Rishi Taparia - Issue #37
This week we explore Walmart’s bid for Flipkart, Verifone going private, Ant Financial’s monster financing, The Copernican Revolution in Banking, Facebook on Capitol Hill and more. Enjoy!
Commerce
Walmart Said to Be Close to Buying Flipkart, Deal Likely by End-June
Walmart is taking major aim at Amazon in international markets, now on the brink of its largest weapon yet. Supposedly done with diligence, Walmart has made a proposal to buy 51 percent or more of the Indian ecommerce giant between $10 billion to $12 billion, valuing the business at close to $20bn. One wrinkle in the deal could be Softbank who owns 20% (because, duh), who is unlikely to sell any shares due to a belief that the price is too cheap. More to come here for sure.
Online retailers go offline in China - Two Ma race
The concept of ‘omnichannel’ has taken on new meaning in China where Alibaba and Tencent continue to battle with an increased focus on offline retail (which makes sense considering 85% of spend is still done offline, hence the QR code payments movement etc.) Experience in grocery is especially unique, with “Eat-as-you-shop” and cashier-less checkout already mainstays. With the top five grocery providers in China controlling 27% of the market (compared to 78% in Britain as an example), the conditions are ripe for experimentation.
FinTech
Verifone to be Acquired by Francisco Partners for $3.4 Billion
In what was only a matter of time, payment terminal manufacturer Verifone will be acquired by Francisco Partners for $3.4bn. The company had been on a downward spiral, trading at lows not seen since the 2008 financial crisis. The offered price per share of $23.04 represents a 54% premium to the $15 close, a *generous* price that I can only imagine was agreed to prior to the last month over which the stock dropped by 20%.
China’s Ant Financial shows cashless is king
Ant Financial will be bigger than Alibaba. Raising $9bn on a $150bn valuation as a lead up to IPO, the round was supposedly bid up from a $100bn val due to the insane amount of investor demand.
It's big business, and it's just getting started.
It’s Time For A Revolution – Confessions of a FinTech Junkie
A terrific presentation done by Frank Rotman of QED Ventures made a LendIt this week on what he calls ‘The Copernican Revolution in Banking’. He makes the argument that while historically the world has operated under a geocentric model of banking - banks must manage a complete suite of banking products (core banking, lending, payments, wealth management, etc.) and offer these products to all clients through all channels - these a priori beliefs must be challenged as consumers now have a plethora of choice and will naturally gravitate towards best in class products as opposed. Worth a flip and some thought.
PayPal Makes a Move Toward Traditional Banking
PayPal continues to try and expand their product offerings and scope of service for their customers. The company has been quietly reaching out to groups of customers in recent months with an offer to add basic banking features to their PayPal digital wallet. While currently operating without a banking license and continuing to insist that they have no intention of ‘being a bank’ clearly they, like others including Square and Ant Financial, are hoping to drive higher customer LTV without being subject to the regulatory burdens traditional banks face.
Technology
The Facebook Current
Mark Zuckerberg appeared before congress this week following the Cambridge Analytica debacle that has plagued the company over the last few weeks. Consensus is that Zuckerberg came out ahead (investors certainly thought so with the stock price rising by almost 5% while he was testifying!) thanks to poorly informed questions and a partisan divide in congress, each side with their own agenda. Ben Thompson (whom I recommend following in general) breaks down the two clear and articulable viewpoints in the Facebook debate.
Random Tidbits
22 Ambassadors Recommend the One Book to Read Before Visiting Their Country
Not usually one for recommending lists of things, this one is an exception. Language learning app Babbel asked foreign ambassadors to the U.S. to pick the book they believe first-time visitors to their country should read before they arrive. With Spring break having come and gone, hopefully this takes care of some of that wanderlust.
Quote I’m thinking about: “When we are no longer able to change a situation, we are challenged to change ourselves.” - Viktor Frankl