Southeast Asia’s leading property listing company PropertyGuru is making great strides across the region as it secures a fresh investment of SG$300 million ($220 million), it announced this week.
The proceeds, financed by existing investors KKR and TPG, both buyout titans, will fuel PropertyGuru’s already ambitious push across its main market Singapore, Thailand, Indonesia, Vietnam and Malaysia, where it operates country-specific real estate portals.
The private funding arrived almost a year after the online realtor pulled its plan to list on the Australian Stock Exchange. The company, launched in 2007, was reportedly aiming to raise up to $275 million at the time. And it has been nearly two years since the firm raised $144 million from KKR.
Growth has been encouraging for PropertyGuru in 2019, with a 24% year-over-year revenue growth that beat its own forecasts. The company calls itself Southeast Asia’s largest player, but it’s up against some formidable opponents, including a joint venture set up by close rivals 99.co and iProperty last year. 99.co is itself backed by prominent investors like Facebook co-founder Eduardo Saverin, Sequoia Capital and East Ventures.
Online realtors have been making aggressive expansion in Southeast Asia as the region becomes an attractive destination for real estate investors who want to tap the region’s relatively low investment threshold and high rental yield. Many come from neighboring China, which has reined in property speculation in recent years.
PropertyGuru has kept itself busy in 2020 so far, launching a mortgage marketplace in Singapore and a virtual walkthrough feature for property developers as well as seekers at a time when traveling is unsafe or unattainable. Every month, 24.5 million property seekers use the company’s various products to find homes, which number 2.7 million across the region at the time of its latest funding news.
“Our strong financial performance over the last few years has enabled us to invest aggressively and smartly, to build what is today an integrated and differentiated technology platform that caters to the unique opportunities in Southeast Asian markets,” chief executive Hari V. Krishnan said in a statement.
Over the past few months, COVID-19 has brought much of the fundraising community to a standstill. However, amidst it all India’s hyper0growth telco Reliance Jio Platforms has put its fundraising efforts into full gear.
The recent deals have cemented Mukesh Ambani’s ambition to make his oil-to-retails giant Reliance Industries (India’s most valuable firm) a top homegrown internet giant.
On Friday, he said he plans to publicly list Reliance Jio Platforms and Reliance Retail, the largest retail chain in the country — also controlled by him — in the next five years.
As Reliance Jio Platforms, which has become the India’s top telecom operator with over 388 million subscribers in less than four years, continues its funding spree, at Extra Crunch we are doubling down on our focus on covering everything Jio from here and out.
As we’ve attempted to get up to speed on the company, we’ve compiled a supplemental list of resources and readings that we believe are particularly helpful for learning the story of Jio, which remains a mysterious firm to many.
The investment from KKR, which has written checks to about 20 tech companies including ByteDance and GoJek in the past four decades, values Reliance Jio Platforms at $65 billion.
The announcement today further shows the appeal of Jio Platforms, which has raised $10.35 billion in the past month by selling about 17% of its stake, to foreign investors that are looking for a slice of the world’s second-largest internet market.
Ambani, the chairman and managing director of oil-to-telecoms giant Reliance Industries that has poured over $30 billion to build Jio Platforms, said the company was looking forward to leverage “KKR’s global platform, industry knowledge and operational expertise to further grow Jio.”
In recent years, India has emerged as one of the biggest global battlegrounds for Silicon Valley and Chinese firms that are looking to win the nation’s 1.3 billion people, most of whom remain without a smartphone and internet connection.
Amazon, Google, Facebook, Microsoft, Xiaomi, and TikTok-parent firm ByteDance among several others already count India as one of their most important overseas markets. In the past decade, nearly half a billion Indians came online for the first time, thanks in large part to Reliance Jio, which has amassed over 388 million subscribers.
An advertisement featuring Bollywood actor Shah Rukh Khan for Reliance Jio (Image: Dhiraj Singh/Bloomberg via Getty Images)
Launched in the second half of 2016, Reliance Jio upended India’s telecommunications industry with cut-rate data plans and free voice calls, forcing incumbents such as Airtel and Vodafone to significantly revise their prices to sustain customers and many to consolidate and exit the market.
