Good morning! The Wall Street Journal reports that Kirkbi—the parent company of LEGO—is acquiring American edtech firm Brainpop for $875 million. The world’s largest toymaker acquired stakes in 15 edtech companies over the last five years to build a ‘learn through play’ ecosystem. LEGO’s entertainment and theme park businesses may seem like the more obvious juggernauts, but its education division goes back 40 years. No wonder Forbes once called it the “biggest education company on earth”.

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The Market Signal*

Stocks: The headwinds buffeting the Indian economy are gathering strength with retail inflation rising to 7.41% in September, a  five-month high. Industrial production shrunk 0.8% due to a decline in manufacturing and mining outputs. Bloomberg reports that global wealth is set to contract by more than 2% this year as assets lose value.

Early Asia: The SGX Nifty retreated -0.28% from its previous close at 7.30 am India time. The Hang Seng Index (-0.36%)  and Nikkei 225 (-0.48%) also pulled back.

RETAIL

Bira 91 Goes Shopping

The Indian beer maker will snap up alco-bev pub chain The Beer Cafe in an all-stock deal. 

But why now?: Bira91 has been struggling with costs and margins. The pandemic brought in bad juju. Inflation gave the craft beer industry few reasons to cheer. Commodities such as glass, aluminium, wheat, and barley became costly or were in short supply. 

Money-guzzler: Craft beer makes up only 2% of the overall alcohol market. Bira91 cut costs and even launched flavours at premium pricing to counter sluggish sales. But the bottomline remained under pressure. 

Owning the supply chain end to end will allow Bira91 to experiment with new products by taking them directly to consumers while keeping costs under control.

P.S: This news comes a day after it acquired brewery company Kamakhya Beer & Bottling, hinting at an all-out strategy before it aims to hit the bourses.

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BROADBAND

Will Musk Be Second-Time Lucky?

The billionaire-in-the-news is seeking a permit to launch Starlink in India. If cleared, Elon Musk’s SpaceX-owned division will compete with homegrown broadband-from-space providers Jio Satellite Communications and Bharti Airtel’s OneWeb. But that’s a big “if”.

Why?: Musk’s approach has rubbed the Indian government the wrong way. It wasn’t too long ago that Starlink accepted pre-orders in India without regulatory approval; the government clapped back with an order to refund customers since Starlink didn’t have a commercial licence. Then, there was the tug of war over tax concessions for Musk’s other company Tesla versus manufacturing EVs in the country.

Contrast that with Tesla’s Chinese rival BYD, which just launched its passenger EV in India despite frosty Beijing-New Delhi relations. Musk’s disdain for regulations—or India’s regulatory landscape, however you see it—will ultimately dictate whether India will follow Japan in becoming the first Asian country to deploy Starlink.

TUNE IN

Xi Jinping May Have To Flip Traditions

The Communist Party of China is getting ready to hold its once every five years Congress starting October 16. China's political elites will gather to discuss the party constitution, the agenda for the upcoming years, or leadership changes. However, there are several reasons why this Party Congress will go down in history as a significant one for Beijing politics. Tune in to know more!

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METAVERSE

M&M Team Up To Rule The VR Roost

Not the candy brand or Mahindra & Mahindra; we’re talking Microsoft and Meta. Satya Nadella joined Mark Zuckerberg at the Meta Connect conference to announce that Microsoft will bring Xbox Cloud Gaming, Office, and Teams to Quest VR headsets. It’s the most significant collaboration between the companies since Facebook’s integration on the now-dead Windows Phone.

Co-starring: Legs; by which we mean Meta’s metaverse avatars will finally be bipedal, not torso-only. Other major announcements at the conference included the $1,500 Quest Pro virtual reality (VR) headset, a multiyear Meta-NBCUniversal deal to bring streaming platform Peacock to the metaverse, and product bundles for VR fitness apps. Meta added that its Quest Store made $1.8 billion off app and game sales.

The Signal

Quest Pro marks Meta’s jump from the consumer-oriented Quest 2 headset to an enterprise focus. No wonder the company is launching business subscriptions in 2023 and pitching Quest Pro as a productivity device.

Meta’s had a terrible 2022 due to sagging revenues, declining digital ad sales, the Reality Labs division (which oversees all things metaverse) bleeding billions of dollars, and the unwillingness of its own employees to wade into Horizon Worlds (Meta’s version of the metaverse). Interoperability, then, is the only way forward. Microsoft excels at enterprise-everything; that includes the HoloLens 2 augmented reality (AR) device, which has several industrial clients. For Microsoft, being a go-to for metaverse productivity across VR devices makes sense after its own AR division disasters.

PRIVATE EQUITY

Stepping Into The Circle Of Light

CVC partners, Europe’s biggest private-equity firm famous for its rainmaking bets and infamous for its lack of diversity, is going public. 

From a largely secretive world of private dealmaking, it follows larger peers such as Blackstone and Carlyle into a domain where transparency is cherished and proactive disclosures expected.  

Testing times: CVC’s move also spotlights the pressure the private-equity industry is in to grow. A few weeks ago, influential asset managers called out the PE industry for playing pass-the-parcel with portfolio companies to jack up valuations. A Danish asset manager found some parts of the industry resembling a pyramid scheme. It is also hard to value privately held assets such as the Indian Premier League (IPL) team Gujarat Titans, for which CVC paid $700 million.

PAYMENTS

UPI Goes To Europe

While international card issuers fret over India’s real-time payments system UPI and card payment network RuPay, the National Payments Corporation of India (NPCI) is opening a European front.

On the go: NPCI International Payments, the global arm of UPI and RuPay operator NPCI, has tied up with French company Worldline to introduce the services in Europe. It will help Indian travellers make payments digitally. NPCI is also building a bridge between UPI and Singapore's PayNow for cross-border money transfers between the two countries.   

The Reserve Bank of India has allowed linking UPI with credit cards, beginning with RuPay. Once it becomes popular, travellers may not even need to carry plastic with them.

FYI

Pink slips: Edtech behemoth BYJU’s confirmed it’s laying off 2,500 employees across departments to cut costs and achieve profitability.

Funding run: Ready-to-cook packaged-food brand iD Fresh Food is looking to raise $100 million from private-equity investors at a valuation of $486 million.

Counting down: Samsung, Apple, Google, Xiaomi, and Vivo will roll out software updates by December to enable 5G functionality in India on compatible devices.

Coming in hot: A consortium of Japanese companies may reportedly buy consumer electronics giant Toshiba for $19.13 billion. 

Rethink: Twitter is reviewing its permanent bans policy, a week after Elon Musk decided to go ahead with his deal to buy the social media platform.

THE DAILY DIGIT

238

The age of BNY Mellon, the oldest bank in the US that also became the country's first mainstream lender to roll out crypto services (Cointelegraph)

FWIW

Meet Elon Musk, the grifter: Make of this what you will. Tesla CEO Elon Musk is now selling cologne. Called Burnt Hair, it smells quite like its description and is retailing for $100 dollars a pop on The Boring Company’s website. Of course, Musk has made a million dollars out of it already. There's a musk joke waiting to be made here. 

Never say never: Netflix has finally joined the popularity contest. We mean the rating system. It has signed up with UK TV rating agency BARB, creating some sort of legitimacy at a time when it is gearing to launch the ad-supported tier. From November 1, BARB will share ratings for Netflix, which coincides with the launch of their hit drama The Crown.

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