Great Eastern Invests US$70M in Axiata Digital — The Largest Fintech Investment in Malaysia Yetby Vincent Fong June 25, 2020
Axiata Digital the digital services arm of telco operator Axiata Group today announced a strategic investment of US$ 70 Million by Great Eastern to boost its fintech business across the region. Leading up this strategic investment, the Axiata Group and Great Eastern previously entered into a partnership to promote insurance products through Axiata’s various platforms.
This deal is a significant milestone for Axiata Group and the Malaysian fintech scene as this is the largest investment yet into a Malaysian fintech. The closest second would be the acquisition of a 60% stake of Tranglo from Ekuinas by TNG Fintech, a Hong Kong based e-wallet operator that is not related to the local e-wallet operated by Touch ‘n Go. That deal was valued at RM 115 Million, equivalent to roughly US$ 26 Million.
With this investment, Great Eastern takes a 21.875% stake in the holding company for Axiata Digital’s digital financial services business with Axiata Digital Services Sdn Bhd holding the balance. The company, called Boost Holdings Sdn Bhd will comprise of its e-wallet business in Malaysia and Indonesia named Boost, Aspirasi a microfinancing and microinsurance platform, Apigate an API platform and Trust Axiata Digital Limited a joint venture with a local bank in Bangladesh Launchpad.
This investment puts the valuation of Boost Holdings Sdn Bhd at US$ 320 Million, Tan Sri Jamaludin Ibrahim, Group CEO, Axiata, shared during their press conference that the group is looking to build Malaysia’s first unicorn.
According to their media statement, the Boost e-wallet in Malaysia has over 7.5 Million users and 170,000 merchant touchpoints whereas their Indonesian arm has 544,000 merchant touchpoints. Meanwhile, according to Khairil Abdullah, CEO, Axiata Digital, the Aspirasi platform has already disbursed over US$ 20 million in loans to date.
The company will use the funding to expand its digital financial services businesses over the next year in Malaysia and the region which includes securing Boost’s next level push to develop its ecosystem of merchants and customers, enhancing Aspirasi’s credit scoring technology and potentially housing the digital bank.
Axiata Digital expressed earlier this year their interest to bid for the digital banking license under a new Bank Negara Malaysia framework that is to be issued soon. The company said in a previous statement that they are eyeing to launch a digital bank by 2021.
It sees massive potential in this are to serve diverse segments, especially the unbanked and underserved population, as using technology would drive down acquisition, distribution, and underwriting costs for a slew of financial products. Khairil further shared that on their Aspirasi platform, 50% of the merchants are receiving loans for the first time.
This marks the third strategic investment secured by Axiata Digital from well-established financial industry players. In 2018, Sumitomo placed an investment of US$ 20 Million into its digital advertising business ADA, and in 2019, Mitsui channeled an investment of up to US$50 million into the company.
Commenting on the strategic investment, Khairil Abdullah said,
“Over the past two years, we have been sharpening our focus on building and enhancing our digital financing services using digital technologies and our telco assets to serve the underserved. With the investment from an esteemed partner like Great Eastern we hope to further leverage emerging technologies to develop distinct financial and insurance innovations for consumers at the bottom of the pyramid as we continue on our journey to narrow the financial inclusion and protection gap in the country.”
Khor Hock Seng, Group CEO of Great Eastern said,
“This strategic investment will enable Great Eastern to participate in Axiata’s growing fintech expansion plans in the region. Axiata’s focus on providing financial services for the underserved, unbanked, and underinsured segment also resonates well will our business strategy. By leveraging on Axiata’s network and digital capabilities, and partnering with them, we want to grow our reach into new customer segments to provide for the financial needs and ultimately improve their lives.”