Asia-Pac fintech funding up 9% as investors set sights on S-E Asia, Australia: S&P

FUNDING for fintechs in the Asia-Pacific grew 9.1 per cent in the second quarter as investors shifted their bets to firms in Australia and South-east Asia.

While firms in India accounted for 42.9 per cent, or US$543.4 million, of the region's total investments in the first quarter, funding fell to US$339 million in the second quarter as the Indian government continues to clamp down on foreign investments, according to a report by S&P Global Market Intelligence.

South-east Asian and Australian fintechs, on the other hand, attracted US$455 million and US$371 million, roughly thrice and twice the amounts raised in the previous quarter, respectively.

The region's total investments stood at about US$1.4 billion, although deal activity remained flat.

S&P Global's analyst Celeste Goh noted that India's recent ban on Chinese-owned apps may continue to wither investments from prominent Chinese venture capitalists.

Meanwhile, in China, funding fell from US$205 million to US$41 million, with the number of deals halved to 10. Recovering investor sentiment may have been dampened, yet again, by fresh outbreaks of Covid-19, said Ms Goh.

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The report found that payment companies, particularly those supporting online transactions and are thus considered more resilient in the ongoing pandemic, were a big draw for investors. In the second quarter, these firms raised US$623 million, accounting for almost 45 per cent of the region's total.

The other attractive segments in the second quarter - in descending order according to their aggregate value - are digital lending, banking technology, investments and capital markets technology, financial media and data solutions, and insurance technology.

Australian headquartered payment unicorn Airwallex topped the list with a US$160 million Series D round in April, making that its largest funding round to date - which also values the firm at US$1.8 billion on a post-money basis.

Airwallex counts Chinese Internet titans Tencent Holdings and JD.com Inc among its clients. It recently added a WeChat acceptance service in Australia, Hong Kong and Singapore, which gives merchants access to over 800 million WeChat Pay users.

South-east Asia-based e-wallets were also a big draw for investors.

Voyager Innovations, based in the Philippines, raised US$120 million to facilitate the expansion of its e-wallet service, PayMaya, into adjacent services.

Besides QR-code payment for in-store purchases, users can also get prepaid Visa and Mastercard cards through the e-wallet, as well as obtain unsecured loans from a local lender.

Myanmar-based Wave Money saw an injection of US$73.5 million from Jack Ma's Chinese fintech behemoth Ant Financial, which has actively been expanding its global reach outside China. (see amendment note)

Wave Money operates a mobile wallet called WavePay, which facilitates remittances, utility payments, airtime top-ups and other digital transactions.

The report also highlighted Facebook and PayPal's undisclosed investment in Indonesian tech giant Gojek.

The deal, reported in June, will see the integration of PayPal's payment platform with Gojek's GoPay wallet. The investment could also pave the way for the integration of GoPay into Facebook messaging app WhatsApp.

Ms Goh noted that the report had excluded this transaction in its deal count as S&P Global considers Gojek a ride-hailing app which does not fall under any of its fintech industry segments.

The introduction of open banking in Australia may have spurred investments Down Under. Having greater access to deposit and transactions data, with the users' approval, could allow virtual banks to develop more innovative and tailored offerings, she said. Data portability could also enhance competition in the banking sector.

The story has been revised to take in updated figures from S&P, which showed that Australian fintechs attracted US$371 million in funding, rather than US$369 million that was earlier reported. It also updated that payment unicorn Airwallex raised US$160 million in a Series D round in April, rather than US$158.3 million.

Amendment note: An earlier version of this article incorrectly stated that Wave Money is based in Thailand. It is in fact based in Myanmar.