T&I AsiaWatch for April 21st, 2024
Another modest week of transactions and a brutal week for listed GPs
Editor’s Note: Asia and the Rest of World feel the impact of the U.S. Fed pulling interest rate cuts and worse, mulling rate increases. Listed GPs looking back six weeks join EU, Japan other Central Banks disparaging U.S. inflation policy. In an historic event Australia deals tied China's deals YTD. Actis and Affinity had two big PE deals in Korea. HKEX IPOs go from many to one in the 4th falling week of China IPOs with only domestic GPs. No biopharma VC deals. More sub-par China-based IPOs price for NYSE/Nasdaq while a number other countries head to IPO in the USA. China had a fifth RE developer in bankruptcy court; only Vanke's failure awaits a wider Asia impact, as SOE banks ready a bailout package.
Australia: AMP reports first half AUM up at $74 billion (from $71 billion in previous quarter) on an increase in pension AUM to $54 billion (from $51.9 billion). Tritium the Aussie EV charging startup turned poster child for U.S. government funded new age-renewable boondoggles, filed bankruptcy, joining former Biden-Obama failed renewables scheme Solyndra.
Cambodia: The Government deports hundreds of PRC gang members to Wuhan, reported in aptly named Caixin news department: Quick Take.
China: Apple caves to the CCP’s demand to remove messaging apps, joining dozens of blacklisted U.S. apps blocked by the Great Firewall of China. The State Council’s bad debt manager Central Huijin Investment bought $722 million of shares in the Agricultural Bank of China, Bank of China, China Construction Bank and the Industrial and Commercial Bank of China last week to stabilize operations as the four SOE lenders prepare to support SOE-backed China Vanke’s bailout loan. EV startup Hozon Auto gets a $691 million capital injection from Tongxiang State Capital, Yichun and other SOE funds days after the China Chamber of Commerce protests the EU’s probe of EV dumping by China. HSBC's Hang Seng Bank filed a bankruptcy petition against real estate developer Times China in HK courts, following earlier bankruptcy petitions for Country Garden, Evergrande, Kaisa, Shimao; soon to be joined China’s second largest SOE RE developer, Vanke. New China Life's Chairman is disappeared amid investigation into its New China Asset Management (HK) and following the sentencing to death and life in prison for China Life’s previous CEO in 2023. Noah Holdings shareholders Jack Ma, Fidelity and other insiders gather scrutiny as the once high flying listed asset manager makes a modest recovery. An Ex-PBOC Governor confesses to taking $53 million in bribes. Shanghai merges two of its SOE investment firms, Shanghai State-Owned Capital Investment and Shanghai Science and Technology Venture Capital into one entity with $18 billion in AUM. The U.S. House passes legislation for TikTok’s sale or closure in the USA. The U.S. Department of Commerce adds 4 PRC companies to its entities list over use of U.S. AI chips for the PLA. The U.S. Congress Committee on the CCP publishes its study on the PRC’s fentanyl production and export to the USA.The hearing comments from AG, DEA Chief and RAND describe a deliberate, coordinated “government-aided criminal effort to addict and kill millions of Americans”. Unsurprising news that both listed and VC-backed valuation deflation has reached China, gets a headline. SOE China Vanke requests Shenzhen Province to back an $18 billion loan package that will in turn be offered as collateral to refinance its $200 billion plus in debt in parallel with asset sales such as Vanke's fire sale of holdings in Singapore’s GLP; former poster child of the ’19-’21 logistics boondoggle investment theme. The great knock-on effect of China RE’s collapse picks up speed.
