Asean fintechs may list in US market on dual-listing track

Singapore

SOME Asean fintechs may look to soon list in both their home markets and the US, riding on the demand for growth stocks from this part of the world, said a top Citi banker.

"Asia is showing, to a certain extent, an ability to leapfrog in fintech," David Biller, Citi's Asean head of corporate and investment banking head told The Business Times in an interview.

"There are a few companies, particularly fintech-oriented businesses, which have interesting growth profiles. We may very well see a few of those listings. What you'll probably end up seeing is quite a few dual-listings in the USA and their home markets."

Mr Biller did not specify names. Still, there has been focus around robust growth from fintech players in the payments and broader banking space.

Indonesia and Singapore are among the top markets by absolute value of digital payments and by growth rates in the region of South and South-east Asia, a recent Deloitte report showed.

Indonesia's digital payments segment ranks at US$35.51 billion with a 15.7 per cent compound annual growth rate (CAGR) between 2020 and 2024. The same segment in Singapore is valued at nearly US$14.94 billion, and is backed by a 9.3 per cent CAGR through to 2024.

A separate report by S&P Global Market Intelligence showed that non-bank e-wallets have strong growth potential in cash-heavy Indonesia and the Philippines. In both markets, unbanked consumers are switching from banks' traditional prepaid cards to e-wallets. Just over 70 per cent of all e-money value in Indonesia was held in e-wallets in 2019.

Fintech firms have started snapping up banks as well in Indonesia, in line with consolidation there.

Speculation continues over whether Grab, Gojek, and Tokopedia will come together in a mega merger of fintech giants. Citing unnamed sources, Reuters on Monday reported that Grab is exploring an IPO in the US this year to raise at least US$2 billion.

Meanwhile, the strong performance of Nanofilm, which was listed in Singapore last year, pointed to surging demand for growth stocks in this region, despite the lack of peer comparisons to assess valuations, Mr Biller said. Shares of Nanofilm have gained more than 85 per cent against its IPO price in less than three months.

"I think the surprise to us was how broad-based the interest was in the company. I think certainly what it proved, more than anything, is that Singapore-based investors are able to analyse and appreciate companies that don't have a direct set of comparables," said Mr Biller.

More broadly, the "punchy market" in 2020 is expected to extend into 2021, said Mr Biller.

In Asia-Pacific, excluding Japan, equity and equity-related issuance hit a 10-year high of US$410 billion, up 66.5 per cent from a year ago, Refinitiv data showed.

In Singapore, equity and equity-linked issuance by Singaporean companies raised US$11.5 billion last year, up 17.2 per cent from 2019 and at its highest since 2011, data from Refinitiv showed.

The "prisoner's dilemma" prompted companies to raise capital even if they are financially comfortable, and with that dry powder, some will be on the hunt for assets this year.

"I think you ended up having a prisoner's dilemma, where if you don't defect, you are going to be worse off. So even though there are some companies that didn't need the capital on the face of it, they've raised the capital because it's a competitive disadvantage to not have it," said Mr Biller.

Mergers and acquisitions (M&A) have not taken off as actively here. Overall Singapore-announced M&A activity last year slowed by a little over 25 per cent from 2019 to reach US$85.6 billion. Most of the deal-making was in real estate.

"Because of all the stimulus, the hangover hasn't really kicked in yet. The capital-raising is a recognition that at some point, there will be opportunities that surface from this that are going to be of absolute value," said Mr Biller. "And there will be companies that are going to be better positioned to capitalise on that than others."

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