Category: Mergers & Acquisitions

BharatPe Joins The Unicorn Club With Threefold Rising Valuation to $2.85 Billion

BharatPe, merchant payments, and financial services provider, has raised $370 million in a primary and secondary fundraising round led by new investor Tiger Global Management of New York.

Dragoneer Investor Group and Steadfast Capital are two other new investors who participated in this round.

BharatPe joins India’s burgeoning list of unicorn startups with the funding, with its valuation more than tripling to $2.85 billion in only six months.

In February 2021, the company raised $108 million at a valuation of $900 million.

As part of the current fundraising round, new investor Tiger Global invests $100 million in the firm, with Dragoneer and Steadfast contributing $25 million each.

The existing investors have contributed a total of $200 million to the company’s current Series E fundraise, which includes Sequoia Capital, Insight Partners, Coatue Management, Amplo, and Ribbit Capital.

The round also includes a $20 million secondary fundraising to provide liquidity to the company’s employees and angel investors. For BharatPe employees with vested options, this is the third liquidity event.

Suhail Sameer, the company’s group president, has been promoted to CEO and will be in charge of monetization, lending, and the company’s recent banking foray. In addition, he will also join the board of directors of BharatPe.

Ashneer Grover, the co-founder of BharatPe, will take over as managing director of the company. He will continue to lead the company’s strategy, technology, product functions, and working capital financing efforts.

In an interview, Grover mentioned they planned to raise $250 million initially, but the response was highly overcrowded.

They believe the $350 million quick raise will provide them with sufficient runway for the next three years, following which they may consider a public market listing.

Grover added that they still have cash in the bank from their Series C and D rounds and an overall liquidity runway of $500 million, putting them in excellent stead for future development.

He claims that the present financing would be used to tenfold the company’s existing business lines over the following two years.

In collaboration with Centrum Financial Services, BharatPe would use the money to help troubled Punjab and Maharashtra Co-operative (PMC) Bank. In June, the purchase of PMC Bank by Centrum and BharatPe was approved by the Reserve Bank of India (RBI).

Grover also informed that with RBI approval in June, they will invest $250-$300 million (or up to 2,224 crores) in PMC Bank alongside Centrum over the following two years.

However, Grover refused to comment on the PMC Bank acquisition’s future ambitions.

Merchant payments, lending, and financial services offered to merchant partners are among BharatPe’s core business verticals.

It now has a presence in more than 140 cities and intends to expand to 300 towns in the next two years. It also intends to increase the number of point-of-sale devices deployed from 100,000 to 400,000 during the following two fiscal years.

To far, BharatPe has granted almost $300 million in funding to merchant partners and has a $100 million outstanding loan book.

It intends to increase its entire funding to $3 billion by March 2023, with a $1 billion outstanding loan book.

To support this credit expansion, the company plans to raise $700 million in debt capital over the next two years.

The BharatPe platform now processes about $10 billion in yearly payment value, with the firm aiming to reach $30 billion by 2023.

BharatPe also just announced the purchase of PAYBACK India, a multi-brand loyalty platform, to assist its 7 million offline retailers in implementing consumer incentives and loyalty programs.

This marked BharatPe’s debut into the customer-facing sector, as the business intends to launch “Buy Now, Pay Later” services on the PAYBACK platform.

“For the next three years, we do not expect to make any further acquisitions for inorganic growth and will continue to focus on developing our existing lines of business organically,” Grover added.

By the end of the fiscal year 2023, BharatPe hopes to have doubled its merchant partners to 14 million.

Malaysia AirAsia To Buy Indonesia Gojek Through A Stock Swap Deal

Tony Fernandes, CEO of Malaysia’s favorite budget airline carrier AirAsia Group, shared in a virtual press conference that AirAsia will be acquiring Gojek’s Thailand business.

The process will take place through a stock exchange deal, where Gojek’s business will be bought over by AirAsia for $50 million worth of share in AirAsia SuperApp Sdn. Bhd., resulting in Gojek owning a 4.76% stake in AirAsia’s lifestyle platform.

As part of the $50 million, $10 million will be spent on acquiring 100% equity interest in Velox Fintech Co Ltd, while the rest of $40 million will be spent on acquiring 100% equity interest in Velox Fintech (Thailand) Co Ltd.

