|Bid||450.00 x 0|
|Ask||451.00 x 0|
|Day's Range||448.00 - 467.00|
|52 Week Range||258.00 - 485.00|
|Beta (5Y Monthly)||1.52|
|PE Ratio (TTM)||30.19|
|Earnings Date||Feb 05, 2020|
|Forward Dividend & Yield||17.72 (3.93%)|
|Ex-Dividend Date||Mar 30, 2020|
|1y Target Est||483.00|
(Bloomberg) -- SoftBank Group Corp. founder Masayoshi Son has a solution to Japan’s decades-long economic malaise. Not surprisingly, it involves artificial intelligence.Japan can boost growth by joining with India and Southeast Asian countries in creating a common AI platform, Son told scientists and government bureaucrats who gathered in Tokyo on Tuesday for the government’s Moonshot symposium. He envisions Japan taking a leading role and believes the combined populations and markets could give the countries a fighting chance against the behemoths of China and the U.S., which share the lead in AI, he said.“This is the moonshot,” Son said, drawing laughter with a slide that showed a graph of Japanese gross domestic product climbing steeply to exceed those of China and the U.S. “If we can achieve this, the result will be amazing.”As the first country to confront intractable problems of an aging society, Japan should focus on autonomous driving and DNA-centric medicine as solutions to rising traffic accidents involving the elderly and soaring medical costs, Son said. Southeast Asian countries should join Japan in creating a shared data bank and developing an “AI engine,” he said. Son didn’t explain what he meant by that nor say why developing countries would want to help the wealthy neighbor with its first-world problems.“If we create Asia’s number one platform, that is a big potential,” Son said.While many venture capitalists view Son’s sermons about the coming AI age as nothing more than marketing, the billionaire is already pushing his own companies to prepare for the future where every industry is redefined by the technology. Last month, SoftBank announced plans to combine its Yahoo Japan internet business with Line Corp., Japan’s biggest messaging service. The complex deal on his home turf is supposed to create a national champion that can more effectively compete with global rivals like Google and Amazon.com Inc.Son is as bullish as ever on AI even as his investment strategy has come under fire. SoftBank’s Vision Fund had to write down the value of its ride-hailing portfolio, which includes China’s Didi Chuxing Inc., India’s Ola and Singapore’s Grab Holdings Ltd. after Uber Technologies Inc. fell more than 30% following its listing in May. Son also lost billions of dollars afer pouring money into WeWork, a company that has no discernible AI technology but plenty of hurdles as it tries to turn a profit.The hype around self-driving cars has died down recently after a number of deadly crashes in cars on AI autopilot made it clear that true autonomy may be many years away. Still, Son said robotaxis can already do better than senior citizens. He played a video of an autonomous vehicle from Cruise, a General Motors Co. self-driving unit where SoftBank has invested $2.25 billion, navigating San Francisco’s crowded streets.“If you are still doubting the capability of autonomous driving, this is already today,” he said.Son said the answer to rising medical costs is more DNA analysis, putting a spotlight on one of his portfolio companies, Guardant Health Inc. Shares of the cancer-detection company, one of the Vision Fund’s more profitable holdings, have climbed about fourfold since its stock market debut last year. Son also mentioned Karius Inc., a blood-testing startup in which SoftBank has no reported stake.Shifting gears, Son said AI should be a subject on college entrance exams in Japan. Earlier this month, he announced a collaboration with the University of Tokyo in opening the Beyond AI Institute, designed to accelerate the transition of AI research from the theoretical to the applied. SoftBank in May named renowned AI expert and Deepcore adviser Yutaka Matsuo to its board, enlisting a specialist in the field for the first time. Matsuo is the president of the Japan Deep Learning Association, which offers certification exams for AI engineers.“Japan has lost the past,” Son said, and if it doesn’t act swiftly to embrace and capitalize on AI, it “may be losing the future.”To contact the reporters on this story: Pavel Alpeyev in Tokyo at firstname.lastname@example.org;Takahiko Hyuga in Tokyo at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Vlad Savov, Peter ElstromFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Alpha JWC Ventures, an Indonesian firm co-founded by a former banker turned venture capitalist, has closed its second fund at $123 million.This is a record for an Indonesia-focused early-stage venture capital fund, underscoring growing investor interest in fostering a new generation of startups in a country that gave birth to internet giants like Gojek and Tokopedia.The Jakarta-based VC firm launched its debut, $50 million fund in 2016, which backed 23 early-stage startups mostly in Indonesia. They include automotive online marketplace Carro, peer-to-peer lending company Funding Societies, and Kredivo, a digital lending platform in Indonesia. Net asset value of that fund has increased 3.2 times, according to the company.Through its second fund, Alpha JWC has already backed 14 startups, including Kopi Kenangan, a popular grab-and-go coffee chain in Indonesia.“We are on the ground and get the earliest information about deals,” said Chandra Tjan, managing partner of Alpha JWC who co-founded the firm with partners Jefrey Joe and Will Ongkowidjaja. “The digital landscape and trends in Indonesia have changed in the past year, and we have to be more active yet cautious.”Daniel Lin, chief executive officer of FundedHere Pte, a crowd-funding platform that introduces entrepreneurs to investors, said that while the earliest VCs have invested in Indonesia since 2010, it’s only been recently that startups in the country have begun to adopt technology in a significant way to reach a wider audience. “Including Indonesian startups at the seed and Series A stages will be critical to the success of the startup portfolio,” said Lin.Prior to starting the company, former Credit Suisse and Citigroup Inc. banker Tjan had co-founded and served as managing partner of East Ventures, which has become the most active VC firm in Indonesia. In 2019, East Ventures closed its sixth fund at $75 million and launched a $200 million growth fund together with Indonesian conglomerate Sinar Mas and an arm of Yahoo Japan Corp.This year, Alpha JWC has bolstered its team by promoting Erika Dianasari to a partner from principal and added two new partners: Alan Hellawell, former chief strategy officer of Sea Ltd., and Eko Kurniadi, former vice president of investment at private equity firm Creador. Ongkowidjaja has stepped down as managing partner to start his own company, Honestbank, though he will remain as a founding partner of Alpha JWC, according