Author: vivian
Warburg-backed e-Shang Redwood closes US$300 million investment in run up to IPO
A consortium of mainland China investors has invested US$300 million in Warburg Pincus-backed Asian logistics real estate developer e-Shang Redwood (ESR), as the company prepares for a potential initial public offering (IPO) this year.
The named investors for the pre-IPO round consist of top-tier mainland finance firms which include Hong Kong-based GF International Investment Management Ltd., Huarong International, Huarong Rongde, SPDB International, China Everbright Ltd., Everbright Securities and CMBC International.
As per details of the IPO, the company has since the beginning of 2016, been reportedly seeking an initial public offering in Hong Kong to raise around US$1 billion.
“Modern warehousing will continue to benefit from the rapid development of e-Commerce and the transformation of the retail sector in Asia and we believe ESR is well-positioned to further enhance its strong leadership position,” said Elyn Xu, Head of Structured Finance for GF Holdings, a Hong Kong affiliate of mainland-based brokerage GF Securities.
ESR was formed in January 2016, as the result of an all-stock merger between the Shanghai-based developer and operator of warehouses, e-Shang Cayman with Singapore-based logistic fund manager, The Redwood Group. The partnership was aimed to create one of the largest logistics real estate platforms in Asia.
Leveraging on the rapid growth of e-commerce in Asia, ESR has since then quickly built a 6.5 million square meters of projects in operation or under development in China, Japan, and South Korea with another over 6 million square meters in pipeline.
Prior to the latest round of investment, the company’s existing list of backers also comprise supports of major institutional investors which include Warburg Pincus, CPPIB, APG, PGGM and Goldman Sachs.
“2016 has been a very strong year for us with the completion of the Redwood merger, the substantial increase in development starts in our core markets of China, Korea, and Japan on the back of robust market demand from our best-in-class tenant relationships and the establishment of new financing institutional relationships in each of our market,” said Jeffery Shen, the co-CEO of ESR.
“The company is well-positioned to further accelerate its growth and solidify its market leading position across Asia over the next few years,” he further adds.
The company last secured a US$ 300 million commitment in July 2016 from Ping An Real Estate, the real estate investment and asset management platform of Ping An Insurance Company of China, Ltd. The purpose of the funding was for the development of logistics projects in Japan.
By Vivian Foo, Unicorn Media
China’s Sogou targets IPO at US$5 billion valuation to rival Baidu
China’s third-biggest search engine Sogou is expected to hold a U.S. initial public offering this year, according to a report by Bloomberg, based on its interview with Sogou CEO Wang Xiaochuan.
The IPO of Sogou, a subsidiary of Chinese internet giant Sohu.com (SOHU) is likely to release about 10 percent of its total share to the financial market in the United States at a market valuation of US$5 billion.
It is also reportedly said that Sogou, whose name translates as search dog, is planning to use part of the IPO proceeds to improve search results by backing companies developing artificial intelligence. Despite so, the company is yet to formally hire investment bankers to run the listing.
Though Sohu remains the leading investor, Sogou is also backed by Tencent after the China Internet service portal giant paid US$448 million for a 36.5% stake in the Sohu unit. In 2013, Tencent Holdings (TCEHY) and Sogou merged their search engine technology and services to better compete against China search leader Baidu.
According to Bloomberg, Baidu held a 44.5% share of mobile search queries in the third quarter, followed by Alibaba-backed Shenma at 20.8% share and Sogou at 10.2%.
But while Baidu remains the biggest provider across all platforms in China, it is under siege after a scandal over a medical advertising incident, giving smaller rivals including Sogou and Qihoo 360 Technology the opportunity to win over mobile users.
“Over the past year, we’ve seen a trend where people are finding themselves not trusting Baidu as much and some are even seeking a replacement,” Wang Xiaochuan, the CEO of Sogou since 2010 explained.
“So over the next year or two, as more people feel more comfortable with Sogou they’ll realise it is able to replace Baidu,” he adds.
At present, Sogou is the only search engine formally allowed to crawl through the published messages on Tencent’s WeChat platform, which has more than 800 million users.
The Tencent-backed search engine is also signing deals with device makers to ensure more smartphones are shipped with its software already installed, adopting a successful strategy previously used by microblog Weibo.
