Covid-19 has vastly accelerated the adoption of digital services on a global scale. The global tech giants are the biggest beneficiaries of this digital growth. While the pandemic has brought an array of consequences across a number of industries, it has not managed to slow down the investment and growth initiatives of companies in the technology sector.
The 4 distinct investment trends of global tech giants – ASEAN H1 2020
1. Strategic Partnerships in FinTech
In May 2020, Ant Financial invested US$73.5 Million into Wave Money; a strategic partnership aimed at promoting digital finance in Myanmar. The investments into digital payment ecosystems have taken a more strategic nature recently. This strategic partnership highlights the fact that FinTech investments are now taking on a new flavour extending to higher service layers beyond Payments.
As seen with the Ant Financial investment, other service layers within FinTech such as Money Transfer including OTCs and remittances make up a new wave of investments into the FinTech ecosystem. We will see similar aggressive FinTech investments in SouthEast Asia in the coming months.
2. Increased Consolidation of OTT Streaming Companies
There has been an exponential spike in the consumption of OTT content during Covid-19. While the global giants like Netflix, Amazon Prime have seen incredible success, we have also seen good growth amongst the region specific OTT companies. India in particular has about 40 OTT streaming companies, many of whom are very regional in nature. The biggest challenge for every company in this space is the rising cost of content. The entry of the likes of Disney+, Youtube will further intensify the competition for content. The stage is set for consolidation.
In June 2020, Tencent announced its acquisition of Iflix, the SouthEast Asian streaming platform. Tencent is leveraging their acquisition of Iflix to build their consumer base across Southeast Asia for WeTV. We believe we will see a wave of investments in the coming months and years. Consumers in Asia will end up having multiple subscriptions, some global, some regional and some focused on areas such as sports. By the end of the decade we will see the emergence of a handful of streaming leaders across the region.
3. Emergence of State Specific Tech Investment Funds
The third trend that has come into prominence as a result of this pandemic entails the emergence of State specific tech funds. The two countries that happen to be exemplifying this trend are Vietnam and Myanmar. The fact that these two managed to mitigate the effects of Covid-19 relatively well may be a factor in the interest of private equity players launching specific funds around the countries in efforts to leverage on the digitalisation that is occurring during the post-Covid era.
As seen in Myanmar, numerous MNCs made tech investments in the past quarter. Examples include 500 Startups, Frontier Digital Ventures, Xiaomi, Alibaba and Ant Financial with over $22 Million raised in funding. Financial with over $22 Million raised in funding.
Vietnam on the other hand has set itself an optimistic goal to defend its status as South East Asia’s fastest growing economy. As said by Prime Minister Nguyen Xuan Phuc in front of six thousand participants from the foreign and domestic business communities:
“We must put our heads together to restart Vietnam’s economy with the lifting of social distancing, to reach the target of over 5% GDP growth in 2020”
Evident from Vietnam’s efforts, total funding for tech startups in Vietnam reached $741 Mn USD in 2020, making up 18% of total tech startup funding in Southeast Asia. In addition, as numerous other Southeast Asian countries emerge from the Pandemic, we would not be surprised to see this trend replicate itself across the region.
4. JIO Paves the Way for Telco Transformation
The final emerging trend seen this year comes from the increased investments into the JIO platform. During June and May alone, we have seen over 12 investors contribute to acquire an aggregate of 25% equity stake in the company. What this suggests is a shift in the mindset of how tech players perceive the telcom ecosystem. If we take a broader look at JIO, we see that although they started off as a telecom company, the evident game plan is to eventually become a diverse platform. Few examples include services such as JIOmart and JIOmeet.
On the other hand, numerous other telcos in the market today are still focussing on traditional connectivity infrastructure, leaving them restricted. This move will catalyse a realisation that other telcos consider to transform their businesses along similar lines. Something realised through increased investments from other tech players in the market, resulting in a win-win situation for both parties. While telcos can leverage this investment to upgrade their infrastructure, certain tech parties also benefit by now having access to the right regulatory framework and market access.
|Investor||Investment Amount (Rs. crore)||Equity Stake (%)|
|Silver Lake Partners||5,655.75||1.15%|
|Vista Equity Partners||11,367.00||2.32%|
|Silver Lake Partners||4,546.80||0.93%|
|Abu Dhabi Investment Authority||5,683.50||1.16%|
The ASEAN market is the key battle ground between the American and Chinese tech giants. From an investments standpoint, it is the Chinese companies who have been leading the race in making acquisitions in this region. The complexity of many countries, regulations, languages all make it a difficult one, and also an interesting one. With a population of 650 million people, it will always be an interesting one for every global giant.