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December 15, 2021
Mergers and acquisitions is a hot topic for commercial awareness. Learn about the appeal of Southeast Asia to impress at interview.

One area of note is the tech-sector in Southeast Asia, where mergers and acquisitions in the first 6 months of 2021 rose by 114% compared with the same period of time in 2020. Deal-making hit $19 billion and marks Southeast Asia’s strongest start to a year on record.

Analysts believe this growth will continue, with Southeast Asia’s digital economy set to hit a £300 billion valuation by 2025.

A Managing Partner at early-stage venture capital (VC) firm Golden Gate Ventures optimistically remarked that Southeast Asia is ’10 years behind the curve in China, and five-seven years behind India’, indicating a lot of upside still to be had.

Notable 2021 Deals in Southeast Asia

Gojek & Tokopedia Merge

Indonesia’s digital payments technology group Gojek and e-commerce firm Tokopedia have announced a merger to create an $18 billion food delivery e-commerce group. The two companies are amongst Indonesia’s largest start-ups. The merged entity will have dual listing in both Indonesia and on the Nasdaq in the US and is reported to be targeting a public valuation of up to $40 billion.

Celcom Aviata Berhad Merges With Digi Telecommunications

In July this year, Malaysia’s oldest mobile telecommunications provider Celcom Aviata Berhad (DBA Celcom) merged with Malaysian mobile service provider Digi Telecommunications (Digi.Com) in a deal worth more than £3 billion to create the country’s largest telecoms group. The companies plan to invest in 5G mobile networks and monetise telecoms towers, through leasing and sharing their infrastructure.

Indonesia’s Largest IPO

In August, Indonesian e-commerce company Bukalapak launched its IPO, with shares jumping nearly 25% in their trading debut. This raised $1.5 billion and is now regarded as Indonesia’s largest IPO. Analysts have commented on investors’ bullishness (if an investor is bullish, this means they believe that the price of that security or securities within that industry will rise), noting that Bukalapak is only one of the country’s leading e-commerce companies. Many believe that others may follow suit, inspired by Bukalapak’s new $6 billion valuation.

Grab’s Proposed Merger With SPAC

Yet to be approved, Southeast Asian technology company Grab has declared a proposed merger with SPAC (special purpose acquisition company) Altimeter Growth. The deal would mark the largest merger on record by a blank-cheque vehicle, which led Grab Chief Executive Anthony Tan to remark that Grab had ‘put the region’s tech industry on the map’. If the deal goes ahead, Southeast Asia will have recorded deals over $75 billion across the year, up from the $17 billion and $23 billion recorded in 2020 and 2019 respectively.

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Who is Investing in Southeast Asia?

Internet penetration in Southeast Asia stands at 70%, higher than the global average of 59.5%, making the region attractive to foreign investors. Furthermore, digital adoption is still in its early stages, meaning investors can feel confident they are entering a nascent, not crowded market.

In the last few years, US technology firms have been particularly active in the region. Google was one of the lead companies involved in a $3 billion Series F round for Gojek in 2020 whilst Microsoft has been a long-term investor in Grab and is reported to have invested $100 million in Bukalapak last year. It should be noted that much of the US investment in the region is through venture capital.

Chinese technology giants Tencent and Alibaba have ploughed significant capital into Singapore. In September this year, Tencent helped Singaporean online gaming and e-commerce firm Sea Limited to raise $6 billion. Similarly, just last week Alibaba’s support of Philippine Fintech start-up Mynt helped the company to secure more than $400 million in a funding round led by private equity firm Warburg Pincus.

Three Predictions for Future Growth in Southeast Asia

  1. The greatest predictions concern Southeast Asia’s digital banking industry. Experts predict that the region will establish 10-15 new digital banks across Indonesia, Malaysia, Singapore and the Philippines in the next three years.
  2. Analysts believe that tech start-up growth will continue. There are currently more than 35 technology start-ups in Southeast Asia who have achieved unicorn status. These range across e-commerce, fintech and SaaS (software as a service).
  3. Inspire by recent IPO successes, analysts believe an increasing number of Malaysian and Indonesian companies will choose to go public.

Talking points:

  • How can Southeast Asia maintain foreign investment interest?
  • How can the region establish a regulated technology ecosystem?
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