This took place not long after AirAsia applied for a Malaysia digital banking license, basically conveyed the message there is a shift in business focus towards digitalization.

Tony said that this acquisition marks a big virtual step for AirAsia into the Thai market, as Gojek already has thousands of ride-hailing riders and merchants base in the country. He added that AirAsia will take this opportunity to expand Gojek to other parts of Thailand because AirAsia has opened up many destinations and routes in Thailand.

Gojek CEO Kevin Aluwi said this gives them the opportunity to pay more attention to Vietnam and Singapore markets, to which they seek to commit significant resources to.

Aluwi also said “While we remain committed to our overseas markets, we decided that our priority was to really invest in Singapore and Vietnam, due to the scale of business that we have in those markets. When we realised that we could not properly commit the right resources to make Thailand as ambitious as Singapore as Vietnam, we began the {exit} conversations.”

Gojek is expecting to launch its car and e-payment services this year in Vietnam, and their driver recruitment has begun its process. It is said they will first deploy the service in Ho Chi Minh City and slowly expand to Hanoi.

Indonesia’s GoTo Group Plans Fundraising Before IPO Launch In 2021

Last week, two of Indonesia’s largest startup companies, Gojek and Tokopedia confirmed that they will be merging to form GoTo Group with a deal of US$18 billion to US$22 billion. The merger is said to be Indonesia’s largest with a combined entity of over 100 million monthly active users, 11 million merchant partners, and more than 2 million registered drivers.

GoTo was reported to have registered a transaction of more than 1.8 billion in the year 2020 and together, conquered 2% of Indonesia’s GDP. Moreover, both companies’ executives explained that the plan to implement the merge as a strategy to compete with the two Southeast Asian giants, Grab and Shopee.

With Shopee’s recent launch of its food-delivery feature in Indonesia this year, it became a direct competition with Tokopedia for Indonesia’s market share.

After the announcement of the merger, GoTo Group proclaimed its plans to start a round of fundraising before its initial public offering (IPO) launch before the end of this year. Moving on, during the talk with financial institutions and sovereign wealth funds, GoTo emphasized its scheme to use Gojek as means of transport for Tokopedia packages for customers paid with the group’s e-wallet.

The merge creates shared data resources and customer that makes their services more efficient and cheaper throughout the country. User engagement is also expected to increase with its services after assembling more into one single app, GoPay.

Some people familiar with the merger claimed that an estimate of US$40 billion could be reflected on Gojek and Tokopedia’s recent financial performance. Subsequently after the merge, the two companies, Gojek and Tokopedia will remain in operation as a separate unit under the GoTo Group.

Indian Edtech Unicorns continue acquisition spree in 2021

In 2021, edtech unicorns in India, Byju and Unacademy, remain active in their acquisition of smaller rival online learning startups.

The two unicorns have been in talks to acquire smaller rival online learning startups, with one of the latest acquisitions being WhiteHatJr, an online coding school for young kids which Byju has acquired for US$300 million last August.

Byju is also currently in close discussion with Toppr which might result in a US$150 to US$160 million deal. Like Byju, Toppr operates in the K12 (Kindergarten to Class 12) learning space and provides online learning materials as a service.

If the deal is successful, this will lead to further consolidation in the sector and provide an exit to its backers which include SAIF Partners and Helion Ventures.

“Business momentum for Byju’s has not slowed down even beyond the pandemic. With the Toppr acquisition, Byju’s will strengthen its focus in the K-12 space,” reported DealStreetAsia, further adding that this deal will bring massive value to Byju and that the unicorn is now eyeing both international expansion and strategic inorganic growth.

On the other hand, Byju is also closing another transaction to buy offline test preparation firm Aakash Educational Services for US$1 billion.

Meanwhile, Unacademy which only became a unicorn last year after receiving a valuation of around US$2 billion, has also been on an acquisition spree.

The edtech unicorn has acquired multiple startups in recent months including NeoStencil, PrepLadder, Mastree, Kreatryx, CodeChef, and Coursavy which are primarily involved in the test prep space.

