GOI to the rescue 💪
YC's new deal, LULU's worries, and Citadel's surprise raise.
Market summary: 📊
Another positive session in India, with major indices now up almost 5% for the year. US recovered from the carnage of last 2 days to take a few forward steps as well.
US:
S&P 500 - up 0.92%
Nasdaq - up 1.47%
India:
Nifty 50 - up 0.29%
Sensex - up 0.37%
What’s brewing hot? ☕
🤝 New dealzz — Y-combinator is doubling down on its model — revising its deal terms to now invest $500,000 into ventures going through its accelerator. YC originally used to put in about $125K for a 7% stake, which it will still continue to do — but will follow up with another $375K at a later stage when the company raises its first outside round, at terms set by the lead investor.
👎 LULU sounds the siren — Lululemon, the well loved athleisure brands for women, which also had an EPIC success story in the markets, warned investors its bracing for a horrible quarter in the making — with Omicron, inflation, and supply problems eating into its December festive season sales. Folks are now more worried about how this reads for the broader apparel and retailing market, which is set to report earnings over the next few weeks.
Forget the dues, just hand me some stock 🤙
What’s poppin’ — the Indian government has decided to own 35.8% of India’s No.3 telecom provider, Vodafone Idea, in exchange for the $6.76 billon in fees the company owed GOI.
To remind ya, VI had been gasping for breath for several years now — bleeding cash and subscribers ever since Jio shocked the telco market with its merciless price wars. Meanwhile, VI continued to rake up dues with the government (most of which comes from an arrangement where VI should pay a small portion of its revenues to GOI, for using public spectrum).
Anyway, with the cash to equity swap, GOI now becomes the largest shareholder in VI. Vodafone’s ownership will be diluted down to 28.5%. OG-owners Aditya Birla Group will own 17.8%. Rest will be owned by the public and other investors.
The move drew mixed reactions, obviously. Free market loyalists didn’t like GOI’s meddling, particularly when it's beating the drum on selling government owned corporations elsewhere. Also, the history of blatant mismanagement with BSNL?
However, letting Vodafone crash? And leave India’s fledging, upcoming internet market to the mercy of a ruthless Duopoly (Jio and Airtel)? Nah.
Dalal Street tried to flee the scene though, dragging VI stock down 20% on their way out.
Big picture — money-wise, this is the best shot VI could get to clean up its act. But… it could also end up much worse, turning into a messy giant lacking the agility needed to succeed in free markets. We'll see!
While we’re here, ☝️
Tata Teleservices, which sells enterprise broadband and other communication services, also opted to convert its interest dues into equity — in exchange for a 9.5% stake to GOI. Field day for the Babus.
Who got them monies? 💸
Recykal, a B2B marketplace for waste management and recycling, raised $22 million from Morgan Stanley, Circulate Capital and others.
Recykal is a SaaS tool for waste management companies — helping collectors, processors, and others in the value chain digitize mundane ops like book-keeping, payments, payroll etc. There’s also a marketplace for buying/selling processed wholesale waste.
About 200K tonnes of waste has been processed on the platform till now. 👏
Worth mentioning — India generates over 60 million tonnes of waste annually. Just 20% of that gets recycled or processed. Efficient systems could help tremendously.
Meanwhile, in the fintech world 👇
Rupeek, which offers digital gold-loans, scooped up $34 million from Lightbox and GGV — at a $634 million valuation.
The venture operates in over 35 cities, processing over a billion dollars in loans a year. Fresh $ will be used to launch more products.
Closing out — hedge fund Citadel’s mysterious raise 💰
What’s poppin — billionaire Ken Griffin’s hedge fund, Citadel Securities, raised an unusual round of $1.5 billion from top Silicon Valley players, Sequoia Capital and Paradigm — at an eye popping $22 billion valuation!
Citadel is a quantitative market maker, basically a firm that puts its own money on the table and quickly buys and sells stocks (like a million times) for teeny-tiny profits on each trade.
Such players add liquidity into the market. Citadel is a king here — responsible for ~27% of all stock trading volume in the US.
Anyway, while its unclear what Sequoia and Paradigm are going after, Citadel’s institutional technology has been playing a BIG role in enabling emerging zero-fee brokerages like Robinhood. These no-fee platforms tell customers they don’t charge fees, but then send their orders to companies like Citadel (who then slip in tiny overages) to the unassuming average joe using these apps (perfectly legal in the US).
Lastly, Paradigm’s involvement (who is a Web3 investor founded by Coinbase founders) hints at Citadel bringing its tech to crypto trading as well, perhaps.
What else are we Snackin’ 🍿
🤦♂️ No stopping - US reported 1.35 million new COVID cases on Monday, the highest in a single day across the world.
🏏 New sponsors - Tata will replace Vivo as the IPL’s title sponsor starting this year, ending a run of 4 years for Chinese Vivo.
💯 New man - Tony Xu, the founder of delivery app Doordash, will join the board of directors of Meta. Big social commerce plans?
Hit that 💚 if you liked today’s issue.
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