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(Bloomberg) -- Scott Bluestein has a favorite type of debt investment: companies with no profits, no cash flow, and in some cases even no revenue.While that may seem like a recipe for disaster for most fixed-income money managers, it’s perfectly normal in the world of venture debt. And few companies in the space have been more successful in recent years than Bluestein’s Hercules Capital Inc., the largest nonbank lender in the business.The market for venture debt operates largely in the shadow of venture equity, the segment of startup financing famous for providing early funding for technology giants such as Facebook Inc. and Alibaba Group Holding Ltd. Winning wagers tend to not produce the sort of eye-popping payouts the equity side has become renowned for, but they’re also less risky, relatively speaking. Flying under the radar also has its benefits, according to Bluestein.While investors have plowed hundreds of billions of dollars into direct-lending funds over the past few years amid a global hunt for yield, the $15 billion venture debt market has yet to see the same influx of cash. As a result it’s largely avoided the intense competition, record dry powder and pricing pressures seen in other corners of private credit. In fact, the Hercules chief executive expects core loan yields to keep pace with the long-term average of about 12% going forward.“Venture debt has historically mystified the direct-lending market,” Bluestein said in an interview. “We have the opportunity to partner with and help finance some of the most exciting growth-stage technology and life-sciences companies in the world.”Hercules’s current borrowers include rare-disease drug developer BridgeBio Pharma Inc. and fake-meat producer Impossible Foods Inc.Lending to such companies requires a unique blend of credit, equity and industry expertise, according to Bluestein. The ability to assess why the companies are burning cash is critical.“Venture lending is a pretty esoteric, specialized part of the market,” Bluestein said. “It requires significant domain expertise. It requires an achievement of scale from a performance perspective.”Hercules originally provided BridgeBio a $35 million secured term loan in June 2018. The financing had grown to $75 million by the time BridgeBio went public a year later. Since then, its market capitalization has ballooned to $4.3 billion.As for Impossible Foods, Hercules closed a $50 million commitment in the second quarter of 2018. A year later, the meat-substitute company reached a $2 billion valuation. In both deals, Hercules made equity investments alongside the loans. In others, it often receives equity kickers in the form of stock warrants.Of course, the lender’s record isn’t spotless. Portfolio company Sungevity Inc. filed for bankruptcy in 2017, and the debt was subsequently converted into equity of the company that bought some of its assets. BIND Therapeutics Inc. went bust in 2016, though Hercules says it was able to fully recover its outstanding commitment.Last year, the company’s main challenge was unrelated to its investments. Founder and then-CEO Manuel Henriquez was forced to step aside after being charged by federal prosecutors in March for participating in the college-admissions cheating conspiracy.Wall Street was quick to cut its expectations for publicly-traded Hercules’s shares, worried that access to capital and origination growth may be hurt. The stock has since recovered, and the company said earlier this week it had surpassed more than $10 billion in committed debt capital since its inception in 2003. Assets under management stood at $2.3 billion as of Sept. 30.Niche PlayOthers are also growing in the space. Avenue Capital has sought to raise about $500 million for a venture debt fund, Reuters reported in November. Specialty lenders in the business also include TriplePoint and Horizon Technology Finance, while Silicon Valley Bank is seen as an industry pioneer.Still, the strategy isn’t for everyone. Direct-lending giant Ares Capital Corp. exited the space in 2017, offloading its $125 million portfolio of venture loans to Hercules. CEO Kipp deVeer at the time attributed the exit to the overwhelming challenge of overseeing so many small and complicated financings.Along with being relatively small, maturities on the loans tends to be short. That makes for a fast-churn, research-intensive business. The average tenor of a Hercules loans is 36 to 48 months, but the actual average duration is just a year-and-a-half, according to Bluestein.“Our portfolio turns about every 18 months,” Bluestein said. “The treadmill is set at 10, and you can’t stop.”While recent high-profile venture-capital stumbles such as WeWork may make investors wary of startup financing broadly, Bluestein welcomes the greater scrutiny and caution, acknowledging there have been a number of so-called unicorns where valuations reached extreme levels.“It’s a positive. It puts more focus on fundamentals,” Bluestein said. “Anything that makes the market more realistic is good for business.”(Updates with Hercules assets under management in 13th paragraph.)\--With assistance from Lisa Abramowicz.To contact the reporter on this story: Lisa Lee in New York at email@example.comTo contact the editors responsible for this story: Natalie Harrison at firstname.lastname@example.org, Adam Cataldo, Boris KorbyFor 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.
