SG Digest: Keppel units ink real estate, waste management deals

Keppel Seghers, a wholly-owned subsidiary of Keppel Infrastructure, is acquiring an 18.18-per cent stake in Zerowaste Asia while another Keppel Corporation subsidiary, Keppel Land, is investing about $58 million in a joint venture that will develop an integrated township in Mumbai.

Keppel Land takes 49% stake in Mumbai integrated township JV for $58m

Keppel Land announced that it has entered into a joint venture with Indian developer Rustomjee Group to jointly develop an integrated township in Thane, within the Mumbai Metropolitan Region.

The company informed the Singapore Exchange that its wholly-owned subsidiary is acquiring a 49-per cent stake in Kapstone Constructions Private Limited, the joint venture company, at a consideration of about S$78.2 million ($57.7 million). The JV company will develop the 51.4-hectare Urbania integrated township.

The Urbania township, launched in 2006, has housed 2,700 residential units and the joint venture will develop an additional of about 7,400 homes and retail units with a total gross floor area of approximately five million square feet.

The JV is the first such collaboration between a Singaporean developer and an Indian developer for a township int he Mumbai Metropolitan Region, which is among India’s fastest-growing regions, Keppel said.

Keppel Seghers buys stake in Zerowaste Asia for $3.7m

Keppel Seghers, a wholly-owned subsidiary of Keppel Infrastructure that provides environmental solutions, has agreed to acquire an 18.18-per cent stake in Singapore-based waste and wastewater treatment provider Zerowaste Asia for S$5 million ($3.7 million).

In a disclosure to the Singapore Exchange, Keppel Seghers said Zerowaste Asia’s solutions will complement its portfolio of solutions by providing further treatment to extract heavy metals and pollutants from incineration fly and bottom ash, allowing the ash to be further reused instead of being landfilled.

Keppel Seghers said its waste-to-energy technology significantly reduces the volume of solid waste to be landfilled by up to 90 per cent, extending the lifespan of landfills and reducing greenhouse gases that are released in these areas. Zerowaste Asia’s proprietary technology, on the other hand, removes heavy metal and pollutants from waste and recycles detoxified waste into materials suitable for land reclamation and construction.

The investment comes at a time when environmental issues and the circularity of the economy are drawing increasing international attention, with many cities facing urbanisation challenges brought about by, among others, environmental risks, Keppel Seghers said.

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UPDATE 1-Hallmark reverses position on same-sex couple ads after public outcry

(Reuters) – The chief executive officer of Hallmark Cards apologized on Sunday night and said the company would reverse an earlier decision to pull television advertisements featuring same-sex couples from the wedding registry and planning website Zola.

FILE PHOTO: A rainbow flag flies above Market Street during the gay pride parade in San Francisco, California June 28, 2015. REUTERS/Elijah Nouvelage

In a statement, CEO Mike Perry said cable television’s Hallmark Channel “will be reaching out to Zola to reestablish our partnership and reinstate the commercials.”

Hallmark Channel faced a public outcry after it pulled the ads last week, under pressure from the conservative group One Million Moms.

The One Million Moms website said the group had “personally spoken with Crown Family Networks CEO Bill Abbott” who confirmed Hallmark pulled the commercial and said the advertisement aired in error. Crown Media Family Networks is the parent company of Hallmark Channel.

The decision to pull the ads prompted reactions from thousands of Twitter users as well as Democratic presidential contender Pete Buttigieg, comedian Ellen DeGeneres, California Governor Gavin Newsom and streaming company Netflix (NFLX.O).

On Saturday DeGeneres tweeted to her 79.1 million followers: “Isn’t it almost 2020? @hallmarkchannel, @billabbottHC… what are you thinking? Please explain. We’re all ears.”

The Netflix U.S. Twitter account tweeted: “Titles Featuring Lesbians Joyfully Existing And Also It’s Christmas Can We Just Let People Love Who They Love” above the titles and images from the Netflix film “Let It Snow” and sitcom “Merry Happy Whatever”, which feature lesbian characters.

Newsom tweeted a link to the ad, with the message “Same-sex marriage is the law of the land. There is no one way to love and be loved.”

Saturday Night Live also weighed in with a skit about a fictitious Hallmark Channel matchmaking show, which ended with comedian Aidy Bryant’s character saying: “This is Emily Cringle for Hallmark, reminding you to stay straight out there.”

The LGBTQ advocacy group GLAAD launched a boycott, and the #BoycottHallmarkChannel hashtag was featured in over 16,000 tweets as of Sunday afternoon.

