CAPITAL POURS IN TO FUEL DIGITAL BANKING RACE IN SE ASIA
Edition #89, 6 July 2021 | View in browser
CAPITAL POURS IN TO FUEL DIGITAL BANKING RACE IN SE ASIA
As pure-play digital banking emerges as the next frontier in the development of fintech in Southeast Asia, investors are piling more capital into promising companies.
Within the past week, DealStreetAsia — DATA VANTAGE identified three companies within the digital banking landscape that raised fresh capital.
Voyager Innovations, which operates the popular Philippine payment app PayMaya, received $120.8 million from existing backers such as telco firm PLDT, private equity major KKR & Co and the International Finance Corporation.
The capital came on top of the $116.5 million that the company had secured earlier this year, our data shows. With $561 million in paid-up capital to date, the latest investment round puts Voyager’s valuation at $747.3 million.
Voyager said it will use the proceeds to expand PayMaya and launch digital banking services in the Southeast Asian country. The company has applied for a digital bank licence with the Bangko Sentral ng Pilipinas.
Current shareholders of Voyager Innovations Holdings Pte. Ltd.
Source: DealStreetAsia — DATA VANTAGE
Singapore-based neobank YouTrip, which focuses on servicing travellers’ banking needs, raised $1.4 million last week, bringing the total funds raised in 2021 to $3.5 million.
Enterprise-level digital banking solution provider RootAnt also raised $1.4 million last week as the company gears up for a partnership with fintech firm Byfin, a subsidiary of Japan’s SBI Holdings, which is an investor in RootAnt.
Profitability remains elusive
Changing consumer behaviour in an increasingly digitised world is creating new opportunities for fintech players to access the underbanked. Profitability, however, remains a challenge, including for challenger banks.
A survey of 3,250 consumers and 1,350 merchants in five Southeast Asian countries by Boston Consulting Group (BCG) found that the top reasons that may trigger a shift from traditional to digital banks are: lack of personalised advice (58%), high fees (45%) and unattractive image (40%).
The report concludes that the emergence of fresh technology offerings provides a “background excitement” to all that is new. This view explains why, for instance, Indonesia’s Bank Jago’s presence as an embedded service on Gojek’s platform could be a game-changer for the lender.
Despite its access to Gojek’s pool of over 29 million active users in Indonesia, however, achieving profitability will remain a challenge for Jago, experts told DealStreetAsia recently. This is emblematic of the situation with digital banks globally, according to BCG, as banks compete on price, triggering a race to the bottom.
Out of an estimated 150 digital banks that have emerged globally since 2000, only seven have started to generate profit, including South Korea’s Kakao Bank.
Few digital banks are profitable globally
Source: Boston Consulting Group
Other snippets from DATA VANTAGE
GrabInvest Asia, a business under super app Grab focused on investment services, recently injected $818,000 in its Singapore subsidiary, GrabInvest (S) Pte. Ltd. The latter has raised $5.7 million to date. GrabInvest launched its robo-investment service AutoInvest in September last year.
Indonesia-registered company PT Nusa Jaya Cipta transferred its stake in leading edtech startup Ruangguru to an existing shareholder and a new backer in secondary transactions that were completed last week. Ruangguru announced fresh funding of $55 million in April from a group of investors led by Tiger Global Management. The company has raised $155 million so far.
Healthtech firm Doctor Anywhere also saw a transfer of shares between shareholders last week. The company last raised funds in March last year and has collected $47.6 million to date, our data shows.
Big data analytics company Antuit welcomed a new entity, Panthera Growth Fund VCC, to its cap table last week. The company, which now controls 9.3% shares in Antuit, acquired the stake through secondary transactions involving three existing shareholders. Antuit has raised $76.8 million in total funding to date.
Singapore-registered venture capital firm Joey Capital acquired more shares in Bangkok-headquartered Alpha Supply Chain Group through a secondary transaction last week. As of now, Joey Capital is the largest shareholder in the e-commerce and logistics firm with a 40.5% stake.
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