2021 has been a banner year for Indonesia’s tech industry, from the strong performance of key industry players to fundraising in private markets to IPOs. Data compiled by Bloomberg show that companies in Southeast Asia raised a record US$4.9 billion from January to June. 23 companies listed shares on the Indonesia Stock Exchange (IDX) during that period, leading the region. The deal pipeline has remained active in the second half of the year as well. 

Online investing has rapidly grown in Indonesia in recent years, with the rise of a digitally savvy generation of middle-class consumers eager to maximize returns on their savings. The ascendancy of startup Ajaib, often compared to the U.S.’s Robinhood, reflects the online investing boom in Southeast Asia’s largest economy.

The race is on to attract SPAC mergers in Asia. Having already rejigged regulations to facilitate SPACs, Singapore has a head start on its competitors. That said, the Hong Kong Stock Exchange (HKEX) will be aiming to attract very different companies than Singapore Exchange (SGX). SGX’s focus will be Southeast Asia tech, while Hong Kong will lean heavily towards mainland China biotech and perhaps tech firms in sectors with strong government support. What remains to be seen is if Hong Kong is willing to adjust regulations to create a more favorable environment for SPAC listings.

Hong Kong’s IPO market appears to have found its niche, acting as an offshore – but not in the same sense as New York – hub for up-and-coming Chinese companies to raise capital. Despite Beijing’s renewed emphasis on nurturing mainland capital markets, in the short run it will be hard for any of the mainland exchanges to compete with Hong Kong.

It has been a banner year for firms going public in Asia, with the IPO market booming from Hong Kong to Seoul to Mumbai. The same cannot be said for SGX, which has been much quieter. Thus far this year, the exchange has seen just three IPOs. As always, limited liquidity and sub-par valuations are problems. Something needs to be done to turn things around.

It is hard to believe that during the first half of 2021 Chinese IPOs in the United States raised a record US$12.4 billion, per Dealogic’s estimates. That was the boom before the bust, which had been brewing for a long time but came to the fore with the disastrous debut of Didi Chuxing on the NYSE. Like Alibaba’s nixed IPO heralded a widespread regulatory crackdown on fintech, Didi’s is doing the same for Chinese IPOs overseas.

India’s tech sector has been booming for years, but it is only now that the growth is coming to fruition in the subcontinent’s capital markets. Many of the country’s most successful platform companies, like Zomato and Flipkart, and fintechs, like Paytm, are choosing to go public in 2021 and they are listing at home rather than on the NYSE or Nasdaq.

Kakao Bank has been South Korea’s top digital lender, both in terms of users and profitability, for several years. Following a blockbuster US$2.2 billion IPO in which its shares surged more than 79%, it is now also the most valuable publicly-listed South Korean financial firm, with a market capitalization of 32 trillion won (US$28 billion), compared to KB Financial Group Inc. (22 trillion won)  Shinhan Financial Group Co. (20 trillion won) and Hana Financial Group Inc. (13 trillion won).

Chinese companies raised more than US$12 billion in U.S. markets in the first half of 2021, a half-year record, according to Dealogic. The great U.S.-China financial decoupling had seemingly hit a snag. Then came Didi Chuxing's catastrophic debut on the NYSE, and just like that, the U.S. IPO pipeline for Chinese firms froze. But the companies have to list somewhere offshore and Hong Kong will likely step in to fill the void.

Indonesia’s tech juggernauts are coming into their own this year. First Gojek and Tokopedia merged to create GoTo, which plans to list in both the U.S. and Indonesia. Now Tokopedia’s rival Bukalapak has announced its own plans to go public on the Indonesia Stock Exchange in what looks to be the archipelago nation’s largest ever IPO. Bukalapak recently said that it would increase its IPO size to US$1.5 billion.

2021 will likely be remembered as the year that Asia’s fintech unicorns (ex-China) cashed out. India’s Paytm has become the latest high-flying fintech to cement its plans to go public, filing a draft prospectus with the Securities and Exchange Board of India (SEBI) for a deal expected to raise US$2.2 billion. The deal will be one of India’s largest of all time, including a fresh issue of US$1.1 billion and a secondary issue or offer for sale of the same size.

