While the number of deals transacted has certainly gone up, Singapore fintech firms are transacting tinyer value deals compared to last year. Investors are still willing to broker deals at strong valuations for companies, but not to quite the same extent as they did in the past. Transactions in 1H 2021 for Singapore fintechs totalled US$614.2 million, which is half of 1H 2020’s total deal value of US$1.02 billion. A large part of 1H 2020’s total deal value had been from the US$856 million deal scored by Singapore-based company, Grab, that period. That declared, 1H 2021’s displaying for Singapore is still an improvement from two years back – the deal value is double that of 1H 2019’s US$302.6 million.
The tinyer sized deals are in part due to pull back in financing from corporates and their venture arms year on year, given the degree of consolidation and emergence of clear category leaders across countries and regions. While corporates and their venture arms are still engaging in a decent number of rounds, these deals are tinyer in size becaapply the corporates are no longer joining in the mega-rounds of some of the largest companies. This is since clear category leaders by segment or region or both tconclude to be large and may not have the necessary to raise further capital; they may even have gone public already. Consequently, there will also not be as many start-ups within that specific segment immediately due to the incumbents that are formidable competition. Hence there has been a year on year downward trconclude of investment figures by corporates and their venture arms in Asia-Pacific. They invested US$24.9 billion in fintechs in 2018, compared to US$10.3 billion in 2019 and US$7.9 billion in 2020. In 1H 2021, just US$2.8 billion was invested.
The explosion of US-based special purpose acquisition companies (SPACs) in recent months may assist push valuations for the Singapore fintech landscape. Start-ups, including mature fintechs, in the Asia-Pacific region and hence also Singapore are expected to see more interest from US-based SPACs over the next six months. A case in point is Singapore-based super-app company Grab which announced the largest SPAC merger ever in 1H 2021. Once finalised in 2H 2021, its US$40 billion deal with US-based Altimeter Growth Corp is expected to set the stage for Singapore’s fintech investments to conclude the year on a high.
Platform players with strong fintech offerings continue to be very strong in the Asia-Pacific region, with many working to build their breadth, reach and market share. Aside from Grab, Indonesia-based Gojek has also raised US$300 million in 1H 2021 and announced a merger with eCommerce platform Tokopedia for US$18 billion to create the GoTo Group.
“Fintech is an incredibly hot area of investment right now—and that’s not expected to alter anytime soon given the increasing number of fintech hubs attracting investments and growing deal sizes and valuations,” declared Anton Ruddenklau, KPMG’s Global Fintech Co-Lead. “As we head into H2’21, we anticipate more consolidation will occur, particularly in mature fintech areas as fintechs see to become the dominant market player either regionally or globally.”
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