On Dec. 2, Zola began airing six ads on Hallmark, four of which featured a lesbian couple. On Dec. 11 Crown Media notified Zola those four ads would no longer be airing, with the explanation that Crown Media is “not allowed to accept creatives that are deemed controversial.”

Zola then pulled its remaining ads from Hallmark, according to a Zola executive.

“The only difference between the commercials that were flagged and the ones that were approved was that the commercials that did not meet Hallmark’s standards included a lesbian couple kissing,” wrote Mike Chi, Zola’s chief marketing officer, in a statement prior to Hallmark’s reversal.

Reporting by Helen Coster; Editing by Chris Reese

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SoftBank’s China strategy wobbles as key bets disappoint

HONG KONG/BEIJING (Reuters) – For SoftBank Group Corp (9984.T), financial technology firm OneConnect’s IPO should have been a vindication of an aggressive China investing strategy.

FILE PHOTO: Japan’s SoftBank Group Corp Chief Executive Masayoshi Son attends a news conference in Tokyo, Japan, November 5, 2018. REUTERS/Kim Kyung-Hoon

Instead, embarrassed bankers had to slash the offering size and cut its price as investors baulked at a business model seen too reliant on majority owner Ping An Insurance (601318.SS). The IPO valued OneConnect at $3.7 billion, about half its worth last year when SoftBank’s Vision Fund invested $100 million, and its stock finished flat in its debut on Friday.

OneConnect Financial Technology (OCFT.N) is just one of many China bets placed by the Japanese investment giant or its massive Vision fund which have run into trouble. That’s added to global woes for SoftBank CEO Masayoshi Son, under fire for bad judgement and insufficient due diligence, exemplified by U.S. office-space startup WeWork’s disastrous IPO attempt and subsequent bailout.

In ZhongAn Online P&C Insurance Co Ltd’s (6060.HK) 2017 IPO, for example, SoftBank ploughed in $550 million as a cornerstone investor. But the deal was seen by some investors as way overvalued and now trades at about half its IPO price.

Its unlisted portfolio has also had problems. The Vision Fund in February invested $1.5 billion in Guazi.com, valuing the second-hand car dealing platform at more than $9 billion.

But a $500 million funding round for Guazi.com in the first half of the year failed to get off the ground, people with knowledge of the fundraising said.

The people, who were not authorised to speak to media and declined to be identified, said potential investors thought it was too pricey and were put off by its lack of profits in a sector where sales have been declining.

Guazi.com said in a statement that talks for new funds were advanced, investors included the Vision Fund and other top international investment institutions and that it expected to be profitable in the fourth quarter.

In fairness to SoftBank, many China IPOs have stumbled, hurt by a sharp slowdown in economic growth and trade tensions with the United States.

But investors and some bankers looking at China-related deals say SoftBank’s involvement, once a sign of promising prospects, was now viewed as a red flag that a company was likely overvalued.

“SoftBank has become a signal that the market has peaked,” said one person involved in the OneConnect IPO.

SoftBank declined to comment on its investments in Chinese companies for this article.

OTHER PROBLEMS

Other big bets like TikTok owner ByteDance and artificial intelligence firm Sensetime are threatened by the fallout from the U.S.-China trade conflict. The Vision Fund has invested roughly $1 billion in both, sources have said.

ByteDance is entangled in a U.S. national security review over how it handles U.S. customer data.

Sensetime in October was added to the U.S. “entity list” which bars it from buying U.S. components without U.S. government approval, over its alleged involvement in human rights abuses in China’s Xinjiang.

Sensetime has countered it abides by all relevant laws of jurisdictions in which its operates and that it has been actively developing an AI code of ethics.

Ride-hailing company Didi Chuxing, one of SoftBank’s biggest China bets with $11.8 billion invested, appeared to have a bright future after U.S. rival Uber (UBER.N) traded its China business for a stake in Didi.

But the rape and a murder of a Didi passenger by her driver has dented the company’s image, and its IPO timetable remains unclear after Uber valuations slid.

The Vision Fund opened a China office this year led by former Silver Lake managing director Eric Chen. Two sources familiar with the operation told Reuters that the pace of hiring for the China team has been slow, though SoftBank says the team has grown a lot since March to include about 20 investment professionals.

One source said Chen had scaled back the size of the deals he was looking at, now focusing on investments of around $50 million compared to those of $200 million-$300 million.

SoftBank declined to comment.

It’s all a far cry from just two years ago, when SoftBank and the Vision Fund were ramping up. Son had made a killing with an early investment in Alibaba (BABA.N) – a stake now worth $140 billion – and the China tech business was booming.

