Southeast Asia tech dealmaking booms as investors place bets

Fintech and e-commerce companies in Southeast Asia are raising hefty amounts of capital as global investors bet on post-pandemic technology plays, bankers and investors said, a trend that is also stoking concerns about frothy valuations.

Public equity capital raising by Southeast Asian firms has surged to a four-year high of $8.4 billion this year, data from Refinitiv shows, with companies such as Indonesian e-commerce firm Bukalapak attracting strong interest in its IPO.

Private equity investments have also jumped, reaching $8.2 billion, just shy of a record of $8.9 billion in 2020 and expanding the “unicorn” club of startups valued at more than $1 billion.

Near-term fundraising activity will be led by Indonesian tech group GoTo’s expected completion of a $2 billion pre-IPO funding, while about a dozen start-ups are looking to list regionally or in the United States over the next two years, bankers and investors said.

The hectic pace of activity comes as the COVID-19 pandemic boosts consumers’ adoption of digital platforms and investors scout for internet-based companies that are able to grow their businesses faster in a region of 650 million people.

Cash-rich global funds are also sharpening their focus on these opportunities, given China’s regulatory crackdown on technology companies.

“There’s strong interest from public market investors to get exposure to the growth profile of this region,” said Jeffrey Perlman, head of Southeast Asia at buyout fund Warburg Pincus, one of the biggest investors in the region.

Startups looking to list as early as this year include Indonesian travel firm Traveloka and online classified marketplace Carousell, sources familiar with the plans said.

“We do see more exciting companies emerge. I would be constructive on the opportunities within Southeast Asia,” said Sukumar Rajah, director of portfolio management at Franklin Templeton Emerging Markets Equity.

Southeast Asia’s internet economy is forecast to triple to $300 billion by 2025 from end-2020, according to a report from Google, Temasek and Bain & Company.

The total value of venture capital transactions has already hit a record $10 billion in the first half of this year, surpassing 2020’s level of $8.2 billion, data from industry tracker Preqin shows.