to Tjan.To contact the reporter on this story: Yoolim Lee in Singapore at email@example.comTo contact the editors responsible for this story: Peter Elstrom at firstname.lastname@example.org, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- SoftBank Group Corp. founder Masayoshi Son unveiled a $184 million initiative Friday to accelerate artificial intelligence research in Japan, enlisting Alibaba’s Jack Ma to expound on his goal of commercializing the technology.Son’s company announced a partnership with the University of Tokyo that includes spending 20 billion yen ($184 million) over 10 years by mobile arm SoftBank Corp. to establish the Beyond AI Institute. He roped in the Alibaba Group Holding Ltd. co-founder for an on-campus chat, during which the two billionaires discussed their vision for the future of technology.The institute will support 150 researchers from various disciplines and focus on transitioning AI research from the academic to the commercial using joint ventures between universities and companies. Health-care, city and social infrastructure and manufacturing will be the primary areas of focus, SoftBank Corp. said in a statement. That dovetails with its own goals: in November, SoftBank and Korea’s Naver Corp. said they plan to merge Yahoo Japan and Line Corp. into an internet giant under SoftBank’s control, to combine resources on AI and challenge leaders from Google to Tencent Holdings Ltd.Read more: SoftBank to Create Japan Internet Giant to Battle Global RivalsSon has long advocated AI as the most revolutionary new field of technological development. The Beyond AI Institute marks an investment in accelerating that research on his home turf, where he has previously bemoaned the relative under-performance of Japan’s startup scene. At the same time, he’ll be eager to put behind him a tough 2019 thanks to the calamitous implosion at WeWork and the shrinking values of Uber Technologies Inc. and Slack Technologies Inc.Offering a reminder of his most fruitful investment, Son hosted a talk with Ma, whose online retail empire has been the crown jewel in SoftBank’s investment portfolio. The two exchanged compliments and advocated passion, optimism and world-changing visions as essential to successful entrepreneurship.“In the past 20 years, we’ve been friends, partners and like soulmates in changing people’s lives,” said Son. Ma, in turn, said: “He probably has the biggest guts in the world when doing investment.”In a rare expression of contrition, Son recently said “there was a problem with my own judgment” after the WeWork debacle. He has imposed greater financial discipline on startups since then. On Friday, he said his enthusiasm for grand projects was undimmed. “My passion and dream is more than 100 times bigger than what I am right now. I am still only at the first step to my 100 steps.”To contact the reporters on this story: Vlad Savov in Tokyo at email@example.com;Takahiko Hyuga in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Vlad Savov, Peter ElstromFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Google Chief Executive Officer Sundar Pichai was in Tokyo Tuesday to inaugurate the relocation of the company’s Japanese head office to an expansive new complex in the trendy district of Shibuya.Taking up the majority of the gleaming new 35-floor Shibuya Stream skyscraper, Google has put its name on the building and dedicated two floors to a newly launched Google for Startups Campus, which is its seventh in the world and second in Asia after Seoul.Agnieszka Hryniewicz-Bieniek, the director of Google for Startups, said that the company will run an accelerator program early next year that will select 12 startups looking to scale up their work on artificial intelligence and machine learning, both critical aspects of Google’s current and future operations. She also stressed the importance of inclusiveness at an event where the Wi-Fi password was BuildInclusiveTeams.“We would like Campus Tokyo to support women founders,” she said, and that Google is proud that 37% of its Campus participants are female entrepreneurs, a higher proportion than the wider startup ecosystem. “So when they go to the next stage of growth, we’re behind them, we’re supporting them.”The Campus initiative extends Google’s effort to combine education and training for startups with evangelism for the use of its cloud and business services. Co-location with Google’s main office will make it easy for experts from Google’s developer relations and web marketing teams to make themselves available to help budding entrepreneurs, Google said.Joined by Japan’s Minister for Internal Affairs and Communications Sanae Takaichi on stage, Pichai said he had toured some of the venues for next year’s Tokyo Olympics, which Google will be supporting through its various services like Google Maps and Translate. “Ultimately, we want to make sure the legacy of technology innovation extends far beyond 2020. This Google for Startups Campus is one part of that,” he said at the opening.AI has been topical in Japan recently, with SoftBank Group Corp. announcing plans to combine its Yahoo Japan internet business with Naver Corp.’s Line messaging service in an effort to create an AI tech leader capable of rivaling U.S. juggernauts like Google and Facebook Inc. On Monday, Peter Thiel visited Tokyo to introduce Palantir Technologies Japan Co., which will use AI to make sense of large volumes of unwieldy data in the fields of health and cybersecurity.Google has said the move to Shibuya Stream will double its employee headcount in Japan to beyond 2,000. The company’s first office outside the U.S. was in Tokyo, opening in 2001. It said it has “invested heavily” in Japan over the years and earlier in 2019 committed to training 10 million people in digital skills by 2022. Its so-called Grow with Google program is the Campus equivalent for individual job-seekers and students.“At Google, we are deeply committed to fostering Japanese startups,” Pichai said.(Updates with details of accelerator from second paragraph)To contact the reporter on this story: Vlad Savov in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Vlad Savov, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Masayoshi Son, after backing startups around the world, is engineering a complex deal on his home turf to create a national champion that can more effectively compete with global rivals like Google and Amazon.com Inc.Son’s SoftBank Group Corp. plans to combine its Yahoo Japan internet business with Line Corp. in a deal that values the country’s leading messaging service at $11.5 billion. SoftBank and South Korea’s Naver Corp. will take Line private and then fold Line and Yahoo Japan into a new joint venture. The deal requires shareholder approvals and is scheduled to close by October 2020.The two companies said the combination is driven by a sense of crisis that global giants are increasing their grip on the technology industry and countries like Japan risk falling behind. Together, Line and Yahoo Japan, which now operates as Z Holdings Corp., will be able to share engineering resources, access broader sets of data and invest more in areas like artificial intelligence, the chief executive officers said in a Tokyo press conference.