Then, Son’s penchant for splashy checks to help startups grow fast and quickly vanquish rivals was in full force – as evidenced by a meeting with Chinese online medical platform Ping An Good Doctor (1833.HK) in late 2017 to discuss pre-IPO fundraising.

“How much do you want to raise in the pre-IPO round and via IPO? “ Son asked Good Doctor’s CEO Wang Tao, according to sources.

Wang told him it would be $300 million and $1 billion respectively.

“How about I give you $1 billion and you drop the listing plans?” Son said.

Wang later decided not to take him up on the $1 billion, receiving instead $400 million from the Vision Fund in a pre-IPO round before listing in Hong Kong last year.

In contrast to some of SoftBank’s other China investments, its stock has made progress after a rocky start, however, climbing and mostly staying above its IPO price since October.

(This story refiles to correct SoftBank Group Corp, not SoftBank Group Inc in paragraph one)

Reporting by Kane Wu and Julie Zhu in Hong Kong and Yang Yingzhi in Beijing; Additional reporting by Sam Nussey in Tokyo and Clare Jim in Hong Kong; Writing by Kane Wu; Editing by Jonathan Weber and Edwina Gibbs

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Gojek-backed Pathao said to merge with Bangladeshi payments firm SureCash

Bangladeshi ride-hailing startup Pathao is in talks to merge with SureCash, a local digital payments provider, according to multiple local reports.

According to The Daily Prothom Alo and Future Startup, the two companies have entered advanced discussions to consolidate. The merger is expected to place them in a better position to attract funding and provide a wider range of services to its customers. The reports add that the two companies will continue to operate independently after the merger.

Pathao declined to provide DealStreetAsia a comment for this story.

Both Pathao and SureCash are understood to share Osiris Group as a common shareholder. According to Crunchbase, Osiris Group last invested in SureCash’s $7 million Series B round in 2015. The frontier markets private equity firm also joined one of Pathao’s early fundraising rounds as an investor.

Pathao ran into cash troubles earlier this year after it came up short of securing its targeted $50 million Series B round. The company retrenched nearly 300 mid to top-level employees, restructured its operations and announced plans to postpone its Series B final close.

The Dhaka-based startup had raised $10 million for its pre-Series B round in April 2018, securing capital from Gojek, Openspace Ventures and Battery Road Digital Holdings.

Fundraising remains a major challenge for frontier markets like Bangladesh.

In an earlier interview with DealStreetAsia, Pathao’s chief operations officer Pardeep Grewal shared that the hurdles are even greater for pioneers in an unproven market. Most investors tend to have an “India-only” mandate when it comes to investing in South Asia, leaving neighbouring markets like Bangladesh highly misunderstood as a destination for capital.

Pathao or “send it” in Bangla was founded in 2015 by Hussain Elius, Fahim Saleh and Shifat Adnan. The company started as a courier service for e-commerce merchants in Bangladesh, before branching out into other verticals like food delivery and ride-hailing. It counts players like Uber and Shohoz, a Golden Gate Ventures-backed local startup, among its competitors.

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VetPartners to acquire ASX-listed National Veterinary Care for $168m

Australia’s National Veterinary Care Ltd said on Monday it entered into an initial agreement to be acquired by a veterinary clinic chain operator, in a deal valued at A$248.4 million ($168.56 million).

Under the deal, VetPartners has offered to pay A$3.70 for each share of National Veterinary Care, which represents a premium of about 56.8% to the stock’s last closing price.

VetPartners, owned by private company Australian Veterinary Owner’s League Pty Ltd, owns and operates more than 140 veterinary clinics in Australia, New Zealand and Singapore.

The board of the ASX-listed veterinary services provider said it unanimously backed the deal.

“VetPartners’ proposal represents a significant premium to National Veterinary Care’s current share price, is 100% cash consideration and offers National Veterinary Care shareholders a high degree of certainty,” said Susan Forrester, the company’s chair.

Subject to approval by the country’s Foreign Investment Review Board, it expects the scheme to be implemented in early April 2020, National Veterinary Care said in a statement.

Reuters

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Disney+ to debut late March in France in exclusive deal with Canal+

FILE PHOTO: A man looks at his phone as he passes by a screen advertising Walt Disney’s streaming service Disney+ in New York City, U.S., November 12, 2019. REUTERS/Brendan McDermid/File Photo

PARIS (Reuters) – Walt Disney Co (DIS.N) will launch its Disney+ streaming service on Vivendi SA’s (VIV.PA) pay-TV business Canal+ platform by the end of March next year, executives of the two groups said in a joint interview released in the daily Les Echos on Sunday.

