India Draws US$ 1.93 Billion Fintech Investment in Q3; Tops APAC: S&P Global

According to S&P Global Market Intelligence study, India remained to lead fintech investments in the Asia-Pacific (APAC) region with US$ 1.93 billion raised across 66 deals in the third quarter of 2021.

At an cumulative level, investments in Asian fintech companies rose 68% sequentially to US$ 5.47 billion in the third quarter, achieving a new quarterly high since the first quarter of 2019 (Q1-2019). The volume of transactions also rose 21% to 216 deals, the study revealed.

The development in investments in APAC region’s fintech companies, according to the study, was predominantly on account of the increase in the number of transactions totalling US$ 100 million in size. The move towards digital channels, the study said, has been complemented by increased valuations, which may in part be pushed by improved fundamentals.

Ms. Celeste Goh, fintech analyst at S&P Global Market Intelligence stated that “Though, it may also reflect private investors’ readiness to pay higher multiples due to their bullishness in the fintech sector. That said, newly-listed APAC-based fintechs have so far seen optimistic reactions from public markets, which may promote more fintech investments in the region. Especially, we anticipate Southeast Asia-based fintechs to attract more investment as venture capitalists raise new money to double down on technology investments in the region.”

Meanwhile, fintech investments in Southeast Asia more than doubled on a quarter-over-quarter basis to US$ 1.90 billion, according to the S&P Global Market Intelligence’s note, while deal volume grew by 32% to 62 deals.

“While consumer-facing payment apps have dictated funding into the payment sector in the past, business-to-business payment fintechs have been enticing more investors’ attention of late,” the study told.

Going forward, professionals see the fintech landscape changing rapidly in India as digitisation of customers and merchants opens up new opportunities for players to offer financial services.

According to Antique Stock Broking study, adoption of digital payments which accelerated by 1% CAGR in value but 45% CAGR in value over FY18-21, suggests high use cases and could provide a host of insights in spending behaviour/need of a consumer and cash-flow of merchants which otherwise would have been tough to estimate based on document filings.

Antique Stock Broking study stated that “Recognised players would remain to be major players in the near-term, specifically banks in the context of deposit creation and lending and we expect a lot of partnerships to emerge. Newer solutions such as buy now, pay later (BNPL), SME financing by leveraging a huge merchant base, would have crossed the proof of concept stage and some regulatory oversight would develop. This would only strengthen the competitive landscape and with time, a new financial system would appear and may split up into have (strong) and have not (marginalized) players.”

Source:IBEF