“The internet industry often operates on the winner-takes-all principle and the strong only get stronger,” said Line co-CEO Takeshi Idezawa. “Even combined, our market capital, business scale and R&D expenditures are dwarfed by the global tech giants.”At the event, the CEOs gave unusual emphasis to their corporate vulnerabilities and the incumbent risks for Japanese consumers, perhaps in an attempt to preempt government scrutiny of a deal that will combine two of the country’s largest internet companies. The chiefs said they need to join forces to mount a serious challenge to much larger rivals from the U.S. and China.“We want to become an AI tech company that leads the world from Japan,” said Kentaro Kawabe, CEO of Z Holdings. Kawabe wore a bright green tie, Line’s trademark hue, while Idezawa donned one in Yahoo Japan red.Under the proposed transaction, Z Holdings and Naver will buy out Line’s public shareholders in a tender offer at a projected 5,200 yen per share, a 13% premium to Line’s share price before news of the talks. Each company plans to spend 170 billion yen ($1.56 billion) on the bid. Naver already owns 73% of Line, while SoftBank Corp., the domestic telecom arm of Son’s business empire, holds a roughly 44% stake in Z Holdings.The companies have been in talks about a possible alliance since June and settled on the idea of a merger in August, according to the statement. After taking Line private, SoftBank and Naver will undertake a reorganization that will eventually result in a 50-50 ownership of the new company. The combined entity will hold stock in Z Holdings, which will remain public with Yahoo Japan and Line as wholly-owned subsidiaries.SoftBank and Line have increasingly competed in fields such as digital payments, and an alliance may allow them to save money on expenses like subsidies. Both companies have also been investing in artificial intelligence to improve their services. While the announcement didn’t say how the mobile payment rivalry will be resolved, it said the resulting company aims to spend 100 billion yen annually on development of AI-powered products.“Big data is key for the future of both companies,” said Koji Hirai, the head of M&A advisory firm Kachitas Corp. “The merger will enable them to create a massive repository of client data.”Idezawa and Kawabe said there are potential synergies in a number of services areas spanning media content, fintech, advertising, communications and commerce, but didn’t give further details. The combined company will also have about 20,000 employees, a major benefit in an industry where competition for talent intensifies year after year, they said.Steps to the planned merger:Step 1 - Final signing of the deal planned for DecemberStep 2 - Naver and SoftBank to buy out Line’s public shareholders and create a new 50-50 joint ventureStep 3 - SoftBank moves its stake in Z Holdings to the JV, while Z Holdings issues 2.8 billion new shares to the JVStep 4 - Line and Yahoo Japan become fully owned subsidiaries of Z Holdings, which will be owned by the JV. The companies plan to complete the deal by October 2020Silicon Valley giants like Google, Amazon and Facebook Inc. and Chinese startups have taken the lead in both pushing AI development and turning the research into commercial products. That has left most other companies scrambling to attract scarce talent and collect the data necessary to conduct research in fields like deep learning.Line and Yahoo Japan are betting they can leverage local knowledge to stay in the race in their home country and markets where their services are popular, including South Korea, Taiwan, Thailand and Indonesia. Line and Z Holdings shares rose on the deal.Yahoo Japan was once the country’s leading search engine, web portal and major e-commerce player, but has lost ground as users migrated from PCs to smartphones. The company’s online shopping offering has been squeezed by Amazon and Rakuten Inc., while smartphone-native newcomer Mercari Inc. lured customers from its auction service. Yahoo Japan counts some 48 million daily active users across its portfolio of more than 100 mobile phone apps.Line’s origins date back to the turn of the century, when Naver dispatched Shin Jung-ho to Japan to promote its search engine technology. Shin led the company through its first decade in relative obscurity, distributing online games and dabbling in social networking services. In 2010, Line acquired Livedoor Inc., a once high-flying Japanese web portal that had fallen on hard times after its founder was thrown in jail for accounting fraud. It launched Japan’s dominant messaging service in 2011 and went public in 2016.Shin, who shares the CEO title with Takeshi Idezawa at Line, will become the newly created entity’s chief product officer. The post will give him control over the 100 billion yen AI budget and oversight of service development for both Line and Yahoo Japan.Line has 82 million monthly active users in Japan and is also the dominant messenger in Taiwan and Thailand, where it has 21 million and 45 million customers respectively. The company has been expanding into financial services by partnering with Nomura Holdings Inc. and Mizuho Financial Group Inc. It has also been developing a lineup of AI-powered hardware products, including speakers and earphones. Outlays on the new businesses have led to losses in four out of five past quarters.In the Tokyo press conference, the CEOs repeatedly spoke about getting outgunned by GAFA, or Google, Amazon, Facebook and Apple Inc. They said they wouldn’t want see Japan lose out on world-leading services like search and e-commerce, but they want to create a local alternative that can address domestic needs and tastes.“GAFA’s biggest threat is the kind of loyalty they command from their users,” said Kawabe. “We want to give users a domestic AI option. By focusing on Japan’s unique challenges, we can offer services others cannot.”(Updates with the deal strategy from first paragraph.)To contact the reporters on this story: Pavel Alpeyev in Tokyo at firstname.lastname@example.org;Takahiko Hyuga in Tokyo at email@example.comTo contact the editor responsible for this story: Peter Elstrom at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Japanese stocks rebounded on Friday as White House comments that Washington and Beijing were close to striking a trade deal sparked buying in cyclical and financials. White House economic adviser Larry Kudlow said on Thursday an agreement with China could be reached soon, providing a fillip to investor confidence. High-beta shares, or those that are sensitive to economic cycles were among the biggest gainers, with shippers advancing 1.6% and brokerages climbing 1.4%.
