IPOs, IPOs and government manipulation
Asia Tech Review: 31 May 2021
Welcome back,
This newsletter started as a way to track what was happening with Asia tech way back in February 2014. Back then it was mostly startups, early stage funding and small scale (but interesting) news. These days, huge cheques and IPOs are happening every week in China; India is poised to break out with public listings of local firms—starting with Zomato; and in Southeast Asia it’s much the same—Sea is already public, Grab and GoTo are following with others in hot pursuit.
Times have truly changed. Still, the clash between Twitter, WhatsApp and the Indian government this past week, as well as China’s tech probes and IPO pressure, shows that with great power comes the inevitable manipulation efforts from government.
See you next week,
Jon
China
Public listings are once again the hot button topic among China tech companies. There’s distinctly two different paths here, one the government would like its companies to take—a local route—and the US path that still seems to be the preferred option for the market. I say still because we wrote that back in August on ATR.
So what’s the latest?
There’s an IPO in offing for Full Truck Alliance—the ‘Uber for trucking’-style startup known by the slightly unfortunately translated Chinese name Manbang—which plans to list on NYSE. Axios reports that it could raise at least $1.5B at a $30B valuation. Impressively, it reported a $25M profit on $396M in revenue for 2020.
Meanwhile, vegetable supplier Meicai is reported to have filed for a US IPO confidentially
But—you knew it was coming…—Bloomberg reported that the glut of Chinese companies listing in the US has slowed, which has triggered the likes of Hello, Ximalaya and Qiniu to pause plans, despite initial filings in April. The fact that mutual aid platform Waterdrop has been below its early May IPO price doesn’t inspire confidence.
Not only that but the government is also pushing some companies—Reuters names Ximalaya, the podcasting platform—to go public domestically or in Hong Kong.
JD’s logistics arm just went public in Hong Kong—raising $3.25B—and there could be more to come. NetEase Music filed to raise $1B in Hong Kong and chipmaker SigmaStar is reported to be looking at the Shanghai STAR for a $780M raise sometime this year.
The government has got big guns like Alibaba, Tencent, JD and NetEast to commit to Hong Kong for secondary listings or unit IPOs, but it remains to be seen if other companies will commit their big listings
Speaking of big listings, ByteDance is said to have paused its own IPO and instead it is focusing on share buyback for employees wanting to cash out, according to Reuters. Beyond talk of a TikTok IPO, Douyin was also said to have been up for an IPO in… Hong Kong. But with founder Zhang Yiming stepping down, it makes sense to at least rethink the plan.
That might not be a bad thing given that TikTok rival Kuaishou saw its Hong Kong stock tumble nearly 10% after it revealed lacklustre sales growth
The uncertainty around listings isn’t stopping investors from diving in—Qiming reported launched a $500M fund to invest in public Chinese companies, although The Information suggests healthcare is the primary focus
Elsewhere, Chinese tech giants have been forced to spend more to grow following government crackdowns on their practices and alleged monopolies—real estate property brokers could be next while government intervention is said to have caused chaos for edtech platforms which have held off on IPOs.
Alibaba’s fast-growing cloud computing business is slowing
ByteDance—known as the app factory—has a new star in the US after its video editor Capcut reached the top of the App Store rankings
Amazon is cracking down on China made products with fake reviews
Huawei’s founder thinks being great at software can offset the hard hits its hardware business has taken (good luck!)
Tesla and other automakers are following Apple and storing user data in China at the behest of the government (good luck!)
There’s concern that Chinese surveillance equipment is being sold across towns in the US despite a ban at local government level. That’s because restrictions don’t apply at the municipal level, TechCrunch reports. This is the same kit used to surveil Uighur Muslims in China, such as video cameras and thermal imaging scanners. Some of the local authorities contacted by TechCrunch said they weren’t aware of links to human rights abuses—others said they were purchased via a vendor.
Meituan posted strong growth but also a big loss due to investment in new retail programs
Xiaomi beats its earnings estimate as US sanctions on the company were lifted
Autonomous deliveries are coming to Beijing
India
What a week of chaos in India, where social media has been at the center of tensions. Twitter, most notably, has been accused of “a path of evasiveness instead of cooperation.”
That statement was put out in response to the microblogging company’s failure to appoint dedicated point people for the government—a chief compliance officer, nodal contact person and grievance officer—per IT rules. Twitter proposed an external consultant which was rejected. Its peers including Facebook, its WhatsApp service, LinkedIn, Google and Telegram all complied.
All the while, a crazy turn of events kicked off after Twitter marked tweets from members of the ruling party’s spokesperson and others as “manipulated media.” The opposition party claims they shared fake images relating to their criticism of Covid-19 efforts and favours to members of the media. The government had previously requested that Twitter remove tweets critical of how it has handled Covid-19, more recently it asked that mentions of an Indian variant of the virus also be removed.
