|Day's range||30.84 - 30.84|
Alibaba Group Holding (BABA) reportedly plans to invest in a courier firm, Yunda, in a bid to expand its presence in the growing express delivery industry.
(Bloomberg) -- China’s consumers are shopping online again. But their purchases signal they plan to stay indoors for the foreseeable future, dashing hopes for a spending recovery as the nation contemplates its post-virus world.Lunch boxes saw 120 times more searches in the last 30 days as the virus pushes people to prepare their own food even after returning to the office, according to March 26 data from Index.1688, which collects information from Alibaba Group Holding Ltd.’s shopping sites.Portable tableware, foldable spoons and work clothing also surged in popularity, while items typically given as gifts or used for travel and outdoor activities haven’t shown signs of recovery.Yoga mats and hula hoops for home exercise also climbed in demand, a bad sign for gyms waiting for the return of patrons.The data undermines predictions of a V-shaped recovery in the world’s biggest consumer market that has seen more than 80,000 infections and 3,000 deaths from Covid-19. While big operators like Starbucks Corp. and Yum China Holding Inc. have been reopening outlets, they face a public that’s preferring to stay home after work and continue to social distance, even though official data indicates China’s number of new infections fallen to zero.China’s experience may prove an important indicator for how the rest of the world recovers. Even after outbreaks are contained, lingering fear is likely to change consumer behavior for longer than expected.“Consumers are still cautious about going out and many of those venues are not yet back to full working mode,” said Jason Yu, Shanghai-based general manager of Kantar Worldpanel. Items for a return to work, such as instant coffee, hair and skin-care products, are recovering ahead of the market, he said.Other products to post a spike in searches include contact-less thermometers, suits and stationery, according to Index.1688.A report by JD.com Inc.’s research center also shows work-related consumption speeding ahead of other categories. China’s second-largest e-commerce company sold five times more lunch boxes in late February than a month earlier, while powerbanks, office equipment and stationery are also high up the list.“Consumption of staples is clearly outshining discretionary or luxury goods in what is still very much a lukewarm and uneven recovery,” Ned Salter, head of global research at Fidelity International, said in a statement. “We need to see more consumer confidence to sustain the improvement and that will depend on how well China deals now with imported cases to contain the virus fully.”A Coronavirus Vaccine in 18 Months? Experts Urge Reality CheckRetailers in China have been cautious in their forecasts since the virus emerged.Yum China Holding Inc., which operates KFC and Pizza Hut in the country, has said the second quarter will be “challenging” and patience is needed. Anta Sports Products Ltd., the country’s biggest sportswear maker, forecasts the first six months of 2020 will be “tough throughout”.About 60% of listed restaurant operators in China are at risk of running out of cash within six months, according to data compiled by Bloomberg and company reports.With the food and beverage industry reeling, local governments are trying to boost consumption by urging officials to dine out in restaurants and shop in malls. Vouchers are being given out by cities including Hangzhou and Nanjing as well as shopping platforms Meituan Dianping and Suning.com Co. to spur spending.While China’s new infection numbers have plunged, the pandemic is widening globally with cases worldwide now topping 786,000 and more than 37,800 dead. Chinese factories are experiencing a second shockwave as western clients cancel orders en masse.Luiz Chen, a 31-year-old auditor in Guangzhou, recently bought moisturizing masks and a new dress before returning to the office but said she won’t be treating herself to anything expensive after her employer froze bonuses for the past two months.“I’m scared to get a salary cut or even lose the job,” said Chen. “Economic crisis seems not far away. How can I have the good mood to buy buy buy?”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.
Alibaba Group Holding Ltd plans to buy at least 10% of Yunda Holding Co Ltd, marking the e-commerce giant's fifth investment in a large courier, two people with knowledge of the matter told Reuters. Alibaba is looking to buy the stake from Yunda's controlling shareholders - founding couple Nie Tengyun and Chen Liying - who own 52.19% of Yunda through their wholly owned firm Shanghai LuoJieSi Investment Management, said one of the people. The other person said China's dominant e-commerce firm could go beyond 10% and buy up to 15% of Shenzhen-listed Yunda.
