Who’s daddy now! 😎
Public sector IPO, online grocery, and a friendlier Android.
Hi 👋, Tanvi here.
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Market summary: 📊
Indian markets looked okay yesterday, relatively flat throughout the session. US markets however gave away some ground as the first Presidential debate frenzy seeped in.
US:
S&P 500 - down 0.48%
Nasdaq 100 - down 0.37%
India:
Nifty 50 - down 0.046%
Sensex - down 0.022%
Who gaaats the cash? 💰
Online grocery retailer BigBasket is in talks with new investors for a $350-400 million financing round, with discussions being held with Fidelity, Tybourne Capital, Singapore government's Temasek, and US-based Generation partners. The raise will also include a $100-150 million in secondary sale of shares coming from early investors.
The pandemic completely altered the trajectory of online retailers and this round is estimated to come at a 33% premium to the last raise, bringing valuation to over $2 billion. Existing investor Alibaba has decided to sit this one out and will likely trim its stake in Big Basket going forward. Anti-china sentiment and all that…
Takeaway: online grocery is expected to be a $3 billion endeavor in India in 2020, up more than 75%. Considerable ecommerce growth will be driven by this segment. It’s no surprise that investors will be eager to pile into BigBasket. Makkhan...
Last, in an EV push — 🔌
EV startup Etrio has scooped up $3 million in a series A round from a bunch of HNI individuals and Angels from Singapore, including Janardhan Rao, founder of Triumph Global Group, a Singapore headquartered international commodity trading house.
Touro, Etrio's three-wheeler brand, is scheduled for market launch in October 2020 and the fresh round of funding will go towards targeting B2B logistics and ecommerce companies — who find use for the vehicle in last mile deliveries. A cargo variant is currently being tested and the company says over 1,250 units have been pre-booked already.
Two oldies, ready to show who’s daddy 😎
Yesterday we got a little passionate and wrote quite a few words on the likely outcomes for Tata Group, with its supposed dream of building a digital platform from the ground up. Turns out, the Tata’s were taking the temperature of the market, but back channel talks were already going on quite swiftly with one of the world's largest retailers, Walmart.
And the investment is no small amount — the American retail powerhouse could deploy as much as $25 billion in Tata Group, to build an end to end new "super app". In all honesty, when you’re up against Mukesh and Jeff, two of the boldest capitalists of our times, you’re left with not much of a choice. Go big or go home.
What does this mean—a million things happening here. But most importantly, the move shows Walmart is damn serious about India and won’t let its baby, Flipkart, fight this battle without reinforcements. Secondly, between the trio — Walmart with its deep pockets, Flipkart with its digital expertise, and Tata with its dense product portfolio and India-specific operational expertise, the synergies forming could be truly magnificent.
Anyway, so far the talks are apparently proceeding well and the 'super app' could be launched as a joint venture, with room to get more foreign investors onboard. The duo are setting an aggressive launch deadline for January, and WMT has appointed Goldman Sachs as its banking advisor already, eyeing an estimated app valuation of $50-60 billion.
Bottomline: do not take these happenings lightly. $60 billion “value”, created overnight by connecting two old behemoths with some “digital” glue — unprecedented, and HUGE. Particularly for India, where the consequences of this, good or bad, are unimaginable.
Surprise turn around 🙄
Displaying an unexpected shift in its mood and strategy, Google yesterday made a small yet consequential move, indicating that it wants to be much more tolerable of third-party app stores and apps installed from outside the Play Store, on Android 12, in a stark contrast to Apple’s strategy.
Some context: Over the years, Apple had shown a clear inclination to slowly button up its App Store and restrict control of what gets installed on user’s devices, in a bid to enrich its own services, while dangling consumer privacy as the boogeyman when questioned too much.
Google on the other hand, although not as strict with its policies, hadn’t taken an explicit stand otherwise either, mostly choosing to do a monkey-see monkey-do, on a case by case basis, blindly following the actions of Apple.
However, it appears the Android maker is finally waking up to its senses and realizes this might be an opportunity to stand out. So yesterday they declared intentions of making the upcoming Android 12 friendlier for 3rd party app stores (think Epic Games’ store or Facebook’s cloud gaming service which would distribute games inside it, or even Microsoft’s xCloud).
Not just that, Google also expressed willingness to make it easy to install apps not distributed via its Play Store at all—such as those downloaded from the web as an apk file (your fantasy league apps for example).
Why this sudden shift in mood—well for once, Google finally perhaps realizes it has an opportunity to starkly differentiate its consumer strategy from that of Apple going ahead. True to its past, Google’s services have been cross-platform, unlike Apple, which contributed largely to its ubiquitous rise (4B+ users). Keeping Android such that it doesn’t thwart innovation is key going forward.
Also, we can’t ignore that payment processing may be on Google’s minds too. The company is scrambling to monetize beyond just ads and by allowing free-flow of a burgeoning gaming services or other apps, it can collect the 15-30% it charges on payment processing, instead of mindlessly letting go of the $$, solidifying its multi-billion dollar segment in no time.
Whatever the reason may be, Apple has been abandoned on this hill by its neighbor, which could make it quite hard for them to justify defending their position to regulators.
Gormint fishing for pocket change 🤝
Few weeks ago we wrote about how the government is planning on selling a larger stake in LIC than anticipated. Well, we finally have some confirmation as GOI looks to offload about 25% of LIC to raise cash to stop its deficit problems.
Cabinet’s approval will be sought in the coming days and the government will have to make some changes to the LIC act to allow for outside ownership of the insurance corporation. Post that, identifying decent market conditions, the insurer’s equity will be offloaded in multiple rounds.
This could in fact work out well — in addition to giving the government some cash, outside investors and shareholders will bring much needed accountability to the public sector corp, which may help cut down inefficiencies and lean up the corporation a bit. Chop chop.
What else are we snackin’ 🍿
👏 Musk promises Starlink IPO - Elon claims he will IPO his satellite constellation company in the future once growth and cash flows smoothen out, which had fan boys and enthusiasts set their hopes high.
💪 Edtech adds to ranks - Edtech startup Avishkaar has hired serial entrepreneur Pooja Goyal as Cofounder and COO at the firm. Goyal brings over 20 years of product experience, and built Intellitots in the past—an early childhood company which was acquired by Klay in an all cash deal.
📱 PayTM stands up - Payments platform Paytm has brought back its cashback feature on UPI payments for the promotion of IPL on its app, the one the company had withdrawn after its app got delisted from the Playstore for violating Google’s anti gambling policies.
📦 Scaling up logistics - Amazon India has set up 200 new delivery stations across the country as it gears up for its festive season. The investment in delivery infrastructure will also help create employment for tens of thousands of workers.
🛒 Protecting downside - Flipkart has partnered with Bajaj Allianz Insurance company to offer Digital Suraksha Group Insurance for customers in the country, covering financial losses which are caused by online frauds and cyberattacks which occur during online transactions.
💉 Hopes set on Serum - Serum Institute will get an additional $150 million in funding from Bill and Melinda Gates Foundation and GAVI vaccine alliance to make an additional 100 million COVID-19 vaccine doses for India and some other low and middle income countries.
Hit that 💚 if you liked today’s issue.
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