Their goal: to make money, and to do social good.
Chinese Internet giant Alibaba Group Holding Ltd., in its biggest overseas acquisition to date, said Tuesday it would pay about $1 billion for a controlling stake in Singapore e-commerce startup Lazada Group, betting on growth in populous Southeast Asia.
The acquisition of Lazada—which sells everything from rice cookers to smartphones and operates e-commerce platforms throughout Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam—comes as Alibaba has been using its $3.7 billion in free cash flow to expand into e-commerce, logistics and media, as well as entertainment both at home and abroad.
You may recall back in 2014 I wrote about Lazada’s operations in Indonesia, Southeast Asia’s largest market. (I snapped the image above at a Lazada warehouse outside Jakarta.) The nut graf:
Challenges are par for the course at Lazada Indonesia, founded in Jakarta in 2012 and partly funded by Rocket Internet AG, a Berlin-based tech incubator that went public last month. Indonesia’s e-commerce market is still small, and Lazada had to build a lot of what it needed from scratch. But the company is plowing ahead so it can get a head start in the country over international giants like Amazon.com Inc., Alibaba Group Holding Ltd. and eBay Inc.
Lazada already gets more visitors than any other business-to-consumer site in Indonesia, according to data from research firm SimilarWeb. Lazada’s site saw 6.6 million visitors a month, compared with 3.9 million for Alibaba’s marketplace website AliExpress.com and 2.2 million for eBay, according to the most recent data available from brokerage UBS.
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Thanks for reading Newley’s Notes, a weekly newsletter where I share my WSJ stories, posts from my blog, and various interesting links.
I’m back after an excellent week off that included seeing friends, lounging on the beach, and reading some fantastic books — real, old-fashioned, paper books! Among them: Jonathan Franzen’s newest novel, “Purity,” which I absolutely loved for its vivid characters and plot lines that span decades.
On to this week’s update:
What I wrote in The Wall Street Journal:
+ Blackstone to Buy HP Enterprise’s Stake in Mphasis — HP Enterprise stands to make about $825 million on the deal, selling its stake in the Indian outsourcer. Private equity titan Blackstone, meanwhile, is showing their optimism in outsourcing even as the industry faces big challenges.
+ Singapore’s Garena Raises New Funds, Valuing It at $3.75 Billion — In this exclusive, I wrote about the Southeast Asia-focused online gaming and e-commerce company’s newest fundraising, showing investors’ confidence that it will continue to grow. Click through a video, narrated by yours truly.
+ Online Auctioning Made Easier With Asia-Based Apps — My colleague and I wrote about the rise of consumer-to-consumer shopping apps, like Singapore’s Carousell and Shopee and Japan’s Mercari. This one also has a video.
5 items that are worth your time this week:
1. Various non-fiction filmmakers tell The Guardian about their favorite documentaries. There are fifty interesting films on this list, many new to me.
2. A graffiti artist in Cairo recently unveiled a fascinating piece that spans dozens of buildings. Very cool.
3. I am a huge notebook nerd, and I enjoyed this roundup of 16 well-known designers displaying photos of their favorite notebooks. (Via the always-fun Notebook Stories blog.)
4. A space archaeologist — yes, you read that right — at the University of Alabama at Birmingham examined high-altitude infrared images, discovering what might be the “holy grail” of Viking landmarks: a second settlement in North America.
5. Quote of the week: “Men want to see normal-looking guys modelling their clothes.” That’s from plus-size male model Zach Miko, the first such model signed to IMG. (Thanks, Anasuya!)
Have a great week!
Hewlett Packard Enterprise Co. said on Monday it planned to sell its majority stake in Indian outsourcing firm Mphasis Ltd. for about $825 million to Blackstone Group LP, as the U.S. technology company seeks to shore up capital following a recent decline in revenue.
Blackstone will purchase at least 84% of HP Enterprise’s majority stake in Mphasis for 430 rupees ($6.49) a share, showing the private-equity firm’s optimism in Mphasis’s prospects even as the industry faces technological challenges.
Besides buying HP Enterprise’s stake, Blackstone said Indian takeover laws require it to buy 26% of Mphasis’s shares via a mandatory tender offer to the company’s public shareholders. Depending on the demand for that offer, the private-equity firm said it could end up spending as much as $1.1 billion on its investments in Mphasis.