(Bloomberg Opinion) -- Line Corp. would be lucky to have a suitor. Even if it bears the name Yahoo. The instant-messenger company has been marching toward irrelevance since its dual Tokyo and New York initial public offerings three years ago, with management failing to navigate any clear future for the company or its core product. They’ve shown zero interest in geographical expansion and have instead rested on the belief that being hip in a few places would be enough.It’s not hard to see why. The company had a meteoric rise and remains favored among fans for its array of stickers, emoji-like cartoons that they often paid for. It’s easy and comfortable but accounts for only 13% of revenue and has stagnated.Now, Line may merge with Yahoo Japan’s parent, Z Holdings Corp., which itself is a part of the broader family of SoftBank Group Corp., Bloomberg News reported early Thursday, citing Z Holdings.Both Nikkei news and Kyodo wrote about the talks late Wednesday, driving Line’s U.S.-listed depositary receipts up more than 26%. Z climbed as much as 17% in Tokyo on Thursday morning, while Line’s Tokyo-listed shares didn’t transact because bids far exceed offers.Line’s parent, South Korea’s Naver Corp., could reach an agreement with Z as soon as this month in a deal that would see the two have a 50% stake each in a holding company that would own both Line and Yahoo Japan, Nikkei reported. Line confirmed that it’s considering the idea, along with other opportunities to boost value.To be frank, this is the best opportunity Line is likely to ever get. Most of the Tokyo-based company’s revenue comes from advertising fed to its audience of 164 million monthly active users. Other businesses, such as content and fintech, haven’t gained much traction despite years of trying. It all comes down to expanding the number of chat users and extracting more from them.Yet after seven years in operation, Line’s core instant messenger product has been unable to expand much beyond its four key markets of Japan, Taiwan, Thailand and Indonesia. That it can’t even make headway in South Korea, the homeland of its parent company, says a lot about ineffective management. You knew it was desperate when it announced a move into the cryptocurrency business.I believe that a merger with Singapore-based internet company Sea Ltd. would make more sense, given there are more growth prospects in Southeast Asia than in North Asia. But right now, Line should settle for any dance partner it can get. After losses in six of the past eight quarters and meager revenue growth, I suspect the recent run-up in its stock has been spurred by the belief it will eventually be bought. Though that may finally be happening, Z is not exactly an inspiring match. Its own revenue and earnings growth have been lackluster. At least it’s profitable, which would make a pleasant change for Line investors. Yahoo Japan’s major hope for the future is to expand in e-commerce, advertising and mobile payments. Having an instant messenger product in the portfolio would certainly help it further those goals. Still, it would likely ensure Line’s user numbers remain stagnant given the lack of growth in the Japanese economy and population. Being part of the SoftBank stable might not be a bad thing, either. Founder and Chairman Masayoshi Son is a born salesman and loves to talk up his portfolio companies. If he’s willing to spend cash to help a Line-Yahoo entity expand, then they may be able to gain some real marketing clout against rivals like Rakuten Inc. and Amazon.com Inc. But it would certainly mean the end of Line as we know it. To contact the author of this story: Tim Culpan at email@example.comTo contact the editor responsible for this story: Patrick McDowell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- SoftBank Group Corp. is considering a plan to consolidate its Yahoo Japan internet business with the messaging service Line Corp.Z Holdings Corp., a unit of SoftBank’s telecom arm formerly known as Yahoo Japan, confirmed that it’s in talks with Tokyo-based Line about a possible merger, but said no final decision on a deal had been made. Line separately said it is considering such a merger along with other opportunities to increase value. Z Holdings shares surged in Tokyo, while Line’s stock was poised to climb.SoftBank Corp., the domestic telecom arm of Masayoshi Son’s business empire, holds a 44% stake in Z Holdings, while Line is controlled by South Korea’s Naver Corp. SoftBank Corp. is considering setting up a new company with Naver, according to people familiar with the matter who asked not to be identified because the talks are private. They may reach an agreement as early as this month, one of the people said.SoftBank and Line have increasingly competed in fields such as digital payments, and an alliance may allow them to save money on expenses like subsidies. Both companies have also been investing in artificial intelligence to improve their services. Line initiated the talks this summer and is looking for the partnership to give it a fighting chance in AI against larger rivals in the U.S. and China, according to a person familiar with the matter.“We can expect synergy benefits for its payment business and e-commerce operations,” said Taketo Yamate, senior analyst at Frontier Management Inc., a Japanese M&A advisory boutique.Japan’s biggest messaging service would become a wholly-owned subsidiary, but will retain a separate brand, the person said, asking not to be identified because the details are private.Z Holdings shares rose as much as 18% in Tokyo on Thursday, the biggest intraday jump since 2013. SoftBank Corp. rose as much as 2.6%, while Naver jumped as much as 12% in Seoul, most since 2008. Line was set to gain about 14% and hadn’t traded yet as of 10:30 a.m.SoftBank Group’s founder Son has relied on earnings from the telecom operations in Japan to finance his investments in technology companies overseas. But profits in the business may come under pressure from the entry of e-commerce giant Rakuten Inc. planned for next year. Son has pushed the company to go “beyond carrier” operations, strengthening its alliance with Yahoo Japan, acquiring online clothing retailer Zozo Inc. and launching a mobile payments service PayPay. Rakuten slumped as much as 6.4% on Thursday.The merger will have an immediate impact by ending a costly mobile payments rivalry between Line Pay and PayPay, Bloomberg Intelligence analyst Vey-Sern Ling wrote in a note. Both companies have seen their profit margin slip because of aggressive spending on user acquisition, he said.Yahoo Japan was once the country’s leading search engine, web portal and major e-commerce player, but has lost ground as users migrated from PCs to smartphones. Line’s app not only counts 82 million monthly active users in Japan, but is also the dominant messenger in Taiwan and Thailand, where it has 21 million and 45 million customers respectively. The company has also been expanding into financial services by partnering with Nomura Holdings Inc. and Mizuho Financial Group Inc., a move that puts it in direct conflict with Rakuten, which operates a bank and a rival mobile payment system.