Asia fintech deals near US$10b amid mega funding in China

Total dominated by Ant Financial Services’ US$4.5 billion round of private equity financing in April

PUBLISHED : Thursday, 25 August, 2016, 5:26pm
UPDATED : Thursday, 25 August, 2016, 10:57pm

Massive deals in mainland China have lifted overall financial technology (fintech) investments in Asia-Pacific to a record US$9.623 billion in the past seven months, eclipsing the size of transactions in North America and Europe for the same period.

Total fintech investments in the region had skyrocketed on the back of the US$4.5 billion round of private equity financing by Alibaba Group Holding affiliate Ant Financial Services in April.

That oversized financing round by Ant, which operates Chinese online payment platform Alipay, became the world’s largest single private placement by an internet company.

New York-listed Alibaba owns the South China Morning Post.

Data released on Thursday by global consulting firm Accenture and venture capital database CB Insights showed fintech investments in mainland China reached US$8.848 billion by the end of July, which made up the bulk of deals in Asia-Pacific during the first seven months of this year.

James Giancotti, the chief executive at start-up ratings agency Oddup, predicted fintech investments in Asia would continue moving forward in the next two to three years but said “the Ant Financial funding was a rare occurrence and should be treated as such”.

Hong Kong, Shanghai, Singapore and Sydney are where we will see start-ups get more funding in the coming years
James Giancotti, chief executive, Oddup

Other major mainland Chinese transactions were the US$1.2 billion financing raised in January by Lufax, the peer-to-peer lending arm of Ping An Insurance (Group), and the US$1 billion in funding obtained by JD Finance, the consumer finance subsidiary of e-commerce firm

“Hong Kong, Shanghai, Singapore and Sydney are where we will see start-ups get more funding in the coming years,” Giancotti said.

Beat Monnerat, the senior managing director for financial services in Asia-Pacific at Accenture, predicted “China’s established companies, rather than nascent start-ups”, would be at the forefront of fintech investments in the region.

The fintech investment tally in North America and Europe over the seven-month period reached US$4.58 billion and US$1.85 billion, respectively, according to Accenture and CB Insights.

Melissa Guzy, a managing partner at Arbor Ventures, said there had been a “general pause by the venture industry” in the US and Europe in the past quarter.

“Asia is a different market that will continue to develop and leapfrog the rest of the world,” Guzy said.