HONG KONG/BEIJING (Reuters) - Ant Financial [ANTFIN.UL] shares are being offered privately at levels which value the Chinese financial giant at $200 billion (£153.4 billion), two people with knowledge of the discussions said, lifting it up the ranks of the most valuable unlisted companies. Alibaba affiliate Ant, which had an implied valuation of $150 billion during a 2018 fundraising, is preparing to step up plans for eventually going public in Hong Kong and mainland China, three other sources told Reuters. Speculation has grown that Ant, the world's largest so-called "unicorn" -- a newly-formed unlisted tech firm valued at $1 billion or more -- is working towards an IPO this year.
Indian e-commerce space gets pepped up with the growing initiatives of overseas companies like Amazon (AMZN), Walmart (WMT) among others.
Vipshop Holdings (VIPS) stock has soared 140% in the last year to crush Alibaba as the online discount retailer expands its customer base...
Today, Alibaba.com, the B2B business unit of Alibaba Group (NYSE: BABA), shared the results of its brand new "Alibaba.com U.S. Small and Medium Business (SMB) Confidence Survey" and introduced "B2B Tuesday," a major new awareness initiative to spotlight, celebrate and support B2B-focused U.S. SMBs, highlight their contributions to the U.S. economy and help them capture the global ecommerce opportunity.
(Bloomberg) -- Follow Bloomberg on Telegram for all the investment news and analysis you need.UBS Group AG won an early release from a ban on sponsoring initial public offerings in Hong Kong, setting it up to once again broker deals in the world’s busiest market.The lifting of the ban comes after UBS “engaged and cooperated” with an independent 10-month review over its policies, procedures and practices, the Securities and Futures Commission said in a statement late Tuesday. UBS was in March last year fined HK$375 million ($48 million) and had its license suspended for a year. The early release is a rare move for the regulator and will allow the Swiss bank to get back into the game as the Asian financial hub seeks to lure more international IPOs via primary and secondary listings. Hong Kong was the top spot globally for IPOs last year, boosted by Alibaba Group Holding Ltd.’s $13 billion secondary listing late last year.Three other banks were also penalized in March, including Standard Chartered Plc, Morgan Stanley and Merrill Lynch, who all escaped a ban. The combined fine for the four banks reached $100 million.Hong Kong’s regulator assessed the fine over the mismanagement of three IPOs in the city that handed investors big losses and dented the credibility of the financial center. The IPOs in question were by China Forestry Holdings Co., Tianhe Chemicals Group Ltd. and China Metal Recycling Holdings Ltd., people familiar said last year.A UBS spokeswoman declined to comment. (Adds details from third paragraph.)To contact the reporter on this story: Kiuyan Wong in Hong Kong at email@example.comTo contact the editors responsible for this story: Candice Zachariahs at firstname.lastname@example.org, Jonas BergmanFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
(Bloomberg) -- With tech earnings looming this month, investor attention is zeroing in on some of Asia’s largest chipmakers. And there’s reason for it: the sector’s influence on the region’s stocks has kept on growing.Taiwan Semiconductor Manufacturing Co. is set to report fourth-quarter results Thursday, potentially hitting record revenue of more than $10.2 billion and its highest quarterly gross margins since 2018, Bloomberg Intelligence analyst Charles Shum said in a Jan. 7 preview. TSMC shares are up more than 4% this month and touched an intraday high Tuesday.