“There is a possibility of synergies that go beyond what’s obvious,” said Makoto Kikuchi, chief investment officer at Myojo Asset Management Co. in Tokyo. “There is considerable potential here, but neither company has a track record pulling something like this off.”Story Link: SoftBank’s Z Holdings and Line in Final Talks to Merge: Nikkei(Updates with merger details in seventh paragraph.)\--With assistance from Yuki Furukawa.To contact the reporters on this story: Takahiko Hyuga in Tokyo at email@example.com;Pavel Alpeyev in Tokyo at firstname.lastname@example.orgTo contact the editor responsible for this story: Peter Elstrom at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Markets) -- Vijay Shekhar Sharma, 41, founded closely held One97 Communications and its brand Paytm (rhymes with ATM) almost two decades ago. It offered a variety of digital services before moving into payments in 2014, just as millions of urban Indians began shopping online. Two years later, India’s banks created the Unified Payments Interface, a tech umbrella to help banks and fintech startups create services quickly, and the government eliminated high-value currency notes, turbocharging demand for Paytm’s services. Sharma, a self-described hippie who loves to sprinkle U2 and Pink Floyd lyrics into his conversation, now has backers including Alibaba’s Jack Ma, SoftBank’s Masayoshi Son, and Berkshire Hathaway’s Warren Buffett.Paytm is the market leader in India, where KPMG sees digital payments growing at the fastest rate of any country, with transaction value rising at an estimated annual rate of 20.2% from 2019 to 2023. But competition is heating up as Google, Walmart, and Facebook jump into India, wielding cashback offers to lure customers. Meanwhile, the government has proposed scrapping fees on digital payments, Paytm’s core product. In an interview in Delhi, Sharma described his career and how Paytm is adapting to India’s changing market, cutting annual expenses 45% and preparing to raise new funds to accelerate the next phase of growth in smaller cities.SARITHA RAI: What led you to digital payments and e-commerce?VIJAY SHEKHAR SHARMA: I grew up in a small town called Aligarh where I studied in a very basic Hindi medium school [where Hindi is the medium of instruction]. I didn’t have fancy schooling. I was lucky to get into engineering college in Delhi at the age of 15. I taught myself English by memorizing rock songs and simultaneously reading translated textbooks in English and Hindi. When I graduated, I was the youngest teenage engineer out of the University of Delhi. As the Pink Floyd song [Breathe] goes,Run, rabbit run.Dig that hole, forget the sun,And when at last the work is doneDon’t sit down it’s time to dig another one.For long you live and high you flyBut only if you ride the tideAnd balanced on the biggest waveYou race towards an early grave.My early heroes were internet entrepreneurs Jerry Yang and Mark Andreessen. I started One97 Communications in 2000 and began by selling content to users through telecom operators. By 2010 the smartphone became the distribution channel. Payment became our thing, and destiny was in our hands. In 2014 we launched our licensed wallet product. By 2015, Ant Financial had invested in us, then Alibaba and then SoftBank.A whole generation of internet entrepreneurs in India have small-town roots and hunger to build something significant and successful. My father was a schoolteacher. I had four siblings; there was no money to go around. I had to find ways to make money through weekend consulting jobs to set up computer networks for small businesses. At engineering college, I naively asked around [to find out] what the best-paying job is. Somebody said CEO. I didn’t even realize the person was being sarcastic. I knew the only way to get to be CEO was to build my own company. Looking back, I’ve never had a business card which said CEO. When I set up One97 Communications, my business card stated my title as EO. My engineering school buddy and one of my first employees, Harinder Takhar, also had the same title. We were both EOs.I couldn’t get to Stanford or Silicon Valley. Somewhere there was the urge that I should do something worthwhile, but I would have to do it in the Silicon Alley called Delhi. I wanted to build a great company; I wanted to attract the best talent. The internet age was calling. Paytm began offering people searches and went from there into business services, payments, commerce, gaming, content, financial services, and banking.“If you build in India, you can go build anywhere in the world. What do you think is the first thing an Indian kid learns? That the bus stop is not where the bus will stop”SR: Are you satisfied with what you’ve built so far?VSS: Many entrepreneurs are called “overnight success.” I say, “Yeah, my overnight was 19 years long.” We started in the dial-up internet era, where we ran up huge phone bills. We now carry the internet in our pockets. How far we have come! The last 20 years have been the most significant for India. It is an unprecedented kind of change the world hasn’t seen, not even in the U.S. or China. Nowhere else have such a large number of users come online in such a short period of time.SR: How will India’s digital payment transformation be different from China’s?VSS: China has two players. We will not have that kind of dominance. India will have four or five players, with a leader, which will have significant market share. Everybody can coexist. Payment is way too huge a problem for one or two players to control.India is far more competitive. We have neither the best talent nor the best infrastructure, nor the required levels of capital. We have to be far more resourceful. To raise money we have to take a flight out of India and explain our market to investors. Neither the Chinese nor the Americans have had to describe their market to their investors.SR: Is India changing?VSS: With low mobile data tariffs, the internet is reaching the corners of India. That’s spawning a huge number of startups in payments, cloud, and even startups that help people file taxes. There is a large local market. Risk capital is available to win the market. We are now grade-A entrepreneurs, not Third World businesses. It is possible to build a business to serve this country and then take it to the rest of the world. These are phenomenal days. Ten years ago, there was no local market, no risk capital, no internet infrastructure, no customers. When we started, it was the very beginning of the internet era of the country. I feel tickled that I am now bracketed with today’s young entrepreneurs of India, like Ritesh Agarwal of OYO [Oravel Stays Pvt.] and Bhavish Aggarwal of Ola [Electric Mobility Pvt. and ANI Technologies Pvt.]