Quoteworthy: "Anyone who dares try to do that will have their heads bashed bloody against the Great Wall of steel forged by over 1.4 billion Chinese people." — China premier Xi Jinping speaking at the ceremony marking the centennial of the Chinese Communist Party.
Indonesia close to IPO overhaul to attract mega tech listings
Indonesia is close to finalising a sweeping revamp of listing rules, paving the way for Southeast Asian start-up giants from Bukalapak.com to ride-hailing leader GoTo to go public from August.
Authorities are finalising details of new regulations that will allow firms to go public with multiple classes of shares carrying different voting rights, said Pandu Sjahrir, a commissioner at the Indonesia Stock Exchange (IDX). They will also relax curbs on loss-making firms, among other changes.
Online marketplace Bukalapak.com will become the first unicorn to take advantage of the new regime and list around August, he said. GoTo, the country’s biggest tech start-up valued at US$18 billion ($24 billion), should follow soon after, he said in an interview.
From Hong Kong to London, stock exchanges around the world are trying to capture a slice of a global IPO boom. Indonesia joins its fellow bourses in relaxing regulations to entice often loss-making but highly sought-after fastgrowth start-ups. Bukalapak is going public as Southeast Asia’s start-up scene matures and investors seek exits: the region’s most valuable private firm, Grab Holdings, aims to go public via a blank-check firm in the second half of the year.
“We’ve been discussing this since last August and there has been a lot of progress,” said Sjahrir, a venture investor who serves as chairman of Sea’s Indonesian arm and on the board of commissioners at Gojek, which will soon merge with Tokopedia to form GoTo. As commissioner, Sjahrir oversees and advises the bourse’s directors. “It’s going to happen soon.”
Microsoft Corp-backed Bukalapak could raise at least US$500 million in an IPO, Bloomberg News has reported. At that size, it would exceed the roughly US$421 million raised by 21 domestic offerings so far this year, data compiled by Bloomberg show. Under the new regime, Bukalapak is expected to first start trading on the IDX’s development board before moving to the main board, according to Sjahrir, who expects the process to take about six months.
Details of the deal could still change. Bukalapak had also been weighing a US listing via a special purpose acquisition company that could value it at US$4 billion to US$5 billion, Bloomberg News reported in March. Bukalapak representatives have declined to comment on its IPO plans.
Indonesia — whose US$450 billion stock market value eclipses that of Singapore’s — is headed for a bumper year. There have been 22 IPOs so far this year, while another 24 are in the pipeline, IDX director I Gede Nyoman Yetna told reporters on June 29. Besides Bukalapak and GoTo, three other local firms with a combined value of roughly $2 billion are looking to float shares, Sjahrir said without elaborating.
All these could push this year’s IPO haul above the US$1.02 billion recorded in all of 2019, data compiled by Bloomberg show. That would make 2021 one of the best years for Indonesian IPOs in the past decade. Both the stock exchange and the financial regulator view tech IPOs as a “game-changer” that will draw more retail investors, Sjahrir said.
“We will get there soon because the intent from the beginning has been to accommodate technology-led businesses,” he said. Both the regulator and IDX “understand deeply that they are a game-changer”. — Bloomberg
Xpeng poised to raise HK$14 bil in Hong Kong listing
Electric-vehicle maker Xpeng has raised about HK$14 billion ($2.43 billion) in its Hong Kong listing, becoming the first Chinese EV producer to finish a so-called homecoming share sale.
The US-listed firm sold 85 million shares at HK$165 each, according to an exchange filing on June 30, confirming an earlier Bloomberg News report. The offer price represents a discount of about 4.1% to its closing price of US$44.32 on June 29 on the New York Stock Exchange.
Xpeng had set a maximum price of HK$180 for the portion reserved for retail investors. One of Xpeng’s American depositary shares is equivalent to two ordinary shares. Trading in Hong Kong is slated to start on July 7.
Xpeng is the latest to join a slew of US-traded Chinese firms selling shares in Hong Kong, giving them a hedge against the risk of being kicked off American exchanges while broadening their investor base closer to home. About US$37 billion has been raised through such homecoming-listings since Alibaba Group Holding started the trend in late 2019. Prior to Xpeng, online travel platform Trip.com Group raised US$1.2 billion in a second listing in the city in April.
The Guangzhou-based firm will be the first among three US-listed Chinese EV makers to complete a dual listing. Nio and Li Auto are also planning share sales in the Asian financial hub, Bloomberg News reported in March.
Xpeng went public in New York in August last year through an initial public offering that raised $1.72 billion. The timespan makes the Hong Kong listing dual primary instead of secondary, unlike the other homecoming listings, which require at least two years of trading on another exchange. — Bloomberg
Alibaba nears first big deal since record antitrust fine
Alibaba Group Holding is poised to make its first major investment since it paid a record antitrust fine as part of a bruising crackdown on Jack Ma’s internet empire.
A consortium led by the e-commerce giant and the Jiangsu provincial government is nearing a deal to buy a stake in the retail arm of Chinese billionaire Zhang Jindong’s Suning conglomerate, people familiar with the matter have said. The deal would add to the 20% stake that Alibaba already owns in Suning.com, one of China’s biggest retailers of appliances, electronics and other consumer goods that is valued at roughly US$8 billion ($10.77 billion).
The potential investment could mark a comeback for Alibaba since authorities levied a US$2.8 billion fine on the company in April for anti-monopoly violations, fuelling its first loss in nine years. The deal would help the e-commerce firm encroach on top rival JD.com’s traditional stronghold of electronics, while joining hands with local authorities signals that the tech billionaire and his company are ready to get back to deal-making.
“Should the deal proceed, it strengthens the case that Alibaba isn’t allowing regulatory overhang to constrain its strategic ambitions or opportunistic investments,” said Michael Norris, a tech analyst with Shanghai-based market research firm AgencyChina. “The potential strategic value of Suning’s stores, distribution centres and last-mile delivery stations to an increasingly omnichannel Alibaba is clear.”
Any deal will likely need to be approved by the State Administration for Market Regulation, the increasingly powerful antitrust watchdog in Beijing. The regulator had previously penalised Alibaba for not properly declaring a past investment in Intime Retail Group, on top of the US$2.8 billion fine levied as part of a wider anti-monopoly investigation.
Even as Alibaba attempts to moves on, Ma’s FinTech arm Ant Group is still undergoing a painful state-ordered transition into a financial holding company that will be regulated more like a bank.
Zhang, the Suning founder, will no longer have control of the company after the deal, the people said, marking the end of his run as a high-profile entrepreneur who drove his firm into an array of businesses, including ownership of the Inter Milan soccer team.
Among hypermarkets, Suning has the fifthlargest nationwide share of 4.4%, according to 2020 data from Euromonitor International. Sun Art Retail Group, which Alibaba controls, has the biggest share at 13.7%. A consolidation of Alibaba’s units would pose a challenge to other players, like Walmart’s China operations — currently in fourth-place with a 9.3% market share — which has a tie-up with JD.com in its online operations.
Alibaba and Suning have long been closely allied, forming a partnership in areas ranging from logistics to online sales. In 2015, Alibaba invested US$4.6 billion for its 20% stake in Suning.com, which in turn paid US$2.3 billion to buy a 1.1% stake in the larger company that it later pared down. Since then, Suning. com’s shares have tumbled about 60% even as Alibaba’s stock more than doubled. The smaller firm’s bonds climbed on June 30 after news of the potential bailout. — Bloomberg
Photo of an EV by Xpeng: Bloomberg