Jio Platforms, a subsidiary of Reliance Industries, operates the telecom venture, called Jio Infocomm, that has become the top telecom operator in India.
Reliance Jio Platforms also owns a bevy of digital apps and services including music streaming service JioSaavn (which it says it will take public), on-demand live television service and payments service, as well as smartphones, and broadband business.
“Few companies have the potential to transform a country’s digital ecosystem in the way that Jio Platforms is doing in India, and potentially worldwide. Jio Platforms is a true homegrown next generation technology leader in India that is unmatched in its ability to deliver technology solutions and services to a country that is experiencing a digital revolution,” Henry Kravis, co-founder and co-chief executive of KKR, said in a statement.
“We are investing behind Jio Platforms’ impressive momentum, world-class innovation and strong leadership team, and we view this landmark investment as a strong indicator of KKR’s commitment to supporting leading technology companies in India and Asia Pacific,” he added. This is the single-largest investment (in equity terms) made from KKR’s Asia private equity business to date.
The new capital should also help Ambani, India’s richest man, further solidify his last year’s commitment to investors when he pledged to cut Reliance’s net debt of about $21 billion to zero by early 2021 — in part because of the investments it has made to build Jio Platforms. Its core business — oil refining and petrochemicals — has been hard hit by the coronavirus outbreak. Its net profit in the quarter that ended on March 31 fell by 37%.
In the company’s earnings call last month, Ambani said several firms had expressed interest in buying stakes in Jio Platforms in the wake of the deal with Facebook. Recent investments also pave the way for an initial public offering of Jio, which could happen within five years.
With the S&P 500 down 24% YTD (at yesterday’s close), and debt markets also reeling, private equity firms are poised to swoop in and snag some bargains.
The sector — which includes Blackstone (BX +15.7%), Carlyle Group (CG +16.3%), and KKR (KKR +14.7%) — has a record $1.5T in cash piled up and is looking at …
Coty (COTY -0.4%) is slightly lower after bidding for the company’s professional hair and nail products business advances to the second round. Sources tell Bloomberg that Henkel and KKR (NYSE:KKR) are still in the mix, but Advent International and a Cinven/Abu Dhabi Investment Authority consortium is out of …
According to the latest AgFunder Agri-FoodTech Investing Report, $19.4 billion has been invested in AgriFood tech across 1,858 deals in 2019. AgFunder, a food and agtech venture firm, publishes the annual report utilizing Crunchbase data to build its unique analysis. The report represents a wide swath of industries from innovative food, eGrocers and restaurants to farming, ag biotech, farm robotics and equipment, bioenergy and biomaterials.
The largest growth year over year in funding includes meat alternatives, indoor farming, robotic food delivery and cloud kitchens. Investment in startups operating what the report terms upstream–closer to the farmer and before retail–increased 1.3 percent year over year, accelerating in the second half with the highest numbers for H2 on record. Alternative proteins (Impossible Foods raised $300 million, Motif FoodWorks, $90 million and Puris, $75 million) and vertical farming (AeroFarms raised $100 million, Infarm, $100 million and AppHarvest, $82 million) drove much of this. The whole sector showed 250 percent growth in the last five years.
Closer to retail and grouped as downstream in the report are eGrocers, restaurants, delivery and home cooking, which saw an overall decline of 7.6 percent year over year. The largest sector decline is food delivery by 56 percent year over year.
Agritech and foodtech experienced growth in investments in regions outside of Asia and North America. According to Louisa Burwood-Taylor head of media and research at AgFunder “Europe continued its trend for growth across VC industries posting a 94 percent increase in agri-foodtech funding, while Latin America had a breakout year, closing $1.4 billion in agri-foodtech funding across 40% more deals than in 2018; that’s more than the entire LatAm VC industry in 2017. Africa also more than doubled its funding in the space.”
Audax,HarbourVest and Genstar ranked as the top three most active private equity firms in 2019, based on the volume of completed deals in the U.S., according to PitchBook. Three companies tied for fourth place: Abry, Carlyle and Shore Capital.
