Dorsey bangs $29B 💰

Unacademy raises big, more Bad loans, and RIL wants Subway.

Aug 03, 2021

Hi 👋, Tanvi here.

Filter Coffee hits your inbox every morning with notable tech and business news scoops to jump start your day.

Let’s go ahead and get started:

Market summary: 📊

India kicked off the week really well here, but will be seen how far the optimism lasts. US opened the week down, as lockdowns and mask mandates begin to return in certain regions.

US:

S&P 500 - down 0.18%
Nasdaq - up 0.025%

India:

Nifty 50 - up 0.77%
Sensex - up 0.69%

What’s brewing hot? ☕

✅ We need help boooo — Kumarmangalam Birla, boss of the Birla empire, is asking GOI to take VI’s mess seriously and put together a rescue package that’ll save the ship from sinking. VI had been trying to raise ₹25K crores from private investors to help cap its cash drain, but we’re guessing progress ain’t looking that bright. Industry folks unequivocally agree that help is overdue, but… whether GOI has any bandwidth for $$ commitments, amidst second wave woes, is the real question.

✅ Tech IPO flowing in — Policybazaar will try to raise $809 million in its IPO, with Softbank offloading nearly $250 million worth of shares, and $500M worth of fresh stock issued. India’s insurance game is estimated to grow 18%+ CAGRs through 2030, remains digitally super underpenetrated, and with Policybazaar owning 90% share of online distribution, prospects couldn’t be better. Besides, $ZOMATO has set the mood about right!

Dorsey plays dice with $29B 🎲

What happened — payment processor Square acquired buy now pay later platform AfterPay, for $29 billion, in one of the biggest and most audacious fintech deals ever!

Dropping a deal that size, late on Sunday night should be illegal, but perhaps the negotiations stretched too close and Square wanted to bed the bride before minds got changed!

AfterPay basically offers consumers micro-loans at checkouts during ecommerce transactions. Taking out your credit card, entering info, running up on limits, is believed to be an arduous process, unworthy of the convenience-first demands of 2021.

BNPL platforms rely solely on secondary data, your transaction history, and other derived info to determine your ability to pay. $100 billion+ was processed via BNPL in 2020, nearly 2% of ALL global ecommerce volume, expected to 3x over the next 3 years!

Square’s business — Square basically sells these sleek terminals for your neighborhood shopkeeper to process payments — via cards, digital wallets, QR codes, the entire suite. Then there’s P2P payments platform Cash App too (like a much cooler PayTM), which also allows users to buy Bitcoin.

So what’s the grand logic:

Firstly, Square now gets to serve an international base of users with this acquisition, instantly. Lack of geographic diversity was considered a huge risk.
AfterPay can work into Cash App to disburse consumer loans over time, or split purchases made using mobile wallet
AfterPay can also be integrated for offline store purchases — offer it as a perk for merchants. Buy a big sofa? Pick it now, pay later!

What matters — strategically it's a good deal. Don’t forget Apple is working with a BNPL product with Goldman Sachs too. But investors are pissed that Square paid up via stock, which is generally considered an expensive way to pay for things.

Big picture — the $700B+ global credit card industry probably had a sleepless Sunday. Digital wallets and buy-now-pay-later are a dangerous combo, capable of uprooting the traditional card industry.

okay, that was long… phew!

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Unacademy lands a big one 🔥

The edtech prince raised $440 million in a Series H round from Temasek, Softbank, Tiger Global, and a few others, at a $3.44 billion valuation!

We’d like to think most of it was meant to show some aggression to counter Byju’s acquisition spree. Regardless, Unacademy’s numbers are stellar — with 6 million monthly active learners on the platform, adding up to revenues of $200 million+.

Also, bets beyond the core test prep and supplemental education business have been promising — with hiring platform Relevel, and creator monetization tool, Graphy, making some heads turn.

Big picture — big money chasing edtech in emerging markets finds an exciting opportunity in India right now, as China beats up and sterilizes its own edtech companies. More fireworks gotta be incoming!

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Ain’t nobody paying loans bruh 🏘️

Hardly anything to be excited about in HDFC’s earnings — with profits down, repayment of loans falling behind, and asset qualities worsening.

Quick look at the numbers:

Interest income came up 22% YoY to ₹4,147 crores
Net Profit of ₹3,001 crore, down 1.73% YoY
Bad loans expanded from 1.98% last quarter, to 2.24% as of this quarter!

Delinquent accounts, that haven’t been paying up for nearly 90 days now grew by 27% YoY — clearly not welcome.

But… management hinted that demand for new homes in the post-COVID boom cycle was holding up well in some regions, and next quarter could be significantly better driven by momentum here.

Meanwhile, gaming nerds cheer coz Nazara Tech killed it 👏

$NAZARA managed to swing to profits (vs. losses same time last year), powered by excellent growth in revenues — up 45% YOY! Esports revenues nearly doubled, and recent acquisition of Publishme is expected to further accelerate that. Watch the emerging trends, kids!

Closing out — Mota bhai wants a sandwich 🥪

What happened — Reliance’s Retail biz is apparently looking to buyout the India operations of Subway. Moneycontrol says the deal could be worth $200-$250 million.

Subway is currently ongoing a global restructuring process, cutting out excess, improving quality, and figuring out why it’s struggling to compete. Part of the mandate is to streamline its India ops — where a convoluted franchisee arrangement is becoming a hurdle to swift experimentation and progress.

Enter RIL — who can be an operationally savvy, and deep-pocketed partner. RIL could bring Subway joints inside its malls, expand footprint with little overhead, and enhance utilization.

Lastly, India loves its quick-service-eateries, and here you have a (limping yet) recognizable brand that could be even snatched off existing food delivery platforms, and brought to any hyperlocal ambitions RIL has.

$200 million? Tiny price to run up some experiments.

What else are we snackin’ 🍿

🗣️ Ask for more - US regulators added to China-tech’s problems, demanding a bunch of more disclosure before allowing new public listings on Wall Street.

📈 Going up - India’s manufacturing game bounced back pretty solid in July, shows the manufacturing PMI Index, a good sign that we’re shrugging off June’s freeze.

Hit that 💚 if you liked today’s issue.

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