|Day's range||7.05 - 8.50|
The Jack Ma Foundation and the Alibaba Foundation today announced donations of essential medical supplies to seven more countries in Asia.
Yandex (YNDX) rolled out a project called Helping Hand, which will manage transportation, medicinal deliveries, and food and other essential commodity supplies to fight COVID-19 pandemic.
(Bloomberg) -- Masayoshi Son has been among the most fervent believers in the sharing economy, investing billions in startups that help people split the use of cars, rooms and offices. But as the coronavirus curtails unnecessary human interaction, it’s hammering such businesses and rattling the foundations of Son’s SoftBank Group Corp.In New York City, the co-working space of SoftBank-backed WeWork stands practically empty as tenants stay home for fear of infection. In Shanghai, drivers for the ride-hailing service Didi Chuxing have seen their pay plummet as customers avoid shared automobiles. In San Francisco, Dara Khosrowshahi, chief executive officer of Uber Technologies Inc., another SoftBank investment, said “I wouldn’t put my kids in an Uber.”Investors are increasingly spooked about the stability of Son’s empire and its $100 billion Vision Fund amid the pandemic. Before this week, SoftBank shares had tumbled about 50% in a single month, including their worst one-day decline since the Japanese billionaire listed his company in 1994. In response, the SoftBank impresario launched one of the most audacious deals of his career: sell part of Alibaba Group Holding Ltd. and other assets to raise $41 billion to buy back shares and slash debt.While that envisioned deal put a floor under the share price, it hasn’t changed the fundamental vulnerability of an edifice built on sharing-economy standouts that’ve been walloped since sheltering in place became the norm. SoftBank gained about 40% since Son revealed that blueprint, which is said to include unloading $14 billion of Alibaba stock for starters. But it remains down about 30% from a February peak. In fact, Moody’s Corp. questioned the wisdom of selling prized assets into a market downturn and pushed SoftBank’s debt deeper into junk territory. SoftBank fired back by accusing Moody’s of bias, but its stock fell 9.4% on Thursday.“Right now, investments sensitive to sharing and the economy are not where you want to be, with the pandemic encouraging a stay-at-home mentality,” said Pelham Smithers, whose London-based firm offers research on Asian technology companies, in a note to clients. Companies such as WeWork, Uber and the hotel-booking Oyo “weren’t profitable when times were (relatively) good, begging the question, what will their economics look like in 2020?”Read more: Masa Son Unveils a $41 Billion Asset Sale to Silence His CriticsDespite the stock bounce, SoftBank’s credit default swaps -- the cost of insuring debt against default -- are still near their highest levels in a decade. The concern isn’t so much that the Japanese giant won’t be able to pay its own debts -- its cash will cover money due for at least the next two years. Rather, investors fret that Son’s 80-plus portfolio companies will struggle in the current environment, triggering negative headlines and massive writedowns.“With the prospect of more good money being sunk into firms like WeWork and Oyo, investors would not have reacted as positively as they did this week,” Amir Anvarzadeh, a market strategist at Asymmetric Advisors Pte. in Singapore, said in a note to clients.Most worrisome for investors, Son -- who saw $70 billion wiped from his net worth in the dot-com crash -- may feel compelled to step in to support some of his startups rather than see them fail. The litany of woes surrounding SoftBank’s highest-profile startups threatens to tarnish Son’s reputation as a tech investor -- one built largely on an early bet on Alibaba before it came to dominate Chinese e-commerce, which he’s struggled to replicate.Last year, after WeWork’s effort to go public fell apart, SoftBank stepped in to organize a $9.5 billion bailout. Son had to choose between financial aid or bankruptcy, at a time when risk aversion is straining global tech investment.“SoftBank frustrated investors already with its assistance to WeWork last year,” said Makoto Kikuchi, chief investment officer at Myojo Asset Management Co. in Tokyo. “SoftBank owns many investments such as tech companies that get hit particularly in this situation.”SoftBank and Vision Fund representatives declined to comment for the story.Read more: SoftBank Blasts Moody’s for ‘Biased’ Ratings DowngradeSon did vow he wouldn’t step in to rescue any more portfolio companies after WeWork and called for more financial discipline. Among SoftBank startups, Brandless Inc. said in February it would close down while satellite operator OneWeb is mulling a possible bankruptcy filing.“It’s unlikely that SoftBank portfolio companies will see any of that money, because the announcement was pretty clear on the purpose of the asset sale,” said Justin Tang at United First Partners. “In fact, it would be an opportune time for SoftBank to get rid of its weaker portfolio companies and stick with the leaders.”On Wednesday, Moody’s said it will watch SoftBank and the extent to which tumbling valuations will hurt its tech-heavy portfolio. Son’s biggest bet to date has been on ride-hailing, with stakes in Uber and the leading companies in China, India and Southeast Asia. The latest to exhibit signs of trouble was European player Getaround, which is now said to be dangerously short of cash and actively seeking a buyer.Beijing-based Didi Chuxing is another prime example of how the virus is walloping these operations. The startup, once tagged at $56 billion, had struggled to justify its valuation even before the latest crisis because of a government crackdown on its services. Ridership tumbled during the outbreak in China and Didi cut driver subsidies.Sheng Gang, a 34-year-old Shanghai resident, said he used to earn a 36 yuan ($5) bonus for every four rides during the morning rush hour; now that’s been lowered to just 6 yuan for every three. He expects his income to drop by about half this month to around 10,000 yuan.“I don’t have a Plan B since I just bought a new car,” Sheng said.Wen Peng, a 35-year-old Hebei native, earned around 6,000 yuan a month as a part-time driver. But when the coronavirus hit, most people chose to stay inside and he couldn’t sustain himself. He quit in February.