. Nobody remembers that I started with old-generation internet businesses.SR: Competition is building up in digital payments—Walmart, Google, and others whose launch is imminent.VSS: Rivals are spending huge amounts of money, but none of them have dented our market share. India’s digital payments market share is expanding. In the next five years, India will be a much more digitized country. That’s a good thing. As for rivals spending money, the big giants with the deep pockets never win the war. Microsoft didn’t win the search war. Search didn’t win the social war. Social didn’t win the messaging war.I can bet that none of the above is going to win the digital payments war. It’s a huge opportunity. There will be many players. This country could produce the payment player which will go on to dominate the world. It will be an Indian player, not a Chinese one. The payments leader of India will build a low-cost, highly scalable model in an extremely competitive environment. The winner here can go and win anywhere.SR: Why is cash still king in India?VSS: We’ve had the first phase of India’s digital payments journey with many world players as our rivals. We were the clear leader in the digital wallet phase.The second phase began with the United Payments Interface, which is the tech backbone linking banks and digital payments players so they can create services quickly and cheaply. Our rivals are using that backbone for person-to-person money transfers rather than merchant payments. Our business model is in merchant payments, in the everyday experience of users paying businesses. That’s our journey now.Less than 10% of payments made by users to businesses is through digital means. We believe merchants should provide their customers the whole range of options, and that’s what we offer through the Paytm wallet, which accepts cash, debit cards, credit cards, UPI-linked bank accounts, and other wallets. A digital wallet is far more inclusive. Even if a user doesn’t have a bank account, he can do digital payments.SR: When UPI was introduced, it seemed that digital wallets were going to die.VSS: In the early days, I had assumed that people would give up on the wallet after you could link a bank account and begin using UPI. But users are still uncomfortable with linking bank accounts. There is low penetration of digital money and low consumer trust. The pecking order in the country is: cash, followed by card, then wallet, and UPI.We do more than 600 million merchant payments a month. All UPI payments together are not even as big as our wallet transaction numbers. The whole UPI universe has 110 million registered users, but less than 10% of them account for more than 80% of transactions. On UPI, all apps put together have a $150 million monthly payments volume. We have a total of $390 to $400 million volume via Paytm through UPI, other wallets, cards, and cash. After spending billions of dollars, Google Pay and Walmart’s PhonePe haven’t been able to touch us.SR: How do you enlist merchants?VSS: It takes time. Shopkeepers need a lot of hand-holding for digital payments, cloud services, and everything else. They are underserved by tech companies. We are currently at 13 million merchants and will reach 25 million by March 2020. It’s all about how many cities, how many shops, how many markets give consumers the chance to use digital payments. We are very visible in India’s main cities. We are now headed to Tier 3 and Tier 4 markets.SR: To transition merchants to digital payments and other digital services can’t be easy.VSS: We are offering software where they can create their own store and start selling online. They can build their business’s credit score and access our instant business loans. We have leapfrogged from being a payment company to a complete ecosystem for small and medium enterprises for their software and financial-services needs. Our “Business With Paytm” app is in 10 languages. In this era of zero-margin digital payments, as mandated by the government, we have to make money on additional services such as financial services and cloud services.SR: Isn’t every digital payments service using cashbacks as a lure?VSS: Cashbacks are a good thing. They incentivize users and merchants to try out digital payments. Our cashbacks, by the way, are not in cash. They are in the form of movie vouchers, flight vouchers, and so on. Cashback is a strategy for us. We have pushed the Paytm cashback logo a lot more in the last few months.“If you build in India, you can go build anywhere in the world. What do you think is the first thing an Indian kid learns? That the bus stop is not where the bus will stop”SR: How have you innovated for users in the smaller towns and semi-urban India?VSS: We use a lot of data. Rich users don’t value the 20 rupee [28¢] cashback. Our engine understands who values the small sum of money. Our AI is built at Paytm Labs in Toronto. We started in 2014. We have the ecosystem advantage because we can be the one stop for many things. We introduced cancellation insurance for movie tickets. This is a global first. The cancellation value is extremely low, and our AI engine ensures that it’s an extra revenue earner.Here’s another example: India saves in gold. We allow users to buy infinitesimal amounts of the metal. For example, a user can buy gold for 11 rupees and aggregate. Buying gold is a wealth service we offer everyone. Our gold product has more customers than all wealth management companies in India put together. We have 17 million users.SR: What will it take to win India?VSS: Some people still want to pay by card—card transactions are the highest by value. Others want to pay by wallet because they do not want to link their bank account to third-party apps for fear of digital theft. As the market matures, all use-cases as a combined offering makes sense rather than just one. In the countryside, there’s huge fear they’ll get defrauded of their money. Soon as one system grows, fraudsters walk into that system. That is why we have a large investment in setting up a lab in Canada building fraud detection systems. We have 110 people there. We have been lucky so far. We have been working hard. For a payment company like ours, competition does not come from another payment company. It comes from hackers.SR: What’s the life of an Indian entrepreneur like? We had a tragic suicide recently of the founder of India’s largest cafe chain [V.G. Siddhartha], who described himself as a failed entrepreneur.VSS: In India it is particularly tough. Entrepreneurship is looked down upon, unlike in the U.S. We are just above Africa markets in terms of per capita income. We have to build a business model for that. Then there are many rules and regulations, sentiments, behavior.Siddhartha’s suicide is heartbreaking for entrepreneurs like me.You have to be far more Zen to survive in this country. As I said, if you build in India, you can go build anywhere in the world. What do you think is the first thing an Indian kid learns? That the