“Many of TSMC’s customers such as Huawei, Qualcomm and Mediatek are quickening their pace of adopting cutting-edge processes to prepare for the launch of 5G mobile devices,” Shum said in the report.Rival Samsung Electronics Co. releases its final results Jan. 30. Preliminary figures announced earlier this month showed quarterly earnings beat estimates as global chip prices have shown signs of escaping a protracted slump.The two chipmaking behemoths are the No. 3 and 4 largest stocks in the MSCI Asia Pacific Index and also key contributors to the growing influence of technology names in the gauge. The industry now accounts for almost 15% of the regional gauge, up from 12% at the start of 2019. Internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd. have the highest weightings in the index.Managers of emerging-market stocks have increased their exposure to semiconductor shares to a record 7.3%, making of it the largest overweight by sector, according to Steven Holden, an analyst at Smartkarma Holdings Pte. Taiwan and South Korean equity overweights also hit a peak, with TSMC among the most favorite companies, it said.Despite all the positives, one potential question mark for TSMC remains Huawei Technologies Co. Tighter export restrictions on the Chinese company by the U.S. would make some of TSMC’s technologies unshippable to Huawei, analysts led by Mark Li at Sanford C. Bernstein wrote in a Jan. 8 note. While the actual impact on revenue is expected to be in the low single digits and TSMC will be able to pivot to other customers, a short-term impact is “inevitable as share shifts and supply-chain realignment take time.”But overall, the outlook for the semiconductor industry is positive on growth drivers including new 5G technology adoption, internet of things momentum, robust data center demand and even new game console launches, Credit Suisse analysts Randy Abrams and Haas Liu said in a Jan. 13 report.“Stocks are recovering from the prior decade’s de-rating and returning to pre-crisis valuations that can sustain,” the analysts said. The main risk? With higher valuations after a strong 2019 rally, any disappointment from product cycle ramps or macro shocks could lead to potential short-term pullbacks, they added.Stock-Market SummaryMSCI Asia Pacific Index up 0.2%Japan's Topix index up 0.3%; Nikkei 225 up 0.7%Hong Kong's Hang Seng Index down 0.3%; Hang Seng China Enterprises down 0.4%; Shanghai Composite down 0.1%; CSI 300 down 0.2%Taiwan's Taiex index up 0.5%South Korea's Kospi index up 0.3%; Kospi 200 up 0.4%Australia's S&P/ASX 200 up 0.8%; New Zealand’s S&P/NZX 50 up 0.7%India's S&P BSE Sensex Index little changed; NSE Nifty 50 little changedSingapore's Straits Times Index up 0.5%; Malaysia’s KLCI down 0.7%; Philippine Stock Exchange Index down 0.5%; Jakarta Composite up 0.2%; Thailand's SET little changed; Vietnam's VN Index up 0.2%S&P 500 e-mini futures little changed after index closed up 0.7% in last session(Adds Smartkarma comments in sixth paragraph, stock-summary section)\--With assistance from Cormac Mullen, Abhishek Vishnoi and Moxy Ying.To contact the reporter on this story: Eric Lam in Hong Kong at email@example.comTo contact the editors responsible for this story: Christopher Anstey at firstname.lastname@example.org, Lianting Tu, Cecile VannucciFor 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.
Hello and welcome back to TechCrunch’s China Roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world. The event is meant to give clues to WeChat's future and the rare occasion where its secretive founder Allen Zhang emerges in public view. The boss's absence was not outright unexpected, an industry analyst told me, as WeChat shifts to focus more on monetization.
