Q1 Apac fintech funding data signals improving appetite for digital lending: S&P
DIGITAL lenders pulled in US$548 million over 38 transactions in the first quarter of 2021 to make up more than half the total amount raised by this sector over 2020, according to a recent report by S&P Global Market Intelligence.
S&P Global on Thursday said the latest data suggests that investor appetite for digital lending appears to be returning. This comes after the sector was the hardest hit in terms of both venture capital funding and volume last year, when digital lenders gathered just US$788 million across 79 deals.
Japan's buy-now, pay-later provider Paidy netted the largest fundraising among digital lenders through its US$120 million Series D round, which brought total equity raised by the firm to US$337 million.
Overall, S&P Global's report showed that financial technology (fintech) companies in the Asia-Pacific (Apac) drew in US$2.35 billion in the first three months of 2021. There were 153 deals in the first quarter, which was 50 per cent higher than the same period last year and 35 per cent more than the preceding quarter.
South-east Asia notably saw the largest amount of fintech funding activity with 51 deals in the first quarter. The region accounted for 44 per cent of Apac's total fintech funding value for Q1, with one-third coming from Grab Financial Group's US$300 million Series A round.
The inclusion of Grab's latest round "massively boosted" South-east Asia's contribution to the aggregate funding amount in Apac, said S&P Global.
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Capital raised by ride-hailing firms including Grab and Gojek had been left out from S&P Global's funding roundups in 2020 and before, as capital allocated to their financial services businesses had not been disclosed.
The news and data provider said South-east Asia's growing representation in the larger Apac region's fintech investments would still hold, even with the exclusion of Grab Financial's transaction in the first quarter. More capital may flow into South-east Asia-based fintechs on the back of Grab's US$40 billion blank-cheque deal, it added.
S&P Global in its report highlighted that China could also see a surge in fintech funding flows following the rollout of stricter capital requirements imposed on Internet lenders. With the recent regulatory changes, it thinks Chinese fintechs could turn towards the private market to raise capital.
"While the adoption of digital financial services at the height of the Covid-19 pandemic was borne out of necessity due to widely imposed lockdowns, digital habits seem likely to continue post-pandemic, which should benefit fintech companies," the report noted.
"We continue to maintain a positive outlook on the fintech fundraising environment even as the resurgence in Covid-19 cases in several Apac countries threatens the pace of economic recovery. Further, the emergence of more mature fintechs and subsequent successful exits may serve as catalysts for more fintech investments in the region."
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