Exits of many different kinds

Asia Tech Review: 10 August 2020

Welcome back,

This week’s theme is exits: they are all around us and very different depending on where in the world you’re looking.

This newsletter went AWOL for a few weeks, my apologies for that. Writing it is a passion project for me but it can also be a busman’s holiday at times since I spend most of time working on stories, newsletters and more for The Ken.

But I wouldn’t want it any other way. The Ken just turned four last week—you can read this passionate note from our CEO. We just passed 25,000 paying readers, most of whom are in India such is the youth of our SEA subscription, and are just getting started.

Before I’m done, I want to recommend Pear Anderson’s SEA Covid summary emails for anyone curious of how the region (and travel, in particular) will recover, I’ve found it (and the podcasts) useful. Finally, I was interviewed by Tanya Aggarwal for her Medium publication blog—thanks again Tanya. (Takeaway: I’ve been in this part of the world for a long, long time!)

Until next time,



Unpacking Trump’s EO on TikTok and WeChat

The Trump administration’s executive order that will ban the use of TikTok in the US unless it is sold to a US owner within 45 days. (What an exit.) But it has also reeled in WeChat, which you’ll likely know is China’s top messaging app. Given the different scope of these apps, the order on each has very different impacts.

[You can read the TikTok EO here and the WeChat EO here—both form part of a “Clean Network” strategy]

Casting the political right or wrong behind the EO aside, WeChat is probably the most suitable candidate for a technology service to be banned in the US. (I’m of the opinion that this could set a dangerous precedent, for what it’s worth.) 

In practical terms, WeChat is the only real communications tunnel that connects China with the world. That’s a very deliberate situation. Beijing has blocked practically all overseas internet companies in China, and those it has allowed—such as Microsoft’s LinkedIn service—as subject to government pressure which essentially means they are not channels for secure information. (LinkedIn’s China censorship actually extends to all countries since it limits messages that it deems sensitive from appearing in China.)

That means WeChat is the only way for overseas Chinese to communicate with family or friends back home. Likewise, for those doing business with China, it was a crucial channel. VPNs, of course, can be used to access forbidden services on Chinese soil but it’s complicated since the government made them illegal (none are available for Chinese iPhones) with fines for those who use them. Government-registered VPNs are allowed but that means the user data can be accessed by the government.

Data on WeChat is absolutely accessible. You’ll recall that Dr Li Wenliang—who is widely credited with identifying Covid-19 when the outbreak began on Wuhan—was apprehended by police after messaging fellow doctors in a WeChat group. We’ve long known that certain terms are monitored and censored in conversations, but Dr Li’s example shows that close listening happens, too.

All of this should worry the US government since it is a recipe for espionage. Whether or not that justifies a ban is something else.

As for TikTok, The New York Times says government agencies don’t fear it like Huawei but the thread, to me, seems to be around shaping news narratives. The service has, for example, censored videos around Black Lives Matter protests in the US. That isn’t China-level yet—Beijing has a tight leash over what ByteDance surfaces in Douyin in China—but the fact that a Chinese service has such influence in the US, and elsewhere, is rightly a concern.

But the style of the deal—this apparent forced sale to Microsoft—is alarming. It’s the type of deal you’d expect to see in despotic nations not America.

Things to watch next:

  • Are other Chinese apps or digital services targeted by the US government?

  • What happens to WeChat when the 45-day EO is over? It seems unlikely Tencent will sell the service as ByteDance is doing to TikTok.

  • Will Tencent’s other businesses (read: gaming) be impacted in the US? The immediate answer seems no, but then WeChat wasn’t expected to be dragged into this.

  • How does ByteDance deal with a backlash in China, where it is seen as kowtowing to Washington(!)?

  • And—mostly obviously—can Microsoft pull off the TikTok deal? The scope of the deal has now expanded to cover more than just the US, with India reportedly part of Microsoft’s wishlist, while there’s also competing bidders including Twitter.

Further reading:

In other news

The Trump administration threatened to delist Chinese stocks that don’t provide access to audits. Despite that looming, Chinese companies are still tapping US public markets.

Li Auto, a five-year-old EV startup backed by ByteDance among others, raised $1.1B in a Nasdaq IPO. Meanwhile, digital property brokerage Beike filed to raise up to $2B in a US IPO—the largest Chinese listing in the US since 2018 and a potential SoftBank exit.

But many are also cutting their US ties. Microblogging site Weibo was last month rumoured to be delisting, now travel giant Ctrip is linked with a Nasdaq delisting on account of Covid-19 and Sino-US tensions, according to Reuters

The management of China’s largest online travel firm, with a current market value of $16.5 billion, has reached out to a number of financial and strategic investors including private equity firms and domestic tech companies about joining a take-private deal, said four people with direct knowledge of the matter.

