HONG KONG (Reuters Breakingviews) - Didi's road to Hong Kong may be paved with good intentions, but that will not make the journey any easier. China's $38 billion ride-hailing group is eschewing its New York listing for one in the Asian hub amid pressure from Beijing. A take-private would be costly; migrating American depositary receipts could be tricky. Didi will have to navigate Hong Kong's tougher IPO requirements too. | Video
HONG KONG (Reuters Breakingviews) - Some people thrive on defaults and restructurings, but they’re rarely company bosses. Kaisa founder and chairman Kwok Ying-shing may be an exception. The Chinese developer, which put its creditors through the wringer six years ago, is asking holders of $400 million in bonds due to be repaid next month to effectively wait another 18 months to help it avoid another restructuring. But they are being offered little reward and will take added risk. It’s hard to see how this deal will avoid the rougher option.
HONG KONG (Reuters Breakingviews) - Some deals are about more than just the money. A successful market debut by artificial-intelligence dragon SenseTime https://www.breakingviews.com/considered-view/sensetime-ipo-success-rests-on-overseas-investors could go a long way to uncovering interest in politically sensitive Chinese technology. And it might do almost as much for HSBC, the issuer’s only Western lead financial adviser, as it tries to showcase renewed investment banking ambitions.
MELBOURNE (Reuters Breakingviews) - Maybe Jamie Dimon learned something about President Xi Jinping’s sense of humour during his recent visit to Hong Kong. The JPMorgan boss was clearly just looking for a chuckle on Tuesday when he said he’d wager that his bank would outlast China’s Communist Party, following up with, “I can’t say that in China. They are probably listening anyway.” As others can attest, however, the blowback from Beijing after perceived slights is often no laughing matter.
HONG KONG (Reuters Breakingviews) - Anything General Electric can do, Toshiba can do too. The Japanese conglomerate has become the second industrial titan in a week to announce plans to split itself into three. For corporate Japan, the move is revolutionary. For Toshiba shareholders hoping for a speedy sale to a private equity buyer, a proposal that will take two years to come good seems designed to discourage them from hanging around.
HONG KONG (Reuters Breakingviews) - Fools rushed in to China Evergrande. The embattled Chinese real estate developer’s deals to sell its headquarters and property management arms may have run into political snags. Overpay for the assets and it looks like a bailout while a lowball bid invites cries of opportunism. Hesitant governments can hurt more than they help.
HONG KONG (Reuters Breakingviews) - What to say to a friend whose troubles give you an opportunity? Evergrande’s shares are suspended while a rival eyes taking a $5 billion majority stake in the ailing developer’s property management unit, Chinese media reported. Now tycoon Joseph Lau has launched a $250 million buyout bid for the 25% his family doesn’t already own in Chinese Estates. Its shares have been beaten down by its close ties to Evergrande boss Hui Ka Yan, a poker buddy of Lau. Sellers in each case are looking at strong hands that they’ll have little choice but to fold on.
HONG KONG (Reuters Breakingviews) - There’s a fresh sign that Japan’s shareholder spring is slowly blossoming. Online financial supermarket SBI has initiated a surprise siege at rival Shinsei Bank to more than double its stake to 48%. The $1.1 billion tender offer comes some two decades after U.S. buyout baron J.C. Flowers was labeled a vulture for rescuing the same lender then known as Long-Term Credit Bank. More domestic-led boardroom shakeups are welcome, especially at the country’s sluggish banks.
HONG KONG (Reuters Breakingviews) - Not many people get to put senior roles at both Goldman Sachs and McKinsey on their resumes. The investment bank has snapped up Kevin Sneader just six months after he was ousted from the management consultancy’s top job. Installing the person who agreed a $573 million opioid settlement and grappled with a host of other controversies may look odd for a bank still smarting from the Malaysian 1MDB scandal. In fact, it suggests an openness to fresh ideas.
HONG KONG (Reuters Breakingviews) - Artificial intelligence has delivered as much in controversy as it has for investors. Nowhere does that hold truer than for China’s AI “dragons”, the largest of which, SenseTime, is now seeking a Hong Kong initial public offering. It wants to raise as much as $2 billion, according to media reports. If regulators sign off, its biggest test will be overcoming its position on a U.S. trade blacklist to attract international backing. Seven-year-old SenseTime, which counts SoftBank’s Vision Fund and Alibaba among its backers, was valued at $10 billion in a 2020 funding round. It specialises in image recognition software used by city authorities and in smartphone cameras and self-driving vehicles. Its technology is also useful in the metaverse, which promises to mix reality and a virtual world. Assuming first-half revenue increases at the same pace for the rest of the year, its compound annual growth rate since 2018 would be 21%. Research, sales and administrative costs have been rising faster. Still, unprofitable U.S. AI-related companies such as $50 billion Palantir or $90 billion Snowflake have outperformed the Nasdaq Composite Index over the past three months. The big issue though for foreign investors is social governance. SenseTime sold its holding in a company focused on Xinjiang in March 2019 but was still added to the U.S. “entity” list in October that year along with three other AI dragons for its perceived involvement in Beijing’s repressive treatment and surveillance of minority Muslim groups in the province. The U.S. blacklist, which applies to components, has had no material impact on SenseTime’s software-dominated business. The company established an ethics council in 2019, too. Yet the fact remains that its cutting-edge technology could be used by bad actors. Listing may not be easy. Compatriot Megvii let its Hong Kong IPO application lapse in February 2020 after failing to win approval while AI chipmaker Yitu Technology in March dropped plans to go public in Shanghai. HSBC’s presence as a sponsor of SenseTime’s deal suggests the company is serious about wanting international backing. A broadly backed share sale would suggest that foreign investors are less concerned about Chinese technology than many governments are.