Issue 40

Asia Digest: Grab MY partners with UEM Sunrise;
Scrum Ventures, Dentsu launch accelerator

Ride-hailing startup Grab Malaysia has announced a partnership with Khazanah-owned property developer UEM Sunrise Bhd, while US-based venture capital firm is joining hands with Dentsu Inc to launch a sports tech startup accelerator. 

Grab MY partners with UEM Sunrise 
Ride-hailing startup Grab Malaysia has announced its partnership with Khazanah-owned property developer UEM Sunrise Bhd to drive cashless transactions at properties owned by the developer, it said in a statement on October 2. 

“Since our launch a few months ago, we have been able to increase our merchant numbers by four times, and despite the general high cash transaction percentage in the country, our GrabPay transaction rates are increasing week on week. This is a testament that Malaysians are ready to embrace the cashless culture, given the right encouragement,” said GrabPay Malaysia, Singapore and Philippines head Ooi Huey Tyng. 

Scrum Ventures, Dentsu launch accelerator for sports tech startups 
US-based venture capital firm Scrum Ventures is joining hands with Dentsu Inc to launch a sports tech startup accelerator, a one-year programme that will take place in Silicon Valley and Japan, it said in a statement on October 1. 

The accelerator will provide mentorship opportunities with global sports leaders as well as introductions to entrepreneurs, investors and major sports brands across the global networks of Dentsu, Scrum and other sponsoring partners. 

“SPORTS TECH TOKYO is a unique accelerator program made possible by the collaboration of Dentsu, where we have supported sports for many years, and Scrum Ventures, a firm experienced working with startups in the US,” said Dentsu business development senior director Fumihiko Nakajima. 

The programme involves the initial selection of up to 150 companies and of these, about 10-20 finalists will be chosen to participate in a three-month intensive virtual mentorship programme. 

“The sports tech market is rapidly growing and is one of the hottest investment fields. Scrum Ventures has been investing in sports and health industries, including wearable devices, sensors, and VR technology that are changing the way we play and watch sports,” said Scrum Ventures founder and general partner Tak Miyata.

  From – Deal Street Asia

GDex picks stake in SAP Express; Malakoff gets nod for Alam Flora deal

While Malaysia-based GD Express Carrier Bhd (GDex) will subscribe to 44.5 per cent in the IPO of PT Satria Antaran Prima Tbk (SAP Express), the shareholders of power producer Malakoff Corp Bhd have given their approval for the acquisition of Alam Flora Sdn Bhd. 

GDex picks 44.5% share in Indonesian courier firm 
Malaysia-based GD Express Carrier Bhd (GDex) will subscribe for 44.5 per cent in the IPO of Indonesian courier firm PT Satria Antaran Prima Tbk (SAP Express) for 92.71 billion rupiah ($6.2 million) or 250 rupiah per share, it said in a filing with Bursa Malaysia on October 2. 

According to the stock filing, SAP Express, founded in 2014, provides services in the express delivery segment as well as transportation, distribution and warehousing. It covers the whole of Indonesia through its 58 branches and 12 representative branches as well as more than 100 retail counters. 

SAP Express is schedule for listing today (October 3), with quoted price at 250 rupiah per share. GDex will subscribe for 137.5 million shares or a 16.5% stake in SAP Express’ IPO, while its two wholly-owned subsidiaries GDex SEA Sdn Bhd and GD Valueguard Sdn Bhd will buy up 150 million shares (18 per cent) and 83.33 million (10 per cent) of SAP Express shares respectively. 

“The participation of GDex companies in SAP Express’ IPO will enable the company to tap into the fast growing express delivery industry in Indonesia. This is also in line with the company’s strategy of regional expansion, starting with Indonesia,” said GDex. 

Malakoff gets shareholders’ nod for $228m Alam Flora buy 
The shareholders of power producer Malakoff Corp Bhd have passed the resolution to acquire 97.37 per cent stake in waste management company Alam Flora Sdn Bhd for RM944.6 million ($228 million), it said in a statement on October 2. 

In August, Malakoff, via its wholly-owned subsidiary Tunas Pancar, entered into a conditional share sale agreement with DRB-Hicom Bhd’s HICOM Holdings to buy the stakes of Alam Flora. “The acquisition offers synergistic opportunities between Malakoff and Alam Flora to develop waste-to-energy (WTE) projects, leveraging on their respective core competencies and experience,” said Malakoff chairman Hasni Harun. 

Pending necessary approvals, Malakoff said the acquisition is expected to be completed in six months from the date of the SSA.

From – Deal Street Asia

Singapore’s Mapletree acquires $1.1b logistics
portfolio in US, Europe from Prologis

Singapore-based real estate investment firm Mapletree is acquiring a $1.1-billion logistics portfolio, further deepening its presence in the US and Europe. 

The 16.5 million square foot portfolio was acquired from Prologis, Inc. and covers key logistics markets such as Chicago, Dallas, Seattle, Paris and Warsaw. 

According to a statement, Mapletree has been looking for investments beyond Asia since 2014, making the acquisition in line with its strategy to expand its footprint as a logistics real estate provider. 