“People didn’t leave their homes, almost no one wanted rides,” he said. “Many others quit for similar reasons.”A Didi spokeswoman said ridership has rebounded significantly in recent weeks as people went back to work.Read more: WeWork’s New Crisis: ‘Workplaces Will Never Be the Same’WeWork is another question mark: SoftBank has told WeWork shareholders that it could withdraw from the agreement to buy $3 billion of its stock that was part of a bailout deal. WeWork has kept its offices open despite the virus, even while other co-working operators have closed them. That may be because revenue would disappear otherwise, just as SoftBank is trying to engineer a turnaround. WeWork said Thursday it doesn’t expect to hit its 2020 financial targets as it grapples with the outbreak.One executive who usually uses a WeWork office on Park Avenue in New York said hardly anyone shows up anymore. His WeWork representative has stopped coming to the site and works remotely. He figures customers may be canceling their leases or simply not paying, which would leave WeWork on the hook for rent owed to the landlord, Tishman Speyer. “None of us are going to the office,” he said. “But we’ve decided for now to just kick any decisions down the road for six months.”Then there’s Oyo, which is in a particularly tricky spot. The Indian company has been expanding rapidly by guaranteeing a certain amount of revenue to hotels if they sign on as franchisees. But with few travelers anywhere, Oyo has to pay hotels even when their rooms are mostly empty.At the Kawasaki Hotel Park in Japan, more than 400 reservations were canceled for February to April. The result was a drop in revenue of about 25 million yen ($226,000), according to Sanho Miyamoto, the owner.“Overseas customers disappeared and Japanese businessmen halted business trips. I had to ask our employees to take a vacation for a while,“ Miyamoto said. “I am worried whether Oyo can manage because it guarantees the revenue fall for its members.”He wouldn’t comment on arrangements with Oyo. But if the startup paid the entire shortfall, it would lose about $240,000 on a single hotel.Read more: Masayoshi Son’s Other Big Real Estate Bet Has Some Real ProblemThere’s opportunity in the downturn too. SoftBank-backed Slack Technologies Inc., a popular work communications tool among home workers, has surged following lockdowns from New York to California. And after a difficult first year in Japan, Oyo has turned to promising cash for hotels that join its platform as bookings plunged. While the company didn’t say how much it was prepared to spend, that kind of opportunism can only shorten its runway of available cash.Investors fear that companies like Oyo have become too big to fail for SoftBank, Atul Goyal, senior analyst at Jefferies Group, wrote in a report. The WeWork rescue showed that “zero is not a floor” for any SoftBank investment and that Son is willing to throw more good money after bad, he wrote.SoftBank may soon prove Goyal right. The company is seeking to raise an additional $10 billion so its first Vision Fund can support portfolio companies, according to people with knowledge of the matter. And the list of SoftBank portfolio firms that may soon need help also includes gym company Gympass, Getaround and travel startups Klook and GetYourGuide.“These startups are geared for high growth and high cash burn,” Goyal said. “As revenues fall, they will need further infusions of capital to keep the lights on.”Read more: SoftBank Seeks $10 Billion to Support Vision Fund Companies(An earlier version of the story corrected the name of GetYourGuide.)(Updates with WeWork’s warning in the 21st paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Multi-Lingual Support From the Global MediXchange of Combating COVID-19 (GMCC) Programme to Further Enable Sharing Among Medical Personnel Worldwide
(Bloomberg) -- SoftBank Group Corp. lashed out at Moody’s Corp. after its debt was downgraded by two notches, accusing the ratings company of “bias” and “creating substantial misunderstanding” days after the investment group announced a $41 billion asset sale program intended to shore up confidence.SoftBank’s shares slid as much as 8.4% early in Tokyo trade. The Moody’s downgrade -- lowering SoftBank’s corporate family rating and senior unsecured rating to Ba3 from Ba1 -- pushed the company deeper into junk territory. It comes at a critical time for founder Masayoshi Son, who this week set in motion his biggest play yet to silence critics and shore up his company’s crumbling shares and bonds.“Such a downgrade, which deviates substantially from Moody’s stated rating criteria, will cause substantial misunderstanding among investors who rely on ratings in making investment decisions,” SoftBank said in a statement, which also asked Moody’s to withdraw the rating.While SoftBank had 1.7 trillion yen ($15 billion) of cash and equivalents on hand at the end of December, it also has a huge debt load: The firm faces 1.68 trillion yen of bonds and loans coming due over the next two fiscal years and a total of about 3.6 trillion over the following four-year period.Read more: Masa Son Unveils a $41 Billion Asset Sale to Silence His CriticsThe company, which also operates the $100 billion Vision Fund, is vulnerable to economic shocks given that debt, and its ties to unprofitable startups from WeWork to Oyo Hotels. Many of the Vision Fund’s biggest bets lie in what’s known as the sharing economy, which has been particularly hard-hit by the pandemic that’s causing millions of people to stay indoors. Travel spending has slumped as a result.SoftBank is said to be targeting the sale of $14 billion of stock in the Chinese e-commerce leader Alibaba Group Holding Ltd., as well as slices of its domestic telecom arm and Sprint Corp., which is merging with T-Mobile US Inc. But SoftBank risked unloading some of its most prized assets at a discount given the downturn, Moody’s said in its statement.