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Billionaire Jack Ma pushes ahead with Ant Group IPO

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When Ant Group Co. goes public later this year, the Chinese financial-technology behemoth will likely earn a stratospheric market valuation that would place it at the top of companies listing globally for the first time.

In the coming days, the company controlled by billionaire Jack Ma could shed light on what has been a closely guarded secret for years: how it actually makes money. Ant, which is preparing for blockbuster share sales in Hong Kong and Shanghai, is planning to file its listing documents with exchanges in both cities this week, according to people familiar with the matter, kicking off a process that could have the company go public by October.

The company’s debut will provide a major boost to China’s nascent Nasdaq-style exchange known as the STAR Market, which was created last year to draw listings from the country’s homegrown technology firms. Ant, which unveiled its IPO plans right around the new board’s one-year anniversary, would be by far the biggest and most valuable company to list there. Inside Ant, the code name for the listing plans is “Project Star,” according to people familiar with the company.

Ant’s listing prospectus will for the first time reveal detailed financial and operational data that investors and analysts will use to justify a more than $200 billion market valuation that Ant is said to be seeking with its dual IPOs.

If attained, it would be the highest-ever valuation at the time of a deal pricing for a company going public for the first time on a major exchange, according to data from Dealogic. Back in 2014, Ant’s sister company, Alibaba Group Holding Ltd., was valued at around $168 billion in its record-setting IPO, which ended up raising $25 billion.

Hangzhou-headquartered Ant, formerly Ant Financial Services Group, operates Alipay, a popular payment and lifestyle app that has more than 700 million monthly active users in China. Two years ago, the company was valued at around $150 billion after raising $14 billion in private capital from domestic and global investors.

Ant’s valuation has skyrocketed since it was launched in 2014. The following year, it was valued at around $45 billion in a domestic fundraising round. In 2016 its valuation jumped to $60 billion, based on exchange rates at the time. Among Ant’s current investors are private-equity funds Warburg Pincus, Carlyle Group LP, Silver Lake, General Atlantic and Primavera Capital Group, as well as Singapore and Malaysia’s sovereign-wealth funds.

Ant’s surging value mirrors a sharp run-up in valuations for many U.S. and Chinese technology firms. In many cases, investors have prized rapid expansion and strong market positions over short-term profitability. Some high-growth-focused startups—like We Co. and Uber Technologies Inc. —have recently stumbled and prospective investors will likely want to know how Ant plans to translate its powerful competitive position into higher future profits.

Investors who wrote Ant big checks in 2018—reaching $500 million in some cases—bought into the company expecting its valuation to top $200 billion when it goes public, according to people familiar with the matter and an investor presentation obtained by The Wall Street Journal. That level implied gains of at least 30% on their investments.

Over the past year, some investment funds that bought Ant shares have marked up the value of their investments significantly, according to Wall Street Journal calculations from their regulatory filings.

Two funds managed by Fidelity Investments that hold stocks, bonds and other assets marked their Ant shares at the end of June at prices that implied a company valuation of $305 billion, according to their filings with the U.S. Securities and Exchange Commission.

Other funds managed or subadvised by T. Rowe Price Group Inc. earlier this year marked their Ant shares at prices that implied a $188 billion valuation, the filings showed.

The discrepancies are wide in part because the company hasn’t shared comprehensive financial results with most of its shareholders thus far. In addition, its businesses that meld financial services and technology have proven difficult to value. Mutual funds, hedge funds and other institutional investors use differing or proprietary methods to estimate the value of securities from private companies that are difficult to sell. Inputs into those models include whatever financial information is available as well as valuations of publicly traded companies in similar industries.

In Ant’s case, investors have over the years been able to glean quarterly profit numbers for the company from the results of Alibaba Group, which used to have a profit-sharing agreement with Ant and now owns a third of the company. Earlier this month, Alibaba’s quarterly filings showed that Ant produced about $3.5 billion in profit for the six months ending in March, but provided virtually no explanation as to how the money was made.

Ant previously shared some quarterly financial figures and hosted regular briefings with shareholders, but two of its investors said information from the company was “very limited” and had “some delay.” In addition, no representatives from outside investors were given seats on Ant’s board following its various fundraising rounds. Last week, Ant added three independent directors to its board, according to business-registration records.

“At first look, everyone agrees this is a good company. But it isn’t easy to understand their businesses and advantages,” said David Dai, senior research analyst at Sanford C. Bernstein, who came up with a $210 billion valuation for Ant in November 2019.

“Ant’s businesses are very complex, with a variety of products spanning financial services and technology. You can’t get a full picture from either a financial or a technological perspective,” he added.

The company known as Ant encompasses Alipay, which handles trillions of dollars worth of payments a year and houses various digital finance operations that include personal credit lines, small-business loans, insurance and investment funds.

