Insurance going digital 📱
Buffet buys, tea industry suffers , and venture deals.
Hi 👋, Tanvi here.
Filter Coffee is a newsletter that hits your inbox every morning with notable tech and business news scoops to jump start your day. Sign up below for free 👇
Let’s go ahead and get started:
Stock market summary:
US - S&P 500 up 1.59%
India - Sensex up 1.29%
Buffet finally playing his hand 🤙
Warren Buffet’s Berkshire Hathaway Inc. on Sunday announced that its energy unit will buy Dominion Energy Inc.’s natural gas transmission and storage network assets for $4 Billion.
The transaction gives his energy portfolio more than 7,700 miles (12,390 km) of natural gas transmission lines and 900 Billion cubic feet of gas storage assets. Berkshire’s energy business will now carry 18% of all interstate natural gas transmission in the USA, up from 8% before.
Berkshire was sitting on a lot of cash and investors were getting anxious about Buffet’s sentiment about the market. With this deal, there is some clarity on what the Oracle is thinking.
Berkshire gets 100% of Dominion energy transmission, Questar Pipeline, and Carolina Gas Transmission plus 50% of the Iroquois Gas Transmission System in the deal. The deal also includes 25% of Cove Point LNG, which is a liquified natural gas export and import facility in Maryland and is also one of only 6 LNG export facilities in the US.
Berkshire is assuming $5.7B of debt putting a $9.7B value tag on the entire deal. Read more.
Insurance is rapidly heating up 🔥
Paytm and its CEO Vijay Shekhar Sharma will acquire traditional insurance firm Raheja QBE for $76 Million, possibly signalling the financial services startup’s entry into the insurance segment.
With the pandemic poking holes into the agent-driven offline insurance business, financial services platforms are identifying a nice long term opportunity.
Raheja QBE offers insurance services to cover an individual's health, home, and vehicles. It also provides protection on commercial properties and workplace injuries and is currently owned by Prism Johnson (51%) and QBE Australia (49%).
According to Paytm, this acquisition will help it democratise general insurance in the country. Only a fraction of the nation's 1.3 Billion population have access to general insurance and analysts say that the digital firms could prove crucial in bringing the services to the masses.
Just last week insurance marketplace PolicyBaazar had attracted investor interest.
Tea industry handed a gut punch ☕
As the digital economy strengthens on the back of the pandemic, many traditional segments are suffering. India’s tea business is one such victim, with output down nearly 54% YoY during the worst of the lockdowns in April.
April tea output was just 39.02 Million Kgs, as Assam which is India’s top tea plucking state, went into an absolute lockdown. For Assam alone the output dropped 76% YoY for that month.
As things have somewhat started to go back to normal and people have wisened up to work around the virus, India’s 2020 tea production is down 40% year to date, with the year expected to end at about 9% down YoY.
The economic ramifications of this slump will be devastating for small businesses and vendors who mostly operate on thin margins and never have disposable cash sitting around. Also, labor migration is putting a strain on the availability of workers for the industry. Read more.
Indian startups are struggling to survive 🙁
The Federation of Indian Chambers of Commerce and Industry (FICCI) and the Indian Angel Network (IAN) conducted a survey that adds some color to the hardships of India’s startup ecosystem. Apparently, 17% of survey participants claim closure of business post COVID.
Painting an unexciting picture, the survey claims that startups are “stressed for survival” and that a subdued investment climate is not helping. With working capital and cash flows drying up, layoffs and further closures will be inevitable.
68% of respondents claimed operational and administrative cost cutting and about 22% claim cash reserves to last just 3-6 months. A staggering 43% agree to salary cuts between 20-40% between April and June.
IAN leadership is calling for investors to play a mentoring and hand-holding role to help young companies navigate these times. Clearly the prolonged pandemic is making the gap between winners and everybody else much wider. Read more.
Boosting the MSME sector 😎
Aye Finance, a digital era lender to MSME businesses in India has raised Rs. 125 Crore in debt financing from a German impact investor, adding to the Rs. 210 Crore equity round the company raised very recently.
MSME’s form the backbone of economic activity in India and have been suffering terribly due to lockdowns. A rebound is conditional on the segment getting cheap and easy access to capital and other resources when they need it the most. Aye’s value offering most resonates in times and cases like these.
The company will utilize the funds to further accelerate lending, create jobs, and build systems and processes that bring unorganized MSMEs under the umbrella of systematic lending.
Since 2014, Aye has distributed over 3,000 Crores in funds to more than 2 Lakh MSMEs in India. That goes to show the transformative potential financial technology broadly has in accelerating economic progress in India.
Tweet of the day -
A refresher of how it all began. Just 6 months ago.
What else are we snackin’ 🍿
🦆 DuckDuckGo is back - the privacy - focused search engine said that service has now resumed in India days after the department of telecom blocked the platform. Last week, users accessing the search engine were thrown a notification saying that it was being blocked by internet service providers on the direction of DoT .
😷 India at 3rd spot - we went past Russia on Sunday to become the third worst-hit country by the Covid-19 pandemic with the country’s tally of infections crossing 6.90 lakhs. Only the US and Brazil are ahead of India in terms of total coronavirus infections.
💉 Mexico is joining the COVID-drug race - Drug firm Zydus Cadila on Monday said it has received approval from Mexico’s regulatory authority Cofepris to test one of its lead research candidates Desidustat in the management of Covid-19. An elaborate study of effectiveness will follow.
➗ Fujitsu to halve office space - Talking about a new normal amid the Coronavirus pandemic, IT solutions company Fujitsu said that it would halve its office space in 3 years. The company also said that around 80,000 of its employees in Japan would work flexible hours and WFH would be standard wherever possible.
📈 TikTok rival crosses 5 Million downloads - Domesitc apps are thriving on the void left by Tiktok. Moj - a video sharing platform has crossed 5 Million downloads on Google Play Store in just a week after the release of its beta version.
💰 Chingari to pay consumers to create content on its platform - The app is inviting music composers to create and share music on the app, and also said that it will pay the composers based on the reach of these songs and help them get exposure. The service is another winner of India’s TikTok ban.
🤝 Uber and Postmates agree on a deal - Ride sharing leader Uber has agreed on a deal to buy Postmates, the food delivery app in a $2.65 Billion all stock agreement. The deal which is approved by Uber’s Board will help Uber gain share in the food delivery space as its ride hailing business tanked due to the pandemic.
🤑 RIL clinches new highs - business as usual for RIL as the stock clinches new highs each day, most recently climbing over a $160 Billion landmark in market valuation. The company’s fortunes tied into its digital services portfolio has turned green on the back of the pandemic.
Hope you took a thing or two away from today’s edition. 😀
If you like it, show us some love by clicking the heart icon below. And don’t forget to invite your friends.
Great scoops! :D