APAC scoops $41.8 billion in fintech deals amid global investment slump
Asia Pacific brought in $41.8 billion in fintech investment in the first half of the year, amid a drop in the global figure to $107.8 billion. The payments sector drew the bulk of investment, followed by crypto and blockchain, which raised $14.2 billion.
Global fintech investment fell from $111.2 billion in the second half of last year, with 2,980 deals inked in the first half of 2022, according to KPMG’s latest Pulse of Fintech report. The figures included venture capital, private equity and mergers and acquisitions (M&A).
The Americas pulled in $39.4 billion of total investment, down from $59.7 billion in the second half of last year, while EMEA brought in $26.6 billion, compared to $31.6 billion in the second half of 2021.
Asia-Pacific’s total investment had more than doubled in the first half, up from $19.2 billion in the second half of 2021, driven by Block’s $27.9 billion acquisition of Australian buy now, pay later service provider Afterpay.
Across the board, venture capital investment fell to $52.6 billion in the first half of 2022, with the Americas accounting for $27.2 billion and EMEA pulling in $16.6 billion. Asia-Pacific’s venture capital investments reached $8.7 billion, but saw robust M&A transactions that reached $31.8 billion in deal value.
Apart from Afterpay, the region also saw other major merger deals, including KKR’s $2.1 billion purchase of Japan’s financial software provider, Yayoi, and the $1 billion merger of Superhero and Swiftx in Australia.
According to KPMG, the payments sector received $43.6 billion in global investment during the first half of 2022, compared to $60.3 billion for all of 2021.
Venture capital investments in Asia-Pacific were somewhat spread and included $690 million raised by Singapore’s Coda Payments as well as $300 million by Indonesia’s Xendit. India’s fintech firms Stashfin and Oxyzo raised $270 million and $237 million respectively.
China’s fintech investment remained soft in the first half of 2022, with the biggest deal inked by enterprise app platform Fenbeitong, which raised $140 million in Series C+ round.
Singapore’s fintech funding fell 15% to $2.14 billion in the first half of the year, compared with $2.51 billion in the second half of 2021, amid greater investor caution due to market developments.
Cryptocurrency funding in the Asian market fell by more than half in value to $539.1 million, down from $1.3 billion in the second half of 2021 when crypto investments had reached a record number. The sector also saw some consolidation with seven exit or merger deals, KPMG noted.
While Singapore’s overall fintech investments for the first half of 2021 fell compared to the second half of 2021, the figure reflected a 64% increase compared to the same period last year, which saw $1.31 billion in total deal value. This indicated “continued confidence” in the potential of fintech developments to drive growth and innovation for the financial sector, KPMG said.
Its global head of financial innovation and fintech, Anton Ruddenklau said: “2021 was a banner year for the fintech market globally, which makes the first half of 2022 seem sluggish in comparison. In reality, many sectors within the fintech market have shown strength and resilience. While the fintech market is likely to be quite challenged in the second half of 2022, due to global uncertainty and broader economic concerns, fintech is likely to continue to attract significant attention and investment – if at lower levels than last year.”
But with challenges expected to play out throughout the year, including geopolitical uncertainty and rising inflation and interest rates, KPMG said the fintech market could see activity slow down considerably. While it expected fintech investment to remain robust in key areas such as B2B payments, cybersecurity automation and data-driven analytics, the consultancy noted that deals could take longer to complete as investors became more critical of opportunities.
Anton said: “With valuations coming under pressure, fintech investors are going to increase their focus on cash flow, revenue growth and profitability, which could make it harder for some fintech firms to raise funds. However, M&A activity could lead to an upswing as struggling fintech firms look to sell rather than hold a downturn, corporates and private equity investors move to take advantage of better prices, and well-capitalized fintech firms look set to take on the competition.”