The company is also known for coming up with novel ideas, such as Yu’e Bao, a product used for managing spare cash that quickly became the world’s largest money-market mutual fund.

Ant’s entrenched position in China’s payments industry—and the rapid growth of Yu’e Bao—have drawn scrutiny from Chinese banking and securities regulators in recent years. For some time, the company has been trying to shed its image as a provider of financial services. In 2017, then-Chief Executive Eric Jing told investors Ant was a techfin company, rather than a fintech business.

Earlier this year, Ant dropped the word financial from its name, saying it wanted to be known as a technology provider. Outside of payment-processing revenue, Ant makes the bulk of its money from technology service fees that it charges banks, asset managers and other businesses that provide consumer and business loans and sell products to Alipay’s users.

Its myriad products have enabled Ant to diversify its income stream, lowering its reliance on payment processing for most of its revenue. While its payments business is still growing, Ant has in the past lost money after spending heavily to increase its market share. In 2018, the company incurred an annual loss of at least 1.9 billion yuan ($275 million) due to “aggressive marketing and promotion activities,” increased user acquisition and innovation costs, according to Alibaba’s filings.

— Stella Yifan Xie and Zhou Wei contributed to this article.

Write to Jing Yang at Jing.Yang@wsj.com

This article was published by the Wall Street Journal

Source: https://www.penews.com/articles/billionaire-jack-ma-pushes-ahead-with-ant-group-ipo-20200824

Private Equity

Alternative Investments: Accelerate’s Alt ETFs Now On RBC Dominion Securities A+ Platform

Accelerate Financial Technologies Inc announced this week that its alternative ETFs have been added to the RBC Dominion Securities A+ platform. RBC Dominion Securities describes the A+ as the next level of wealth management.

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Alternative Investments: Accelerate’s Alt ETFs Now On RBC Dominion Securities A+ Platform

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The A+ is for you if “you require serious investment management for your serious money.”

Accelerate Financial Technologies Inc announced this week that its alternative ETFs have been added to the RBC Dominion Securities A+ platform.

RBC Dominion Securities describes the A+ as the next level of wealth management.

For select clients with serious money, the platform provides greater convenience, customization, RBC’s Unified Managed Account technology, access to elite money managers worldwide, and tax efficiency.

Accelerate’s Alt ETFs on RBC A+

The range of alternative ETFs from Accelerate allows investors to diversify beyond stocks and bonds by including alternative asset classes in their portfolios.

The firm is known as a pioneer in institutional caliber alternative ETFs including hedge fund and private equity ETFs. It claims it is “disrupting the asset management industry by offering performance-oriented alternative investment strategies previously reserved for wealthy investors at a fee significantly lower than competitors.”

“We are pleased to be chosen by RBC Dominion Securities, a global leader in wealth management, as one of the select group of high-quality investment managers on the exclusive A+ platform for RBC Dominion Securities advisors and their clients,” said Accelerate CEO Julian Klymochko. “In an era of rock-bottom interest rates and record-high stock market volatility, we are pleased to provide investors with diversification, alternative yield, and alpha generation solutions through alternative investment strategies including absolute return, arbitrage, enhanced equity, and private equity replication.”

Selected ETFs

The alternative ETFs on the RBC Dominion Securities A+ platform include:

  • Accelerate Absolute Return Hedge Fund (TSX: HDGE) – a diversified, liquid, and performance-oriented long-short equity hedge fund
  • Accelerate Arbitrage Fund (TSX: ARB) – provides exposure to SPAC arbitrage and merger arbitrage investment strategies
  • Accelerate Enhanced Canadian Benchmark Alternative Fund (TSX: ATSX) – combines exposure to the S&P/TSX 60 plus a long-short Canadian equity overlay
  • Accelerate Private Equity Alpha Fund (TSX: ALFA) – designed to provide investors with private equity-like investment returns

Related Story:  Liquid Alt ETF Provider Accelerate Offers Ready-Made Alternative Investment Strategy                                                

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Source: https://dailyalts.com/accelerates-alt-etfs-now-on-rbc-dominion-securities-a-platform/

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Private Equity

Venture Capital: AgTech Startup Benson Hill Lands $150M

Benson Hill, an agtech startup based in St. Louis, announced Thursday its close of a $150 million Series D round led by Wheatsheaf and GV (formerly Google Ventures). It uses biotechnology and data science to enhance the nutritional qualities and sustainability of crops.

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Venture Capital: AgTech Startup Benson Hill Lands $150M

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Benson Hill uses biotechnology and data science to enhance the nutritional qualities and sustainability of crops.

Benson Hill, an agtech startup based in St. Louis, announced Thursday its close of a $150 million Series D round led by Wheatsheaf and GV (formerly Google Ventures).