HP Enterprise said its decision to sell its position in Bangalore, India-based Mphasis aligns with the company’s capital allocation priorities, which it has said include directing investments toward developing new products and services. The company also has said it would pursue more mergers and acquisitions.
A recent week-long vacation combined with subsequent general busyness means I’ve been delayed in pointing out a couple of recent stories.
The first is a story my colleague and I put together on the rise of Asia-focused consumer-to-conumser shopping apps. Think eBay, but for the smartphone age.
Instead of listening to music or playing videogames during his daily train commute in Singapore, Jay Pang uses the down time for something different: selling rare sets of Legos via his smartphone.
Mr. Pang frequently manages listings for his online business using a new e-commerce app called Shopee. The app was created by a unit of Garena Online, a fast-growing Internet startup in Singapore valued at $2.5 billion. Mr. Pang frequently taps away on his Samsung Galaxy smartphone during his ride, haggling over prices with customers in real time.
The 29-year-old engineer’s on-the-go business offers a look at the changing face of commerce in the era of the smartphone and is a blueprint for how mobile shopping could evolve elsewhere.
Consumers in the U.S. use their mobile devices more for getting directions or listening to music than for making purchases, according to a 2015 survey by the Washington, D.C.-based Pew Research Center.
But a handful of Asian startups are starting to change the commercial landscape by offering apps that let individuals buy and sell goods directly from one another more easily than on traditional Web-based sites like eBay. The so-called peer-to-peer commerce market is attracting funding from international investors and some companies have valuations of $1 billion or more despite the global economic slowdown.
There’s also a video, narrated by yours truly, embedded at the top of the post and online here.
The second story, out Thursday, is an exclusive: Singapore-based startup Garena has has raised a new round of funding at a valuation of about $3.75 billion.
The piece begins:
Investors are plowing fresh funds into a fast-growing Internet company focused on populous Southeast Asia despite falling valuations for some less-successful startups in the U.S.
Garena Interactive Holding Ltd. has raised $170 million in fresh capital in a fundraising round led by Malaysia’s state investment arm, Khazanah Nasional Bhd., valuing the Singapore-based online entertainment and e-commerce startup at about $3.75 billion, according to a person familiar with the situation.
Garena has now raised more than $500 million, including a round of fundraising in March 2015 that valued the firm at more than $2.5 billion, the person said. The company didn’t disclose other investors in the new round. Earlier investors include the Ontario Teachers’ Pension Plan, one of Canada’s biggest pension funds, and U.S.-based private-equity fund General Atlantic LLC, though neither participated in the new round.
There’s a video for this one, too, embedded above and online here.
Facebook, as we all know, has a gargantuan user base — some 1.59 billion people, to be exact.
And as its recent earnings show, the company is doing extremely well, raking in more than $1 billion in quarterly profit for the first time.
Last week here in Singapore I spoke with Dan Neary (pictured), Facebook’s Asia-Pacific vice president, about big picture trends in the region.
In short, the company seems to have many reasons to be bullish on continued Asia expansion.
Facebook Inc. is adding users in Asia at a much faster rate than other parts of the world, an executive said, showing the recent controversy over the firm’s free Internet service in India is not deterring the social networking giant’s expansion in this part of the world.
Dan Neary, Facebook’s vice president for Asia Pacific, told The Wall Street Journal in an interview Tuesday that some 540 million of Facebook’s 1.59 billion monthly active users were in Asia as of the end of December, up from 449 million a year earlier.
Facebook is adding users in Asia at a rate of about 20% annually compared to 14% globally, he said.
“The potential is greater in Asia-Pacific than it is in any other region because we’ve got two thirds of the world’s population, and it’s all mobile,” Mr. Neary said.
Also, for the first time, Instagram has broken out the number of users in a country outside the U.S.: It has 22 million in Indonesia, up from 11 million a year ago:
Mr. Neary pointed out that the company’s image-sharing platform, Instagram, is popular in many parts of Asia, as is its WhatsApp messaging app. Instagram is making particularly big gains in Indonesia, Mr. Neary said, which is a key global market due to its population of 250 million.