Traditional media companies like Canal+ are under pressure to find ways to bulk up their content as they face competition from deep-pocketed online streaming platforms such as Netflix Inc (NFLX.O) and newcomers in the sports rights business such as Chinese-owned Mediapro.

“This exclusive partnership is a new major step in the transformation of the Canal+ model,” said the French broadcaster’s chief executive, Maxime Saada.

Saada declined to say how much Canal+ would charge for Disney+.

Kevin Mayer, who heads Disney’s Direct-to-consumer & International business, confirmed the U.S. group hoped to acquire 60 million to 90 million customers by 2024.

Data from analytics firm Sensor Tower on Friday estimated that Disney+ had been installed by an estimated 28 million customers across five countries since its launch on Nov. 12.

Reporting by Sybille de La Hamaide; Editing by Peter Cooney

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See the Ocean in Las Vegas: Fisker will unveil its electric SUV at CES 2020 in January – USA TODAY

After months of releasing teaser images, American automaker Fisker announced it will unveil its $40,000 electric Ocean SUV in January at the Consumer Electronics Show 2020 in Las Vegas.

Fisker also announced a partnership with Electrify America to ensure Ocean owners will have access to a vast network of fast-charging stations once the vehicle hits the market.

A “full prototype” of the SUV will be shown at the tech convention, Fisker said.

“The world will get to see the fully engineered vehicle, which rides on a production-ready platform – signaling our intent to get it to market efficiently,” the company’s CEO, Henrik Fisker, said in a news release. 

Most polarizing vehicles of the century:Tesla Cybertruck joins the list

Previously, Fisker said the Ocean would have all-wheel-drive. Something the company calls “California mode” will give owners “fresh air and an open feeling without being in a convertible.” 

The vehicle will house an 80 kWh lithium-ion battery pack with a range of up to 300 miles, depending on driving conditions. 

China’s BAIC raising Daimler stake to unseat Geely as top shareholder: Sources

BAIC has been Daimler's main partner in China for years and operates Mercedes-Benz factories in Beijing through the two automakers' main joint venture, Beijing Benz Automotive.
BAIC has been Daimler’s main partner in China for years and operates Mercedes-Benz factories in Beijing through the two automakers’ main joint venture, Beijing Benz Automotive.

BEIJING/HONG KONG/FRANKFURT: Daimler’s main China joint venture partner BAIC Group has set in motion a plan to double its stake to around 10% and win a board seat in the German luxury car maker, as it aims to upstage rival Geely, two sources told Reuters.

State-owned Beijing Automobile Group Co Ltd (BAIC), which already owns a 5% shareholding in Daimler, has started buying the German company’s shares from the open market, said the sources who were briefed on the matter.

BAIC is currently Daimler’s third largest shareholder but a stake of 10% will make it the biggest shareholder, surpassing its Chinese automaking rival Zhejiang Geely Holding Group which owns 9.69% of the German automaker and is seeking to expand its partnership with Daimler in China.

With the shareholding of around 10%, BAIC is looking to secure a seat at Daimler’s supervisory board, which Geely does not currently have, the sources said.

HSBC, which advised BAIC on its 5% stake purchase in Daimler earlier, is helping the Beijing-based group in the new investment, one of the sources said.

Daimler said in a regulatory filing last month that HSBC held 5.23% in Daimler’s voting rights directly as well as through instruments such as equity swaps as of Nov. 15.

When asked by Reuters, Daimler said it had not received any notification about BAIC having raised its stake. Daimler’s China chief Hubertus Troska said on Friday “we welcome long-term investors in Daimler”. Asked about BAIC and its potential to become a larger shareholder, he added, “we like each other. Let us see how things develop.”

A third source familiar with BAIC’s thinking said that BAIC wanted to be a bigger shareholder than Geely in Daimler in order to be seen as the German automaker’s senior-most partner in China.

BAIC and Geely did not respond to requests for comments made after usual business hours. HSBC declined to comment.

The sources declined to be named as they are not authorised to speak to media.

DAIMLER’S CHINA PARTNERS

Reuters reported in November that BAIC had signalled intentions to extend its investment in Daimler, citing sources familiar with the matter.

BAIC has been Daimler’s main partner in China for years and operates Mercedes-Benz factories in Beijing through the two automakers’ main joint venture, Beijing Benz Automotive.

Two months before its 5% stake purchase was announced in July, sources told Reuters that BAIC wanted to invest in Daimler to secure its investment in Beijing Benz Automotive.

The partners also planned to revamp manufacturing facilities to make Mercedes Benz-branded trucks via their commercial vehicle joint venture Foton Daimler Automotive (BFDA), Reuters reported in August citing a document and sources familiar with matter.