“Asset sales will be challenging in the current financial market downturn, with valuations falling and a flight to quality,” said Motoki Yanase, a Moody’s senior credit officer in Tokyo.Read more: SoftBank Is Said to Plan $14 Billion Sale of Alibaba Shares“SoftBank’s decision to withdraw its corporate and foreign currency bond ratings by Moody’s probably wouldn’t save the company from higher new borrowing and refinancing costs.”Anthea Lai, analyst, Bloomberg IntelligenceThe scale of the endeavor unveiled by SoftBank on Monday surprised investors. Despite several days of gains, however, the stock remains down about 30% from its 2020 peak, underscoring persistent concerns that tumbling technology valuations will damage Son’s company. S&P Global Ratings said this week the asset sales could ease downward pressure on SoftBank’s credit quality.The rout triggered by the coronavirus has spread to credit markets and sparked a surge in the cost of insuring debt against default -- including that of SoftBank, whose credit-default swaps are near their highest level in about a decade. Apollo Global Management, the alternative asset management house co-founded by Leon Black, has placed a short bet against bonds issued by SoftBank because of its tech exposure, according to the Financial Times.(Updates with share action from the second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- SoftBank Group Corp.’s Masayoshi Son is continuing to bet on himself, even after he considered and then abandoned the idea of taking his conglomerate private.Son discussed the idea with investors including Elliott Management and the Abu Dhabi sovereign-wealth fund Mubadala in the past week, the Financial Times reported, before moving ahead with a plan to sell assets instead.The Japanese billionaire is backing himself in other ways. A regulatory filing Tuesday shows his stake has risen to 26.9% from 25.5% and, with SoftBank’s shares gyrating wildly, he also pledged more stock against his holdings.Son committed an extra 600,000 shares, or about 0.3% of his holdings, to lenders, the filing shows. It means 38.6% of his stake is now pledged to global banks including UBS Group AG and Nomura Holdings Inc., more than triple the level in 2013.He also loaned 30 million shares -- about 5% of his holding -- to Son Equities, according to the disclosure. The holding company is invested in GungHo Online Entertainment, a gaming firm founded by his youngest brother Taizo Son whose shares have dropped 33% this year, according to data compiled by Bloomberg.The size of Son’s pledges -- 216.9 million shares worth $7.4 billion -- are among the most significant tracked by the Bloomberg Billionaires Index. That amount trails only Larry Ellison, Russia’s Suleiman Kerimov and China’s Qin Yinglin on the ranking of the world’s 500 richest people.“It’s most common among controlling shareholders,” said Michael Puleo, assistant professor of finance at Fairfield University’s Dolan School of Business in Connecticut. The practice is rare right now because of the stock market rout and it is much more expensive to satisfy margin calls, he said. “Banks want nothing to do with high-risk loans.”Largest FortunesSoftBank spokeswoman Hiroe Kotera declined to comment on Son’s personal finances.SoftBank’s shares have tumbled since February with investors concerned about some of its investments.The past week Son began thinking of a leveraged buyout after Gordon Singer of Elliott’s London office expressed interest in buying more SoftBank shares last week, one person said, according to the FT. The plan was eventually abandoned for a number of reasons, including difficulty in getting an investor consortium together so quickly for a large deal, Tokyo listing rules and tax considerations.The regulatory filing doesn’t explain the rationale for Son’s 30-million-share transaction but the shifting of stakes is a reminder of the complex web of relationships that have long underpinned one of Japan’s largest fortunes.When GungHo was spun out of SoftBank in 2015 all the shares owned by Taizo Son’s holding company were pledged to his brother’s Son Holdings, according to a statement at the time. Son has also leveraged his stake in the Vision Fund, which invests in tech startups, including WeWork and DoorDash. That boosts his returns if things go well, with outsize losses if they don’t.Leveraged bets are common among the wealthy, but the marketwide plunge triggered by the spread of the coronavirus is pressuring rich families across the globe, who over the years used share-backed debt facilities. Some are now facing margin calls, adding to broader financial turmoil.India’s Gautam Adani and his family put up an additional $1.4 billion of stock as collateral on existing debt earlier this month. In China, shareholders of at least 14 firms were asked to supply additional shares. The Hinduja family, one of the world’s richest clans with interests in finance, energy and real estate, are repaying debt backed by equity they hold in lender IndusInd Bank Ltd. after a stock rout caused a breach in loan terms.Like Son, SoftBank isn’t averse to pledging its holdings. Its stakes in Alibaba Group Holding Ltd. and SoftBank Japan both include pledged shares.The company’s enormous debt load and ties to unprofitable startups from WeWork to Oyo Hotels through its $100 billion Vision Fund are worrying investors. Other assets like chipmaker Arm Holdings aren’t listed and may prove difficult to monetize quickly. Moody’s Japan downgraded SoftBank’s unsecured debt rating on Wednesday, saying the Japanese investment firm’s plan to sell off assets during a market downturn threatened the value of its entire portfolio. SoftBank responded to the downgrade by saying it was “biased and mistaken.”SoftBank shares have tumbled 27% since Feb. 12, even after soaring this week on Son’s plan Monday to unload 4.5 trillion yen ($41 billion) of assets.The disposal includes the sale of about $14 billion of its shares in prize asset Alibaba. That amount will probably increase, Bloomberg Intelligence analyst Anthea Lai said in a note this week.Even for a billionaire who embraces risk as much as Son, the past few weeks have been tumultuous.At the start of the month his fortune stood at $17 billion. In two weeks it was cut in half. So far this week it has climbed by about 50% as markets embraced his plan.Son may be comfortable with such swings. He saw $70 billion wiped from his net worth in the dot-com crash. But falling fortunes aren’t the only potential downside of pledging shares.“It can get painful for more than one reason,” said Fairfield University’s Puleo. “There’s the loss of wealth but it also creates very negative headlines.”(Updates with Moody’s downgrade in 16th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Benchmarks closed in the negative territory on Monday after lawmakers failed to implement the massive fiscal stimulus designed to ease the economic impact of COVID-19.