Michael Smith, Regional Chief Executive Officer, Europe and USA at Mapletree, said, “With properties strategically situated in key distribution hubs, Mapletree is well-positioned to capitalise on the growing demand for modern logistics facilities and the thriving e-commerce sector globally.” 

“As an active capital manager, we have also embarked on a syndication of our European and US logistics assets to institutional and high net worth investors,” added Smith. 

The acquisition adds to Mapletree’s current Europe and US investments in student accommodation, serviced apartments, commercial properties and data centres. 

Temasek-backed Mapletree is one of the leading real estate developers in Singapore. It manages four Singapore-listed real estate investment trusts (REITs), six private equity real estate funds across markets like China, India and Japan. Mapletree also owns and manages a global portfolio worth $33.55 billion (S$46.3 billion) as of 31 March 2018.

From – Deal Street Asia

Bain Capital, KKR to back hardship fund for Toys R Us workers

When Toys R Us closed its US operations at the end of June, the famed toy retailer laid off some 33,000 workers. 

Three months later, storefronts across the country where the company used to reside remain empty. And laid-off employees are still waiting for the roughly $75 million in combined severance pay they were once promised by management.

But that could soon change. Bain Capital and KKR have held discussionswith workplace advocacy group Organization United for Respect and former Toys R Us employees about setting up a hardship fund to pay back that full $75 million severance figure, with an announcement "hopefully coming soon," according to a source close to the situation. Late Friday, meanwhile, The Wall Street Journal reported that Bain Capital and KKR are working on a $20 million severance fund. 

Bain Capital and KKR didn't respond to requests for comment. 

Setting up this type of mea culpa fund would be a highly unusual move for a private equity industry that typically aims to maximize profits at all costs. But KKR and Bain Capital both received significant blowback from both the public and LPs after Toys R Us suffered a swift demise following a disastrous holiday sales season. 

How did we get here? 

Bain Capital, KKR and Vornado Realty Trust took Toys R Us private for about $6.6 billion in 2005. The deal reportedly saddled the company with about $5 billion in debt, a total that became impossible to pay down in part because of the rise of online retailers such as Amazon and Walmart. Meanwhile, the lack of available capital made it difficult for the business to adjust to a retail industry that began producing more revenue from ecommerce. 

Toys R Us eventually filed for bankruptcy in September 2015, with plans to either find a buyer or restructure the company's debt load. But lenders including Angelo Gordon & Co. and Solus Alternative Asset Management, a pair of New York-based investors, ultimately decided to shut down the company's US operations. 

In August, both firms sent a letter through law firm Wachtell, Lipton, Rosen & Katz explaining that they "do not believe there is a sound basis to claim that Toys R Us secured lenders should make additional financial contributions for the benefit of employees or other unsecured creditors." The letter cited the fact Angelo Gordon and Solus had already contributed to a $450 million bankruptcy loan, helped implement a compensation plan that paid out "millions of dollars" to employees and gave Toys R Us additional time to find a buyer after it defaulted on the loan, among other concessions. 

Oaktree Capital Management, Highland Capital Management and Franklin Mutual Advisers were also among the secured lenders that opted for liquidation, but none have agreed to contribute to the hardship fund, according to a source. Vornado Realty Trust, meanwhile, has not responded to requests to make a financial contribution. 

The outrage over the whole episode has poured over to Capitol Hill. In July, 19 Democratic members of Congress sent Toys R Us' former owners an informal letter asking about their business practices. And this past week, a group of the store's former workers in New Jersey lobbied the state's investment council to pull its $300 million investment in Solus. In the meantime, former Toys R Us employees have lobbied LPs in Texas, Oregon, North Carolina, Virginia, Arizona and Minnesota with investments in the lenders to ask they pay back some of the severance.

From – PitchBook

China’s Morningside Venture Capital raises $593m for two new funds

China’s early stage investor Morningside Venture Capital has raised a combined fund of $593 million which will go towards two separate vehicles, according to a filing with the US Securities and Exchange Commission (SEC). 

The firm has raised $395.5 million for its Evolution Fund I vehicle, which targets a total fund of $600 million. A separate filing filed on the same day shows the firm closing $197.8 million toward a $300 million opportunity fund, Evolution Special Opportunity Fund I. 

Both funds received investment commitments from 37 limited partners, the filings show. Morningside Venture Capital is one of China’s earliest early-stage venture investors with around $ 1.7 billion under management including four USD funds and one RMB fund, backed by various investors including sovereign wealth funds, family offices, fund of funds and university endowments. 

The firm, which was founded in 1992, closed its maiden RMB-denominated fund at $140 million hard cap, backed by a host of big investors including China Merchants Ventures, national industrial guidance fund Zhongjin Qiyuan, Tencent Holdings Ltd, Xiaomi. 

In 2015, the firm closed its fourth China TMT (technology, media and telecom) fund at $660 million. 

Morningside’s current venture investments focuses on four main sectors of clean technology, education technology, life science and TMT (technology, media and telecom), according to its website. Among its portfolio companies are Xiaomi, Nanovision, Combined Solar and CollegeVine. 

Last month, it reportedly led a $50 million Series C round in Beijing-based distributed database company PingCap. 

From – Deal Street Asia

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