Credit: Giphy
Also in this letter:
- Indiagold raises $12 million from PayU, others
- Dealmaking booms in Southeast Asia
- Cuba to recognise and regulate crypto
China plans to ban foreign IPOs for tech firms with data security risks: report
The Chinese government is framing rules to ban certain internet companies from listing on stock exchanges outside the country, including in the US, Reuters reported, citing a person familiar with the matter.
Which ones? Under the planned rules, the Chinese securities regulator would tighten scrutiny of overseas IPO-bound firms and ban those that collect vast amounts of user data or create content that could pose potential security risks, the source said.
How it will work: All internet firms planning to list their shares outside China would be asked to voluntarily apply for reviews with the powerful Cybersecurity Administration of China (CAC). The CAC would conduct a review, and after getting its approval, companies would be allowed to submit an application to the securities regulator.
Yes, but: The plan is one of several proposals under consideration by Chinese regulators.
Crackdown intensifies: The move is part of a wider crackdown on China’s tech industry that has smashed stocks and badly dented investor sentiment. Beijing said last month that it planned to strengthen supervision of all firms listed abroad, after conducting a cybersecurity investigation into ride-hailing giant Didi Global just days after its US listing.
The crackdown has particularly targeted unfair competition and internet companies’ handling of huge amounts of consumer data.
VIEs targeted: The rules would also emphasise the legal responsibility of underwriters in overseas listings and require a more thorough shareholding disclosure for those with the so-called variable interest entities (VIE) structure.
What is a VIE? The VIE business structure was created two decades ago to circumvent rules restricting foreign investment in sensitive industries such as media and telecommunications. They have enabled Chinese companies to list overseas.
Read our recent deep dive into China’s devastating tech crackdown here.
Also Read: China’s crackdown to boost Indian startups
Indiagold raises $12 million as gold loans surge
Indiagold cofounders Nitin Misra (left) and Deepak Abbot
Indiagold, a gold-based lending platform founded during the pandemic, has raised $12 million in fresh funding and plans to use it to expand its operations across India in the next two years.
Investors: PayU, the financial technology arm of Prosus NV, and Alpha Wave Incubation led the fundraising. It also involved Better Tomorrow Ventures, 3one4 Capital and Rainmatter Capital, and existing investor Leo Capital.
Loans against gold: There has been a surge in loans against jewellery since the start of the pandemic in early 2020, according to a S&P Global report.
Indiagold was founded against this backdrop by former Paytm executives Nitin Misra and Deepak Abbot. It lets customers store gold in lockers at much cheaper rates than traditional banks, and also offers a line of credit against the deposits.
- “India offers a large $650 billion addressable gold loan market which is highly fragmented and currently dominated by the informal segment. Even the formal segment hasn’t adopted digital practices at scale. Indiagold’s suite of financial products bridges this critical need gap,” Abbot and Misra said in a statement.
21st century gold rush: The World Gold Council expects the gold loans market to grow at 15.7% a year and touch Rs 4.6 lakh crore in FY22 from Rs 3.4 lakh crore in FY20. It estimates that Indian consumers are sitting on a $1.5 trillion hoard of the yellow metal, mostly in the form of ornaments passed down for generations.
Tweet of the day
Dealmaking booms in Southeast Asia, but hefty valuations a concern
Fintech and ecommerce companies in Southeast Asia are raising hefty amounts of capital as global investors bet on post-pandemic technology plays — a trend that is also stoking concerns about frothy valuations.
In numbers: According to data from Refinitiv and Preqin,
- public equity capital raising by Southeast Asian firms has surged to a four-year high of $8.4 billion this year.
- private equity investments have also jumped, reaching $8.2 billion, just shy of a record of $8.9 billion in 2020.
- the total value of venture capital transactions has already hit a record $10 billion in the first half of this year.
Southeast Asia’s internet economy is forecast to triple to $300 billion by 2025 from the end of 2020, according to a report from Google, Temasek and Bain & Co.
The opportunities: The pandemic-induced boost in adoption of digital platforms in a region of 650 million people are bringing investors to Southeast Asian shores.
That’s allowed about a dozen startups to weigh the prospects of listing regionally or in the US over the next two years. Indonesian tech group GoTo is leading the charge with a $2 billion pre-IPO funding. Indonesian travel firm Traveloka and online classifieds marketplace Carousell are reportedly next in line.
The challenge: Some concerns are emerging over whether the abundant global liquidity is inflating company valuations and if they can be sustained in secondary markets.
For example, Bukalapak, which launched Indonesia’s biggest IPO of $1.5 billion this month after scaling it up from $300 million, saw its shares jump 55% from its IPO price in the first few days before giving up most of its gains.
“To justify its high enterprise value to sales multiples, Bukalapak will need to maintain annual revenue growth at around 50% over the next five years, which seems like a rather difficult target,” Oshadhi Kumarasiri of LightStream Research said.
ETtech Deals Digest
India’s startup ecosystem witnessed smaller funding rounds in the week to August 27 compared to the previous week, but a unicorn—the twenty-fifth so far this year—was nevertheless minted. (read more)
Cuba to recognise and regulate cryptocurrencies
Cuba will recognise and regulate cryptocurrencies for payments, making the island nation the second Central American country after El Salvador to accept Bitcoin as legal tender.
Driving the news: A resolution published in the Official Gazette said the Central Bank will set rules for such currencies and determine how to license providers of related services within Cuba.
- The Central Bank can authorise use of crypto “for reasons of socioeconomic interest” but with the state’s assurance that their operations are controlled. It also explicitly noted that operations could not involve illegal activities.
Why now? The popularity of such currencies has grown among a technologically savvy group in Cuba as it has become harder to use dollars, in part because of toughened embargo rules imposed under former US President Donald Trump.
A local cryptocurrency expert, programmer Erich Garcia, said some Cubans are already using such devices, often via gift cards, for online purchases.
Today’s ETtech Top 5 newsletter was curated by Tushar Deep Singh and Zaheer Merchant in Mumbai. Graphics and illustrations by Rahul Awasthi.
For all the latest Technology News Click Here