(Bloomberg) -- SoftBank Group Corp. plans to sell about $14 billion of shares in Chinese e-commerce leader Alibaba Group Holding Ltd. as part of an effort to raise $41 billion to shore up businesses battered by the coronavirus pandemic, according to people with knowledge of the matter.The Japanese conglomerate is considering raising the remainder of the money by selling a stake in SoftBank Corp., its domestic telecommunications arm, as well as part of Sprint Corp. following its merger with T-Mobile US Inc., said one of the people, who requested anonymity discussing private transactions. The Alibaba stake sale could range from $12 billion to as much as $15 billion, the people said.SoftBank’s shares surged as much as 21% in Tokyo Tuesday in their biggest intraday gain since listing, just days after marking a drop of roughly the same magnitude. The reversal comes as founder Masayoshi Son is finally doing what investors have been urging for years -- using his stake in Alibaba for shareholder returns and to pay down debt.Son has set in motion his biggest play yet to silence critics, unveiling the unprecedented plan Monday to unload 4.5 trillion yen ($41 billion) of stock and alleviate investor concerns that at one point shaved more than 40% off SoftBank’s value from a February peak. The company, which also operates the $100 billion Vision Fund, is vulnerable to economic shocks given its enormous debt load and ties to unprofitable startups from WeWork to Oyo Hotels. Many of the Vision Fund’s biggest bets lie in what’s known as the sharing economy, which has been particularly hard-hit by a virus that’s causing millions of people to stay indoors and slash travel spending.“The market sent a strong message and SoftBank has heeded it,” Kirk Boodry, an analyst at Redex Holdings who writes for Smartkarma, said after Monday’s announcement. “What’s changed is that this will entail a meaningful sale of Alibaba stake with much of the proceeds going to shareholders,” he added. “SoftBank has never done that before.”Read more: Masa Son Unveils a $41 Billion Asset Sale to Silence His CriticsWhile SoftBank didn’t specify which assets would be sold, its Alibaba stake is worth more than $120 billion and makes up the largest chunk of unrealized value. It’s unclear what timeframe SoftBank’s looking at -- its stock in Sprint and Hong Kong shares of Alibaba may be subject to lockup periods: one year from listing in Alibaba’s case and up to several years for Sprint, though certain conditions may allow earlier transfers and the company could employ special vehicles to get a deal done. Alibaba’s stock was up as much as 2.7%, reversing early losses on Tuesday in Hong Kong.An Alibaba spokesperson didn’t respond to an emailed request for comment. SoftBank spokespeople in Tokyo and the U.S. declined to comment.SoftBank’s Fire Sale May Erode Stake in Alibaba: Tim CulpanThe Japanese company’s envisioned asset sale would almost match its entire market value last week. Part of the proceeds would go toward a new share buyback program of as much as 2 trillion yen that comes on top of previously announced repurchases.The scale of the endeavor surprised investors and sent SoftBank soaring. Yet even after Monday’s and Tuesday’s combined gain, the stock remains down about 33% from its 2020 peak, underscoring persistent concerns that tumbling technology sector valuations will damage Son’s debt-laden company.The coronavirus-triggered rout has spread to credit markets and sparked a surge in the cost of insuring debt against default -- including that of SoftBank, whose credit-default swaps touched their highest level in about a decade. Apollo Global Management, the alternative asset management house co-founded by Leon Black, has placed a short bet against bonds issued by SoftBank because of its tech exposure, according to the Financial Times.Alibaba, Sprint and SoftBank Corp. are worth as much as $190 billion combined, estimates Atul Goyal, senior analyst at Jefferies Group. But Son will want to keep at least a 50% stake in the domestic telecom unit because it’s the only cash-generating asset and its dividends help pay for SoftBank’s interest on debt, he wrote. And since Sprint is going through a merger with T-Mobile, most of the funds will initially have to come from Alibaba, he said.“This buyback is music to our ears,” Goyal said. “But the timing of this announcement is not ideal. We would have ideally preferred such an announcement from a position of strength and not because the SBG stock came under tremendous pressure.”(Updates with Alibaba’s shares from the third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- To get permission to leave China’s coronavirus epicenter and return to his job in Hong Kong, a Chinese banker needed two things: a letter from his company and a green health code from Alipay.The man, who gave his name only as Clarence because of privacy concerns, secured the necessary permission last week and boarded a high-speed train to the border city of Shenzhen. “It was like the drama Prison Break. There are so many levels to go through and so many barriers to overcome,” he said of the challenges of leaving Hubei province.Alipay by Ant Financial, the finance affiliate controlled by Alibaba Group Holding Ltd. co-founder Jack Ma, and Tencent Holdings Ltd.’s WeChat are credited with helping curb Covid-19 since it erupted in Wuhan in January. Because they’re