Fintech MatchMove gets US$100m shot in the arm

Singapore

FINTECH company MatchMove said it is receiving a US$100 million strategic investment from US-headquartered IT services group Nityo Infotech Corp at a US$600 million post-money valuation, which will make Nityo the startup's largest shareholder. The transaction has yet to be reflected in regulatory filings in Singapore.

The investment was made through Nityo's corporate venture arm Karma Free Capital (KFC) Ventures, which is investing from a US$250 million allocation by its parent company. The deal marks KFC's largest investment by far - it typically cuts cheques of US$5-20 million for tech startups, said Nityo's founder and chief executive Naveen Kumar.

KFC Ventures has backed seven companies in Singapore, including payments solutions company CardUp and human resource startup HRTech.

With Nityo as a strategic investor, MatchMove will gain access to much more staffing resources, clients and markets as it develops its banking-as-a-service product, said Shailesh Naik, founder and chief executive of MatchMove.

Established in 2006, Nityo has a presence in 38 countries and over 3,000 enterprise clients. Its business spans services such as infrastructure management, staff outsourcing, system integration, application software development, IT consulting and cloud computing.

In Singapore, Nityo Infotech Corp-owned entity, Nityo Infotech Services, registered revenue of S$115.4 million in 2019 and a profit after tax of S$5 million, according to data platform Handshakes.

Nityo will join Vickers Venture Partners, Singapore-listed Singapura Finance and Japan's NTT Investment Partners as shareholders in MatchMove. The startup was last valued at US$335.8 million, according to data provider VentureCap Insights.

Founded in 2009, Singapore-based MatchMove helps companies offer digital payments, remittance, loans, insurance and investments to their own customers by embedding these services into their existing platforms or mobile apps through MatchMove's application programming interface (APIs).

A bulk of its business revolves around cross-border money transfers. The startup is authorised by regulators to operate in Singapore, India, Indonesia, Malaysia, the Philippines, Hong Kong and Vietnam. It is eyeing digital banking licences in a few jurisdictions.

Revenue in 2019 was mostly flat at US$7.7 million, driven heavily by transaction-based income. Operating loss deepened to US$9.5 million from US$6.5 million after higher general and administrative expenses and employee benefits expenses, according to a regulatory filing. Cash drain from operations deepened to US$7.1 million from US$3.5 million.

MatchMove typically takes a percentage of the amount transacted by its customer to keep as revenue. In 2019, it processed about US$450 million in transactions.

But last year amid the Covid-19 pandemic, it began shifting to a software-as-a-service (SaaS) model where customers pay a monthly fee per user. "As we go into 2021 and 2022, more than 80 per cent of our revenue will be SaaS-based revenue," said Mr Naik.

The startup also plans to make acquisitions this year to expand its geographical reach and technical capabilities. It is not actively seeking more funding.

Last year, MatchMove teamed up with Singapura Finance to apply for a digital banking licence in Singapore. It incorporated a subsidiary, MatchMove PowerBank, aimed at pursuing digital bank licences in Asean.

PowerBank raised an equity seed round in Q4 last year and a conditional pre-Series A round, comprising a convertible loan that would be extended if PowerBank was awarded the licence by the Monetary Authority of Singapore, said Mr Naik.

The conditional round included US$2 million in convertible debt financing from Singapura Finance. Singapore digital banks have a minimum capital requirement of S$1.5 billion.

After the unsuccessful bid, Singapura Finance sold its stake in PowerBank - it had invested US$1 million in equity - in exchange for a further 0.3 per cent stake in MatchMove.

It said its interest was exclusively in backing a Singapore digital bank, but it was of the view that MatchMove continues to have possible long-term growth potential.

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