Abu Dhabi, UAEThursday 24 September 2020

Billionaires: Li Ka-shing’s early bet on Zoom pays off

In our fortnightly roundup, the wealth of Hong Kong’s richest man soars on his $11bn stake in the app, while a UK start-up backed by Peter Thiel files for US IPO

Li Ka-shing, 92, who’s best known for building some of Hong Kong's most famous tower blocks, first invested in Zoom in 2013. He now holds 8.5 per cent of the video communications platform. Bloomberg
Li Ka-shing, 92, who’s best known for building some of Hong Kong's most famous tower blocks, first invested in Zoom in 2013. He now holds 8.5 per cent of the video communications platform. Bloomberg

Li Ka-shing

Li Ka-shing’s Hong Kong business empire may be struggling, but he has managed to remain the city’s richest man. That is largely thanks to an early bet on Zoom Video Communications and Solina Chau, his long-time confidante who co-founded the billionaire’s venture investment arm.

Mr Li, 92, who is best known for building some of the most famous high-rise tower blocks to dot Hong Kong’s skyline, first invested in the video-conferencing app in 2013. He now holds 8.5 per cent of the company, a stake that is worth $11 billion (Dh40.4bn), or a third of his wealth.

Zoom's value increased this year as the Covid-19 pandemic shut offices and schools, forcing people to hold online meetings and classes.

Last Monday, the US-listed company reported a 355 per cent jump in sales for the three months ended July 31, the second-best result among Nasdaq 100 Index members in the past quarter.

That boosted its shares by a further 41 per cent last Tuesday, with Mr Li’s stake gaining $3.2bn in just one day. He is now worth $32.6bn, according to the Bloomberg Billionaires Index.

While Zoom has surged this year, Mr Li’s conglomerates, CK Hutchison Holdings and CK Asset Holdings, have struggled amid the Covid-19 crisis.

The shares have lost more than a quarter of their value this year and the tycoon who for decades profited by expanding in times of crisis is now scaling back, seeking cost cuts.

After reporting a first-half profit decline of 29 per cent, CK Hutchison issued a warning last month that net income could fall at its core ports and retail businesses in the second half.

Meanwhile, CK Asset said profit fell by 58 per cent in the six months to June.

The Zoom investment is partly thanks to Ms Chau, who in 2002 co-founded Horizons Ventures, which manages Mr Li’s venture investments.

The vehicle was an early backer of Facebook, Spotify Technology and Siri, and has also invested in plant-based meat producer Impossible Foods.

It participated in Zoom funding rounds in 2013 and 2015 and when the company went public last year, Mr Li’s stake was worth about $850 million.

Mr Li’s returns from investments through Horizons Ventures are allocated to his charity, the Li Ka Shing Foundation.

He put a third of his wealth, more than $9bn, in it in 2006, according to a 2015 statement from his business group.

Silicon Valley billionaire Peter Thiel is a co-founder of PayPal and was Facebook’s first major investor. Bloomberg
Silicon Valley billionaire Peter Thiel is a co-founder of PayPal and was Facebook’s first major investor. Bloomberg

Peter Thiel

Compass Pathways, which is backed by Silicon Valley billionaire Peter Thiel, filed for an initial public offering. The mental healthcare company, in which Mr Thiel owns a 7.54 per cent stake, said it plans to list its American depositary shares on Nasdaq under the ticker CMPS.

The London company filed to raise $100m, a placeholder amount that is expected to change, according to a filing with the US Securities and Exchange Commission. It plans to use proceeds to fund clinical trials for its depression therapy.

The company posted a net loss of $24.83m, or 30 cents per share, in the first six months of the year.

Mr Thiel is a co-founder of PayPal and was Facebook’s first major investor. He is also the chairman of Palantir Technologies, which will go public through a direct listing in the coming weeks.

Founded by George Goldsmith and Ekaterina Malievskaia in 2016, Compass received initial funding from Christian Angermayer, a German entrepreneur, and Mr Thiel.

The initial funding round valued Compass at $16m and the IPO will result in initial investors realising about 10 times of their investment.

The company has raised $116m, according to data from Crunchbase.

Hedge fund manager Steve Cohen incorporated Point72 Biotech Private Investments, joining the stampede of capital flowing into closely held biotech companies. Bloomberg
Hedge fund manager Steve Cohen incorporated Point72 Biotech Private Investments, joining the stampede of capital flowing into closely held biotech companies. Bloomberg

Steve Cohen

Steve Cohen is joining the stampede of capital flowing into closely held biotechnology companies.

The billionaire founder of Point72 Asset Management incorporated Point72 Biotech Private Investments last month, according to Delaware state records. The investment vehicle will initially invest on his behalf, with no plans to raise outside capital.

The level of investment in the sector was expected to slow down after venture capital funding in US biopharmaceutical companies hit a record in the first quarter, Bruce Booth, a partner at Atlas Venture, said in a blog post last month.

Instead, amid the Covid-19 pandemic, venture capital funding of biotechnology companies touched another record in the second quarter, exceeding $6.4bn, according to data compiled by transaction tracker PitchBook.

The hedge fund managed $17.2bn as of July 1, according to its website. The company’s allocation to healthcare companies jumped to 24 per cent of its US traded stocks during the second quarter, its largest holding in any one industry, according to regulatory data compiled by Bloomberg.

The biotechnology partnership is separate from Point72 Ventures, an early stage venture capital strategy funded by Mr Cohen and other members of the company.

Paul Singer is the founder and president of Elliott Management, which has a private equity arm that buys struggling firms and fixes them up. Bloomberg
Paul Singer is the founder and president of Elliott Management, which has a private equity arm that buys struggling firms and fixes them up. Bloomberg

Paul Singer

Billionaire Paul Singer’s Elliott Management is exploring a bid for Aryzta, the ailing Swiss baking company that makes Otis Spunkmeyer cookies.

The US investment company has been studying a potential offer for Aryzta, which also supplies buns to McDonald’s. The company has separately attracted interest from private equity suitors such as Apollo Global Management and Cerberus Capital Management, Bloomberg reported.

Canadian grocery and baking company George Weston has also been considering its own bid. Shares of Aryzta have fallen by 46 per cent this year, giving the company a market value of about 586m Swiss francs (Dh2.34bn).

Elliott’s deliberations are at an early stage and there is no certainty that it will proceed with a formal offer.

Aryzta hired Rothschild & Co this year to conduct a strategic review and said in July that several parties had expressed unsolicited interest in acquiring the company.

Swiss companies have been involved in merger and acquisition deals worth $40.3bn this year, down by 33 per cent from the same period last year, according to data compiled by Bloomberg.

Elliott, known for activist investments in which it purchases stakes in public companies and agitates for change, also has a private equity arm that buys struggling companies and fixes them itself. Last year, it bought Barnes & Noble after previously acquiring British bookstore chain Waterstones and network technology company Gigamon.

Updated: September 7, 2020 04:27 AM

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