the primary payments channels for everything from ride-hailing to e-commerce, they already tracked the consumer activity of hundreds of millions of users.During the outbreak, both companies released QR code systems that can be read by smartphones and determine which individuals pose health risks and need to be quarantined or could be allowed to use public spaces and transportation. Now this technology, launched by Beijing and adapted for use on Tencent’s and Ant’s platforms, is proving instrumental in policing the country as it tries to get back on its feet.Alipay, the payment method of choice on Alibaba’s e-commerce platforms from Taobao to Tmall, was among the first to introduce the technology. Ant’s QR-based health code system assigns each user one of three colors -- green, yellow or red -- based on their location, basic health information and travel history. Green allows freedom of movement, while yellow and red indicate that one needs to self-quarantine or enter a supervised quarantine facility, respectively.The colored QR code, which is already deployed in over 200 cities, is obtained by entering information that includes name, national identity number, current location, recent travel history and ticking a box asking if the person has been in contact with an outpatient or anyone hospitalized in the last 14 days. Once everything is complete, a code is automatically generated. Each code is refreshed at midnight.Cafes, restaurants and shopping malls throughout China also request to see the green QR code before granting permission to enter. Since these health codes were first rolled out by Alipay on Feb. 11 in Hangzhou, adoption by merchants and businesses has been swift across the country with plans for wider deployment, according to Ant Financial.Rival Tencent worked with a unit of China’s top economic planning body to design a similar program accessible through WeChat mini programs.A lack of transparency on how colors are generated has led to confusion and frustration with some people taking to social media to complain. Others note technical glitches that have turned into effective travel bans. “These big data platforms have made me really mad,” wrote Weibo user Miuyekanshijie on March 23. “My health code error remains unresolved ... it’s seriously affecting my ability to travel.”(Updates with details on origins of the apps in the fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
TOKYO/HONG KONG (Reuters) - SoftBank Group Corp stock jumped 20% on Tuesday, extending a run that began a day earlier when the Japanese tech investor announced up to $41 billion in asset sales and a record share buyback to shore up its collapsing share price. SoftBank shares ended Monday up 19%, hitting their daily limit, after the conglomerate said in the early afternoon it would buy back up to 2 trillion yen ($18 billion) worth of shares in addition to an up to 500 billion yen purchase announced earlier this month. Chief Executive Masayoshi Son's foray into investing in late-stage startups via SoftBank's $100 billion Vision Fund has hammered the firm's shares as major bets soured, forcing a sell-down of core parts of its portfolio and buybacks - moves long sought by investors pushing for enhanced shareholder returns.
(Bloomberg) -- It’s a good time to look at buying Alibaba Group Holding Ltd. shares as Softbank Group Corp. reportedly prepares to sell some of its holdings, according to veteran emerging-market investor Mark Mobius.The Chinese e-commerce giant, which has American depositary receipts listed on the New York Stock Exchange, is a prime example of a firm expanding its global presence, Mobius said.“It’s probably a good idea to look at Alibaba at this stage,” Mobius, who set up Mobius Capital Partners last year after three decades at Franklin Templeton Investments, told Bloomberg TV from Cape Town. With Softbank said to be selling about $14 billion in shares, “the price may get weaker and it would be a good example of a company that is truly becoming very global,” he added.Mobius also anticipates strength in gold. Its recent sell-off alongside risk assets such as stocks and oil is a sign of pure panic, with investors selling everything as the coronavirus pandemic spread, he said.“I think it’s a mistake. People should have gold and this may be a good time to increase holdings in gold -- in fact I’m thinking that myself,” he said.More broadly, Mobius said he was readjusting his portfolios with selective investments.“It’s a good time to be picking up some of the bargains and getting rid of some of those things that you are not too excited about,” Mobius said. “But the idea is not to reduce cash too dramatically.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
At Lazada, the Southeast Asian arm of Alibaba Group Holding , staff are furious over demands they submit health reports daily and other coronavirus-prevention steps seen as too invasive, highlighting a long-running culture clash with management from China. Since February, Singapore-based Lazada has asked all employees to answer detailed questions seven days a week about their health and where they have been lately, according to five people with direct knowledge of the matter. While the e-commerce firm describes the health reports as not mandatory, employees receive frequent calls from human resources, even on weekends, to make sure reports are submitted, the people said.
