APAC Fintech investment more than doubles, KPMG data reveals
Investments in Asia-Pacific’s fintech sector more than doubled during the first half of 2022, driven by several major mergers and acquisitions.
Despite total global investment in fintech and total number of fintech deals falling between H2’21 and H1’22, APAC investment rose to record $NOK 41.8 billion during the first half of 2022 from $NOK 19.2 billion registered in the second half of 2021.
According to the latest edition of KPMG‘s Pulse of Fintech, Asia-Pacific’s record numbers were driven almost entirely by three major M&A transactions: the $27.9 billion acquisition of Australia-based Postpayment of Blockthe $2.1 billion acquisition of Japan-based Yayoi of KKRand the $1 billion merger of Australia-based fintechs Superhero and Swiftx.
The report also suggests that in many parts of the region, especially outside of China, the legacy infrastructure supporting existing financial markets is driving a significant amount of investment towards financial market infrastructure innovation and into the digital last mile of transactions.
Andrew Huang, partner and fintech leader, KPMG China says: “As we look into 2022 2H, regulators in the region continue to focus on making changes to the industry to support open banking and decentralized finance in an orderly and secure manner.
“Investors are taking a more focused approach to their investments, prioritizing investments in companies with very strong business models and distinctive value propositions. Increasing focus on B2B solutions and technological enablement of traditional players is expected, rather than stand-alone fintech plays, especially in China.”
In the Asia-Pacific region, however, a number of fintech sub-sectors that attracted significant interest and hype over the past 12 to 24 months have cooled considerably in H1’22, including retail payments, insurance technology and B2C solutions. Crypto, NFTs and blockchain also came off the investment burner.
China
Fintech investment in China remained limited in H1’22; the largest fintech deal in the country was a $140 million raise from the enterprise expense management company Fenbetong.
According to KPMG, digital transformation continues to be a significant government priority in China. During 2022 1H, People’s Bank of China released its Fintech Development Plan (2022-2025), which emphasized the commitment to appropriate regulation, privacy and data protection, low-carbon and green fintech, and fair and inclusive financial services.
Barnaby Robson, partner, deal advisory, KPMG China, says: “Given the increasing pressure on valuations, we may see more M&A activity in 2022 2H as companies look for good opportunities to buy out their competitors in less mature markets and startups look to consolidate themselves to gain market share and improve their profitability.”
Key areas that received attention from investors in the Asia Pacific region during 2022 1H include supply chain management, cyber security and privacy, identity management and governance and compliance. Open data also saw solid investments in H1’22.
