Retail ambitions 😎
SPACs, Podcast deals, and tech for social good.
Hi 👋, Tanvi here.
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Stock market summary:
US - S&P 500 up 1.34%
India - Sensex down 1.80%
Can’t stop investing in India 🤙
The India growth story continues to attract suitors. British retail chain Tesco is partnering with Tata in a joint venture, investing 67 crore each into holding company Trent Hypermarket, which runs 51 Star grocery stores and marts across India’s top cities.
Tesco had long held ambitions of wanting more business from the Indian consumer but was overshadowed by big boys Amazon, Reliance, Walmart running amok with billion dollar deals all along. But it seems they finally have their moment and that too with a formidable partner in Tata.
Both companies are long haul players, and have the resources to grind it out over the long term. Currently, of the 51 locations the company operates, 12 are hypermarkets while others are smaller supermarkets. Read more.
Flipkart has raised another $1.2 Billion from parent company Walmart led investor group. In a bid to combat Amazon’s aggression, Walmart hopes the cash will allow its child to double down in times of recovery from Covid-19 crisis.
One of the prime winners of the shift to ecommerce in India so far, Flipkart is riding high on 45% growth in monthly active customers and 30% jump in transactions per customer versus a year ago.
Millennial investors’ favorite raises more 👍
Trail blazing startup Robinhood, that single-handedly launched a no-fee trading revolution across the world, has raised another $320 Million on the back of growing popularity among millennial investors. This brings the company’s valuation to $8.6 billion and adds to the $280 Million it raised just 2 months ago.
With a mobile-first approach, the company took out a ton of friction and made it simple for young investors to participate in the equity markets. That, combined with massive volatility in the equity markets during recent times, saw the company expand user base and engagement at an extreme pace. Also, the company gained a fair bit of notoriety along the way for trivializing investing and encouraging risky bets.
The fresh capital will be used to strengthen tech, scale up backend ops, and bring more products to users. Estimates suggest a user base of 13-15 Million on the platform.
Bottomline: Robinhood is a revolutionary platform but the company has serious hurdles to overcome. Recent reports of some investors taking their lives over losses on the platform have overshadowed all the good that they did so far. Regardless, if they execute well, this is a $100 Billion dollar company someday. And one that will likely help the cause of democratizing financial services to a large extent.
Largest podcast deal ever 🎙️
Sirius is one of the largest old-school satellite radio companies in the world. As they continue to adapt to the new future, the company will purchase Stitcher, a podcast producing and distributing platform, for $325 Million in one of the biggest podcast deals.
When it comes to big buys, Sirius is no noob. The company already owns Spotify competitor Pandora, which it bought for $3 Billion back in 2018 recognizing the shift to music streaming. Pandora obviously offers several podcasts too and now Stitcher will most likely strengthen their offering. Sirius had also bought Simplecast, a podcast hosting platform earlier this year.
Apparently, the strategy behind this deal was to bring all capabilities in-house at Sirius - including podcast production, advertising and distribution.
The podcast industry is growing nearly 50% each year, and is anticipated to pull about $3 Billion by 2025. Old companies are quickly recognizing the shift and are doubling down. Independent creators are thriving recording stories and interviews literally from their basements. Spotify is putting the who’s who under ridiculous contracts, including Joe Rogan, the Obama Family, and Kim K most recently.
Simply put, this is a booming channel of content creation and distribution that is here to stay. Read more.
Tech companies take on social challenges 🙌
Apple will put $440 Million to work to build affordable housing and create homeowner assistance programs, as part of the $2.5 Billion it committed to solve California’s housing crisis.
The company will build 250 new units in the San Francisco Bay Area, through joint partnerships, and make them available to first time buyers and those seeking assistance. Apple will also offer mortgage and down payment assistance.
Another project by the company will build housing for about 1,500 families suffering from homelessness. Jump in Bay Area housing prices on the back of the technology boom had driven residents out, making it unaffordable for regular families to rent a home.
Key takeaway - Tech companies are some of the most resourceful entities ever. And the biggest challenge faced by them is not competition or demand erosion, but government intervention. In order to pacify angry regulators, many are using their resources to help combat social issues and gain some karma. Employees pushing them to “do good” is also at play.
Regardless, the opportunities to solve problems are ample, and good on them for doing so. Housing in the US, poverty and education in emerging, online abuse, financial literacy, upskilling are some hot areas and Microsoft, Google, Intel, Facebook, Amazon - everybody is onboard one way or another. Read more.
Blank check acquisitions gaining momentum 🤝
An electric car maker called Fisker will go public through a merger with a blank check company (SPAC), which is backed by famous alternative investment manager, Apollo Global. The deal is valued at $2.9 Billion.
2020 has seen a lot of such deals mushroom. SPAC (Special purpose acquisition company) is basically a shell company that raises money through an IPO with the intention of acquiring and absorbing another private company at some point. Through this route, the company that sells gets to go public essentially by avoiding underwriters and a bunch of other regulatory hoops. Also, directly negotiating with the buying entity keeps terms of the deal simple.
The transaction type is increasingly becoming interesting with Billionaire investor Bill Ackman launching the world’s biggest SPAC this year.
Fisker’s deal is expected to close in the 4th quarter and will bring $1 Billion in gross proceeds into the company’s coffers, including $500 million of funds committed by existing and other new investors. The company will use the capital to bring its SUV “Ocean” to the market by the end of 2022.
So far this year, 41 SPAC transactions have gone through, almost as many as the full year of 2018, and the average deal size is 40% higher since then. Read more.
Tweet of the day -
Poland conducted elections in these conditions and the pictures are quite something.
What else are we snackin’ 🍿
😷 Bollywood hit by COVID - Balaji Telefilms has stopped the shoot of all television series after one of the actors tested positive for COVID-19. With production mostly halted due to COVID everywhere, the film industry is on the brink of going into a crisis.
🏥 AIIMS is opening up - The medical institute will roll out second phase OPD services by extending the patients limit from 15 patients a day in June to 30 patients a day from July, as COVID strained healthcare system is finally opening up for regular health services. Patients will be allowed to book appointments through an online registration system.
👊US Tech vs. Trump Admin - US tech giants including Google, MSFT, Twitter etc. have filed petitions in a Massachuchets court against ICE, following its announcement that international students would have to leave the country if their colleges shift to online learning.
🤗 Airtel cozying up with Verizon - Bharti Airtel will announce a partnership with US telecommunications giant Verizon, in a bid to give Verizon a piece of the local market. A virtual meet is scheduled for Tuesday to share the details of the deal.
📱 Paytm Money asks for pocket money- Paytm’s investing platform Paytm Money has raised 40 crore from parent company One97 communications. One97 infused Rs. 40 crore in the unit in February 2020 and earlier in September 2019 as well.
Hope you took a thing or two away from today’s edition. 😀
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