Where were these PE firms looking for deals? Eight of the firms on our list name the software and technology sector among their top investment targets, and seven put healthcare companies on their priority list. Financial services and consumer services are each named by five of the firms as industries they focus on, with four naming business services companies. Fundraising from investors in 2019 led to two notable fund launches earlier in 2020: KKR’s $1.3 billion KKR Global Impact Fund and HarbourVest’s $2.6 billion HarbourVest Fund XI.
Here are Mergers & Acquisitions’ profiles of the top 10 firms.
KKR (NYSE: KKR) has raised $1.3 billion for its global impact fund. The fund is “dedicated to investment opportunities in companies whose core business models provide commercial solutions to an environmental or social challenge,” the firm says. The fund will target companies in the lower middle-market that contribute towards the United Nations Sustainable Development Goals. Among the themes that the fund will focus on include: climate change, clean water, workforce development, waste, mobility, sustainability and infrastructure improvements. “We are thrilled to see our investors’ shared enthusiasm for the tremendous opportunity we see ahead for KKR Global Impact and will build on this to help set the new standard across investing, value creation and measuring success in the space,” says Alisa Amarosa Wood, KKR partner and head of KKR’s private market products group. Investment firms are raising funds that focus on climate change. For example, BlackRock hasraised $1 billion to invest in wind, solar and battery-storage projects. Renewable energy is becoming “one of the most active sectors in infrastructure,” David Giordano, global head of BlackRock renewable power, told Bloomberg News. It comes, he said, “as global power generation shifts from two-thirds fossil fuels to two-thirds renewables over the next few decades.”
Large global Fortune 500 manufacturers are focusing on their core competencies and looking to divest non-core assets, resulting in acquisition opportunities for private equity firms. Manufacturers are continuously evaluating their lines of businesses and in recent years have been selling non-core assets to focus on bottom-line growth and profitability. A 2018 Ernst & Young study, How Can Divesting Fuel Your Future Growth, noted that nearly nine out of 10 companies planned to divest assets in the next two years, up from roughly four out of 10 a year earlier. Corporate decision makers say shifts in global tax policy, new technologies and other industry trends amplify the need to sell non-core assets and reroute capital to other business areas. This trend has been a boon for private equity firms in the sector like KPS Capital Partners. “Very large global Fortune 500 corporates are focusing on their core competencies,” says Michael Psaros, KPS co-founder. “The public stock market and activists are really pushing them to divest non-core business lines and they are listening.” Most of his firm’s investments have been complex carve-outs from corporate manufacturers executed on a global basis. In 2019, KPS acquired Howden, a provider of industrial gas handling products and services, from Colfax Corp. (NYSE: CFX), a welding and valves manufacturer, for $1.8 billion, including $1.66 billion in cash consideration. Read our full coverage: 5 trends driving manufacturing M&A.
DEAL NEWS The U.K.’s antitrust authority cleared Google’s (Nasdaq: GOOG) $2.6 billion takeover of Looker Data Sciences Inc., joining U.S. regulators in declining to open an in-depth review. The purchase was not likely to weaken competition as Google would not be inclined to stymie its rivals, the Competition and Markets Authority said. Google announced in June that it planned to buy California-based Looker to boost its cloud offering, which lags behind Amazon.com Inc. (Nasdaq: AMZN) and Microsoft Corp. (Nasdaq: MSFT). Read the full story by Bloomberg News: Google’s $2.6 Billion Looker deal cleared by U.K. regulator.
Genstar-backed energy data analytics company Enverus has acquired oil and gas technology firm RS Energy Group from Warburg Pincus. Goldman Sachs (NYSE: GS), Simpson Thacher, Weil, Gotshal & Manges LLP, Ropes & Gray LLP and Irell & Manella LLP advised Enverus. Credit Suisse, Jefferies and Kirkland & Ellis advised RS Energy.
Apax Partners is buying early childhood education provider Cadence Education from Morgan Stanley Capital Partners.William Blair, Lazard Middle Market and Debevoise & Plimpton LLP are advising Morgan Stanley. Simpson Thacher & Bartlett LLP is advising Apax.