Two IPOs are better than one, as far as Kakao is concerned. The banking and payments arms of Korea’s super app are both preparing to go public in Korea in August. Kakao Pay, South Korea’s largest payments provider, which has 36 million users and is backed by Ant Group, plans to raise up to 1.6 trillion won ($1.4 billion). Kakao Bank, South Korea’s largest online lender, could raise up to 2.55 trillion won.

Hong Kong may be attracting the lion’s share of offshore listings by Chinese companies, but New York is no slouch. In fact, for all the talk of U.S.-China decoupling, the world’s most liquid capital markets retain significant appeal for Chinese companies. According to Dealogic, 36 Chinese companies had raised US$12.59 billion in U.S. markets as of June 30, a half-year record. 

Perhaps there was nowhere for Hong Kong’s IPO market to go but down. From January-March, fundraising hit an all-time high of US$13.9 billion while Hong Kong Exchanges and Clearing (HKEX) posted a record profit of HK$3.8 billion (US$490 million), up 70% year-on-year. At that point, China’s fintech crackdown, which has widened to target tech giants in general, had yet to impact market sentiment.

Paytm is the latest SoftBank-backed unicorn to head for the exit ramp. India’s most valuable startup is planning an IPO in the subcontinent later this year that will value the company at US$25 billion to US$30 billion and raise up to US$3 billion, according to Bloomberg. If the deal is successful, it may be the largest in India’s history.

U.S.-China financial decoupling is an odd thing. Instead of a linear progression in which Chinese firms gradually eschew going public in the US and delist from its stock exchanges, we see some Chinese companies continuing to seek exits on the Nasdaq or NYSE, while others are seeking secondary listings in Hong Kong as a hedge against forced delisting. Still others are actually being forced to delist like the telecoms giant China Mobile, which is now looking at a new listing on the Shanghai Stock Exchange.

China’s fintech crackdown is hurting some of the country’s largest tech firms, but has yet to dampen investor appetite for Chinese tech listings in Hong Kong. In fact, Hong Kong Exchanges and Clearing (HKEX) posted a record profit of HK$3.8 billion (US$490 million) in the January-March period, up 70% year-on-year. Driving the boom were listings by Chinese tech firms of various stripes, including video-streaming platform Kuaishou (which raised US$5 billion) as well as secondary listings by search giant Baidu and video-sharing platform Bilibili. The first quarter is normally the slowest for Hong Kong IPOs as it coincides with the Lunar New Year holiday. 

Ride-hailing giant Grab is full of surprises these days. It was not so long ago that the Singaporean decacorn was said to be considering a tie-up with its rival Gojek. Gojek instead is moving to merge with e-commerce giant Tokopedia while Grab is taking the SPAC merger road to an exit. The forthcoming Nasdaq SPAC could value Grab at up to US$40 billion, but it is not the only listing the company is considering. Indeed, Grab is also considering a secondary listing on the Singapore Exchange (SGX).

It has not been the best six months for Ant Group. The erstwhile high-flying fintech giant landed squarely in regulatory crosshairs on the eve of its abortive IPO and has been there ever since. Initial optimism that the company could expeditiously get its regulatory house in order have been dashed as Beijing’s demands increase. Not only must Ant vastly increase its capitalization, which will eat deep into its profit margins, the company must also restructure and hand over its precious user data to a state-run firm. Ant's valuation could fall as low as US$29 billion, a far cry from the US$315 billion price tag that the company had around the time of its abortive IPO. These changes will have a profound impact on Ant’s future prospects and likely other major fintechs in its ecosystem as well. 

Buy now, pay later may be the greatest thing for payments since well, credit cards, or even better, depending whom you ask. “What we’re seeing now is a once-in-a-lifetime generational shift away from traditional credit products,” Afterpay CEO and co-founder Anthony Eisen recently told The Australian. While the concept of zero-interest installment payments is not exactly revolutionary, Afterpay is one of the fintechs that has figured out how to package it right. As a result, Afterpay is not only one of the biggest BNPL firms in Australia but also the US. In March, Afterpay surpassed AU$1 billion in monthly sales in the US. With the US increasingly driving Afterpay’s growth, the company is considering an IPO on the Nasdaq. 

