle market.

  From – PitchBook

Drew Houston on taking Dropbox public after 10 years

Before Uber, Lyft and Airbnb, there was Dropbox. The company, one of the original cloud-based file-sharing businesses, has received a lot of attention in tech circles since it was founded in 2007, including plenty of buzz surrounding its IPO earlier this year.

Dropbox made headlines in March when it went public in one of the most-anticipated IPOs in recent history, raising more than $750 million and valuing itself at around $9 billion on a fully diluted basis. Drew Houston, who co-founded the company and launched it at TechCrunch Disrupt back in 2008, took the stage at this year’s event to discuss leading Dropbox on the journey from scrappy startup to public company.

For Houston, taking his company public was a natural evolution. He didn’t run into much trouble raising venture capital once Dropbox was an established company. Before it went public, the business raised more than $600 million from VCs including Sequoia and Accel, reaching a final private valuation of $10 billion.

“Investors would kind of get out in front of us," Houston said. "When you get to the growth-stage investment phase, there aren’t that many companies, but there’s a lot of capital."

In 2015, Houston and his team started to think seriously about the mechanics of taking Dropbox public. He knew he would have to keep a close eye on things like revenue, profitability (or lack thereof) and number of paid users. The company became cash flow positive in 2016, two years before its IPO.

“It’s important to begin with the end in mind. It’s important to understand where you’d be as a public company,” Houston said onstage. “As a private company, your scorecard or report card will be things like, ‘How much momentum do you have? How excited is everyone? How many users do you have?' But on the other side, when you’re a public company, investors will grade you pretty clinically: ‘How much money are you making?’”

There are disadvantages to being a public company, including the almost singular focus on financials. But Houston said that in the half year since Dropbox went public, he’s noticed a lot of advantages, as well—including the ability to offer liquidity to some of his earliest employees. And the necessity of disclosing everything about his company's operations also has its perks. 

“What [the employees] hear from me and the management team at an all-hands and what they read in the press and what they hear on earnings calls and what they see in their bank account is all the same thing,” Houston said. “And that’s different from kind of the late innings of being a private company, where there’s no transparency, kind of by design.”

Now that Dropbox’s IPO is behind him, Houston says he’s focused on developing the company and moving it into the future. A decade ago, people were still using USB drives to store files, so Dropbox's focus was moving files onto the cloud. Now that cloud storage is the norm, the company is moving into other workplace collaboration tools, including Paper, a new tool for editing documents. In very general terms, Houston says Dropbox is trying to “make work a more organized experience.” 

It's been a long road. Looking back on his first time on the TechCrunch Disrupt stage back in 2008 “makes me twitch a little bit,” Houston said. “Our launch was not our finest moment. Like, it’s actually kind of hard to imagine how that could have gotten worse.”

But fast-forward 10 years, and his company is one of the major Silicon Valley success stories, with a big exit for investors and early employees. “Just know that it’s a roller coaster, and know there’s no button that a founder can press that says ‘Please just make things go up and to the right,’" he said. "Think of it more as an adventure.”

From – PitchBook

KKR, Warburg Pincus, TPG lead new-look VC deals

Over the past handful of days, three of the biggest names in private equity have led investments worth a combined $170 million that don't look very much like private equity at all. Instead, KKR, Warburg Pincus and TPG Capital are continuing to make more and more forays into the world of venture capital.

KKR announced on Monday that it has led a $57 million Series B investment in Clarify Health Solutions, a developer of tech designed to guide healthcare for physicians, health systems and patients. The startup raised $5 million at a $22.8 million valuation a little less than two years ago. The same day, fintech startup Facet Wealth announced a $33 million Series A led by Warburg Pincus, with additional funding from Slow Ventures. The company makes financial planning software for households and other smaller clients. 

Those two deals came a few days after TPG led an $80 million minority investment in open-source governance startup Sonatype, with support from fellow backers Accel, Goldman Sachs and Hummer Winblad. 

