Deals Buzz: Microsoft set to invest $200 mn in Ola, boost connected car tie-up11 min read . Updated: 30 Oct 2019, 10:33 AM IST
In other news, Jungle Ventures, a Singapore-based venture capital (VC) firm that has invested in several Indian startups, has raised $240 million for its third fund
Mint brings you your dose of the top deals news, reported from newsrooms across the country
Microsoft set to invest $200 mn in Ola, boost connected car tie-up
Ride-hailing company Ola is set to unveil a connected car project in partnership with Microsoft Corp., which will also invest around $200 million in Ola’s parent, ANI Technologies Pvt. Ltd, Mint reported citing two people aware of the deal. Microsoft will acquire around 4.5% in ANI Technologies as part of the deal. The project, which began in 2017, aims to connect cars with Internet of Things sensors, and the transmitted data is stored in the cloud. The car is thus tracked not only for its location through GPS, but also for the quality of its engine and for relaying information needed by vehicle insurers. The project will showcase software and hardware solutions addressing the emerging mobility segment, as it will include cloud solutions, a connected vehicles product and deep-tech capabilities focused on future mobility solutions. The tech will also have direct implications for Ola Electric. Ola’s proposed connected vehicles project is an “extension" of the initial tie-up with Microsoft. In 2017, Ola said it would become a connected car solutions supplier to auto companies worldwide. As part of the partnership, Microsoft would become the default cloud service provider to Ola, wherein the cab-hailing platform would also use Microsoft Azure for Ola Play, the ride-hailing company’s in-cab video streaming service.
Jungle Ventures raises $240 mn for third fund
Jungle Ventures, a Singapore-based venture capital (VC) firm that has invested in several Indian startups, has raised $240 million for its third fund, Mint reported citing a press statement from Jungle Ventures. The firm will invest in innovative technology and digital-driven consumer businesses across Southeast Asia from this fund. For its previous two funds in 2013 and 2016, it had raised $12 million and $100 million, respectively. More than 90% of the capital for the third fund came from institutional investors from North America, Europe, West Asia and Asia. These investors include DEG, Germany’s development finance institution; IFC, a member of the World Bank Group; Bualuang Ventures, a corporate VC fund of Bangkok Bank; Dutch development bank FMO; Cisco Investments and Singapore’s Temasek, among others. The Jungle Ventures III fund includes $40 million raised in separately managed account commitments, the statement added. The firm has already invested in five companies spread across Southeast Asia, such as Engineer.AI, Sociolla, SweetEscape, KiotViet and Waresix, from the new fund. Around 40% of the money raised for each of the previous two funds was invested in India. Jungle Ventures’ portfolio covers digital consumer brands focused on millennials in Southeast Asia, digital platforms for transforming small and medium enterprises (SMEs) and global technology leaders born in Asia. It has backed Indian startups, such as Moglix, Tookitaki, ZipDial, Mobikon, Livspace, Engineer.AI and Vayana, and helped some of them expand across Southeast Asia or globally.
Aramco may begin planned IPO on 3 Nov
Saudi Aramco aims to announce the start of its initial public offering (IPO) on 3 November, Reuters reported citing three people with direct knowledge of the matter told, after delaying the deal earlier this month to give advisers time to secure cornerstone investors. Aramco is looking to float a 1-2% stake on the kingdom’s Tadawul market, in what would be one of the largest ever public offerings, worth upwards of $20 billion (£15.6 billion). The company will soon have more shareholders from institutions, the head of the kingdom’s sovereign wealth fund. It will start subscription for investors in its initial public offering on 4 December, Saudi-owned news channel Al-Arabiya said in a news flash on Tuesday citing people familiar with the matter. The oil giant plans to announce the transaction’s price on 17 November, it added. The company will begin trading on the local stock market, the Tadawul, on 11 December, the broadcaster reported. Russia’s sovereign wealth fund, the Russian Direct Investment Fund (RDIF), is working on a consortium of investors for Aramco’s IPO.
