Secretive coup 🍎
Controlling pipelines, Donuts, and gaming wins.
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Billion dollar donuts 🍩
In one of the largest restaurant acquisitions ever, Dunkin’ Brands, the parent company that owns Dunkin Donuts and Baskin-Robbins, will be acquired by a PE-group backed global restaurant company Inspire Brands in an $11.3 billion deal.
Inspire Brands is actually an umbrella company that already owns a bunch of popular American restaurant businesses. But this is the largest deal they’ve ever made, at a time when the retail industry remains battered by the pandemic, which makes the transaction all the more interesting.
First of all, Dunkin’s key investments in the past few years have helped it shine -- for example, the company had been increasingly investing in drive-in restaurants, recognizing demand from America’s “car culture”. Then, the once “donut” or confectionary only company had lately been expanding its focus with “breakfasts” in mind.
Finally, the pandemic disproportionately benefitting big-box chains helped as well. Popular brands like Dunkin, powered by their deep pockets and scale, snatched share from the average merchant guy down the street who couldn't afford to keep his restaurant open at 20% capacity. Outcome? Dunkin grew ~1.6% in the most recent quarter of 2020, the same rate it grew last year.
Anyway, Dunkin’s more than 12,500 Dunkin' locations and about 8,000 Baskin-Robbins will now help bolster Inspire’s empire once the deal goes through -- which makes Inspire the second largest US restaurant chain after McDonald’s.
Controlling the pipelines 🔌
In its latest capital raise bid, Reliance during its earnings disclosed it had raised $1.1 billion from the Abu Dhabi Investment Authority (ADIA) and Saudi Arabia’s Public Investment Fund (PIF), specifically for the communications infrastructure business — Jio Fibre.
The Ambani led empire had earlier disclosed plans of aiming to raise about $5.4 billion in total for the Jio Fibre business and these checks are in addition to what the middle easterners have already written for Jio Platforms and Reliance Retail separately.
By now, there is little novelty left about these capital raises. But Jio Fibre is particularly interesting to note because with this, RIL aims to literally own the pipelines of connectivity for a digitally exploding India, in addition to owning end-platforms and wireless connectivity, literally securing itself an enviable position unimaginable of the best of monopolies across the world.
While we’re talking about fund raises,
Over the weekend, e-sports and social gaming platform WinZO, secured a sweet $2 million from American PE investor and Bain Capital’s co-chairman Stephan Pagliuca. The company’s platform is operable in a range of regional Indian languages, and has been a big winner of the COVID-induced boom the gaming industry has witnessed.
The investment is a mix of primary and secondary capital and Winzo has already deployed about $1 million for ESOP buyback from early investors and employees. The company boasts nearly 10 million users on its platform and the rest of the funds to go to drive growth.
Apple mounting a secretive coup? 🍎
Financial Times reported that Apple is making moves to build its own search engine to take on Google, as concerns around Google’s dominance increase, and the company continues to draw more regulatory wrath and consumer disdain.
It's hard to read how serious Apple is about this, but small moves have been underlining their intention for a while now. Like the hire of John Giannnandrea about 2 years ago, the guy who used to lead Google Search.
Also, Apple made some acquisitions to help with digital assistants, voice recognition, and then last week's acquisition of an AI company helping with video previews -- which could very well be small moves to build a search tool disguised as something else. Then there is data emerging that shows Applebot, Apple’s web crawler, has been increasingly mining the web for information.
Anyway, building a Google is not easy. Over decades of usage and with unparalleled data troves, Google has secured itself a technical and operational moat. But if there is anyone in this world that can dislocate them from their throne, it could be the company with 1 billion devices, responsible for sending traffic to Google’s servers.
Bottomline: with 1B+ installed device base worldwide and insights on what users read, watch, see, etc. Apple could certainly build atleast a modest tool for its user base. And without it being the best search engine in the world -- it can probably take 20-30% of basic search queries away from Google, hurting Google’s ad-revenue big time.
Google knows that, and that’s why they pay Apple nearly $15 billion in cash a year to secure their position as the default search engine on Apple devices. But, for how long will that pittance stop a $2 trillion Apple from making its own moves?
Festivity led comeback 👏
The India machine is beating louder than pundits expected as festivities drive people to spend and consume more. First of all, GST data for the month of September came in at the highest since lockdowns -- ₹1.05 Lakh Crore, up nearly 10% since September of 2019.
The collections are nearly 200%+ above what India had seen during the peak of March lockdowns, which underlines how far we have come from the worst of this year. The trend is now expected to remain upbeat over the next 2 months as lockdowns slowly get lifted across the nation. Here’s a thorough read from Bloomberg.
Then, collective insight on Autos —🚗
Broad recovery trend is further highlighted by a good month seen in the auto industry -- with category leading companies reporting awesome growth rates. Hero Motocorp saw sales rise 35% in Oct. Maruti grew revenues 19% too, while Hyundai saw its best month ever with domestic sales up 13.2%.
Mahindra and Mahindra suffered though -- despite consumer demand being strong, demand from the commercial segment was weak, down nearly 23.5% -- which goes to highlight that even if the average consumer is looking better than expected, SMEs, mainstream traders and other small businesses perhaps may not exactly be doing great.
Lastly, some data from digital-India — 📈
UPI transactions for the month of October surged to record 207 crore transactions, nearly 15% up, with total payment volume rising to ₹3.86 lakh crores. For comparison, October of 2019 had seen nearly half the number of transactions (114 crores), which goes to highlight the intensity of the digital payment wildfire across the country.
With increased volume, the failed transaction rate jumped as well, up to a total of about 12.4% while only 5.31% was technical failure of banks and tech platforms. Anyway, relative to the growth, the failure rates seem harmless and we think digital ventures and startups in India deserve a pat on the back for bringing this tech more widely to consumers without as many hiccups.
Closing out with a quick look at Airbnb 👀
The company has picked Nasdaq for its blockbuster IPO that is scheduled to hit the street towards the end of the year. Timing is very critical as AirBnb’s business, coming out of the pandemic, is growing at never before seen rates -- especially the long term rental business which is winning from city-hopping remote workers. Last valued at over $31 billion, the company will be one of the largest bids coming out of the US this year.
Tweet of the day -
What else are we snackin’ 🍿
✈️ Breaking barriers - Harpreet Singh has been appointed as the CEO of Alliance Air, the first woman leader of a scheduled passenger Indian carrier. Singh is currently AI’s executive director and will hold the charge of AI”s CEO post until further notice.
🎠 Disney’s apocalypse - Disney world is planning to lay off more than 11K workers due to the pandemic, including part timers by the end of this year. Around 750 Disney world actors and singers were laid off this week as live entertainment shows at the Florida resort have gone dark.
🛒 Golden debut - Amazon has announced its new Dhanteras store which offers products ranging from gold coins, jewellery, electronics, large appliances and more ahead of Dhanteras. With Gold, Amazon is finally pulling a “when in Rome….”, in India.
💉 Second quarter 21 hopes - India’s first coronavirus vaccine, Covaxin is set to launch in the second quarter of 2021 if it gets the required approval after providing proper efficacy and safety data in the last stage of its trials. The potential vaccine has received approval to conduct phase 3 trials in the country and will be conducted in 25-30 sites across 13-14 states.
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