(Bloomberg Opinion) -- Few companies symbolized the zenith of globalization more than Li & Fung Ltd. Few events are more emblematic of its perceived retreat than the company’s decision to go private.Once feted as the ultimate middleman between the consumer markets of the West and the supply chains of Asia, the Hong Kong-based company enjoyed its heyday during the years after China joined the World Trade Organization in 2001, when the country’s exports boomed. Those glory days are long gone. On Friday, the founding Fung family and GLP Pte of Singapore offered HK$1.25 per share in cash to take the company private.In immediate terms, the HK$7.22 billion ($930 million) offer is attractive, representing a 150% premium to the stock’s closing price before the bid was made public. Long-term shareholders who kept faith in the company’s plans to restructure, digitize its operations and diversify sourcing away from China are unlikely to be impressed. Li & Fung shares had fallen 98% from their 2011 high as of Friday’s close. The offer premium pares that loss to 94%.As the world’s biggest supplier of consumer goods, Li & Fung designs, sources and transports products from Asia to retailers such as Walmart Inc. and Nike Inc. There are many factors behind its long decline, from rising factory wages in China to the “retail apocalypse” hollowing out American main streets. The U.S.-China trade war dealt another grievous blow to a business model that depended on linking factories in Asia with American retailers. The coronavirus, which shut down swathes of China’s economy and threatens to drive the world into recession, may have been the final straw.The biggest driver of Li & Fung’s downfall, though, may be the rise of e-commerce and, specifically, of Alibaba Group Holding Ltd. Jack Ma’s internet behemoth connected Chinese producers with overseas buyers directly, finally obviating the need for a comprador-type service to negotiate the pitfalls on behalf of foreign companies. At the same time, the tightening grip of e-commerce retailers in the U.S., principally Amazon.com Inc., has undermined the bricks-and-mortars retailers such as Macy’s Inc. and Kohl’s Corp. on which Li & Fung relied.Chief Executive Officer Spencer Fung, whose great-grandfather founded the company more than a century ago, and GLP, a logistics firm that was taken private in 2018 in a private equity-backed management buyout, will now seek a revival away from the glare of the public markets. It’s not the first time Li & Fung has gone private, having withdrawn in the 1980s before listing again in 1992, as Vinicy Chan and Daniela Wei of Bloomberg News wrote Monday.Repeating the trick will be more difficult this time. Unlike the privatization of another storied Hong Kong business, the real estate company Wheelock & Co., this isn’t a purchase of undervalued tangible assets that can (arguably) be expected to revive with a turn in the market cycle. Li & Fung has long prided itself on its “asset light” model. As a result, the company has typically traded at high multiples of its book value — averaging 7.3 times in the decade through 2010. Even in its present depressed state, Li & Fung is being taken private at a premium to book.Li & Fung’s value lies in intangibles such as its network of relationships with factories and buyers. What are these worth now, after the whole model has been upended? The company has pushed into the higher-margin logistics business. This, though, made up only 10% of revenue last year, insignificant beside the 77% that sourcing contributed. The fundamental trouble for Li & Fung is that the world appears to have changed irrevocably. If the company does return to public markets one day, it’s likely to be in a radically different form. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Masayoshi Son is making his biggest play yet to silence doubters. On Monday, the Japanese billionaire unveiled an unprecedented $41 billion plan to sell off assets and shore up SoftBank Group Corp.’s crumbling market value in the face of the coronavirus pandemic.SoftBank aims to sell assets to raise as much as 4.5 trillion yen ($41 billion) over the coming year to buy back stock and slash debt -- an amount equivalent to almost its entire market value last week. The scale of the endeavor surprised investors, sending the Japanese firm’s stock up 19%. Yet that’s a fraction of the capitalization the investment house has lost since its 2020 peak, underscoring persistent concerns that tumbling technology sector valuations will damage Son’s debt-laden company.The Japanese conglomerate, which also operates the $100 billion Vision Fund, is considered especially vulnerable to economic shocks given its enormous debt load and ties to unprofitable startups across the world. After Monday’s rally, it’s still down more than 40% from this year’s peak in February.The coronavirus-triggered rout has also spread to credit markets and sparked a surge in the cost of insuring debt against default -- including that of SoftBank, whose credit-default swaps touched their highest level in about a decade.Monday’s announcement appeared intended to underscore a point Son himself has made repeatedly: that SoftBank is worth far more than its current stock price thanks to holdings in industry leaders from e-commerce giant Alibaba Group Holding Ltd. to British chip designer Arm Holdings Plc and Japanese carrier arm SoftBank Corp. Its slice of Alibaba alone is worth more than $120 billion.“Son is finally doing what his investors have been asking for years and unfortunately it took an unprecedented sequence of events for him to do so,” said Justin Tang, head of Asian research at United First Partners in Singapore. “His Vision Fund ambition will have to take a backseat for now, but he will be back.”It’s unclear what SoftBank intends to sell, however. Alibaba represents its single biggest chunk of unrealized value, but Arm -- which SoftBank bought for $32 billion in 2016 -- is a worldwide leader in the chip architecture that underpins modern smartphones. SoftBank Corp., on the other hand, is a steady if unspectacular leader that generates cash to help fund Son’s global ambitions, and the group likes to use its stock as collateral for loans.