CenterOak Partners-backed Service Champions has acquired Bell Brothers Plumbing Heating and Air, a provider of residential air conditioning and plumbing services. Greenberg Glusker Fields Claman & Machtinger LLP advised Bell Brothers, while Gibson, Dunn & Crutcher LLP advised CenterOak.
Goldman Sachs Merchant Banking and Eurazeo-backed Trader Interactive has purchased commercial trucking and equipment companies NextTruck, Rock & Dirt, Tradequip and Trade-A-Plane from the Cosby Harrison Co.
Investcorp has acquired seafood distributor Fortune Fish & Gourmet.Houlihan Lokey (NYSE: HLI) advised Fortune.
Corridor Capital-backed Nationwide Property & Appraisal Services LLC has bought appraisal management company Olde City Lending Solutions. Berkery Noyes advised Olde City.
MiddleGround Capital has acquired Banner Service Corp. from Centerfield. The target produces cold finished, straightened, ground, and polished metal bar products.
Windjammer Capital Investors has acquired Compex Legal Services, a provider of outsourced medical records retrieval and litigation support services.
DEAL TRENDS Private equity deal value increased by 3 percent in 2019, despite a 6 percent drop in fundraising, according to EY’s PE Pulse report. Average fund sizesincreased by 32 percent in 2019 to $846 million, helped along by new investors in the space such as family offices. PE exits increased by 2 percent.
PEOPLE MOVES Philip Lo has joined alternative investment firm GPI Capital as a managing director, investor relations and business development. He was most recently with Siris Capital.
John Magee has been named CEO at Aurora Capital Partners-backed VLS Recover Services. Magee was previously with Worldwide Logistics.
FEATURED CONTENT Artificial intelligence in healthcare saw about $4 billion in funding across 367 deals in 2019, according to data and research firm CB Insights. Amazon.com Inc. (Nasdaq; AMZN) is no exception. The tech conglomerate is using itsrecent deals for Health Navigator and PillPackto launch new software services in healthcare. Health Navigator works with companies like Microsoft Corp. (Nasdaq: MSFT) in offering services such as remote diagnoses, and with triage to help patients figure out whether to stay at home, see a doctor or go straight to the emergency room. Read our full coverage: How Amazon is using M&A to revolutionize healthcare.
Pushed by a groundbreaking California law mandating it, more companies are putting women on their public corporate boards. The law faces pressure in court and may not stand, but its rippling effect has already started to increase the visibility and awareness of the important benefits of board diversity. Investors are taking notice and trying to get ahead of the curve. According to a study published by MSCI in March 2018, having three or more women on a company’s board of directors translates to a 1.2 percent median productivity above competitors. Read the full guest article by Venable’s Belinda Martinez Vega: Why businesses are adding women to their boards.
If there’s anything M&A professionals dislike, it’s uncertainty. And heading into 2020, there’s more than enough uncertainty to go around, including questions about the economy, international trade, impeachment, domestic politics and more. The funny thing is, the lack of clarity may actually make the first half of the year a great time for M&A, as dealmakers push to close transactions before the looming uncertainty of Election Day and its outcome. We conducted interviews with 8 investment bankers and other M&A advisors. Some said the first half of the year will be robust, while others said the uncertainty may have a negative impact throughout 2020. Read the full story, What’s ahead for M&A in 2020? We ask 8 advisors.
Mergers & Acquisitionshas named the2020 Most Influential Women in Mid-Market M&A. This marks the fifth year we have produced the list, which recognizes female leaders with significant influence inside their companies and in the wider dealmaking world. It’s been gratifying to watch the project evolve over the years – and become more influential itself. This year, we received more nominations than ever before. As a result, we expanded the number honored to 42 in 2020, up from 36 in 2019. Many dealmakers are new to our list, including Rockwood Equity Partners’ Kate Faust, William Blair’s Shay Brokemond and Avante Capital Partners’ Ivelisse Simon. Read our full coverage of all the champions of change on our list, including Q&As with each individual.
A private equity giant is warning that more untested companies are due for a reckoning in repeats of WeWork’s abrupt fall from grace.
Henry McVey, the head of global macro and asset allocation at KKR & Co., recommends investors stay underweight many high-flying yet unprofitable companies funded by venture-capital firms or in the early stages of growth.