The service now has some 22 million monthly active users, up from 11 million a year earlier, making it one of Instagram’s fastest growing markets. Instagram has not previously broken out its user base by country, though it said in September that more than 75% of its community is outside the U.S.
Again, the full story in online here.
Acquired recently in Ho Chi Minh City, Vietnam.
Backstory is here.
Pat Conroy, the best-selling novelist and proud adoptive son of the Lowcountry who wrote lyrically about Charleston and unflinchingly about The Citadel, died Friday. He was 70.
The author of “The Great Santini,” “The Lords of Discipline” and “The Prince of Tides” and eight other books passed away shortly after being diagnosed with pancreatic cancer. He died at 7:43 p.m., surrounded by loved ones and family.
I wanted to expand on these Tweets I posted not long after the news broke:
I enjoyed Conroy’s books for their lyricism and their setting: Like Conroy, I moved to South Carolina’s Lowcountry as a teenager, first landing in Hilton Head and then moving up the coast to Beaufort. And I appreciated that he so vividly portrayed what is so compelling about the South — namely, its many warm people and its haunting geography, especially along the coastline, which is dotted with marshes and trees that drip Spanish moss.
At the same time, though, Conroy did not shy away from illuminating the region’s many flaws, such as its horrendous legacy of racism and the fact that bigoted attitudes are still a fact of life for many even today.
In 1995, it must have been, when Beach Music came out, Conroy appeared at a bookstore on the Emory University campus in Atlanta, where I was a junior and studying English.
Like many college students, I was short on cash, and wasn’t able to spring for the hardcover of the new book. But I brought an old, battered mass market paperback copy of The Prince of Tides, his previous novel, that I’d brought to school and had recently read.
He was there with this father — an abusive figure he’d written about; he stood by silently — and when the event ended I approached the younger Conroy. When I told him I was “from” Beaufort, he broke into a big grin, shook my hand, and said he was delighted to meet me.
He asked me a few questions about what I studying, and said I should “give him a holler” if I ever saw him out and about back at home.
I never saw him again, but that brief interaction has remained with me all these years.
I’ll have to search out that copy of The Prince of Tides I gave him to sign — appropriately, it remains at the family home in SC — but if memory serves, the inscription reads, “To Newley, for the love of South Carolina and the Lowcountry.”
Silicon Valley’s 500 Startups is starting a fund to pump money into Vietnam, a sign that some foreign investors believe the communist state’s technology scene is set to blossom.
The Mountain View, Calif.-based seed investor and startup incubator said Tuesday that it aims to invest $10 million in some 100 to 150 startups in the fast-growing country.
“I’ve been watching the tech scene here since 2010, and back then it was way too early” to invest, Eddie Thai, a 500 Startups venture partner, told The Wall Street Journal Tuesday at an event to launch the fund in Ho Chi Minh City.
“Over that period of time, the macros [macroeconomic conditions] improved,” said Mr. Thai. “Internet access improved, smartphones became ubiquitous,” and the teams running startups in Vietnam have gotten “stronger and stronger every year,” he said. “This is our call to everybody to say we’re investing, come to us.”
U.K.-based consultancy We Are Social says smartphone ownership is growing quickly in Vietnam, and that 55% of adults in the country now use the devices. The country is also young: Some 41% of the country’s more than 94 million people are below the age of 24, according to CIA World Factbook data. That means there is a huge potential for companies to tap into a growing base of users.
I had a story Wednesday on the front page of our Business & Tech section. You can see it in this image, under the headline “India Welcomes Home Tech Talent.”
It’s about Indian-born entreprenuers who are increasingly returning to their home country to build startups.
BANGALORE, India—Last year, Abhinandan Balasubramanian quit his job at a London-based financial-technology company. The startup scene in his native India was booming, and he wanted in.
The 25-year-old Mr. Balasubramanian moved to Mumbai and in December launched his own business there: Altflo, a global online marketplace for assets such as real estate and shares in investment funds.
Basing Altflo in India was an easy decision, Mr. Balasubramanian said. “The cost of scaling the company is much lower in India,” he said. Office space and talent are “multiples cheaper than in the U.K.”
Lured by a flood of venture-capital funding, relatively inexpensive labor and the size of the potential market in the world’s second-most-populous country, entrepreneurs and technology workers with Indian roots have been coming home in increasing numbers.