This culminated in Delhi police “visiting” Twitter HQ, a move that Twitter sees as intimidation and a threat to the safety of its staff in India.
"Twitter needs to stop beating about the bush and comply with the laws of the land," the government said in a statement posted to Twitter.
Twitter’s India head sums it up:
But there’s one more point about the regulation, it requires companies to track the originator of content. In Twitter’s case that’s one thing, but for services like WhatsApp that would mean breaking encryption on messages. That explains why WhatsApp is suing the government—it not only objects to the order but says it isn’t possible.
Who knows what the next week will bring?
All the while, local challenger Koo raised $30M from Tiger Global in a very curious deal. The famed New York hedge fund is investing very early in a product that has just 6.5M monthly users, according to App Annie, and a long way to go. “We have aggressive plans to grow into one of the world’s largest social media platforms in the next few years. Every Indian is cheering for us to get there soon,” one co-founder said. Mhmm…
Back on the IPO trail, fintech OG Paytm is being linked with a $3B IPO before the end of the year
An IPO is also imminent for Delhivery, which raised a $277M round last week
Online pharmacy startup Pharmeasy bought rival Medlife and now it, too, is reportedly looking to IPO at a valuation of around $3B. Prior to the deal, which is a major consolidation play, it raised a $350M Series A round last month. Meanwhile, Tiger Global and B Capital are keen to invest.
Speaking of consolidation, Tata Group is reportedly planning to buy health and fitness startup Curefit—there’s no word on price but it would presumably be much lower than the $800M valuation the startup previously commanded.
FarEye, which helps companies track and optimise supply chain and logistics operations, raised $100M as it looks to venture overseas. This is its third round in the past year, which has reached $153M.
Open banking platform Zeta raised $250M at a valuation of $1.45B led by SoftBank’s Vision Fund 2
Singapore’s GIC is reportedly in talks to lead a $60M Series C round for Locus, a b2b logistics startup
Blume Ventures plans to raise a new $150M fund, its fourth, this year
Kodo, which offers corporate cards for SMEs, finished Y Combinator and raised $8.75M from some interesting US backers including fintech unicorn Brex.
Fintech startup PhonePe had planned to acquire mobile platform Indus OS for $60M but now that deal is on the rocks after investors attempted to veto it. A hearing at a Singapore court this week will go some way to determining what happens next.
Southeast Asia
Southeast Asia’s IPO train is gathering speed with the news that Bukalapak, the e-commerce service backed by Microsoft and others, has quietly filed to go public domestically in Indonesia. It is still being linked with a US public market entry via a SPAC but that seems less likely now. Bukalapak will reportedly raise at least $255M and look to go public on IDX in August.
That type of attention is drawing A16z and other global VC firms to Southeast Asia as they look to hire/set up offices. I wrote this story looking at how the turn has turned and money from outside of the region is finally easier to get for startups, especially those in fintech.
Speaking of global VCs, one is going local after the partners behind 500 Startups’ Vietnam fund launched their own firm
Singtel is also planning local deals, the telco said it will go after investments in digital services even though its own record is somewhat patchy
GIC, another member of Singapore Inc, backed high tech equipment firm Esco Lifesciences Group in a $200M deal that’s reportedly a prelude to a listing in Hong Kong, a rare crossover from Southeast Asia
Engine Biosciences, another Singapore-based high tech firm, landed $43M for its drug discovery platform
The Indonesian government blocked access to a hacker forum after one member claimed to have data on the entire population, including citizen names, national ID numbers, tax registration information, mobile phone numbers, and even headshots and salary-related information. While the data is somewhat outdated, the government has its authenticity. It’s comical to think that the block will do much good, but this could develop into a very serious issue for Indonesia, which is planning a digital ID system.
Myanmar’s junta whitelisted 1,200 websites for national use, unsurprisingly they didn’t include Facebook or Twitter where there’s much criticism over its recent coup. It’s not clear what the list means at this point and whether the sites not on it will be blocked.
Indonesian crypto exchange Pintu raised $6M from investors including Coinbase
Japan
A data breach with dating app Omiai has exposed the personal details of some 1.7M users
South Korea
Tutoring app Riid raised $175M from SoftBank’s Vision Fund for its service that uses tech for prep tests. It started out covering English assessment in Korea and Japan, but it is now looking to use its tech to develop tests that can be used by public schools in the US.
SoftBank is reportedly planning another big deal in Korea following reports that it will invest in hotels and travel platform Yanolja, which has been linked with an IPO for the last year or so.
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