“Arm is a golden egg for SoftBank, and the business will attract U.S. firms like Intel once it starts a bidding process,” said Koji Hirai, the head of M&A at advisory firm Kachitas Corp. in Tokyo.Part of the sale proceeds would go toward a new share buyback program of as much as 2 trillion yen that comes on top of previously announced repurchases. Alibaba’s stock was down more than 5% in the afternoon in Hong Kong. The Japanese firm’s domestic telecom arm, ended 3.4% lower. SoftBank spokeswoman Hiroe Kotera declined to comment on whether it would sell shares in the Chinese e-commerce giant.“There is institutional memory at SoftBank of these kinds of shocks, first dating back to the dot-com bubble,” said Kirk Boodry, an analyst at Redex Holdings who writes for Smartkarma. “There is no doubt that there will be much more bad news coming from the Vision Fund, bankruptcies and falling valuations. This is one way SoftBank can get ahead of that.”What Bloomberg Intelligence SaysSoftBank may sell some of its 26% Alibaba stake, which we believe accounts for about half its net asset value, to fulfill a $41 billion divestment pledge. The pending deconsolidation of its U.S. telecom subsidiary Sprint won’t generate any cash proceeds for SoftBank, as the transaction is an all-stock merger with T-Mobile.\- Anthea Lai, analystClick here for the researchRead more: Son’s Empire Wobbles as Credit Rout Hits SoftBank Debt LoadSon is trying to salvage his reputation as one of the world’s foremost tech investors, a name based largely on a prescient early bet on Alibaba, which grew to dominate e-commerce in the world’s No. 2 economy. But he’s struggled since to match that success, after sinking money into a string of struggling startups from Uber Technologies Inc. to WeWork and Oyo Hotels.Even before the global outbreak, WeWork’s spectacular implosion served as a catalyst for Son to temper SoftBank’s and the Vision Fund’s aggressive global bets. He urged founders to rein in excesses and focus on the bottom line, wary of a repeat of WeWork’s uninhibited expansion.Son has reason to worry. SoftBank’s exposure to cash-burning startups partly prompted S&P Global Ratings to cut its outlook on SoftBank to negative, citing also the broader market declines and the conglomerate’s initial plans for a buyback. The stock repurchase program announced Monday comes on top of a 500 billion yen plan announced just over a week ago, after activist shareholder Elliott Management Corp. called on the Japanese investment firm to boost returns.SoftBank’s Son to Pitch U.S. Investors Under Cloud of WeWork (1)SoftBank has said its financial policy is to have enough liquidity on hand to cover two years of bond repayments and focus on its loan-to-value ratio, a metric for balancing net interest-bearing debt against the value of investments. SoftBank has also said it’s curbing new investments to match the current environment and acknowledged that fundraising costs are likely to rise.It keeps a running tally of what it calculates is the value of its shares, excluding its debt. Despite Monday’s rally, that figure remains more than three times its closing price of 3,187 yen.While SoftBank’s newly unveiled asset sale and buyback plan would go some way toward assuaging concerns about its situation, the big question remains the spread of Covid-19 and its ultimate impact on both investment activity and the broader economy.“SoftBank is now trying to sell its assets as the values for those are cheap,” said Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Japan. “Investment companies are supposed to purchase assets when they are cheap and sell them when they are expensive. It looks like SoftBank is doing the opposite, when they have to invest more money.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Just six weeks ago, Chairman Masayoshi Son was crowing about the value of SoftBank Group Corp. and brushing off the notion that he should sell his prized stake in Alibaba Group Holding Ltd. after a terrible quarter and massive asset writedowns.Things change. In a surprise announcement Monday, the Japanese conglomerate said it plans to peddle or monetize up to 4.5 trillion yen ($41 billion) of assets over the next year. It plans to use that cash to execute 2 trillion yen of buybacks as well as redeem debt and repurchase bonds.Make no mistake, this is a fire sale. Son’s most likely source of cash over the next few years was supposed to be his $100 billion Vision Fund, but with the Covid-19-spurred global stock meltdown adding to his ill-advised investment in The We Co. (better known as WeWork), that spigot won’t be flowing any time soon. Meanwhile, activist shareholder Elliott Management Co. is pushing the SoftBank boss to buy back shares, and there are at least 1 trillion yen in bond redemptions between now and the end of next year.So instead of just one challenge or two, SoftBank is facing a barrage and equity investors know it. That’s sent the company’s shares down 45% from a recent peak. Making that trauma worse: Shares of Alibaba are off 21%. SoftBank’s 25.2% stake in the Chinese e-commerce giant is now worth at least $33 billion less than in mid-January, highlighting the cold reality that an upward trajectory for Son’s most beloved investment isn’t assured. Not only is Alibaba SoftBank’s largest asset — 54% of holdings at the end of December — it’s a chief source of both net income and cash flow. The stake in Alibaba has to be at the top SoftBank’s “for sale” list. Son has had trouble making successful deals lately, so it undermines his reputation to see the crown jewel also lose its shine. Yet it’s partly because of the details of Alibaba’s contributions that SoftBank is vulnerable and those shares need to be sold.Almost half of SoftBank’s pre-tax net income for the nine months to Dec. 31 were pure paper profits tied to Alibaba. A quarter came from a revaluation of its stake when Alibaba listed in Hong Kong last November. Another portion came when Alibaba took equity in its fintech unit, Ant Small and Micro Financial Services Group Co. If not for these one-time gains, SoftBank’s pre-tax profit would have dropped 34%.While Son proudly notes that Alibaba enjoys an A+ credit rating and churned out 900 billion yen ($8.2 billion) in free cash flow in the second half of