Hence the after-market performance of Australia-listed Afterpay, which surged following China-based Tencent’s acquisition of a 5% stake. Alibaba had its purchase of Western Union’s spinout MoneyGram turned down by US authorities but is also trying to become the global payments provider of choice given Chinese blocks on Visa and Mastercard’s expansion in the world’s second-largest economy.
Tim Piper, an analyst at RBC Capital Markets, told Australian Financial Review: “With western countries dominated by the Visa and MasterCard payment rails, organic global expansion for Tencent and AliPay is challenging. As such, we think Tencent is attracted to Afterpay’s merchant and customer networks in Australia and the US, and the pace at which consumers are taking up buy now pay later offerings.
“Tencent may be able to leverage Afterpay’s merchant networks in [Australia and the US], helping to enable the millions of Chinese transacting outside of China to use Tencent more widely in countries around the globe.”
But an interesting wild card into the mix is social network Facebook’s $5.7bn purchase of a 9.99% stake in Jio Platforms, India’s top telecom operator and subsidiary of Reliance Industries, closely followed by private equity firm Silver Lake’s near-$750m stake purchase this week at a $65bn valuation. Silver Lake has close ties with Alibaba and its Ant Financial affiliate and has taken large stakes recently in travel companies Airbnb and Expedia – prime potential customer bases – while JioMart began testing an “ordering system” on Facebook’s WhatsApp smartphone app with more than 400 million active users in India.
So while the traditional approach to downturns is to explore what startups are formed in the crisis and funded by VCs, such as Silicon Valley Bank’s excellent analysis in its latest State of the Markets report, the challenges caused by the coronavirus could perhaps be better looked at as how venture is creating the ties that make incumbents even more powerful across multiple markets.