Amazon invests ₹4,473 cr in its Indian subsidiaries
Global e-commerce giant Amazon Inc. has infused $631 million ( ₹4,472.50 crore) into its Indian subsidiaries, including Amazon Seller Services, Amazon Pay and Amazon Retail, Mint reported citing filings with the Registrar of Companies. The e-commerce giant has invested ₹3,400 crore in Amazon Seller Services, its online marketplace arm, ₹900 crore in its payments platform Amazon Pay (India), and ₹172.50 crore in Amazon Retail India. The development comes even as its rival Flipkart applied for government licences to set up a new local entity, Flipkart Farmermart, which will focus on food retailing in India. Flipkart is expected to pump in ₹2,000 crore initially in the business, with further investments as it expands the supply chain, storage and logistics for the new business. The latest round of investment comes at a time when the Jeff Bezos-owned e-commerce giant’s India business has witnessed narrowing losses. Amazon Seller Services saw a 9.5% year-on-year fall in loss to ₹5,685 crore in 2018-19, PTI reported on Tuesday, citing documents sourced from business intelligence platform Tofler. Further, its sales grew 55% to ₹7,778 crore in 2018-19 over the previous fiscal year. Even as Amazon Seller Services cut losses, it was hit by the poor performance of its payments business. Amazon Pay India, which competes with the likes of Paytm, Flipkart’s PhonePe and Google Pay, recorded widening losses of ₹1,160.8 crore in FY19 from ₹334.20 crore in FY18, as per Tofler. Amazon’s combined losses in India in 2018-19 were over ₹7,000 crore.
Tata group-led consortium tweaks structure of GMR Airports deal
A consortium led by Tata group working on the acquisition of a stake in GMR Airports Ltd (GAL) for ₹8,000 crore has tweaked the deal structure to make it more palatable to authorities, Mint reported citing two people with direct knowledge of the matter. The Tata group, Singapore sovereign wealth fund GIC Private Ltd, and Hong Kong-based SSG Capital were to pick up 19.7%, 14.8%, and 9.9%, respectively, in the airport operator, according to the original plan. Under the new plan, Tata will hold 14.7% and GIC 19.8%, while SSG stake will remain the same at 9.9%. The deal values GAL, the airports business of GMR Infrastructure Ltd, at ₹18,000 crore. The deal will pump ₹1,000 crore into GMR Airports and facilitate the purchase of ₹7,000 crore of the airport unit’s equity shares from the parent. In October, the Airports Authority of India (AAI) had sought the opinion of the solicitor general of India on the legality of Tata group’s plan to acquire a significant stake in GMR Airports, which operates the New Delhi and Hyderabad airports, as it could run afoul of clauses barring domestic airlines from investing beyond a limit in airport operators. Tata group operates full-service carrier Vistara, a joint venture with Singapore Airlines, and budget airline AirAsia India, which is a joint venture with Malaysia’s AirAsia Berhad. After the completion of the deal, the total debt of GMR Infrastructure will reduce to ₹12,000 crore, a top company official had said earlier this year. Once the deal is done, GMR Infrastructure and its units will hold 53.5% stake in the airports business, while the company’s Employee Welfare Trust will own 2.1%.
Liberty House’s Sanjeev Gupta to merge steel operations
British commodities tycoon Sanjeev Gupta will merge his family’s steel operations by the end of the year into a new entity, the Liberty Steel Group, to be ready for a potential listing, Reuters reported citing Gupta in an interview. Other companies in his family’s privately-held GFG Alliance conglomerate will also be organised for possible IPOs in the future. The merger will take place by the end of the year, while the potential listing could be in London or elsewhere. Liberty Steel, with annual output of 18 million tonnes, would be the world’s 17th largest steel producer, based on World Steel Association figures for 2018. The new steel group, with operations in 10 countries and 30,000 employees, will also press ahead with a sustainable steel initiative, aiming to become carbon neutral by 2030.
Alphabet eyes wearables market with Fitbit bid
Google owner Alphabet Inc. has made an offer to acquire US wearable device maker Fitbit Inc., as it eyes a slice of the crowded market for fitness trackers and smartwatches, Reuters reported citing people familiar with the matter. While Google has joined other major technology companies such as Apple Inc. and Samsung Electronics Co. Ltd in developing smartphones, it has yet to develop any wearable offerings. A deal for Fitbit would come as its dominant share of the fitness tracking sector continues to be chipped away by cheaper offerings from companies such as China’s Huawei Technologies Co. Ltd and Xiaomi Corp.Fitbit’s fitness trackers monitor users’ daily steps, calories burned and distance travelled. They also measure floors climbed, sleep duration and quality, and heart rate. In August, Fitbit said it had signed a contract with the Singapore government to provide fitness trackers and services in a health programme it said could reach up to 1 million users. Fitbit in August also launched its latest smartwatch, Versa 2, adding Amazon.com Inc.’s voice assistant Alexa, online payments and music storage to the device’s capabilities.