Sogou is also launching new search services aimed at bringing foreign results to Chinese audiences. By using translation technology, its customers will be able to search the English-speaking web with Mandarin search terms that will automatically translate the content back into Chinese.
“This is a turnaround year for us,” Wang Xiaochuan said.
With its IPO in planning, shares in Sohu increased by 4.9% to US$35.54 in New York on Tuesday, retaking its 50-day line for the first time in more than two months.
By Vivian Foo, Unicorn Media
China establishes US$1.44 billion Asia Fintech Fund of Funds (FOF) focusing on M&A deals
The influence of China in advancing fintech is likely to grow even stronger in 2017 with the establishment of Asia FinTech Fund Of Funds (FOF) which has accumulated a substantial funding of 10 billion yuan (approximately US$1.44 billion) to invest in fintech startups across Asia.
Based in Beijing, the foundation was formed on December 27 and is led by Hong Kong-listed Credit China FinTech Holdings along with a number of other Chinese companies such as Shanghai Xinhua Distribution Group, China Huarong International, Jilin Province Investment Group Corp Ltd and seven other corporate partners.
“In addition to the aforesaid state-owned enterprises and private enterprises, China Cultural Industry Association, New Times Trust Co Ltd, Shenzhen China Create Group, N-Securities Co Ltd, Beijing Yongyu Investment, Tianjing Borong and Juntong Capital are also partners of the fund,” Credit China FinTech said in a statement,
The fund will primarily be used to target financial and tech mergers and acquisitions (M&A) in Asia, with investments, focused on fintech fields such as big data, artificial intelligence, mobile payments, supply chain financing, and blockchain technology.
“The fund already has projects in the pipeline, covering big-data driven consumption financing, blockchain infrastructure provision, and AI-based credit service platforms,” according to Xie Sha, the Managing Partner of Asia Fintech FOF.
The investment fund also comes as a signal showing China’s growing status in dominating the financial and technology market in the international platform.
A report released by DBS and consultant EY has also ranked China as the number one fintech destination, overtaking London, New York and Silicon Valley as the world’s “FinTech Hub”.
This result is largely contributed by the developments across multiple hubs, such as Shanghai, Beijing, Hangzhou in East China’s Zhejiang Province and Shenzhen in South China’s Guangdong Province.
On a similar note, the Asia FinTech FOF, also comes as the second fund of funds (FOF) after the Zhongguancun FOF, which was established in 2015 with an allotted fund of 30 billion yuan (approximately US$ 4.32 billion).
Asia FinTech FOF attempts to establish growth in the fintech industry is another attempt in China’s cap to establish its economic dominance in the Asia-Pacific region- especially if Beijing can compete with Singapore or London in the fintech sector.
“Leveraging on the fund partners’ experiences and competitive advantages in brand recognition, industry resources, and expertise, the Fund aims to invest in innovative FinTech enterprises with potential and help them to be the FinTech leaders with our technical know-how and capital resources,” said Sheng Jia, the Credit China FinTech Executive Director.
By Vivian Foo, Unicorn Media
India-based instantPay secures pre-Series A funding from RB Investments, Kaleden
A digital payments and financial services startup, instantPay has announced that it has secured its pre-Series A funding round from Singapore-based investors – RB Investment and Kaleden Holdings.
“It is rare to find a small company that has remained cash positive in this industry,” Gurinder Singh, the managing director at Kaleden Holdings commented in regards to the investment.
The exact amount raised was not disclosed, but it was reportedly said to be in the range of Rs 20 crore to Rs 34 crore (about US$3 to US$5 million).
These latest proceedings will be used for talent acquisition, developing new products as well as the geographical expansion across India. Additionally, part of the New Delhi startup funding will also be used for brand-building and marketing.
Launched in 2012 by Sankalp Shangari, Shailendra Agarwal, and Mohammad Rehan, instantPay is a business unit of SMSdaak India Limited, which provides more than 100 products and services which facilitate digital payments at Kirana stores in tier-2 and 3 cities.
The products and services are distributed through over 400 corporate strategic alliances and through a nationwide network of micro-merchants, offering services which include electronic mobile recharges, DTH and utility bill payments, insurance premium payments, travel bookings, domestic remittance etc.