For all three firms, the deals are representative of a newfound interest in VC—a trend we covered earlier this summer with regard to KKR. At each of Warburg Pincus, KKR and TPG, the amount of completed venture investments around the globe began to spike upward about five years ago, per PitchBook data: 


With 2018 a little more than two-thirds complete, TPG Capital and its TPG Growth affiliate appear to be headed for a new decade-high in VC deals, and the other two firms aren't far off pace. 

It's notable, too, that the past nine months have seen these firms participate in much larger VC investments than ever before. Since the beginning of the year, Warburg Pincus has participated in a $14 billion investment in Ant Financial and a funding worth more than $1 billion in Go-Jek. KKR took part in that same Go-Jek funding and also played a role in a $1.7 billion round for Lyft. 

These investments say something about changing deal preferences at the firms, but they also say something about the state of the VC market. Highly valued startups are staying private for longer than ever before, and in turn raising larger rounds to account for the absence of public funding. And when the VC industry includes more mature companies seeking larger financial commitments, the targets start to look more and more familiar to investors that cut their teeth in private equity. 

From – Bloomberg

Ericsson inks $3.5 billion 5G deal with T-Mobile US
Mobile telecom gear maker Ericsson (ERICb.ST) said on Tuesday it had signed a $3.5 billion multi-year deal to support T-Mobile US’ (TMUS.O) 5G network deployment, the biggest 5G order that Ericsson has announced. 

T-Mobile, the third biggest U.S. mobile carrier, said in February it was working with Ericsson and rival network vendor Nokia of Finland to build out 5G networks in 30 U.S. cities during 2018.

Nokia (NOKIA.HE) announced in July that it had agreed on an equally big deal with T-Mobile US.

Ericsson increased its market share of the mobile networks market in the second quarter, partly due to faster network upgrades in the North American, where it ranks as the biggest supplier ahead of Nokia.

From – Reuters

Ma to step down as Alibaba Chairman

Jack Ma, who founded e-commerce giant Alibaba Group and helped launch China’s online retailing boom, announced that he will step down as the company’s chairman next September.

In a letter released by Alibaba, Ma said he will be succeeded by CEO Daniel Zhang, an 11-year veteran of the company. Ma handed over the CEO post to Zhang in 2013 as part of what he said was a long-planned succession.
Ma, a former English teacher, founded Alibaba in 1999 in an apartment in the eastern city of Hangzhou to connect Chinese exporters with foreign retailers.

It expanded into consumer retailing, becoming the world’s biggest e-commerce company by total value of goods sold, as well as online finance, cloud computing and other services.

Ma, who turned 54 yesterday, became one of China’s most famous entrepreneurs and one of the world’s richest. The Hurun Report, which follows China’s wealthy, estimates his net worth at US$37bil (RM153.5bil).

Alibaba’s US$25bil (RM103.7bil) initial public stock offering on Wall Street in 2014 is the biggest to date by a Chinese company.

Alibaba said Ma will remain a member of the Alibaba Partnership, a group of 36 people with the right to nominate a majority of its board of directors. That arrangement limits shareholder control, but Ma has defended it as a way to keep Alibaba focused on long-term development.

“This transition demonstrates that Alibaba has stepped up to the next level of corporate governance from a company that relies on individuals, to one built on systems of organisational excellence and a culture of talent development,” said Ma’s letter.

Ma said he wants to “return to education” but gave no details.

Alibaba is part of a group of companies including games and social media giant Tencent Holding Ltd, search engine Inc and e-commerce rival that have revolutionised shopping, entertainment and consumer services in China.

E-commerce sales in China rose 32.2% last year to 7.2 trillion yuan (RM4.4 trillion), accounting for 20% of total retail spending.

Zhang, Ma’s planned successor, joined Alibaba in 2007 after working at Shanda Entertainment, an online games company. Zhang served as president of Alibaba’s consumer-focused business unit

From – The Star

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