Another, co-working service UCommune has also abandoned a listing although it remains unclear whether this was due to factors like WeWork’s demise more than politics

Huawei says it is running out of processor chips that it needs for smartphones

Ant Group will reportedly aim to raise $30B from its dual China-Hong Kong IPO—that would make it the largest listing ever. Elsewhere in the Alibaba family, Alibaba Health is raising $1B via a share sale

Apple is being sued for $1.4B over Siri patents—the case could impact products sold in China

Zoom will cease direct sales in China and instead run its local business via local partners—Zoom had been criticised for censoring users

Didi is launching its ride-hailing service in Russia

Tencent has been busy doing deals, its latest could be a merger between China’s top two games streaming services, which both count it as an investor. The merger entity could be worth $10B, according to Bloomberg.

YouTube banned over 2,500 Chinese accounts between April-June 2020 for engaging in “coordinated influence operations” on political issues

China will allow small investors to file class-action lawsuits

A real-name verification system for games will come into force in September

Hong Kong

Google, AWS and Microsoft reported rejected a proposal that would have given Hong Kong regulators access to customer banking records

Hong Kong publisher Jimmy Lai is arrested under National Security Law


Wired has a profile on Taiwan’s digital minister, who is quite unlike most politicians and helped get the country’s tech community involved in the pandemic response

Hackers backed by China have reportedly compromised at least seven Taiwanese chip firms over the past two years

Chip designer MediaTek has surged as Huawei has struggled:

When the U.S. administration moved in May to block Huawei Technologies Co. from accessing American technology to manufacture its chips, shares of Taiwan Semiconductor Manufacturing Co. dropped.

Huawei, the Chinese phone and telecoms equipment giant, was one of the custom chipmaker’s biggest clients and losing those orders was thought to pose a huge threat to revenue. Yet that same day, shares of another Taiwanese company jumped as much as their daily 10% limit, the most in almost five years.

MediaTek Inc., a designer of chips used in electronics including smartphones, has since climbed another 78% in Taiwan and by late July overtook the market value of Hon Hai Precision Industry Co., the Taipei-based flagship of iPhone maker Foxconn Technology Group. At the close of trade Wednesday, MediaTek was Taiwan’s second-biggest company, worth NT$1.2 trillion ($40 billion).


A quick exit

Byju’s bought 18-month old WhiteHat Jr. for $300M in what is an unprecedented deal as my colleague Olina Banerji explained last week:

Three things happened in the space of 12 months. Rapidly.

Twelve months ago, ex-Discovery India head Karan Bajaj created a PowerPoint, with his vision for a company that would teach Indian kids coding. He named it Whitehat Jr.

Six weeks ago, Bajaj met Byju Raveendran, whose company Byju’s just raised US$400 million from an investor. Who? Doesn’t matter. At this point, only Jio hasn’t bitten the Byju’s bullet.

Two days ago, Byju’s acquired WhiteHat Jr in an all-cash deal for US$300 million, putting its recent fundraise to good use.

In a matter of 12 months, WhiteHat pulled off the quickest exit in Indian edtech, at seven times its last known valuation—US$40 million.

Meanwhile, Byju’s is said to be close to raising $400M from DST Global. Fellow edtech platform Springboard raised a $31M Series B.

In other news

Speaking of big money: ShareChat is said to be negotiating a $200M investment from Sequoia, while Microsoft is also looking to invest. (That could make things interesting if it buys TikTok India as part of its US deal.) Sequoia itself has beefed up its team with new additions that include Gojek’s former CTO.

Zomato is reportedly looking to bank $100M in new funding from Tiger Global

Google’s next investment after Jio could be Policybazaar, which counts SoftBank among its bakers. Economic Times reports Google may buy 10% of Policybazaar for around $150 million.

India added 15 more apps to its China blocked list—Xiaomi, for example, is rewriting its MIUI operating system to remove banned apps for India-based users

Google is giving its digital learning tools to 23 million students and teachers in India’s Maharashtra state

Online pharma is tipped to follow education with a period of consolidation

Samsung is staging a comeback in India

UPI will soon add NFC as a payment option

RazerPay is reportedly raising money at a $600M valuation

Southeast Asia

The exit bus comes to town

Exit deals have been like buses lately. We’ve written a number of stories recently that mention a lack of exits in Southeast Asia—it’s an important topic—and in recent weeks three have emerged:

  • July 30: Line Man gobbled up Thailand-based restaurant search and booking site Wongnai as part of a $110M investment deal

Each deal is different but they all have something in common, the companies were all seeking a sale. That’s not to demean the deals, but it is important context. The three sales are a validation of sorts for Southeast Asia. It’s likely that Covid-19 forcing more companies to go digital helped each one get over the line, but we have not yet reached the point that buyers are proactively going to Southeast Asia and looking to get into the market with an acquisition: that’s a seller’s market.