last year, none of that money went to SoftBank, the single-biggest shareholder. Alibaba doesn’t pay dividends. To monetize its stake in China’s most valuable company, SoftBank has been forced to take out margin loans with Alibaba shares as collateral. In the last three quarters of 2019, it boosted borrowing against Alibaba shares by $4.4 billion, or an additional 83%. That takes the total to over 1 trillion yen. Another 179 billion yen came from settling a derivative contract tied to that stake. SoftBank has managed to rustle up more cash by selling stakes in some companies to the Vision Fund, which it manages. But by and large, the chief source of cash flow has been to continually tap debt markets with its own assets as collateral.With more than $100 billion of Alibaba shares on hand, it’s possible that SoftBank will try once again to tap this vein. But it’s also likely that wary creditors will already be gun shy about taking on more equity as collateral as global markets post some of their worst declines of the last few decades.An interesting twist is that SoftBank’s loans against Alibaba shares are non-recourse. If SoftBank can’t pay back the debt or the value of the pledged shares falls (by an amount not publicly specified), then creditors have an early settlement clause that could see them take ownership. If push comes to shove, the message from creditors will be: If you don’t sell Alibaba shares, then we will.But there’s a complication. According to its Hong Kong listing prospectus, Alibaba has the right to defer any attempts by SoftBank to sell its stake by up to 90 days “if our board of directors determines in good faith that such registration and offering would be seriously detrimental to us and our shareholders.” With the global economy plunging toward recession, it’s not a stretch to think that unloading a chunk of shares would be seen as bad for Alibaba.That makes for a high-priced game of hot potato. Creditors won’t be keen to take on more SoftBank debt, and Alibaba’s board surely won’t want to approve the sale of more shares, especially with them now trading below their Hong Kong listing price.If Son is to pull off this cash-raising plan, he’s going to need to swallow his pride and accept letting go of at least some of his Alibaba stake. Certainly he, and his investors, would have preferred doing so when shares were trading 20% higher. But better to start now than get caught another 20% lower.SoftBank has made a lot of money from Son’s early belief in a young Chinese entrepreneur named Jack Ma. Now’s not the time to squander that success by chasing more. This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
As people in China retreated indoors in late January to avoid the coronavirus, Alibaba's supermarket chain Freshippo faced a dilemma: online orders for fruit were soaring but supplies were low. To ease the crunch, Freshippo asked staff to rip up bulk fruit boxes, originally prepared as Lunar New Year gift sets, break them up and sell them individually to serve more locked-down customers. Freshippo, which has about 200 stores across the country and is known as Hema in Chinese, also launched a group-buying scheme for locked-down Wuhan - the epicenter of the outbreak.
(Bloomberg) -- Mark Zuckerberg said Facebook Inc. has donated its emergency reserve of 720,000 face masks, joining other tech corporations declaring aid in fighting the coronavirus pandemic. At the same time, Tesla Inc. chief Elon Musk said a shipment of face masks was stuck in transit.Facebook built up a stockpile of masks in case wildfires in its home state of California persisted. It’s now donated that supply, the Facebook chief executive officer said on his feed without specifying recipients. Facebook’s Journalism Project is also distributing $1 million in grants to support news reporting around the virus outbreak.Musk has already delivered some personal protective equipment to Seattle, one of the U.S. regions most affected. He didn’t say what was holding up his latest batch of masks, but Los Angeles International Airport is one of several in the U.S. struggling with logistical issues.Tech leaders and companies have in recent weeks publicized assistance in battling Covid-19. Alibaba Group Holding Ltd. co-founder Jack Ma announced his philanthropic foundations are sending emergency supplies of face masks, test kits, ventilators and protective equipment around the world. Microsoft Corp. has also donated supplies to its local state of Washington to be used in pushing back against the outbreak in the Seattle area.Read more: Jack Ma Sending Masks and Other Aid to Asia, Latin America(Updates with Elon Musk shipment details)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Jack Ma, Asia’s richest man, pledged 1.8 million face masks and 210,000 coronavirus test kits to some of the continent’s poorest nations, the latest step from his foundation to push back against what’s become a global pandemic.Ma also promised to ship 2 million masks, 400,000 test kits and other aid to 24 Latin American countries. “We will hurry,” he said in a tweet.The Alibaba Group Holding Ltd. co-founder took to Twitter for the first time on Monday to announce that the Jack Ma Foundation and Alibaba Foundation were sending a donation of emergency supplies to the U.S. Having previously aided virus-fighting efforts in Japan, Iran and Italy, his philanthropic groups also sent thousands of testing kits and masks to countries in Africa.On Saturday, Ma said that Afghanistan, Bangladesh, Cambodia, Laos, the Maldives, Mongolia, Myanmar, Nepal, Pakistan and Sri Lanka would all receive protective suits, ventilators and thermometers. On Sunday, he said 104 ventilators will be sent to Latin America, helping efforts in countries like Brazil, Cuba, Ecuador and Peru.Global shortages of essential medical and protective equipment have affected even the most developed economies, with New York Governor Andrew Cuomo saying more “ventilators, ventilators, ventilators” were needed to help his state handle the anticipated number of infected people needing treatment.(An earlier version of this story corrected the number of test kits sent to Asia.)(Updates with Latin America shipments in second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.