(Bloomberg) -- Meituan Dianping surged as much as 10% after the internet services giant said its food delivery business began to recover in March, when shuttered restaurants re-opened and much of China returned to work.Meituan, backed by Tencent Holdings Ltd., told analysts on a conference call Monday that demand for food delivery picked up this month, putting it on track for a longer-term recovery after Covid-19 froze a swath of the world’s second largest economy. But it also projected an operating loss and revenue decline this quarter, and warned that the full extent of fallout from the pandemic -- particularly on its travel and ride-sharing businesses -- remained uncertain in 2020. Its stock was up roughly 7% in early trade after Daiwa lifted its price target and said Meituan should return to growth in the second half.Meituan joined sector bellwethers from Sony Corp. to Apple Inc. and Twitter Inc. in emphasizing the difficulty of parsing an unprecedented event and its impact on their business. The Chinese company is one of the most exposed of the country’s major tech corporations to the spread of Covid-19. The company’s outlook is further clouded by China’s worsening economy, which may contract this quarter for the first time since 1989, denting consumer spending.“Although we have seen gradual recovery from March especially for food delivery business, the active merchants of our in-store service category remain at a very low level as of late March,” Chief Financial Officer Chen Shaohui said on the call. “We expect consumers will need more time to build their consumption confidence for local consumption especially those discretionary consumption scenarios in our in-store business.”What Bloomberg Intelligence SaysDespite mild improvements in Meituan’s local services in late March as the virus outbreak subsided in China, the timing of a full operational recovery remains highly uncertain. Its food-delivery business may stay slow, with many restaurants still closed and consumers wary of interactions with delivery personnel. Its in-store, hotel and travel businesses may take even longer to recover, as users stayed home. Strong 42% sales gains and 117% gross-profit expansion in 4Q suggest Meituan’s longer-term growth drivers are intact. The company plans to maintain strategic investments in B2B food distribution and restaurant management systems.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Read more: Chinese Abandon Food Delivery Fearing Drivers Will Spread VirusThe coronavirus dealt an as-yet unquantifiable blow to a company that, before the outbreak erupted in January, was on track to take its place among the country’s most influential technology corporations. While Meituan’s stock has taken a pounding like every other Chinese internet firm, a 2019 rally secured its position as China’s largest publicly traded internet firm after Alibaba and Tencent.“Market expectations were very low as investors have seen the damage COVID-19 has inflicted on offline service providers,” Nomura analyst Shi Jialong wrote.Meituan on Monday reported a better-than-expected 42% jump in revenue to 28.2 billion yuan ($4 billion) in the three months ended December, compared with the 26.5 billion-yuan average of analysts’ estimates. It booked a profit for the quarter of almost 1.5 billion yuan, versus expectations for a loss.The company still harbors ambitions well beyond its current core business. Meituan had been diversifying from takeout, investing in other online services including travel, competing directly against Alibaba Group Holding Ltd. But others are elbowing their way into Meituan’s turf. Ride-hailing giant Didi recently launched a delivery service similar to Uber Eats across major Chinese cities, while Alibaba-backed Alipay is also morphing into an all-in-one online services platform that allows everything from restaurant booking to car-hailing.Executives on Monday stressed the company will keep investing in new initiatives from bike-sharing to online groceries, an e-commerce segment that accelerated sharply after the pandemic forced millions to work -- and cook -- from home. Meituan said it’s setting up the logistics to support that business while exploring ways to roll out the business to more Chinese cities.“The pandemic has already caused severe disruptions to the daily operations of our merchants, including restaurants, local services merchants and hotels, which in turn resulted in downward pressure on our own operations for the first quarter of 2020,” Meituan said in its filing. “Due to the high uncertainty of the evolving situation, we are unable to fully ascertain the expected impact on full year 2020 at this stage.”Read more: Virus Outbreak Exposes $46 Billion Rift in China’s Tech IndustryFor 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) -- The various levels of lockdown and quarantine across China haven’t proven a golden opportunity for the biggest food delivery and bookings company, a warning for on-demand service providers elsewhere as more of the world stays at home to avoid the coronavirus.Meituan Dianping says it will post a loss for the first quarter ending Tuesday following a decline in revenue. The Beijing-based company’s business consists of three main divisions — food delivery, restaurant and travel bookings, and other services such as car hailing, bike rental and groceries.Bookings, which account for around 23% of