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Emerging Markets Daily - March 11
SE Asia's Grab Eyes US SPAC Listing, Coupang Aims to Raise $4.2 B on NYSE, China Correction "Welcome", Cathay Pacific Record Loss, Saudi PIF in $15B Raise
Southeast Asia’s Grab Holdings Eyes US Listing Via SPAC
“Grab Holdings Inc. is exploring going public in the U.S. through a merger with a blank-check company as the Southeast Asian ride-hailing and delivery giant seeks to expedite its listing process, according to people familiar with the matter.”
“JP Morgan Chase & Co and Morgan Stanley, which are already advising Grab on its initial public offering plans, are working with the startup to identify special purpose acquisition companies that it could combine with, the people said. Still, a U.S. listing via a traditional IPO isn’t off the table, said the people, who asked not to be identified as the discussions are private.”
“Merging with a SPAC, a shell company whose sponsors raise money from investors in order to buy a private company and give it a berth on a public exchange, would allow Grab -- Southeast Asia’s most valuable startup backed by SoftBank Group -- to accelerate its listing process. Several of the region’s tech unicorns including Traveloka are considering going public through blank-check companies to ride on the red-hot sentiment,” Bloomberg reports.
South Korea’s Coupang Hopes To Raise $4.2 Billion With NYSE Listing
“South Korean e-commerce giant Coupang Inc. priced its initial public offering above a targeted range to raise $4.2 billion based on the planned size of the share sale, according to a person familiar with the matter.”
“In one of the biggest listings by an Asian company on a U.S. exchange, Coupang priced its shares at $35 each on Wednesday, the person said, asking not to be identified because the information wasn’t public yet.”
“The company and its existing shareholders had planned to sell 120 million shares for $32 to $34 apiece. That range had been boosted earlier from $27 to $30, signaling strong demand from investors.”
“Japanese conglomerate SoftBank Group Corp, its biggest shareholder, is poised to reap a gain of about $16 billion from the IPO, burnishing the reputation of founder Masayoshi Son in picking successful startups even after a number of missteps.”
“In November 2018, SoftBank’s Vision Fund invested $2 billion in the company in a deal that valued Coupang at $9 billion, people familiar with the matter said at the time. That funding followed $1 billion from SoftBank itself in 2015, valuing the startup at about $5 billion.” Bloomberg reports.
China Stock Market Correction Could Be “Welcome Adjustment”
“China’s stock market correction may have further room to go and should be seen as a welcome adjustment as it helped shave valuation excesses and create a base to mount another rally, according to a BCA Research strategy report.”
“The report came after the CSI 300 Index retreated almost 14 percent from its record-high on February 10 amid a surge in US government bond yields. The broader Shanghai and Shenzhen markets have now lost a combined US$1.35 trillion in value from its peak of US$11.5 trillion, according to Bloomberg data. The CSI 300 price-earnings multiple reached 22 times last month, matching the peak before the 2015 market crash.”
“‘The good news is that recent gyrations in the US equity market, coupled with concerns about further tightening in China’s domestic economic policy, have triggered shakeouts in China’s equity markets,’ strategist Jing Sima said in a March 10 report. ‘The pullback in stock prices has helped to shed some excesses in frothy valuations and has opened a door for more upsides in Chinese stock on a cyclical basis,’” South China Morning Post reports.
Hong Kong’s Cathay Pacific Posts Record $2.78B Annual Loss
“Hong Kong's Cathay Pacific reported a record annual loss of HK$21.6 billion ($2.78bn) in 2020, after "the most challenging 12 months" it has endured in its more than 70-year history.”
“The carrier swung to an annual loss from a profit of HK$1.69bn in 2019, due to a pandemic-induced downturn in global traffic, restructuring costs and impairment charges related to its fleet, Cathay Pacific said in a filing to the Hong Kong stock exchange on Wednesday.”
“Full-year revenue plunged 56 per cent to HK$46.9bn, as passenger demand declined amid the pandemic while its air cargo business contributed 60 per cent of total revenue.”
"‘Market conditions remain challenging and dynamic,’ Patrick Healy, Cathay Pacific's chairman, said. ‘It is by no means clear how the pandemic and its impact will develop over the coming months.’”
“The carrier's shares dropped 1.1 per cent when trading resumed on Wednesday following the results that revealed the extent of damage in 2020. The airline had already warned the figures would be grim following a first-half loss of HK$9.87bn.” The National reports.
Saudi Arabia’s PIF Secures $15 B Credit Facility for Future Investments
“Saudi Arabia's sovereign wealth fund, the Public Investment Fund, said on Wednesday it has signed a $15 billion multi-currency revolving credit facility with a group of 17 banks, which it said gives it access to extra capital that can be deployed quickly when needed.”
“The fund manages a portfolio worth $400 billion. It has boosted its firepower through several funding sources in recent years, including a $40 billion transfer from central bank reserves last year.”
“PIF started raising bank debt in 2018 with an $11 billion facility, followed in 2019 by a $10 billion loan which it then repaid last year. The new loan was provided by 17 banks from Asia, the Middle East, Europe, the United Kingdom and the United States, PIF said in a statement on Wednesday.”
“PIF is pursuing a two-pronged strategy, building an international portfolio of investments while also investing locally in projects that will help reduce Saudi Arabia's reliance on oil.”
“Crown Prince Mohammed bin Salman, the architect of Saudi Vision 2030 that aims to wean the economy off oil, said the wealth fund plans to pump at least 150 billion riyals ($40 billion) into the local economy each year through 2025,” Asharq Al-Awsat reports.