Additionally, their financial institutions and merchants can also provide a host of supplementary services to their consumers, thus up-selling and cross-selling their existing portfolios. The platform currently has over 62,000 merchants and targets to cross 120,000 merchants by March 2017.
“While we build this massive network, we are also enabling other products and services to be delivered via this distribution directly and efficiently,” said Sankalp Shangari, the cofounder of instantPay.
At the moment, instantPay claims to be processing around 10 million transactions per month and is looking to touch the 50 million mark by FY18.
Besides, the company has also been profitable, having closed FY16 “net positive in a few lakh”. For FY17, the startup is aiming at a 20% leap in growth with a four-fold jump in revenue for FY18.
“Companies should target to make unit economics sustainable before taking long bets in the market and aggressively aiming for market share,” said Rajesh Bothra, the Managing Director at RB investments.
The investors also add that the key challenge for companies in this space in the upcoming year would be to mitigate cyber security risks following a surge in business due to demonetisation.
At present, the company’s network comprises of more than 50,000 outlets across districts in India, for leading telcos and direct to home service providers.
By Vivian Foo, Unicorn Media
Everstone makes third healthcare acquisition, investing US$35 million in OmniActive Health
India-based private equity (PE) fund Everstone Capital has invested US$35 million (about Rs 232 crore) in Mumbai-based nutraceutical ingredient player OmniActive Health Technologies for a significant minority stake on Monday.
OmniActive Health Technologies is a leading supplier of naturally sourced ingredients for eye health, weight management and heart health to global nutraceutical companies that provide food supplements and nutritional fortification.
The company is equipped with the state-of-the-art manufacturing facilities, R&D centers across India and Canada, as well as sales and marketing presence across the United States, Europe, and Aisa. This latest capital will be used to help OmniActive in diversifying and expanding its offerings and implement its inorganic growth strategy.
“We welcome this partnership with the Everstone Group .with the support of its experienced teams and funding, OmniActive looks forward to building on our history of solid organic growth by further strengthening our presence globally using innovative products and technologies,” said Sanjaya Mariwala, the managing director of OmniActive Health.
“This will be done by also growing inorganically to bring a wider product portfolio of responsibly make ingredients to our customers through our strategic acquisitions,” Mariwala added.
Founded in 2005, OmniActive, over the last decade, has emerged as the leading nutraceutical ingredient supplier to international markets from India, helped by the gradual shift in the nutraceuticals sectors towards the increasing demand in the consumption of natural products.
In the last 18 months, the nutraceutical firm claims that it has completed 12 human clinical trials in healthy populations across its portfolio of branded ingredients. The company also holds a strong presence in the United States and is working to achieve similar success in Europe and Asia.
As part of the deal, Everstone will be represented by Deep Mishra, the Managing Director at Everstone India, who will join OmniActive’s board as a nominee director, along with Dr. Leendert Staal, an internationally reputed nutraceutical expert who was the CEO of the global industry leader DSM Nutritional Products from 2008 to 2013.
Co-founded by Sameer Sain and Atul Kapur, former Goldman Sachs executives in 2006, Everstone Capital has been an active PE investor in India. The PE major assets that it has US$3.3 billion under management, as well as around 200 employees working across five offices located in Mumbai, Delhi, Bengaluru, Mauritius, and London.
“This investment aims at helping OmniActive scale its already strong presence in the fast-growing nutraceutical space. We are excited about partnering with the Mariwala family and building a world-class global business,” said Sameer Sain, the co-founder and managing partner of Everstone Group.
With this deal, the OmniActive investment will also become the fifth acquisition from its third PE fund – Everstone Capital Partners III that it has closed in September 2015 as well as the company’s third acquisition in the healthcare and wellness sector which has completed in less than a year period.
Everstone acquired a majority stake in Mumbai-based drug delivery technology firm Rubicon Research Pvt. Ltd, a pioneering drug delivery technology company for approximately $33 million in October 2015. Preceded by a majority stake in Ascent Health, an Indian pharmaceutical delivery services provider, in March.
Avendus Capital advised OmniActive on this deal as the investment banker.
By Vivian Foo, Unicorn Media