The latest IPOs of a number of tech corporations in Southeast Asia would possibly give buyers trigger to surprise if the time is ripe for exits and consolidation within the area.
In case you’re considering alongside these strains, you aren’t far off from the reality. An evaluation of latest adjustments out there reveals 4 elements which might be set to catalyze consolidation in Southeast Asia within the close to future.
Startups have money and need to spend it
After fundraising a number of occasions, there are a selection of huge and late-stage tech startups which have ample liquidity and are more and more open to pursuing development inorganically.
Latest M&A within the area signifies two key strategic concerns influencing acquisitions:
- Including new product segments/verticals or markets into choices
- Strengthening their present choices (verticals or markets)
As an example, Seize acquired Singapore-based robo-advisory startup, Bento, in 2020. The acquisition was primarily pushed by the strategic consideration of including a brand new product section, as a result of it helped Seize deliver retail wealth administration and funding options to its customers and companions.
As extra tech corporations look to the super-app enterprise mannequin to retain customers and enhance monetization, we may count on extra inorganic enlargement and consolidation within the coming years.
The acquisition of the Singapore-based residence renovation platform Qanvast by Livspace in 2021 is an instance of the second strategic consideration. This acquisition helped Livspace strengthen and consolidate its place in present markets (Singapore and Malaysia).
We’ve summarized some extra examples of strategic acquisitions beneath:
Picture Credit: Jungle Ventures
As cash-rich tech startups turn out to be keener to hunt inorganic development, consolidation is more likely to decide up.
Corporations are increasing throughout areas and international locations
Southeast Asia is culturally numerous and international locations listed below are completely different from one another regardless of their geographical proximity. The area has 11 international locations with a variety of cultures, ethnicities, languages, religions, financial improvement standing, and so forth., which give rise to very completely different client conduct and market traits.
As tech corporations from neighboring international locations and areas increase into Southeast Asia, the area’s variety and variations pose challenges to their enlargement, since every nation seemingly requires a singular greenfield method.