bus stop is not where the bus will stop.SR: Is there an IPO round the corner? Some of the most high-profile companies backed by Masayoshi Son, such as Uber, have gone the IPO route.VSS: Masa has never mentioned the word IPO to me. We will remain private for the next two or three years for sure. I look up to Warren Buffett, Masayoshi Son, and Jack Ma. Their ambition is to build huge impact on their markets, cities, countries, business domains. They are all market share-centric. What I take from them is: First, learn to do one thing really well. Then build the next level of business on top of it. That’s the common thread. We’re not even on the preparation journey for the IPO, which itself takes a couple of years.SR: Then are you looking to raise funds?VSS: There is a huge amount of incoming investor interest. People with large-dollar checks are knocking at our doors. Once we figure out the business requirement and get the necessary board OK, we will raise money. We are very well-capitalized for our business model.SR: Where is Paytm headed in the next few years?VSS: Paytm is [dominating] and will dominate India’s mobile payments ecosystem. Paytm Payments Bank has overtaken India’s No. 1 mobile bank, state-owned lender State Bank of India. Just like Ant Financial dominates payments in China, Paytm wants to dominate in India. We are getting into insurance and lending. We’ve created world-class tech that can be replicated both in emerging and developed markets. We built payments from the bottom up in Japan with Made in India technology. PayPay [a joint venture among Paytm, SoftBank, and Yahoo Japan] today has 10 million customers. We will go to the Americas and Europe.Rai is a reporter covering technology for Bloomberg News in Bengaluru.To contact the author of this story: Saritha Rai in Bengaluru at firstname.lastname@example.orgTo contact the editor responsible for this story: Christine Harper at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Yusaku Maezawa, the flamboyant Japanese entrepreneur who’s set to become the first paying passenger aboard Elon Musk’s SpaceX ride around the moon, is cashing out of the business that made him a billionaire.Maezawa steps down as chief executive officer of Zozo Inc. Thursday and plans to sell a chunk of his shares as part of a $3.7 billion takeover by Yahoo Japan Corp. Wearing a white T-shirt declaring “Let’s Start Today” atop a peace symbol, he said he was leaving his company behind to create a new business, without specifics. He’ll need to train for Musk’s mission and may even embark on another space project he said again without elaborating.At times fighting back tears, Maezawa thanked his supporters and reflected on his entrepreneurial career. “I don’t have an MBA or experience working at a company, but next thing I know I became a president, we got many customers and went public,” he told reporters at a press briefing. “The past 21 years were like a dream.”SoftBank Group Corp.’s Masayoshi Son made a surprise appearance, wearing a matching T-shirt in black. Son said Maezawa had approached him seeking advice ahead of the Yahoo Japan deal. He praised the younger man’s boldness, but joked that he passed on an invitation to fly to the moon. “That’s too scary,” Son said.Announced on Thursday morning, the deal immediately sent stock prices for both companies up. Yahoo Japan is paying a 21% premium to take control of a valuable online fashion store, which strengthens its challenge against Amazon.com Inc. and Rakuten Inc. in one of Asia’s largest e-commerce arenas. Zozo director Kotaro Sawada will take the helm, while Maezawa has tweeted “I myself will be setting off on a new path” after the sale’s announcement.“It’s a plus for Yahoo Japan and would help expand their e-commerce operations,” said Mitsushige Akino, an executive officer with Ichiyoshi Asset Management Co. in Tokyo. “Zozo gets the financial backup it needs for its new venture and overseas expansion.”Read more: Investors Hunt for Winners & Losers on Yahoo Japan-Zozo DealMaezawa is departing the company he founded, which was instrumental to amassing his fortune and building up his name. But he’s unlikely to stop defying the norms of Japanese society -- the other winning aspect to his unconventional approach to business.Before Zozo, he skipped college and moved to California to play in a rock band. Returning to Japan, he started his own e-commerce company and built the shopping website Zozotown into a popular destination for younger consumers, starting from the humble beginnings of a mail-order music album business. Maezawa now has a net worth of $1.5 billion, according to the Bloomberg Billionaires Index, but he has tweeted claiming to “have no money. I spend it so quickly.”Maezawa had been directing Zozo investment toward developing a custom clothing brand, seeking to attract customers through innovative ways of taking individual measurements. His company shipped about 3 million so-called Zozosuits, polka-dot spandex outfits for taking body measurements with the help of a smartphone. But the business was shut down in March. He also said the company plans to launch a foot-measuring device called Zozomat in the fall.What Bloomberg Intelligence SaysZozo may aid Yahoo Japan’s online ad sales, deepen its customer data bank and support its mobile wallet PayPay.\- Vey-Sern Ling and Tiffany Tam, analystsClick here to access the researchYahoo Japan, whose biggest shareholder is the local telecommunications arm of Masayoshi Son’s SoftBank Group Corp., saw its shares rise 2.4% in Tokyo, while Zozo surged 13.4%. Among the local online retail competition, Rakuten and Mercari Inc. slid. Investors in those companies feared the Yahoo Japan deal would intensify competition, said Masayuki Otani, chief market strategist at Securities Japan Inc. in Tokyo.The cost of the acquisition could go as high as 400.7 billion yen, according to the two companies’ announcement, giving Yahoo Japan a 50.1% slice of Zozo.“Together with Zozo, getting to No. 1 in domestic e-commerce comes realistically within striking distance,” Yahoo Japan’s CEO Kentaro Kawabe said at the Tokyo briefing, adding that the company may capture top share within next five to six years.\--With assistance from Shingo Kawamoto.To contact the reporters on this story: Pavel Alpeyev in Tokyo at firstname.lastname@example.org;Takahiko Hyuga in Tokyo at email@example.comTo contact the editors responsible for this story: Peter Elstrom at firstname.lastname@example.org, Colum Murphy, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Japanese shares rose on Thursday, with the Tokyo Stock Exchange's Topix index hitting a four-month high, as signs of a thaw in U.S.-China trade frictions lift cyclical stocks such as machine makers. U.S. President Donald Trump said on Wednesday Washington has agreed to delay increasing tariffs on $250 billion worth of Chinese imports by two weeks after Beijing said it would exempt 16 types of U.S. products from import tariffs.
