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|Foreign capital eyeing Vietnamese fintech|
|Mekong Capital invests in F88|
|Hong Kong fintech group acquires local tech company|
Fintech: the new source of M&A
KPMG’s quarterly report showed that in the first quarter of 2017, total global investment in fintech was $3.2 billion, with 260 deals. The Asia-Pacific alone saw 33 deals with the total value of $492 million.
Vietnam is not an exception to this trend. According to the estimations of Topica Founder Institute, in 2016, total investment in Vietnamese fintech startups was $129 million, accounting for 63 per cent of all startup contract value. New companies such as Payoo, VNPT E-pay, M_Service (Momo), and F88 are leading in terms of deal value.
This wave of fintech startup investment could be the new source of impressive M&A activities in the future.
According to Christian Konig, fintech expert and founder of Fintech Meetup Vietnam and Fintechnews.sg, the Vietnamese fintech market has a very positive outlook.
He predicted that big investors, such as Alipay, Apple pay or Samsung pay, will join the market through multiple channels.
There will be a variety of products, such as insurtech for insurance and wealthtech for investment consultation, among others. Startups in this field will gradually become more professional and may diversify services and products to best serve customers by cooperating with financial institutions, such as banks or insurance companies.
Deal value and foreign interest
As of early 2017, 70 per cent of fintech contracts came in early stage funding (seed round and Series A), with the total value of $29.1 million. For instance, F88, a Hanoi-based pawn shop chain, attracted $10 million investment from Mekong Capital.
|F88 received $10 million investment from Mekong Capital|
As for Series B funding, accounting for 8 per cent of deals, M_Service JSC, operator of mobile payment app Momo honoured by Vietnam M&A Forum 2016, attracted $28 million from Standard Charter Private Equity and Goldman Sachs.
Foreign investor’s interest in Vietnamese fintech startups is predictable since fintech has always been considered a field with high growth potential, with venture capital funds increasing investment in markets with young populations using traditional financing services.
Recently, two South Korean funds, Korea Investment Partners (KIP) and Mirae Asset Venture Investment, invested a total of $10 million in the Vietnamese app Appota. This initial agreement will drive the next development phase of Appota with a focus on fintech.
In November 2016, Champion Crest, the investment fund of Credit China Fintech Holding (Hong Kong), acquired 51 per cent of Amigo Technologies JSC with $12.73 million. Amigo Technologies is one of the five largest providers of IT services and solutions for personalised financial services in Vietnam in terms of market share.
According to Phang Yew Kiat, vice chairman and CEO of Credit China Fintech, this deal is part of the company’s foreign expansion strategy. “The acquisition of Amigo Technologies marked an important milestone in Credit China Fintech’s international strategy and is the first step in the company’s expansion outside China,” Kiat said.
Therefore, it is safe to say that Vietnamese startups with financial products are receiving special attention from foreign investors.