Emerging Markets Daily - September 15

India's Paytm Preps $2.2B IPO, SoftBank Makes First Saudi Deal, Global VC's Eye Nigeria Tech, Korean Peninsula Tensions, Serbia Leads Emerging Europe Economies

The Top 5 Emerging Markets Stories from Global Media - September 15

  1. India’s Paytm Preps $2.2 Billion IPO Amid Rising Competition

    Wall Street Journal

    “Paytm, a pioneer in mobile payments in India and one of the country’s best-known startups, set out years ago to build an ubiquitous digital-finance ecosystem much like Ant Group Co.’s Alipay in China.”

    Now, as Paytm’s owner nears a $2.2 billion listing that will see it beat Ant to public markets, the company isn’t the dominant player it wanted to become and faces mounting challenges in an increasingly crowded Indian payments market. It has already been overtaken in one key area by deep-pocketed rivals including Alphabet Inc.’s Google and Walmart-backed Indian startup PhonePe.”

    “One97 Communications Ltd., which owns Paytm, is targeting a market valuation of $25 billion when it goes public at home this autumn. The listing will generate hefty profits for 43-year-old founder Vikay Shekhar Sharma and a star-studded list of investors including SoftBank Group Corp.’s Corp.’s Vision Fund and Warren Buffett’s Berkshire Hathaway Inc.”

    Ant has invested around $900 million in One97 and would be among the biggest winners in the deal, which is taking place at a time of simmering tensions between India and China. Ant intends to reduce its stake to under 25% from 29.6% now, according to people familiar with Ant’s thinking.” Shefali Anand and Jing Yang report.

  2. SoftBank Makes First Saudi Deal, Third in Mideast in Recent Months

    Bloomberg

    “SoftBank Group Corp. has made its first investment in a company based in Saudi Arabia, partnering with a unit of the kingdom’s sovereign wealth fund to lead a $125 million financing for customer communication platform Unifonic.”

    “Proceeds will be used to fund growth in the Middle East and expansion into Asia and Africa, Unifonic co-founder and Chief Executive Officer Ahmed Hamdan said in an interview. The company will also look at acquisitions in those regions to help it expand faster, he said.”

    The Unifonic deal is funded through SoftBank’s Vision Fund 2, and follows on from July’s $415 million fundraising by Dubai-based cloud kitchen startup Kitopi, which was SoftBank’s first in a business based in the United Arab Emirates and took that company’s valuation past $1 billion. Last month, it also co-led a financing round for Turkish e-commerce company Trendyol.

    SoftBank’s foray in the Middle East comes with a growing number of so-called unicorn businesses worth at least $1 billion. More investors from outside are looking to bet on a shift to online services that has lagged other regions.” Matthew Martin reports.

  3. Global VC’s Vying for Stakes In Nigeria Tech

    Rest of World

    “In 2010, Idris Ayodeji Bello gave up his lucrative job at a major oil company in Texas to return home to Nigeria. Bello believed that Nigeria’s tech sector was poised to explode, so he and three partners established Wennovation Hub, a tech hub to support entrepreneurs and test innovative ideas…”

    “In 2012, Bello and his partners, then in their early 30s, took a bigger risk. They raided their pension funds to create the LoftyInc Afropreneurs Fund 1, an angel investment fund that invested between $25,000 to $50,000 in promising founders. Nigeria’s tech ecosystem was still at a very early stage, and several of LoftyInc’s investments failed. But two — Andela, the developer training platform, and fintech company Flutterwave — would go on to attract hundreds of millions in follow-on funding.” 

    The ticket sizes in Nigerian venture capital have grown substantially since Bello started writing checks. In March, Tiger Global led a $170 million round into Flutterwave, pushing the company’s valuation over $1 billion, and making it Nigeria’s third unicorn. In August, the Japanese mega-investor, SoftBank, joined Sequoia Capital China in a $400 million investment into OPay, a Lagos-based mobile money company.” 

    “The entry of these firms — major investors in the tech sector in emerging markets — has been interpreted as a sign of validation for founders pointing to the growing maturity of the Nigerian ecosystem. Where these funds go, other investors tend to follow.” 

    ‘There isn’t a major global VC firm I’ve spoken to in the last 12 months that isn’t seriously exploring opportunities to immediately deploy funds in Africa right now,’ Aaron Fu, head of growth at the global tech accelerator Catalyst Fund told Rest of World.” Abubakar Idris reports.

  4. Geopolitics: Both Koreas Test-Fire Ballistic Missiles Amid Tensions

    Washington Post

    “Both Koreas test-fired ballistic missiles hours apart from each other on Wednesday in the latest sign of the intensifying arms race on the peninsula amid stalled diplomatic efforts.”

    North Korea fired the two short-range ballistic missiles off its east coast, just two days after it announced a test of a new long-range cruise missile capable of hitting Japan — likely violating U.N. Security Council resolutions and putting renewed pressure on the Biden administration’s efforts to end North Korea's nuclear and ballistic missile program.”

    “South Korea then conducted its own test hours later, launching an underwater ballistic missile fired from a submarine and successfully hitting a designated target — making it one of just a handful of countries with the capability to do so.”

    “While their timing may be coincidental, the duel tests point to growing tensions on the Korean Peninsula. Pyongyang is retreating further from engaging with other countries during a self-imposed coronavirus lockdown, and Seoul is seeking to reduce its military dependence on the United States.” Michele Ye Hee Lee reports.

  5. Serbia Leads Emerging Europe Economies

    bne IntelliNews

    “Serbia was one of the best performers in the entire emerging Europe region in 2020, with its economy contracting by a mere 1% during the pandemic year, in stark contrast to some of its neighbours. The economy is now on track for rapid growth this year — provided the latest wave of the pandemic doesn’t prove to be too much of a setback. “

    “In the depths of the crisis in Q2 of last year, Serbia’s economy contracted by only 6.3%. By the first quarter of 2021, the economy returned to year-on-year growth. Serbia’s real GDP growth in the second quarter was 13.7%, exceeding the flash estimate of 13.4%…”

    “The European Bank for Reconstruction and Development (EBRD) wrote in its latest Regional Economic Prospects report: ‘The effects of the COVID-19 pandemic on the economy were moderate in 2020. The structure of the economy — limited reliance on tourism and a relatively high share of basic goods such as food and some chemicals in manufacturing — combined with large government aid packages and less restrictive lockdown measures for most of the year, contributed to a GDP contraction of only 1%.’” Clare Nuttal reports. 

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