The company said other strategic and ESG focused investors also participated. These included Argonautic Ventures, Caisse de dépôt et placement du Québec (CDPQ), Emart, GS Group, Louis Dreyfus Company, iSelect Fund, Fall Line Capital, Mercury Fund, Prelude Ventures, Prolog Ventures, S2G Ventures, and additional strategic and family office investors.  (FOOD navigator-USA.com)

Benson Hill technology

Benson Hill uses biotechnology, data science, and AI to enhance the nutritional qualities, flavor, and sustainability of crops and vegetables.

The firm’s “Cloud Biology” is the fusion of data, machine learning, and AI techniques with biology. Its “CropOS” is a proprietary platform that facilitates the accessibility and actionability of Cloud Biology.

The CropOs platform uses plant phenotyping, predictive breeding, and environmental modeling algorithms to better control the plant breeding process and realize these advantages:

  • Produces plants that are highly productive, highly nutritious, and better tasting
  • Better texture
  • Reduce the number of processing steps
  • Reduce the need for additives
  • Grow plants that “do more with less,” thus boosting sustainability

The company’s work so far has been concentrated around soybeans.

Its new, ultra-high-protein (UHP) soy products spiked the interest of investors. They come from a highly productive non-GMO soybean that is rich in oleic oil content.

Use of funds

Benson Hill plans the commercial launch of the first Ultra-High Protein soybean varieties in 2021, among other product launches.

It also plans to expand its team by adding top talent and continue the development of Cloud Biology and CropOS.

“As a society, we’re at a crossroads made more evident as the pandemic has revealed strengths and vulnerabilities in our food system,” said Matt Crisp, Benson Hill CEO. “Food choices that create enjoyment, make us stronger, and help preserve our environment need to be accessible to everyone, and the power of plant diversity and technology innovation can help fuel that evolution.

Related Story:   Smart Farm Technology To Take The Drudge Out of Plant Breeding

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Source: https://dailyalts.com/agtech-startup-benson-hill-lands-150m/

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FinTech: Alliance Data Buys BNPL Fintech Bread For $450M

Alliance Data Systems (NYSE: ADS) said Thursday that it will acquire Bread and its digital platform for $450 million of which $100 will be paid through Alliance stock. The transaction would expand Alliance Data’s own digital offerings by including buy-now-pay-later (BNPL) products.

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FinTech: Alliance Data Buys BNPL Fintech Bread For $450M

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Alliance Data will pay in cash and stock for the acquisition.

Alliance Data Systems (NYSE: ADS) said Thursday that it will acquire Bread and its digital buy-now-pay-later (BNPL) platform for $450 million of which $100 will be paid through Alliance stock.

The transaction would expand Alliance Data’s own digital offerings by including BNPL products. BNPL is a major trend now that consumers have embraced the interest-free, zero-fee facility to pay in installments. Alliance is a provider of data-driven marketing, loyalty, and payment solutions. (Alliance)

Digital BNPL is particularly popular with millennials and the younger set. They prefer not to run up credit card debt and like the speed and convenience. The technology and products acquired from Bread will address this segment of the population.

Bread already has tie-ups with merchants such as online jewelry seller Noémie, the luxury watch seller Hublot and Newton Baby, the crib mattress provider.

BNPL customer experience

“Bread’s flexible, easily-integrated payment solutions, coupled with Alliance Data’s Enhanced Digital Suite, will improve the digital customer experience and support increased acquisition and checkout rates, offering the best payment product to the right consumer at pivotal moments in the customer’s online shopping journey,” Alliance said in a statement.

Alliance intends to leverage Bread’s solutions along with its own existing private label, general-purpose and commercial products.

COVID-19

Its brand partners will therefore get another advantage in the eCommerce channel, with online businesses already getting a boost from COVID-19.

“With the timing of the holiday season upon us, the COVID-19 pandemic has accelerated the adoption of digital technologies, and perhaps nowhere as significantly as in financial services and payments,” said Val Greer, chief commercial officer, Alliance Data.

BNPL is now crowded with cash-rich players

Payments giant PayPal (NASDAQ: PYPL) announced in August that it would begin offering BNPL services, recognizing that COVID-19 had triggered a dramatic increase in their popularity.

Other players in the BNPL field include Klarna, Affirm, Afterpay, and Quadpay.

In a recent study, Tech Crunch found that PayPal had the highest retailer coverage with a presence of 65% retailers. Afterpay was a distant second at 10%, then Affirm 6%, Klarna 5%, and QuadPay 2%.

The study concluded that PayPal was primed to dominate the BNPL wars.

Related Story:   PayPal Challenges Klarna In U.K. BNPL Tussle                                                

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Source: https://dailyalts.com/alliance-data-buys-bnpl-fintech-bread-for-450m/

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