Southeast Asia’s Tech M&A Deals Reach Record High

Grab, Gojek, and Sea are leading the Southeast Asian surge in technology mergers and acquisitions (M&A), with deals totaling an estimated $19 billion during the first six months of this year, the Financial Times reported (June 30).

Compared with last year, M&As went up114 percent, the news outlet reported, citing data from Dealogic. Southeast Asia is considered a hot market for digital growth, with an estimated 400 million people online.

The region’s digital economy is forecast to be worth $300,000 billion by 2025, FT reported, citing data compiled by Google, Temasek, the Singapore state investment company and consultancy Bain.

With an estimated valuation of over $40 billion, Grab’s merger with the special purpose acquisition company (SPAC) Altimeter Growth Corp. could send the delivery and payments platform to hit a value of $75 billion, FT reported. The deal is expected to close before the year is over. Grab is Southeast Asia’s most valuable startup so far.

The merger of Gojek and Tokopedia also anticipated to close year-end, will create a tech company with a valuation of $18 billion, the industry’s biggest tie-up to date.

Even without Grab and Gojek, the M&A market in Southeast Asia is expected to set a full-year record, the news outlet reported. The biggest moves attracting attention are coming from the digital banks and lending space, said Varun Mittal, EY partner and FinTech specialist based in Singapore, per the Financial Times.

Mittal cited the acquisition by the eCommerce platform Sea of Indonesia’s Bank Kesejahteraan Ekonomi in January.

“We are seeing FinTech firms acquiring incumbents to gain access to regulatory licenses and achieve scale at a fast pace,” Mittal said in the report. “Southeast Asia will have 10 to 15 new digital banks across Singapore, Malaysia, the Philippines, and Indonesia over the next three years, thus making this sector one of the critical investment destinations.”

Global M&A deals hit record numbers from March to May of this year, with $532.9 billion in deals announced in May, more than any other on record for that month. The total value of deals as of June 4 — both pending and completed — hit $2.4 trillion for the first five months of this year.