Asia Pacific fintech investment has reached a record high midway through 2022 following a $27.9 billion Afterpay acquisition.
The Asia-Pacific region recorded an unprecedented annual high of $41.8 billion in fintech investment in the first half of the year alone; this record high was primarily due to Block’s $27.9 billion acquisition of Australia-based Afterpay. A vast array of jurisdictions throughout the Asia-Pacific region attracted sizeable deals during H1’22. The region also saw a number of other significant moves during this period: a $1 billion merger of Superhero and Swiftx in Australia; the $2 billion buyout of Yayoi by KKR in Japan; Singapore-based Coda Payments raised $690 million; Indonesia-based Xendit raised $300 million; and India-based fintechs Stashfin and Oxyzo raised $270 million and $237 million, respectively.
While H1’22 was productive for most jurisdictions within the Asia Pacific, fintech investment insights in China showed limited activity throughout the same period; the most significant fintech deal in the country was a $140 million raise by corporate expense management company Fenbeitong.
Key highlights from the Asia-Pacific region in H1’22
Investment in many fintech subsectors has declined
In the Asia-Pacific region, a number of fintech subsectors including retail payments, insurtech, and B2C solutions that initially garnered a considerable amount of interest and buzz over the past 12 to 24 months, cooled off significantly during H1’22. Crypto, NFTs and blockchain also experienced a drop in investments.
Modernising outdated financial systems to promote investment
In many jurisdictions of the Asia-Pacific region – particularly those outside China – there is a general consensus that the infrastructure underpinning existing financial markets is outdated. This view is driving a notable increase in the innovation of, and updates to, financial market infrastructure, as well as the last stage of digital transactions.
New priorities on the APAC fintech investment landscape
While investment in areas that saw significant interest during the height of the COVID-19 pandemic have lost some attractiveness, those that align with rapidly evolving global issues – including rising inflation, increasing interest rates, geopolitical uncertainty, and supply chain woes – have continued to attract investment. Investment remains high in areas focusing on major global issues such as supply chain issues, rising inflation and interest rates and geopolitical conflict, while interest in areas that gained substantial attention throughout the COVID-19 pandemic have dwindled. Key sectors that caught the eyes of investors in the Asia-Pacific region during H1’22 included supply chain management, cybersecurity and privacy, identity management, and governance and compliance. Asia Pacific fintech investment insights also displayed solid investment in open data during H1’22, as well as infrastructure companies focusing on the crypto space.
Digital transformation a government priority in China
Digital transformation continues to be a priority for the Chinese government. The People’s Bank of China released its Fintech Development Plan (2022-2025) during H1’22, which outlined a firm commitment to appropriate regulation, privacy and data protection, low carbon and green fintech, and fair and inclusive financial services. Fintech investment in China experienced a quiet period in H1’22; however, companies focused on infrastructure plays and partnerships with traditional financial institutions still gained attention from investors, while insurtechs that were focused on similar plays also began to attract interest.
Asia Pacific fintech investment trends to watch for in 2022
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To learn more about the analysis and topics raised in this edition, or to discuss your organisation's unique fintech agenda and roadmap, please contact your local KPMG advisors.
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There were a couple of very big corporate M&A deals in the Asia-Pacific region during the first half of 2022, including Block’s mega-acquisition of Afterpay and the merger of Superhero and Swiftx. Given the increasing pressure on valuations, we could see more M&A activity in H2’22 as corporates look for good opportunities to buy out their competitors in less mature markets and startups look to consolidate in order to gain market share and improve their profitability.