Both edtech unicorns Byju and Unacademy has benefited from the pandemic-led lockdown which has facilitated learning to go online. The two had raised multiple rounds of fundings last year with Byju securing over US$1.25 billion in 2020 and is currently valued at US$12 billion.

In 2020, Indian edtech firms raised US$2.1 billion, which counts as the highest of all sectors. It was almost 5x more than the US$426 million in 2019, according to data by Venture Intelligence.

During an interview with DealStreetAsia, Unacademy’s Founder and CEO Gaurav Munjal said that the startup was still looking for 2 to 3 more acquisitions in the pipeline. “We are looking for a team or a particularly unique selling proposition that they have, but we don’t,” he said.

Based on a report by Anand Rathi Investment Banking, India’s edtech sector is set to reach US$12 billion by 2025 on the back of continued investor interest, rising urbanization, and internet users among other factors.

Singapore Startup Carousell Set to Become Latest SEA Unicorn in Merger with Rival 701Search

Singapore’s Carousell, a startup that operates in the online classifieds business space, announced recently that it had agreed to a merger with 701Search, a subsidiary of Norwegian multinational telecommunications giant Telenor Group.

The merger of the two entities will see the valuation of Carousell skyrocket to more than US$850 million from its current valuation of US$560 million, bringing it tantalizing close to the US$1 billion valuation mark that denotes unicorn status. As a result of the agreement, 701Search will cease to be a subsidiary of Telenor Group after the merger and will begin operations as a unit of Carousell, reporting to Carousell chief executive officer Quek SIu Rui.

As part of the deal, Telenor will now hold a 32 percent stake in the newly merged company, thus succeeding Rakuten Ventures to become the Singapore-based startup’s single largest minority stakeholder. The cash and equities deal saw Carousell acquiring 701Search assets and US$20 million in currency in exchange for some of the company’s shares to Telenor.

Discussing about how the merger with 701Search came into being, Carousell’s chief financial officer, Rakesh Malani, said that the entire process was very fluid and organic as both companies have been operating in the same space for quite some time and thus are quite familiar with each other.

701Search operates 3 digital marketplace platforms in Southeast Asia; OneKyat in Myanmar, Mudah in Malaysia and ChoTot in Vietnam. Following the merger, all three marketplaces will still keep their respective names and manage their business operations, though Quek Siu Riu will be fully in charge.

As well, Carousell will completely absorb 701Search’s Singapore-based regional hub team. Quek said that the strategic merger will accelerate Carousell’s plans to be Southeast Asia’s preeminent force in the online classifieds business space as the three aforementioned online sites are already the leading digital classifieds marketplaces for their respective countries. Besides the newly added entrants of Vietnam and Myanmar through ChoTot and OneKyat, Carousell has existing operations in the markets of Singapore, Philippines, Taiwan, Malaysia, Hong Kong, Australia, and Indonesia.

Even though the idea of being so close to achieving unicorn status might be an attractive and tempting prospect to some, Malani said that the company has its sights set firmly on the ground; the newly combined company will further examine how the merger will serve to enhance its business performance and grant access to potentially lucrative new markets in Vietnam and Myanmar.

He also emphasized that, as a result of the merger, the Singapore-based startup’s annualized revenue for the current year is now a whopping US$40 million, which is a substantial five-fold increase over its 2018 revenue of US$7 million. Malani added that so long as the company remains focused on delivering results and improving performance, the startup will eventually reach unicorn status as a matter of course.

Founded in Singapore in 2012 by Ngee Ann Polytechnic graduates Quek Siu Riu, Lucas Ngoo and Marcus Tan, Carousell is an online business to business and consumer to consumer marketplace that has received investments from notable parties such as Rakuten, 500 Startups and Quest Ventures. It managed to successfully raise US$85 million for its Series C funding round in May 2018, which was co-led by EDBI and Rakuten Ventures.

Singapore-based startup Carousell, though coming very close to being Southeast Asia’s premier unicorn in the online classifieds business space, is still focused on its core business and providing quality service and solutions for its users first and foremost. Nevertheless, by keeping its feet planted firmly on the ground, the company may soar to even greater heights and join Southeast Asia’s pantheon of unicorns sooner rather than later.

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