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What Ant Group’s upcoming IPO means for the Southeast Asian startup ecosystem

The startup ecosystem in China and Southeast Asia (SEA) is closely related in its own unique ways. It is often said that whatever trend arising in China at the moment will give us a preview of what might happen in SEA in the next few years. The two markets impact each other both directly and indirectly.

Within the last five years, we have seen Chinese investment in the region intensified. It reached a momentum with Alibaba’s investments in regional e-commerce giants Lazada and Tokopedia; its rival Tencent had also made its mark through investments in gojek, Sea Group, and VNG, among the few.

This year, despite setbacks and challenges caused by the outbreak that must not be named, we saw significant moves from these Chinese tech giants. There was the iflix acquisition by Tencent, as part of the effort to expand its streaming platform WeTV.

And finally, here comes the IPO announcement from Alibaba’s Ant Group.

While the company did not state further details about the IPO, including when it is set to happen, Reuters reported that Ant Group targets a valuation of over US$200 billion.

Also Read: Ant Financial to infuse US$73.5M into Myanmar’s Wave Money

Possibly one of the biggest IPOs of the year, South China Morning Post writes that Ant Group’s decision to list in Hong Kong and Shanghai, instead of New York City, “illustrates a shift in the balance of financial power eastward as more of China’s leading technology companies raise capital in markets closer to their users.”

Naturally, this will create a ripple effect on the industry.

For the startup ecosystem in China, the IPO can possibly trigger more Chinese startups to go public, especially as it coincides with the country’s recovery post-COVID-19 crisis.

“Everyone … wants to strike now while the iron is hot,” Brock Silvers of Adamas Asset Management told Dealstreet Asia.

For Southeast Asia, this upcoming IPO will trigger even tighter competitions among local e-payments companies, especially those with ties to Chinese tech giants.

The battleground
Last month, two major Indonesian digital payments platform OVO and Dana were reported to have agreed to merge.

Both platforms are already the top three most popular digital wallets in the country. This move will lead to the rise of a mega-player in the local market, which has begun to embrace digital payments on an unprecedented scale.

It is important to note that Dana is the result of a joint venture between Ant Group and local media and tech giant Emtek Group.

Also Read: Today’s top tech news: Ant Financial seeks digital banking license, Ctrip discusses new listing in Hong Kong bourse

Ant Group is making big moves in foreign markets such as Indonesia, and it is almost natural to link this upcoming IPO as fuel to these moves. Especially since the company itself named “develop global markets with partners and expand investment in technology and innovation” in its official statement for the IPO.

Certainly, its competitors in the market are not going to take this lightly. And we will start to see moves as early as today.

Yesterday, KrAsia reported that gojek and Grab are competing to invest in LinkAja, a digital payments platform that counted state-owned mobile operator Telkomsel as a backer. For Gojek, this move is aimed to secure GoPay’s position as a leading e-wallet player in the arena, in the face of OVO-Dana merger threat.

For Grab, who is tied to OVO, this an opportunity for them to further strengthen their position.

That was the case with big markets such as Indonesia. Ant Group’s move is certainly not limited to those; even in emerging markets such as Myanmar, it has announced plans to invest more than US$70 million in local fintech company Digital Money Myanmar (Wave Money).

As the major players consolidate with mergers and acquisitions, the junior ones will need to consider their moves more carefully. They may follow suit with another merger, but they might also come out with something entirely different which might surprise us.

One thing we know for sure is that China is moving –and we willingly follow them.

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Source : E27

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