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What’s sizzling? 👀
World No.1 in men’s tennis, Novak Djokovic, was disqualified from the ongoing US Open 2020 series after a ball he threw out in frustration hit a line judge in the throat. Yep.
Fighting it out over JEDI ⚔️
Quick backstory: Couple years ago, the US Department of Defense made a splash by announcing a $10 billion dollar cloud computing contract, as digital transformation seemed inevitable for Uncle Sam’s operations as well. All big tech companies put in a bid. Millions were spent on lobbying in Washington. Microsoft came out as the eventual winner of the deal, however, other bidders alleged favoritism and Amazon and Oracle quickly slapped lawsuits on the government. Not to forget that Trump hates Bezos’ guts, which Amazon alleges may have influenced the decision.
Anyway, so the US Department of Defense promised an audit of the contract to squelch the revolt, and in the latest news the government has decided to stick with its earlier allocation to Microsoft, which it believes offers the best value for money.
The entire drama kinda sucks because it delays critical tech deployments the country is counting on for defense operations worldwide. Anyhoo, Amazon has made it clear that it won’t back off from a legal fight. Oracle’s appeal however was tossed by an appeals court recently.
The 10-year Joint Enterprise Defense Infrastructure (JEDI) program will ultimately see all US military branches sharing information in centralized cloud-based system boosted by AI and other emerging tech. Read more.
Capital talks… 💰
Last week, following the footsteps of Jio, we saw that Vodafone was looking to entice foreign investors to buy an equity stake. The company finally received approval from its board of directors to raise up to ₹25,000 crores.
Limiting the legalese, basically the board has okayed a raise of upto ₹15,000 crores by selling equity or convertible bonds in global markets, and another round of unsecured and/or secured, non-convertible debentures of ₹15,000 crore, by way of public offering or private placement, with total raise not exceeding ₹25K crores.
Vodafone is struggling with its mountain of debt, in addition to capital commitments necessary to keep its 4G expansion running, as well as preparing for a digital war it was reluctantly dragged into by Mota bhai. It's an all out sticky situation for them and while management does have a “plan” to resolve things, there’s little room for error.
In other notable capital raises,
WeWork has infused about $100 million in cash into its Indian entity, valuing the local operations at about $500 million. Sandeep Mathrani, the new-hired CEO of WeWork Global will also sit on the board of the local WeWork India.
Some context here — WeWork Global had entered a partnership with Embassy Group, an independent Indian entity, to run the India business of WeWork. Embassy had 100% rights over WeWork India, but now after this deal, Embassy sold 20% of its stake. The company plans to use the money to fuel growth post-pandemic, for paying vendors and for capital expenditure.
And at last we have,
A legal tech platform, Lawyered, that runs a marketplace of accessible lawyers as well as a law-student job portal is looking to raise ₹7 crores in a pre-series A round. Sounds very much like an invitation for investors, but you can’t help notice and admire the breadth of ideas hot in the market right now. Good luck.
Fintech is unstoppable 😍
Despite a major slump hitting other sectors of the economy, India’s pipping hot fintech arena looks unfazed as venture investments hit an all time high. Per KPMG’s Pulse of Fintech report, $1.7 billion has been deployed in Indian fintech companies in 2020 — a 134% growth year-to-date.
The $398 million angel check into personal venture Navi by Sachin Bansal takes the pole position. Then Pine Labs’ $300 million fundraiser and the acquisition of Pay-sense by PayU for $185 million are close followers for the other biggest deals.
Thanks to COVID-19, which only accelerated the adoption of digital services, KPMG pegs India digital payments market to scale upto over ₹4,323 lakh crore by 2023-24. The trend of investment is only expected to accelerate as fogginess in the market evaporates and investors get much more clarity on secular and lasting trends.
While we’re on the subject,
PayTM gave a rare glimpse at its numbers. Revenue for the last fiscal year which ended in March came in at ₹3,629 crore, helped by a strong pre-pandemic consumer spending. Losses in that time frame had narrowed by 40%.
Without delving into the specifics, the company states that the majority of growth on its platform came from other financial services (investing, insurance?) and from the 2 lakh point of sale devices it sold to merchants and SMEs. Eventual profitability in 2022 is coming.
This forthcoming transparency may be part of the company’s plan to warm up investors for an eventual IPO in the making. Excited! 👏👏
Hold that spending ✋
Cinema brand PVR put on hold its capital expenditure plans for the next quarter. Capital expenditure is money earmarked by the company for investment in fixed assets that pay off over the long term— in this case new theaters, land, buildings etc.
Adjusting for a persistent slump in demand caused by consumer anxiety which is driving a lukewarm response to reopening of theaters, the company is going into full cost control mode.
In 2019-20, PVR added 87 screens to its portfolio, spending around $52 million on capex. This year the spending will be down 62% to a tiny $19 million. The cinema chain owns and operates a network about 845 screens across 176 properties in 71 cities in India and Sri Lanka. Its dispersed operations imply that smaller towns are more likely to face the brunt of its spending pause.
Key takeaway: well theater chains may just be the start. Soon other companies who have seen demand dry up will likely go conservative with spending plans, which could catalyze in no time an economic freeze downstream. India’s inability to contain the pandemic and offer some clarity on how soon things can return to normal will have lasting effects on the economy.
Tweet of the day -
A simple read as we enter into a new week.
What else are we snackin’🍿
1️⃣ Wall Street will be preparing for the Slack’s earnings on Tuesday. After Zoom’s blowout success earlier this month, expectations for Slack are set pretty high. The company had guided for about 43% growth in revenue in the range of $206-209M but investors are definitely expecting more.
2️⃣ Remember Airbnb is planning an IPO? So a very high profile SPAC by legendary investor Bill Ackman has approached the company for a merger instead of the traditional IPO path. We wrote about the differences here a few weeks ago. Anyway, Airbnb says they’re keeping options open. The deal offered the company a $5 billion cash injection ASAP. Ball’s in CEO Brian Chesky’s court.
3️⃣ Harsha Bhogle has turned into an Angel investor, pitching into the $175,000 round of a fantasy gaming platform “Akhada”. The man is expected to be a strategic guide to the team and help leverage his popularity to drive eyeballs. Working well so far.
4️⃣ As incidents of ‘mystery seeds’ keep rising in the US, Amazon will ban all seed imports on its platform from foreign countries. Thousands of US residents received unknown seeds in packages across the country, which has left authorities baffled.
5️⃣ Bengaluru has rolled out a queue management system at the Kempegowda International Airport to reduce waiting times for passengers and manage the crowd more efficiently during busy hours. Cool.
6️⃣ As the EV market heats up, the GOI is mulling setting up at least one EV charging kiosk at some 69,000 petrol pumps across the country in an attempt to get people to opt for electric mobility. Who’s gonna pay for it?
7️⃣ After a single day spike of 90K+ cases, India’s COVID tally has now crossed the 4 million mark. 31 lakh patients have recovered from the infection so far, pushing the recovery rate to 77.3%, which remains oddly high.
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