Tech M&A gathering steam in Vietnam amidst COVID-19 pandemic

Tech M&A transactions are gathering steam in Vietnam

Ray Liang, COO of Society Pass (SoPa) told VIR that SoPa has just completed its initial public offering (IPO) on Nasdaq on November 9. The funds from the IPO will allow SoPa to expand its buying sprees in the region, focusing on fast-growing economies in Southeast Asia including Vietnam.

Liang noted that SoPa develops its mergers and acquisitions (M&A) strategy focusing on fashion, beauty, food, and tourism to build a comprehensive ecosystem for Southeast Asian consumers. The company is looking for potential targets including tech startups and e-commerce platforms in the fields. The funds will be allocated appropriately after SoPa considers the development stage of potential businesses in each respective market.

SoPa has acquired Leflair’s luxury e-commerce platform in Vietnam in June and made an official comeback in September. Leflair has recorded impressive results in the Vietnamese e-commerce market with double-digit growth on-week and a record number of orders.

With the fresh funds, Sopa will actively restructure Leflair to extend the reach of the platform to other Southeast Asian markets in 2022.

According to Liang, SoPa’s M&A strategy not only helps expand its ecosystem but also increases investment in the regional startup scene. Several tech startups have the potential to earn millions of dollars in revenues if they receive the necessary support and have the right strategy. SoPa is looking to invest and acquire these startups to help them scale up with SoPa’s resources.

“Our team has talked to three businesses in Vietnam, the Philipines, and Indonesia. SoPa is also calling Vietnamese startups to join its ecosystem. We will soon announce further M&A deals in 2022 after completing the procedures,” Liang added.

The funds from the Nasdaq IPO will allow SoPa to expand its buying sprees in the region, including Vietnam

In November, Vietnamese e-commerce startup Tiki bagged $258 million in a Series E funding led by AIA Insurance. Other investors participating in the round include UBS London Branch, Mirae Asset-Naver Asia Growth Fund, and Taiwan Mobile, as well as current investor STIC GIGF.

Accordingly, Tiki and AIA have entered a 10-year partnership to develop an insurtech platform. By the end of December, customers can buy AIA Vietnam health insurance on Tiki’s e-commerce platform. Shortly, customers can also manage insurance records and submit claims through Tiki.

The AIA Vietnam-Tiki partnership represents a new form of collaboration between insurers and e-commerce players, offering unique lifestyle propositions through an innovative, customer-centric distribution model.

Meanwhile, the overall volume and value of M&A deals in the technology sector remained robust in the first 10 months of 2021. The deal volume has doubled compared with 2020, while the aggregated transaction value has climbed more than thrice to nearly $1 billion, surpassing the pre-pandemic levels. Key factors driving tech M&A include the need for additional investment in technology infrastructure, as well as the ever-increasing urge to go digital in search of alternative business models.

According to the FinTech in ASEAN 2021 report by UOB, Vietnam saw a sharp rebound in fintech funding in ASEAN, attributable to two large deals, namely $250 million into VNPay and $100 million into MoMo’s Series D fundraising round.

Besides e-commerce, insurtech, and fintech, there are more tech-related deals in other areas such as healthcare. In the private sector, healthtech startups such as JioHealth 8 and Med247 have raised funds from foreign investors, highlighting the prospects of this relatively nascent segment in Vietnam. Meanwhile, healthtech startup Gene Solutions also bagged $15 million from Mekong Enterprise Fund IV (MEF IV) by Mekong Capital in October.

Eddie Thai, general partner of 500 Startups Vietnam said, “For the past three decades, Vietnam has been the fastest-growing market in Southeast Asia and is forecasted to continue to play a critical role in the region. We believe that Vietnam will be a new tech capital.”

“As the tech ecosystem in Vietnam has evolved, so has our strategy. That’s why we are launching Ascend Vietnam Ventures (AVV). AVV will seed $500,000 to $2 million into 25 tech startups over the next three years. A third of those companies will receive further investment from us of up to $4 million each,” he noted.

Tech M&A will help businesses to build ecosystems as well as promote digital transformation efforts. One Mount Group, which is invested by VinGroup and Techcombank, has built Vietnam’s largest technological ecosystem which can provide solutions and services across an industry’s entire value chain, including retail, distribution, real estate, and financial services.

A representative of One Mount Group said, “Our business model and approach allow us to bring value and benefits for each party along an industry’s supply chain – from global and local manufacturers to distributors and large retailers to small- and-medium-sized enterprises and, ultimately, consumers.”

“Specifically, by digitalising supply chains we can help industries and companies streamline operations and solve bottlenecks. This includes helping them reach new audiences and markets; improving the distribution process by providing access to a wide variety of goods, transparent prices, and attractive incentive programs; opening up access to capital; and increasing their margins,” the representative noted.