(Bloomberg) -- Askul Corp. plans to exercise its right to demand Yahoo Japan Corp. sell its 45% stake, escalating a public dispute between two major Japanese internet companies.Chief Executive Officer Shoichiro Iwata said he intends to convene a board meeting within a week to vote on the issue. Whether the online retailer can force a sale hinges on the interpretation of an agreement struck when Yahoo Japan, which is backed by SoftBank Group Corp., first invested in Askul. The company is in advanced talks with at least four potential bidders for the stake, Iwata added. They include a foreign private equity firm, a Japanese industrial company, a financial institution and a local fund, the CEO added.The dispute -- a rare instance of public bickering in corporate Japan -- flared this month after Askul accused Yahoo Japan of violating the spirit of their agreement and its own independence by demanding the sale of internet mail-order business Lohaco. Yahoo Japan in turn wants to oust Iwata, saying it’s unhappy with the company’s deteriorating business. Yahoo Japan has said it has no intention of off-loading its 45% stake in Askul, worth about 67 billion yen ($617 million).Should Yahoo Japan contest a stake sale decision, Askul’s management may consider bringing the matter to the courts, Iwata said. He plans to hold a town-hall meeting on Monday morning to ease employees’ concerns, explain the situation and outline ways to improve their business.“I want to exercise the right” to force a sale, Iwata said in an interview. “New management could withdraw the court filing after I leave, so I will bring everything to light now and would like them to manage the company under public scrutiny.”Yahoo Japan has voted against Iwata’s reappointment prior to Askul’s shareholders meeting on Aug. 2. But the latter company has argued its under-performance can’t be pinned on one individual because of one-off factors -- including losses incurred in a major warehouse fire -- as well as staff shortages plaguing the industry.To contact the reporter on this story: Takahiko Hyuga in Tokyo at email@example.comTo contact the editors responsible for this story: Takashi Amano at firstname.lastname@example.org, Edwin Chan, Peter ElstromFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Line Corp., Japan’s largest messaging app, is close to getting a license to launch a cryptocurrency exchange in its home nation, according to people familiar with the matter.Japan’s Financial Services Agency could issue the license as early as this month, with exchange operations starting a few weeks after that, said the people, asking not to be identified discussing private matters. The service, which will be called BitMax, will allow Line’s 80 million users in Japan to buy and sell cryptocurrencies including Bitcoin and Line’s own token Link, one of the people said. Shares rose as much as 4.6%, the most intraday in two weeks.Line joins a crowded field of tech companies racing to roll out cryptocurrency products, including a move from Facebook Inc. earlier this week to create its own financial system with Visa Inc. and Uber Technologies Inc. For Line, the pressure to succeed is particularly acute as stagnant user growth has pushed shares to their lowest since listing in 2016. The Japanese company booked a loss last fiscal year as it stepped up investments into new businesses to reduce its reliance on advertising revenue.Line spokeswoman Icho Saito declined to comment.BitMax will use the same back-end technology as BitBox, a Singapore-based crypto exchange that Line launched last year for global users, according to one person. BitBox is off limits to users in Japan because of the licensing issue and so far hasn’t delivered a big boost to the company’s earnings. Exchange volume over the past 24 hours was about $2 million, according to its website.Line is still awaiting a separate banking license in Japan that will allow deeper integration of cryptocurrencies with its other services like online shopping. That license is unlikely to be issued until next year, according to one person. Line aims to debut stock brokerage operations this year with Nomura Holdings Inc. and banking services next year with Mizuho Financial Group Inc., co-Chief Executive Officer Shin Jung-ho said this month.Facebook this week announced its new crypto project Libra, a so-called stablecoin that is expected to let users send and receive money, shop online and invest through the social media platform. In Japan, tech companies including Rakuten Inc. and Yahoo Japan Corp. have launched their own crypto exchanges this year after receiving licenses from the FSA.Crypto’s growing adoption by large companies is contributing to a rebound in prices this year, with Bitcoin more than doubling over the past three months. Line’s own token Link has almost doubled in June alone, giving it a market valuation of about $30 million. It’s one of the few cryptocurrencies in the world that is issued by a large listed company.(Updates with shares in fourth paragraph.)To contact the reporters on this story: Yuji Nakamura in Tokyo at email@example.com;Yuki Hagiwara in Tokyo at firstname.lastname@example.org;Pavel Alpeyev in Tokyo at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Peter ElstromFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Moody's Japan K.K. says that SoftBank Group Corp.'s (the holding company, Ba1 stable) plan to reconfigure the shareholding structure of its subsidiary, Yahoo Japan Corporation, could be credit positive by netting more than JPY500 billion in cash, if it sells all of Yahoo Japan's shares and effectively transfers ownership to SoftBank Corp. (the telecommunication subsidiary). This JPY500 billion of cash proceeds adds to over JPY2 trillion of cash that SoftBank Group already had on hand as of 31 December 2018. Pro forma for this transaction, the holding company will lose the JPY15 billion-JPY20 billion of annual dividends that it received from Yahoo Japan, according to Moody's estimates.
Japanese telco SoftBank Corp said on Wednesday it would spend $4 billion (3 billion pounds) to up its stake in Yahoo Japan Corp and turn the internet company into a subsidiary, a move that would help boost its profit by 24 percent this year. The telco said it would buy 456.5 billion yen (3.2 billion pounds) worth of new shares to be issued by Yahoo Japan, increasing SoftBank Corp's stake to 45 percent from 12 percent. With that addition, SoftBank Corp, which listed in December in Japan's largest-ever initial public offering, forecast its operating profit would rise to 890 billion yen in the current financial year through March 2020.
Honda Motor and Hino Motors are joining a venture of SoftBank Corp and Toyota Motor that will develop self-driving car services in Japan, as alliances between automakers and tech firms broaden. Under an agreement, Honda and truck maker Hino, in which Toyota owns a majority stake, would each invest around 250 million yen (£1.7 million) in the joint venture, Monet Technologies, and take 10 percent stakes in the venture, Monet said on Thursday.