Tuesday Tech Briefing: Alibaba, Legend Holdings, Ele.me
BIG TECH COMPANIES
1. Alibaba Forms Partnership With French Logistics Company Bollore Group
What: French logistics company Bollore Group has formed a partnership with Chinese e-commerce giant Alibaba Group, covering cloud computing, clean energy, logistics and other areas.
Why it’s important: Bollore Group runs a large logistics business in Asia and Africa, and has a roughly 20 percent stake in French media company Vivendi. The partnership will help Alibaba expand its logistics network overseas.
Big picture: Alibaba has stepped up investment in its logistics network in recent months. In June, its logistics arm Cainiao Network Technology Co. announced that it would set up a joint venture with China National Aviation Corp. (Group) Ltd. and YTO Express Group Co. to invest $1.5 billion in a new logistics center at Hong Kong International Airport. Cainiao is also working with Emirates SkyCargo, the freight division of Emirates airline, to jointly develop a logistics hub in Dubai. (Source: Reuters)
2. Alibaba-backed Ele.me to Invest Billions to Upgrade Local Services
What: Food delivery company Ele.me announced on Monday that it will invest billions of yuan in the next two months to upgrade its services for merchants. Ele.me, acquired by Alibaba Group over three months ago, plans to improve its logistics system and offer consumers more discounts.
Why it’s important: Ele.me is the strongest competitor of Meituan-Dianping. With Meituan in the process of making an initial public offering in Hong Kong, Ele.me is hoping to upgrade its system and take market share from Meituan with the strong support of Alibaba. (Source: 36Kr, link in Chinese)
3. Deppon to Invest 3.5 Billion Yuan Per Year in Large-Scale Express Logistics
What: Package-delivery firm Deppon Logistics Co. Ltd. announced on Monday night that it will change its name from Deppon Logistics to Deppon Express to emphasize that it’s an express delivery company. Deppon also said it will invest 3.5 billion yuan ($522 million) per year in large-scale express logistics, allowing consumers to deliver packages weighing up to 60kg (132 lbs).
Why it’s important: Traditionally confined to the business-to-business market, Deppon has for years wanted to take part in the booming e-commerce industry and work directly with consumers. With some 130,000 employees, Deppon was slower to go public than most of China’s other top delivery firms, listing in Shanghai earlier this year. The IPO has offered Deppon financial resources to invest in its express delivery service. (Source: Caixin, link in Chinese)
4. WeChat to Start Charging Service Fee for Credit Card Repayment
What: China’s largest social platform WeChat announced that, starting from Aug. 1, it will charge users a 0.1% fee on credit card repayments through the app’s WeChat Wallet. WeChat previously paid the fee for users, but has decided to abandon that practice now.
Why it’s important: According to WeChat, about 13.6 percent of its 1 billion monthly active users have signed up for the credit card repayment service. This policy change may signal the beginning of the end for China’s free-of-charge mobile payment services. (Source: South China Morning Post)
DEALS AND FUNDRAISING
5. Legend Holdings Completes Acquisition of Luxembourg’s BIL Bank
What: Lenovo’s parent company Legend Holdings Corp. announced on Monday that it has received the green light from regulators in Europe and China for its purchase of Banque Internationale à Luxembourg (BIL). Legend Holdings now owns a close to 90% stake in BIL, with the Luxembourg government keeping close to 10%.
Why it’s important: BIL is Luxembourg’s leading bank with a long history and an excellent brand image. After the acquisition, Legend Holdings’ market performance will be less dependent on PC maker Lenovo Group. (Source: Caixin, link in Chinese)
6. Taking Softbank’s Lead, China, UK Form $15 Billion Tech Fund
What: China Merchants Group and SPF Group announced that they will partner with London-based investment firm Centricus to launch a 100 billion yuan ($15 billion) fund to invest or acquire tech companies mainly in China. The plan is similar to Softbank’s $100 billion Vision Fund, which was formed in 2017.
Why it’s important: The technology investment market has been flooded with private equity and sovereign wealth funds in recent years. Softbank has announced that it will set up a second Vision Fund in the near future, and the market is worried about a potential bubble. (Source: Reuters)
7. Biotech Startup Innovent Files for Hong Kong Debut
What: Innovent Biologics, a Chinese biomedical developer backed by Singapore’s Temasek Holdings, filed for an IPO in Hong Kong after the bourse opened the door for pre-profit biotech startups to list. Innovent reported combined losses of 1.49 billion yuan ($225 million) during its seven years in business, according to the prospectus it submitted to the Hong Kong stock exchange last week.
Why it’s important: Innovent has raised almost $490 million through five rounds of equity funding since its inception seven years ago. Major backers include Temasek, Fidelity, Hillhouse and Legend Capital. In April, Innovent closed its latest $150 million fundraising round, which gave it a valuation of more than $1 billion.
Big picture: Innovent is the third China-based pre-profit biotech company to apply for listing in Hong Kong under a regime revised in April to allow early-stage biotech issuers. Hepatitis C drugmaker Ascletis Pharma Inc. and diabetes drug developer Hua Medicine filed for Hong Kong listings in May and are awaiting regulatory review. (Source: Caixin)
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