India: Byju's latest CEO quits, leaving founder Byju in charge while the firm enters a second month of “deferred” salaries. Carlyle's hoped for $1 billion IPO of IT portfolio Hexaware continues its PR rollout with reports it's retained JP Morgan and Kotak Bank to manage the offer. India’s oldest listed, PE-founded infrastructure GP, IIP, announces its lenders recalled its loan, as a precursor to IIP filing bankruptcy. Following research showing that a paltry 15% of Venture Capital invested in India currently comes from domestic investors, India’s Ministry of Finance is reported “preparing a framework” that would allow domestic pensions and insurance companies to invest in startups, despite 8 of 10 startups in India failing. From our department of “is it really good news?” and in response to the generally positive spin on Paytm being allowed to migrate its customers from its Paytm Bank, to other banks so as to access the government mandated UPI payment interface — T&I earlier wrote that its banking was the reason for PayTm’s usefulness — that approval happened in parallel with the RBI backing up over the already prone corpse of Paytm, to deny it permission to invest any further money in its PayTm payment unit, because China’s Antfin holds a 10% stake. Ex-Chairman Sharma offered his latest attempted positive spin response. Back on the topic of valuations, markups by U.S. hedge funds Barons and Invesco are reported as evidence that valuations for India VC startups (unlike China) are rising.
Japan: Boeing, the U.S. firm made infamous by its faulty 737 Max aircraft, announces its Wisk flying VTOL taxi unit in Japan where US-made Osprey VTOLs are already infamous for crashes, groundings and protests. Boeing says it will have flying taxis going by 2030. Sekisui House paid $4.9 billion for U.S. homebuilder MDC; will build 15,000 homes a year in 16 states; no PE involved, but trend for Asia’s return to investing in U.S. RE grows.
Korea: Following a similar TSMC award, Samsung wins a $6.4 billion grant by the U.S. Dept. of Commerce in support of Samsung’s $45 billion investment into US semiconductor fabs. Looks like another win for Biden economic policy with Asia along with EV battery factory investments.
Malaysia: The government announces its latest (T&I’s 4th or 5th?) VC program creation. Yikes!
Singapore: Politics and commerce swirl as the latest PM in waiting announced current PM Lee moves to Senior Minister Advisor in an all-but-complete replay of the transition of current PM Lee’s father, ex-PM Lee’s transition to Senior Mentor and advisor, as a regent-placeholder PM, for his son ruled for the 12 years it took groom current PM Lee, into ruling of Singapore. The next transition may take longer as the current PM’s son is.. well, third time is never the charm for dynasties. It’s likely no coincidence that Singapore is facing its latest SOE-SWF’s slow unwinding of investment in China real estate, while in turn China SOE-backed Vanke, announced dumping its equity in Singapore-SOE backed logistics real estate GLP
Thailand: Thaksin surrogate's anti-weed government is all-in on Casinos.
Vietnam: DragonCapital VEIL reports March NAV up 3% driven mainly by a resurgence in the retail (+10.5%) and mid-cap property (+10.7%) sectors. Vietnam Holdings reports March NAV up 4.4% on performance of construction, retail and telecoms. Warburg returns to Vietnam (again) buying a minority in hospital operator Xuyen A.
Investment Pace: After a strong week (ex-China) of 43 transactions we’re back in third place for the past 16 years (only six shown above) slightly ahead of last year; nothing to celebrate, but as long as we make progress to beat last year — especially as China turned in another nothing burger week — I’m a happy camper. It’s not a great year, but it’s better than last year. How’s that for a positive spin? And on note of passage, let’s stop and take a breath to see that Australia is tied with China for transaction totals for the first time for 2024 and one of the few times in T&I reporting since 2005. And then let’s admire that India now has two times the total of either of those two developed economies. Singapore is ostensibly ahead of Japan and Korea who are tied in terms of transaction totals, but Singapore numbers reflect government investment in jobs creation that I largely discount due to the nature of SOE-backed investments anywhere including Europe and the USA. IFC had a big week with 4 transactions for Bangladesh, Georgia, India, and with a Pan-Asian investment, though one of those was for a VC fund for emerging Asia. And finally, Biden may have gone off the rails with solar renewables, but his administration has hit the ball out of the park incentivizing EV related (battery)and semiconductor investments, last week attracting another IC investor, Samsung to the USA. It’s a rare and extraordinary success that has now gathered by my estimate close to $350 billion in foreign investment in the USA. Take a bow.
Jerry Borrell, Editor in Chief, T&I Asia. © 2024 T&I