But we do have signs of progress here. 

Southeast Asia can do Saas: Intuit is a global business that found a fit with TradeGecko’s product. The product is global so this isn’t a Southeast Asia deal per se but it’s a validation that global Saas companies can be started and become successful from Southeast Asia.

Thailand isn’t impossible: The Line Man deal is a positive sign about Thailand from another global company, Line, which sees a promising consumer market. That’s notable because it is a country that many overseas companies have struggled to break into.

Traditional players must go digital: The Chilindo deal is a sign that traditional retailers and old school conglomerates need to be digital players, too. There are sure to be many other deals like this in the future—some of which will generate far larger exits.

Investors are increasingly interested in Southeast Asia due to difficult political situations in China and India, and Sea (the company) is also shining light on the region with its surging stock performance. (Even though much of the analysis is rather too rosy for me.)

In other news

Grab is reportedly raising $200M from Korea-based PE firm Stic Investments—the company launched a range of new fintech products around investment last week

Payments is a complicated game in Indonesia: Gojek, which operates GoPay, and Grab, which is an investor in OVO, are both competing to invest in Linkaja, a government backed payment service, according to KrAsia

Southeast Asia is the next global showdown for streaming: includes Chinese players iQiyi, Tencent’s WeTV and Mango TV as well as Netflix, HBO and (soon) Disney+. Good overview from Bloomberg 🔒 

As if to prove the point:

Chinese streaming giant iQIYI is to boost its Southeast Asia operation with the appointment of three new country managers. Two hail from Iflix, the regional streamer now being acquired by Tencent Video.

IQIYI said that former Iflix executive Sherwin Dela Cruz had been hired as its country manager for the Philippines. Dinesh Ratnam, also previously with Iflix, will oversee the markets of Malaysia, Singapore and Brunei. Steven Zhang of live streaming platform Jovy will join iQIYI as country manager in Indonesia.

E-commerce enabler aCommerce says it is aiming to raise $200M in an IPO next year—company has talked about listing before, but this appears more advanced

Thailand is threatening Facebook with legal action if it doesn’t comply with requests to restrict content deemed illegal, including perceived insults to the country’s monarchy

Wahyoo raised $5M to help digitise small restaurants in Indonesia

Indonesia plans to expand its 10% digital tax initiative to cover Facebook, Netflix, Disney and others


Nintendo is killing it as game playing spikes during Covid (speaking personally, I am from a two Switch household)

TOKYO -- Nintendo posted its highest ever operating profit for the April-to-June quarter, logging a 427% rise to 144 billion yen ($1.3 billion), the Japanese gaming giant said on Thursday, as lockdowns and other social restrictions brought on by the coronavirus led to a surge in demand for its popular Switch console and game titles.

Net profit for the period reached its highest level since 2008, jumping 541% to 106 billion yen, while revenue doubled to 358 billion yen.

The Kyoto-based company attributed its bumper performance to strong demand for the Switch console as well as higher software sales, including those of smash hit "Animal Crossing: New Horizons."

Payment firm Hey raised an undisclosed sum from Bain Capital

South Korea

The New York Times relocation of staff shows Seoul is now a credible rival to Tokyo and Singapore when it comes to tech and business hubs in Asia

Longer reads

Last week on The Ken

I work at The Ken where we publish one daily story for each of our subscriptions. Here’s a recap what we ran over the last week:

Southeast Asia

  • SGX’s corporate governance challenge is RegCo’s opportunity link [free read]

  • Rocket Internet ventures into a crowded space searching for relevance link

  • Willson Cuaca and East Ventures’ race against themselves link [free read]

  • From Eko to Amity, a college dropout’s hurry to escape his family’s shadow link

  • The Southeast Asia encroachment of Singapore’s data hub position link


  • The problem with Nisaba Godrej’s silver linings playbook link

  • The Interview – Kunal Shah on improving Indians’ relationship with money through CRED link

  • To fix retail store dependence, Epigamia pours into digital link

  • The 32-year-old who wants to bring down the edifice of India’s fintech revolution link [free read]

  • The unbearable heaviness of being Jio Platforms link

  • Decoding Byju’s $300-million acquisition of WhiteHat Jr link

You can sample more stories on our free reads page.

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