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

Mr Li’s returns from investments through Horizons Ventures are allocated to his charity, the Li Ka Shing Foundation. He put one-third of his wealth in it …

Li Ka-shing

Li Ka-shing’s Hong Kong business empire may be struggling, but he’s managed to remain the city’s richest man. That’s 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.

The tycoon, who’s best known for building some of the most iconic skyscrapers to dot Hong Kong’s skyline, first invested in the video-conferencing app in 2013. The 92 year-old now holds 8.5 per cent of the San Jose, California-based company, a stake that’s worth $11 billion (Dh40.4bn), or one-third of his wealth.

Zoom has shot up in value this year as Covid-19 shuttered offices and schools, forcing people to hold virtual meetings and classes. On 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 last quarter. That boosted the stock a further 41 per cent on Tuesday, with Mr Li’s stake gaining $3.2bn in just one day. He’s 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 in 2020 and the tycoon who for decades profited by expanding in times of crisis is now scaling back, seeking cost cuts.

After reporting first-half profit dropped 29 per cent, CK Hutchison warned last month that net income may fall at its core ports and retail businesses in the second half of the year. Meanwhile, CK Asset said earnings sank 58 per cent in the six months to June.

The Zoom investment is partly thanks to Mr 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 one-third of his wealth in it in 2006, or more than $9bn, 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

Peter Thiel-backed Compass Pathways filed for an initial public offering (IPO). The United Kingdom-based mental health care 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-based firm filed to raise $100m, a placeholder amount likely 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.

Silicon Valley billionaire 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, as well as Mr Thiel.

The initial funding round valued Compass at $16m and the IPO will see the initial investors realising a multiple of 10 times of their investment, according to sources.

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 biotech 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, according to a source.

The level of investment in the sector was expected to slow after venture capital funding in US biopharma companies hit a record in the first quarter, Bruce Booth, a partner at Atlas Venture, wrote in a blog post last month. Instead, amid the Covid-19 pandemic, VC funding of biotech set another record in the second quarter, exceeding $6.4bn, according to data compiled by transaction tracker PitchBook.

The hedge fund manager oversaw about $17.2bn as of July 1, according to its website. The firm’s allocation to health care 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 biotech partnership is separate from Point72 Ventures, an early stage VC strategy funded by Mr Cohen and other members of the firm, the source said.

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, sources said.

The US investment firm has been studying a potential offer for Aryzta, according to sources. Aryzta, which also supplies buns to McDonald’s, has separately been attracting interest from private equity suitors including Apollo Global Management and Cerberus Capital Management, Bloomberg reported.

Canadian grocery and baking giant George Weston has also been weighing its own bid, sources have said. Shares of Aryzta have fallen 46 per cent this year, giving the company a market value of about 586m Swiss francs (Dh2.4bn).

Elliott’s deliberations are at an early stage, and there’s no certainty it will proceed with a formal offer, the sources said.

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 firms have been involved in $40.3bn of mergers and acquisitions this year, down 33 per cent from the same period in 2019, 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 firms and fixes them itself. Last year, it bought Barnes & Noble after previously acquiring British bookstore chain Waterstones and network technology company Gigamon.

Updated: September 5, 2020 09:43 AM

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