After years of raising funds in private markets, Southeast Asia’s largest platform companies are suddenly eager to exit. The region’s foremost super app rivals are leading the pack, but the exit routes vary considerably. Grab is making SPAC history with the largest ever such deal, on the Nasdaq. Not to be outdone, Gojek and Tokopedia are moving to finalize their expected merger, which will likely include a listing both in New York and on Indonesia’s own stock exchange. The combined entity, the aptly named “GoTo,” could attain a valuation of US$30-$40 billion. 

Grab is heading for the exit ramp SPAC style. IPOs are slow, costly and let regulators hold a magnifying glass to a firm’s balance sheet. Less so with this SPAC on the Nasdaq, which will give Grab a high valuation (US$40 billion) and investors a way to cash out. Grab has been operating for about nine years. The merger will include roughly US$4.5 billion in cash, the largest share sale yet by a Southeast Asian firm in the U.S.

Before Ant Group’s IPO was nixed, the Shanghai STAR board was red hot. Since then, it has cooled off considerably. Not only is Ant’s IPO in limbo, but other Chinese tech companies are scuttling their plans to go public, one after the next. Ant is the bellwether for the market, whether it is a bull or bear. Data compiled by Financial Times show that 76 firms suspended their IPO applications in March, more than twice the number in February. Overall, 168 companies have put their plans to go public on ice since November. 

Hong Kong's IPO market picked up in the first quarter right where left off in 2020, soaring to a new high in terms of overall proceeds, according to KPMG. Deals raised on the Hong Kong Stock Exchange totaled US$13.9 billion. The nixed Ant Group deal last October has sidelined most fintech listings but not the rest of what KPMG describes as "innovation companies," notably biotechs.

Heading into 2021, Indonesia's prospects for fintech investment were looking pretty good. Among Asia's key emerging markets, Indonesia checks all the right boxes. It is huge, relatively open to foreign investment, has a fast-growing economy (hindered by the pandemic for now, but certain to rebound sharply) and has a large unbanked population. With most Indonesians new to retail investing, fintechs see a strong opportunity to get in on the ground floor. Since January, several Indonesian online investing startups have closed successful funding rounds.

After umpteen funding rounds and nearly nine years in operation, Grab is finally heading for the exit ramp. The question is, will the Singaporean decacorn choose to go public the usual way or do something different? Until the past few weeks, a standard IPO in New York looked like the obvious choice. But with the current SPAC (special purpose acquisition company) craze, Grab might decide to hop on the bandwagon.

To delist or not to delist: That is the question. The New York Stock Exchange (NYSE) could not seem to make up its mind earlier this month, delisting three Chinese state-owned telecoms stocks (China Mobile, China Telecom and China Unicom Hong Kong), reversing course, and then finally deciding that the three firms should be delisted after all. The professed reason for kicking the companies off the NYSE is they have ties Chinese military and threaten America's national security. The impact on their market capitalization will likely be limited as their trading volume is much higher in Hong Kong than New York. More forced delistings of Chinese firms could occur in the waning days of the Trump administration though.

Hong Kong's IPO market has been almost unstoppable in 2020. Neither the worst pandemic in a century nor the nixing of Ant Group's long-anticipated blockbuster debut have been able to dampen market sentiment for long. To be sure, fintechs have shelved plans to list in Hong Kong, but there are many other Chinese companies unaffected by the microlending crackdown eager to go public in the former British colony. In fact, while the fintech unit of JD.com will likely delay its listing indefinitely, JD's health unit is set to raise US$3.5 billion.

The suspension of Ant Group's blockbuster IPO has cast a shadow over China's fintech industry as online microlenders scurry to figure out how to meet tough new capitalization requirements. JD Digits, the fintech unit of e-commerce giant JD.com, is one of the firms most affected by the nixed Ant IPO. JD Digits filed in September to list on the Shanghai STAR board, a deal that was expected to raise up to US$3 billion.

With the suspension of Ant Group's IPO, Beijing is once again signaling that its patience for fintech-induced disruption has limits. In the past, Chinese regulators throttled entire fintech industry segments - cryptocurrency and P2P lending - that they deemed excessively risky to the financial system and a threat to social stability. To be sure, Ant Group plays an integral (some would say peerless) role in the Chinese financial system which makes it very different from P2P lenders and crypto firms. However, Beijing places a premium on controlling systemic financial risk. No company can expect the enthusiastic backing of regulators if it appears too gung-ho about disruption and somewhat contemptuous of the system. China officially remains a socialist market economy, lest fintechs or their investors forget.

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