SPACs close to home 🏠
Crypto fund, Venture deals, and stuff from the week before.
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Market summary: 📊
Overall a phenomenal week in India, as vaccinations picking pace made markets optimistic. US had a mixed Friday, with tech beaten, while travel and other traditional sectors favored.
US:
S&P 500 - up 0.33%
Nasdaq - down 0.14%
India:
Nifty 50 - up 0.44%
Sensex - up 0.43%
What’s brewing hot? ☕
✅ Betting on the future — institutions seem more hungry for crypto than retail. Andreessen Horowitz, one of Sand Hill Road’s top VC platforms, pulled in a $2.2 billion new crypto fund to double down on startups figuring out the future of money. This would be a16z’s 2nd dedicated crypto platform, which takes its total AUM north of $18 billion.
✅ Google delays cookie ban — a while ago Google had declared it will ban all third-party cookies on browsers by 2022, in a bid to help stop rampant online data harvesting. Now in a turn of position, Google claims it will hold off on the ban for a year at least, to help the ad-driven internet economy figure out survival. Cookies are basically extensions that self-install in our browsers, and under disguise of helping improve the experience, mine data for ad targeting. Anyway, ad tech stocks were flying on the news up 10-15% in a day.
India jumping into the SPAC sea? 😎
What’s poppin’ — MoneyControl claims SEBI is working on a framework to facilitate SPAC listings in India, making way for the flurry of cash-guzzling Indian startups to go public.
For folks unfamiliar with a SPAC — Special Purpose Acquisition Companies are shell companies that raise a bunch of cash from large investors, and then list themselves on the stock exchange as a “blank check” entity. This company, with its cash pot, then goes out and acquires another private company (ideally a startup), absorbs itself, and then trades on the exchange as the startup itself.
The concept has been extremely popular in taking unprofitable startups public in the US, modestly bypassing regulatory oversight and prying eyes of bankers. $75 billion+ in SPAC capital was raised in 2020, and 2021 has already managed to top that.
Anyway, SEBI’s framework will address the issue, likely allowing a “strictly” controlled avenue for established entities to toy with the approach. Several modifications to the Companies Act of 2013 will be needed.
Big picture — an actual listing in India may take a couple of years AT LEAST, but if at all, it could play an important role in limiting Indian startups from chasing IPOs abroad.
Latest from Venture Street 💰
Unacademy is making a tiny acquisition — buying out the Twitch of India, Rheo TV, for about $10 million.
Started by two ex-Unacademy folks — the platform basically helps college students and professional gamers make some $$ by live streaming gameplays, incentivized based on follower count and tournament performances. Over 20,000 professional streamers use the platform, streaming 100+ games.
While it's unclear why Unacademy is after the platform, we’d guess it has something to do with interlacing gaming and curriculum through interactive exercises. Or, plainly acquiring control of as much of “student time spent” as possible.
Key insight —India’s nascent gaming ecosystem is growing fast, up 40% last year to about $930 million in spending, expected to top $10B+ by the end of this decade.
Meanwhile, a deal of EPIC proportions,
Online pharma platform Pharmeasy finally pulled the trigger on Thyrocare — acquiring 66% in the diagnostics company for ₹ 4,500 crores. Deal’s quite complex, but the founder of Thyrocare will be given a 5% stake in Pharmeasy too, which will value Pharmeasy at about $4 billion post deal.
The deal marks many firsts — including THE first acquisition of a public company by a unicorn startup, a sign of the times coming.
Aight that’s it for today, here’s a quick look at the important stuff from the week…
🤑Old guy, new filter — JP Morgan spent a billion dollars on acquiring online investing platform Nutmeg, which sells a breadth of “managed” investing products, including robo advisors, retirement savings, as well as options to buy stocks, bonds and ETFs. Nutmeg will supplement JPM’s existing consumer banking and investing services division, while helping jumpstart the old bank's ambitions of starting a neobank for young consumers.
💄 Cosmetics is the shizz — PE giant KKR invested $625 million into Vini Cosmetics, the maker of FOGG perfumes, for a majority 54% control. Vini’s 2019 revenues peaked at ₹1,100 crores, before COVID stalled business. Forced shift to online selling helped save the day, and KKR wants to double down exactly here. BTW, this is THE largest buyout of a CPG company in India by a PE giant.
😔 Why u do dis bruh — Car-rental platform Zoomcar is dissing Indian markets, to pursue a US listing via a SPAC deal instead, ideally over the next 12 months. The company has a remarkable story of growth, founded with just $250K in the bank and a fleet of 7 cars in 2013, to expand to a fleet of 10K+ vehicles and projected $100 million in revenues this year. After Flipkart, Grey Orange Robotics, and possibly Grofers, this is the latest Indian growth story to go chasing the US markets.
✈️ Bacc on its feet — NCLT finally signed off for new owners of Jet Airways, a consortium led by businessman Murari Lal Jalan and UK based Kalrock Capital, to take over the kneecapped airline, clearing the way for the company to start running flights after a 3 year pause. Jet will have to figure out its operations over the next few months, including hiring, getting routes, fuel contracts, etc., but all that pales in front of a grand headache management faces — clearing out the $3 billion+ debt pile.
🛍️Problems brewing — Household savings hit another bottom, down to 8.2% of the GDP at the end of 2020, while total indebtedness (i.e. money borrowed) spiking to over 37% of the GDP. Primary reasons include COVID driven joblessness, rising prices, and healthcare expenses. Also, a spike in revenge spending after the first wave could be responsible for emptying consumers’ pockets. These stats will be an overhang on investor mood as we slowly enter next quarterly earnings season.
🔥 Mota bhai, da king — this week we had the RIL annual meet, and Ambani stumped the markets with comprehensive agenda for the “greenification” of the empire with a ₹75,000 crores investment earmarked into green energy over a span of 3 years — focusing on batteries, storage, solar panel manufacturing, the entire bill. The Google-powered low cost smartphone is coming in Sep, and on the retail front RIL guided for 3x growth in volumes of Reliance HyperMart. Lastly, Saudi’s Aramco will invest in RIL’s Oil and Chemicals business, with the Chairman joining RIL board. In all, investors got the rush they were looking for.
💳 Finally, Visa got what it wanted — after its deal for open-banking platform Plaid had fallen through, a bruised Visa finally acquired a smaller competitor — Sweden based fintech Tink, for $2.1 billion. Tink, with 250M users, basically works with banks to build infra that enables linking accounts to any fintech app, making users’ banking and transaction data portable. The acquisition will help Visa defend its business against the attack of digital wallets which are rendering “cards” useless.
Hit that 💚 if you liked today’s issue.
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