revenue, took the biggest hit. That was predictable. Consumers aren’t keen to take a seat at a restaurant or a night at a hotel amid a deadly disease outbreak, and widespread travel curbs meant moving around China wasn’t an option.Food was more of a surprise. Two months ago amid the Lunar New Year break, I theorized that such deliveries — at 56% of Meituan’s revenue — might bounce back quickly as customers opted to stay in rather than eat out. I was wrong.Thousands of vendors on Meituan’s platform were forced to close either voluntarily or by mandate, and thus couldn’t provide meals. Those who did stay open were often met with fear and complications on the demand side.Many customers had concerns not only over the safety of meals coming from restaurants, but the drivers who delivered them. Those still willing to order online were met with layers of challenges as local governments, neighborhoods and buildings exercised strict controls over who could come and go. There was no supply bottleneck for drivers; Meituan noted plenty of capacity on hand.Three weeks ago, Alibaba Group Holding Ltd. said that its own courier and food delivery services, Cainiao and ele.me, were back to full staffing. But the food business was still down because many restaurants remained closed.An upside has been grocery delivery. Meituan’s two services, self-operated and marketplace, have seen strong growth during the crisis, a trend that echoes what Alibaba experienced with its Freshippo service. In many cities, consumers either cannot or prefer not to step out to shop. They’re apparently less afraid of groceries brought to their door than fresh-cooked meals.Even as China returns to a certain level of normalcy, food delivery may struggle for another few months. Most companies are maintaining degrees of isolation, such as working from home or rotating shifts. Taking lunches to places of business is normally an important part of the consumption scenario. As investors start to ponder the outlook for Delivery Hero SE, Just Eat Takeaway, and GrubHub Inc., they’d do well to look at how their China peers have fared during the virus battle. Collectively, these companies get most of their revenue from Western markets that are now imposing lockdowns to battle the pandemic. They’re implementing contact-free and non-cash deliveries to make customers feel safe.That may not be enough. While it’s true that people still have to eat, China’s experience shows that this doesn’t mean consumers will necessarily order delivery or that restaurants can supply them.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.
Covid-19 test kits donated by the Jack Ma Foundation and the Alibaba Foundation arrived in Vientiane at Wattay International Airport on March 28.
As companies around the country and world suffer from the effects of the deadly novel coronavirus, some businesses are stepping up to help alleviate some of the economic impact. Here’s a list of some of their efforts so far. We’ll continue to update this list as more companies contribute to the relief effort.
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 pledged an extra 10.1 million SoftBank Group Corp. shares to lenders in the past two weeks as he unveiled an ambitious plan to overhaul his Japanese conglomerate and silence critics.Son has now committed 227 million SoftBank shares as collateral, worth about $8 billion, according to regulatory filings. That’s about 40% of his 27% stake in the publicly traded conglomerate. The newly pledged shares were worth about $360 million at Friday’s close.The Japanese billionaire has more than tripled the level of pledging since 2013, turning to banks including UBS Group AG, Nomura Holdings Inc., Credit Suisse Group AG and Julius Baer Group Ltd. It’s not uncommon for the ultra-wealthy to borrow against their stock, but Son’s use of the tactic is among the most significant tracked by the Bloomberg Billionaires Index. The amount he’s pledged trails only Larry Ellison, Russia’s Suleiman Kerimov and China’s Qin Yinglin on the ranking of the world’s 500 richest people.Son’s net worth is $12 billion, which excludes the value of the pledged shares. It has fallen $3.6 billion so far this year and has been one of the more volatile fortunes tracked by Bloomberg.SoftBank spokesman Takeaki Nukii declined to comment on Son’s personal finances.SoftBank has been battling on several fronts this year, including facing pressure from Elliott Management Corp., which called for a special committee to review processes at the Vision Fund, the world’s largest single investment pool for tech startups. Son has responded with a plan 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. Son moved ahead after he reportedly considered and then abandoned the idea of taking his conglomerate private.SoftBank also lashed out at Moody’s Corp. this week after its debt was downgraded by two notches, accusing the ratings company of “bias” and “creating substantial misunderstanding.”Some other billionaires are scrambling to meet margin calls on their pledged shares. India’s Gautam Adani and his family put up an additional $1.4 billion of shares as collateral on existing debt this month, and wealth managers like UBS and Credit Suisse have asked clients to post additional collateral.(Updates with Moody’s response in seventh 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) -- 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.