BAIC built its 5% Daimler stake after Li Shufu, chairman of Zhejiang-based private automaker Geely, built a 9.69% stake in Stuttgart-based Daimler in early 2018.

By using Hong Kong shell companies, derivatives, bank financing and structured share options, Li kept the plan under wraps until he was able, at a stroke, to become Daimler’s single largest shareholder.

Since the investment, Geely and Daimler have said they plan to build the next generation of Smart electric cars in China through a joint venture.

Geely owns Volvo and a 49.9% stake in Malaysian car maker Proton, while BAIC, in addition to Daimler, has a partnership with South Korea’s Hyundai Motor.

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The $100bn ceiling Japanese companies cannot shatter

TOKYO — At the end of 1989, with Japan’s bubble economy blindly approaching the cliff’s edge, Japanese companies made up about half the world’s 100 most valuable corporations.

Now the country’s only representative on that list is Toyota Motor.

The biggest factor behind Japanese companies’ lackluster market performance is corporate chiefs’ inability to make tough calls and focus resources on strategically important businesses. They are falling behind even as technological innovations and strategic acquisitions drive brisk corporate expansions across the world. 

The remarkable rise of Procter & Gamble’s market value compared with such Japanese companies as Fast Retailing and Rakuten serves as a prime example.

The American multinational consumer goods company has sold off its Pringles potato chip and Duracell battery brands and instead focused on laundry detergent, skin care and eight other core businesses over the past 20 years. Shareholders rewarded the company by lifting its value to $300 billion from $100 billion in that time. 

On the other hand, the operator of the Uniqlo casual clothing brand has not been able to hit $70 billion, and Rakuten, Japan’s leading e-commerce company, has lost steam after reaching $20 billion.

Similarly, the market value of Kao, a major Japanese consumer goods maker, has doubled, but just to $39 billion during the same period.

The Tokyo Stock Exchange is planning an overhaul of its market categories to bring back investors. It aims to create a “prime” market for selected blue chips, a category reserved for companies with strong investor appeal.

The move would remake TSE’s swollen first section into a board for elite companies that can power the market’s advance.

But such superficial changes may not be enough to lure back capital.

The exchange already has an index tracking the cream of the crop: the Topix Core 30 Index. It is composed of 30 of the first section’s largest companies in terms of sales or market capitalization. The stocks constituting the index are reviewed annually to ensure that only high-growth companies are on the list.

Despite being made up of the bluest of chips, however, the Topix Core 30 has actually underperformed other indexes.

Currently, the Core 30 is slightly below 80% of the value it held on April 1, 1998, while the Topix is 40% higher. The Topix Small Index, composed of first section issues not among the 500 largest ones, is 120% above its April 1998 level.

The data leaves little doubt that the principal factor behind the Japanese stock market’s failure to climb has been the wobbly performance of the leading stocks.

Japanese companies tend to stop growing earlier than their Western and Chinese rivals. Many of the country’s corporate giants struggle to rise past 10 trillion yen ($100 billion) in market capitalization.

According to data from QUICK-FactSet from 1985 onward, of the companies that exceeded $10 billion (approximately 1 trillion yen), 20% reached $50 billion in Japan, but only 3. 9% of the companies reached $100 billion.

Only eight Japanese companies have ever cleared the $100 billion bar. This is far below the 86 in the U.S., 53 in Europe and 18 in China.

Japanese companies tend to mature early, according to a return on assets analysis conducted by a researcher group led by Hiroshi Shimizu of Waseda University. The results show Japanese companies’ average return on assets, or ROA, an indicator of a company’s profitability relative to its total assets, peaks at slightly above 10% about 10 years after it is founded, then starts dropping.

The ROA picture at Japanese companies stands in sharp contrast to that of their U.S. counterparts, which keep ROA figures at 10% to 12% for extended periods.

Shimizu says the biggest factor behind the difference is that Japanese companies are unable to shift resources away from unprofitable ones toward strategically important businesses.

Kazushige Okuno, chief investment officer of Norinchukin Value Investments, says growing companies can maintain momentum by concentrating resources on core competencies and shooting for overwhelming dominance in the market.

There are some encouraging signs. Sony‘s stock has surged to a 17-year high as the company has invested in its highly competitive image sensor business while scaling down its consumer electronics operations.

Keyence makes automation sensors, measuring instruments and other industrial-use products. It has excelled in its ability to meet detailed customer needs and is approaching the 10 trillion yen threshold.

Dynamic management that can make strong businesses even stronger is the only way to escape the doldrums Japanese companies remain stuck in.

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