“The WeWork situation was not a ‘one-off’ occurrence,” he added in a 2020 outlook report, which didn’t reference any specific companies. A growing number of the co-working company’s peers “may have difficulty funding in 2020.”
The We Co., more commonly known as WeWork, saw its valuation plummet to less than $8 billion in October from as high as $47 billion earlier in 2019. The company was forced to shelve plans for an initial public offering and required a liquidity lifeline from SoftBank Group Corp. to stay afloat. The yield on its junk bonds spiked from just below 7% at their lows in mid-August to above 16% in mid-November.
The debacle saw WeWork become the poster child for Wall Street concerns about questionable valuations and corporate governance at highly-regarded private companies. But from McVey’s perch, this poster child isn’t an only child, and investors should be more vigilant about the risks of such firms.
“There are still too many companies with high fixed costs and less marginal revenue dollar per purchase that are being funded, and in 2020 we believe that a more skeptical investment community will expose some of these flaws, particularly as unprofitable private growth companies try to access the public markets,” he writes, envisioning an environment in which “cash flow conversion will again become king.”
Early in 2020, however, investors have shown a strong appetite for recent entrants to public markets. The Renaissance IPO exchange-traded fund is up nearly 7% year-to-date and less than 1% off its July 2019 all-time high, buoyed by hefty gains from the likes of Uber Technologies Inc. and Beyond Meat Inc.
Another SoftBank-backed company plotting a listing is DoorDash, which dominates the food delivery industry. It hasn’t turned a profit and has held talks with JPMorgan last year for a $400 million credit line, people familiar with the matter have said. It has raised about $2 billion in 18 months and the valuation has ballooned to $12.6 billion. NYU Professor Scott Galloway, known for his commentary on the technology industry, has been critical of the startup’s operations.
Casper Sleep Inc., which submitted a filing on Friday to pave the way for a public listing, reported losses of $67 million in the nine months ending September 2019.
Confronted with the rare prospect of defeat on Capitol Hill, private equity titans Blackstone Group Inc. and KKR & Co. unleashed a national advertising blitz last year against legislation that threatened their investments in health-care companies valued at $16 billion.
The $53.8 million campaign sought to derail a crackdown on surprise medical billing, in which patients are unexpectedly hit with exorbitant charges, often following visits to emergency rooms. Television ads depicted patients in trauma being denied care and urged viewers to contact lawmakers, dozens of whom were identified by name.
The onslaught ended up generating a bi-partisan backlash, and a rebuke from President Donald Trump’s White House, in large part because Blackstone and KKR didn’t reveal that medical-staffing companies they owned were bankrolling the effort.
“It was a dumb strategy,” said Representative Greg Walden, the top Republican on the House Energy and Commerce Committee, which is investigating Blackstone and KKR’s investments in medical-staffing companies. “All it’s done is driven a bunch of us to double down. They would have been much better served to just come in and talk to us about their concerns.”
The furor comes at a time when private equity firms need allies in Washington. The industry is under attack from progressive Democrats, who accuse it of looting companies, putting Americans out of work and profiting from investments in unethical businesses. Among the chief adversaries is presidential candidate Elizabeth Warren, who has proposed making private-equity executives pay much higher taxes and tying their earnings to the success of companies they control.
Those involved in the influence campaign say it was necessary — even if it did irk some lawmakers — because Blackstone and KKR have so much at stake.
The bill they are fighting would effectively cap how much medical-staffing firms, which outsource doctors to hospitals, can charge patients. Blackstone completed an acquisition of TeamHealth in 2017, valuing the company at $6.1 billion. KKR bought Envision Healthcare, valued at $9.9 billion, a year later. Health-care policy analysts predict revenues would fall significantly if Congress capped the companies’ fees.
TeamHealth and Envision support competing legislation that would resolve payment disputes between medical providers and health-insurance companies through arbitration. They argue the cap would be a boon for insurers that would hurt patients by triggering doctor shortages.