(Bloomberg) -- China’s social media and e-commerce startup Xiaohongshu, or “Little Red Book,” is in early talks to raise funds at a valuation of about $6 billion, according to people familiar with the matter.The online platform, backed by Tencent Holdings Ltd. and Alibaba Group Holding Ltd., aims to raise about $400 million to $500 million, said the people. The company is working with an adviser on the financing plan and has sounded out potential investors, said the people, who asked not to be identified as the discussions are private. Its valuation reached about $5 billion last year, one person said.There hasn’t been a final decision on the fundraising size as deliberations are still at an early stage, the people said. A representative for Xiaohongshu didn’t respond to requests for comment.Xiaohongshu resumed seeking new funds following an earlier attempt that was suspended after its offering was taken down from app stores last year. The app has since returned and is available for downloads, with more than 300 million users as of July, according to its website.Xiaohongshu -- which calls itself RED and stresses its name bears no relation to the seminal book of Mao Zedong’s quotations -- was founded in 2013 as an online community that recommends overseas e-commerce sites for users in China. It later entered e-commerce and then evolved into a social media platform where users share their daily life moments through videos and pictures on topics including skincare, food and travel.The startup closed a $300 million series D financing at a valuation more than $3 billion in 2018. The round was led by Alibaba and other investors including GSR Ventures and Tencent Investment.\--With assistance from Lulu Yilun Chen.To contact Bloomberg News staff for this story: Dong Cao in Beijing at email@example.comTo contact the editors responsible for this story: Fion Li at firstname.lastname@example.org, Vlad SavovFor 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.
India's Zomato is raising $150 million from investor Ant Financial, an Alibaba affiliate, at a valuation of $3 billion for the food delivery startup. Zomato's top shareholder Info Edge (India) Ltd said in a filing on Friday that after the funding its stake will drop to about 25.13%. The fund infusion comes as Zomato pushes for a bigger market share in the highly competitive Indian food delivery space in a race with rivals such as Tencent-backed Swiggy and Uber's UberEats.
(Bloomberg) -- Greenpeace, calling attention to the Chinese technology sector’s ballooning energy consumption, has ranked the country’s best and worst environmental citizens for the first time. The winner by a long margin turns out to be ChinData Group, a little-known unicorn-in-waiting backed by Bain Capital that outdoes far bigger names Alibaba and Tencent.Ranking 15 of China’s biggest internet companies for the first time, Greenpeace found the majority lacking in areas such as transparency -- by way of public disclosure of their energy consumption -- and the speed at which they’re moving to renewable energy sources. The research was conducted in partnership with the North China Electric Power University and urges faster adoption of solar and wind power along with commitments to 100% renewable energy consumption.Greenpeace did note progress among many of China’s internet giants, but said they lag global peers. Apple Inc., for one, has pledged to ditch fossil fuels and reduce their usage throughout the supply chain. Tencent Holdings Ltd. was among the best in disclosures of energy usage, though the company hadn’t made much of an advance in switching to renewable sources, the activist group said. Alibaba Group Holding Ltd. scored highest after ChinData but only managed a mark of 60 out of 100, illustrating the enormity of the task ahead. 21Vianet Group Inc., Microsoft Corp.’s cloud provision partner in China, scored a paltry 21.“Power consumption from China’s internet industry is skyrocketing,” said Greenpeace East Asia climate and energy campaigner Ye Ruiqi. “And it’s imperative that Chinese internet giants lead the sector to break away from its reliance on coal.”Around two thirds of China’s power is produced from coal-burning plants, but Beijing wants to drastically reduce that through expanded use of renewable energy. “In the near term, China will still need to rely on coal power to serve for balancing and ensuring grid safety, and Chinese enterprises will continue to find it cheaper to sign power purchase contracts with coal power plants,” said Hanyang Wei, China power market analyst at BloombergNEF. Ranking reports are meaningful because they allow Chinese tech companies to benchmark against foreign counterparts, he added.ChinData became the first domestic datacenter company to commit to a 100% renewable energy target at the end of 2019, according to Greenpeace, which also ranks tech companies globally. It’s also among a group of companies that have begun to strategically locate new data centers near areas of existing and abundant renewable energy generation, such as Hebei, Inner Mongolia and Sichuan province. The company, likely headed for an initial public offering this year, builds and operates massive server warehouses that handle data for internet companies.(Updates with analyst comment in fifth paragraph)To contact the reporter on this story: Vlad Savov in Tokyo at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Colum MurphyFor 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.