Tencent Leads $110-m Round in MX Player
Chinese technology giant Tencent is leading a $110-million (about ₹780 crore) financing round in MX Player at around $500 million (around ₹3,545 crore) valuation, The Economic Times reported citing people close to the matter. This will be the video-streaming platform’s first external fundraising after its acquisition by Times Internet (TIL), which has also participated in the current round. The deal would help Tencent get a foothold in the fast-growing Indian over the top, or OTT, market, as it is expanding its video streaming platform Tencent Video outside of China with a recent launch in Thailand. For Tencent, this is the second instance of the internet conglomerate backing a Times Internet property. It led a $115-million funding round in music streaming service Gaana in February last year. Times Internet is part of The Times Group, which also publishes this paper. In 2018, Times Internet acquired a majority stake in MX Player, which was then a video playback app, from Chinese mobile games firm Zenjoy for an estimated ₹1,000 crore. Kai Xia, the founder of Zenjoy, who is on the board of MX Player, had bought out the company from its South Korean founder in 2016. MX Player intends to use the fresh capital to bolster its content portfolio by acquiring as well as producing original programming, expand further in the entertainment genre and increase its talent pool.
Coca-Cola Set to Sell Some Bottling Units to Partners
American beverages major Coca-Cola is close to finalising deals to sell part of its bottling operations in India to three franchise bottling partners, The Economic Times reported citing three officials directly aware of the developments. The combined value of the deals in the first phase of the selloff is estimated at ₹1,500-2,000 crore. The company-owned Hindustan Coca-Cola Beverages (HCCB) is in final stages of negotiations to divest its plants to Moon Beverages, Ladhani Group and the Kandhari Group. All three have been longstanding franchise bottlers of Coca-Cola India, and the size of the deals would vary depending on the plant capacity and infrastructure. The deals are expected to be closed next month. HCCB has 18 plants and accounts for two-thirds of Coca-Cola India’s volumes. The maker of Coke and Thums Up colas also has 13 independent franchise bottlers. The move to refranchise bottling operations is in line with Coca-Cola’s global strategy to divest asset-heavy operations. In June this year, Coca-Cola had named a new head for M&A and new ventures—the first such vertical in India to focus on acquisitions and divestments. The maker of Sprite soft drink and Minute Maid juice said in a post earnings call last fortnight that better growth in India and China had helped it post 4% volume growth in the Asia Pacific region.
Apollo Hospitals Gets Shareholders’ Nod to Divest Pharmacy Business
The restructuring exercise by Apollo Hospitals Enterprise (AHEL) to divest front-end pharmacy business to Apollo Pharmacy (APL) has received approval of shareholders, paving the way for the final nod from the National Company Law Tribunal (NCLT), The Economic Times reported. During November last year, Apollo Hospitals had proposed to divest its front-end pharmacy business in favour of Apollo Pharmacy for a lumpsum cash of ₹527.8 crore. The shareholders of AHEL at an NCLT-convened meeting on October 21 approved the restructuring scheme with a majority vote of 99.99%. Amidst reports that AHEL’s decision to demerge its pharmacy business with a complex structure would hurt the minority shareholders, the stock on Tuesday plunged 6.4% or ₹97.8 to close at ₹1,430.85 on BSE. While AHEL plans to utilise the proceeds of divestment towards growth and enhancement of other existing businesses, APL hopes to create value for its shareholders by acquiring ready-to-use assets and reducing time to market. APL currently has 3,428 outlets spread across 400 cities and towns, serving about 300,000 customers daily with an employee strength of over 21,000. AHEL holds 100% stake in Apollo Medicals (AMPL), which in turn holds 100% equity in APL. The shareholding structure of AMPL would undergo changes with the approval of this scheme. Post implementation of the scheme, AHEL’s shareholding in AMPL would be diluted to 25.5% with other investors together holding 74.5% stake.
PNB may not Subscribe to Housing Arm’s Fresh Equity
Punjab National Bank is unlikely to subscribe to the fresh equity expansion of its housing subsidiary PNB Housing while Carlyle Group is keen to expand its investment, The Economic Times reported citing sources familiar with the development. The housing finance company is raising ₹2,000 crore in equity for the first time in four years. State-run PNB holds 32.66% in the company while Carlyle holds 32.25% through a group company, called Quality Investment Holdings. General Atlantic with 9.87% interest in the housing finance lender may also subscribe to the issue. A couple of new investors may join in. The mortgage lender may opt for ‘limited preference’ route whereby a maximum of five investors can participate. The company has hired Kotak Mahindra Capital Co and JM Financial to manage the issue which is expected by the end of this fiscal.