“A very broad coalition of doctors, patients, and bi-partisan members of Congress — not just TeamHealth — believes that arbitration is the right approach to end surprise medical bills,” Blackstone spokesman Matthew Anderson said in a statement. “By contrast, the insurance-industry-backed bill for government rate setting has generated widespread opposition from many quarters given concerns it would harm the availability of high-quality patient care, which is the real reason it has failed to gain support.”
KKR’s Envision made similar points, saying in a statement that it “will continue advocating for an effective independent dispute resolution process that puts patients first.” KKR fully supports those efforts, Envision said.
TeamHealth and Envision funded the tsunami of ads. Opponents such as Walden, who backs the bill that TeamHealth and Envision are trying to kill, concede the campaign slowed momentum on Capitol Hill.
But the fight is far from over. In December, lawmakers tried to include a measure on surprise-medical billing in year-end legislation funding the federal government but couldn’t work out their differences. Key negotiators in the House and Senate have now set a deadline of May 2020 to strike a deal, at which point they intend to include a proposal in negotiations to extend funding for expiring health-care programs.
TeamHealth and Envision influenced the debate via a front group called Doctor Patient Unity. One ominous ad showed an ambulance arriving at a hospital with a dark and empty emergency room — all because of “government rate setting.”
“The ads are disgusting and are only meant to take advantage of vulnerable Americans,” White House domestic policy adviser Joe Grogan, a former pharmaceutical industry lobbyist, said in a statement. “The administration remains undeterred as we meet with members of both parties to find a bi-partisan solution to end crushing surprise medical bills.”
Calls from anxious voters flooded the offices of House and Senate members after the ads began to run. Once lawmakers started probing, they found out that Blackstone and KKR controlled the companies behind them. No advocacy group spent more than Doctor Patient Unity on a single issue in 2019, according to Advertising Analytics, which tracks political ads.
“They’ve made a lot of enemies,” Senator Jeanne Shaheen, a New Hampshire Democrat, said in an interview. “They deliberately misled the American public.”
Surprise medical billing has long been controversial. It happens when patients don’t realize that all the doctors who treat them during a hospital visit aren’t covered by their insurance.
One proposal that was gaining traction last year would restrict out-of-network medical providers from billing patients the full amount for services. Instead, medical bills would be based on the median rates paid to in-network providers, likely hurting TeamHealth and Envision’s profits.
With the debate heating up on Capitol Hill, Doctor Patient Unity started blanketing airwaves in July. Its biggest ad buys have been in states where lawmakers face tough re-elections this year, including North Carolina, Georgia, Colorado and Minnesota. Running the campaign is Narrative Strategies, a Washington-based communications and advocacy firm.
Greg Blair, a spokesman for Doctor Patient Unity at Narrative Strategies, said the group had to step up to counteract insurers, which have spent almost $50 million to lobby for legislation that would have “severely harmed patients.”
“As the insurance industry pressed lawmakers to rush their legislation through Congress, our coalition worked to educate voters about the harmful consequences of rate setting,” Greg Blair said in a statement.
At the Minnesota State Fair in August, Democratic Senator Tina Smith said voters flooded her booth to share how “completely confused” they were by Doctor Patient Unity’s campaign.
Smith added that the group’s ads sent mixed messages. She felt targeted by an early version even though she was co-sponsoring the bill that TeamHealth and Envision supported. Then, with no disclosure of who was funding the ads, Doctor Patient began airing new ones thanking Smith.
“You ought to at least have the guts to say who you are,” she said.
The fight is erupting as Trump seeks re-election. Private-equity executives say privately that they expect to be wearing a bullseye in 2020, with critics shining a spotlight on policy wins the industry secured during his first term.
House Financial Services Committee Chairwoman Maxine Waters has already said she plans to hold a hearing early this year featuring executives from top firms. Meanwhile, progressive groups such as Americans for Financial Reform and United for Respect are funding anti-private equity campaigns.
The scrutiny won’t be helpful should Congress turn its attention back to surprise-medical billing, something the firms’ opponents on the issue have pledged to do.
“I’m going to do everything I can to keep surprise medical billing on the front burner,” retiring Republican Senator Lamar Alexander of Tennessee said in an interview. “It’s a bill that almost everyone wants passed except a handful of people, including private equity firms that benefit from it.”