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Southeast Asia’s technological boom has driven record mergers and acquisitions

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Driven by the acquisitions of leading groups Grab, Gojek and Sea, transactions in the Southeast Asian technology industry reached US$19 billion in the first six months of 2021, the strongest start of a year in history.

Dealogic’s data shows that compared with 2020, M&A transactions have increased by 114%, reflecting investor enthusiasm for one of the world’s fastest-growing Internet markets.

According to a report last year by Google, Singapore’s state-owned investment company Temasek, and consulting firm Bain, Southeast Asia has about 400 million Internet users. By 2025, the digital economy is expected to reach US$300 billion.

If the announced transaction is completed before the end of the year-including Grab merger Through a special purpose acquisition company, the valuation of this SoftBank-backed startup will reach US$40 billion-the transaction value will reach US$75 billion, which is much higher than the US$17 billion in 2020 and US$23 billion in 2019.

Harry Naysmith, head of investment banking at Goldman Sachs Southeast Asia, said that the region’s technology economy has “accelerated for 5 to 10 years,” stimulating large-scale liquidity events such as initial public offerings.

One of the biggest deals is Between Gojek and TokopediaThe Indonesian Technology Group has created a technology platform worth more than 18 billion U.S. dollars, which is the largest merger in the history of the industry. But even excluding this transaction and Grab’s Spac, the 2021 transaction is still expected to set a full-year record.

Varun Mittal, a partner and fintech expert at professional services firm Ernst & Young in Singapore, said that digital banking and lending are the main areas of interest.

These include Offshore acquisitionIn January, the gaming and e-commerce platform of Kesejahteraan Ekonomi, Bank of Indonesia. The size of the transaction was not disclosed.

“We are seeing fintech companies acquiring existing companies to obtain regulatory licenses and quickly achieve scale,” Mittal said. “In the next three years, Southeast Asia will open 10 to 15 new digital banks in Singapore, Malaysia, the Philippines and Indonesia, making the industry one of the important investment destinations.”

Rohit Chatterji, co-head of Asia Pacific M&A at JPMorgan Chase, said that the telecommunications industry is also very popular, and the company integrates to create scale and increase the return on investment of 5G mobile networks.

Malaysia-based companies Celcom Axiata and Digi.com completed a merger this month to create the country’s largest telecommunications group.

Chatterji said the company is also looking to monetize the telecom tower, including plans to “release capital from infrastructure that can be leased and shared.”

Indosat Ooredoo, a telecommunications company based in Indonesia, sold its mobile tower product portfolio to the US infrastructure company Digital Colony in March for US$750 million.

The biggest test for investors will be whether the company can be listed. Indonesian e-commerce company Bukalapak is scheduled to conduct an initial public offering in Jakarta next month. GoTo, the names of the merged Gojek and Tokopedia entities, and Grab will be listed at the end of the year.

“If the recent capital market events proceed as planned, we should see the beginning of a truly virtuous circle,” Naismith said. “More investors will be satisfied with TMT in Southeast Asia [technology, media and telecom] The ability of the department to provide returns. “

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