Asian Fintech Investment Hits US$16.8B, on Strength of Ant Financial Deal

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Fintech funding in Asia surged to US$16.8 billion across 162 deals in the first half of 2018 powered by a massive US$14 billion Series C VC funding round by Ant Financial, up from US$2 billion the second half of 2017, said KPMG recently.

Excluding this mega-deal, Asia still saw strong fintech investment, including quarter-over-quarter increases in overall fintech investment in India, Australia, and Singapore, KPMG noted.

Following the global trend, median fintech VC late stage deal size in Asia increased significantly during the first half of the year—rising from US$25million to US$37.7 million—the highest of any region, according to the KPMG Pulse of Fintech report.  said the firm.

Blockchain and AI continued to be key priority areas for fintech investors in Asia, in addition to insurtech and regtech, KPMG added. 

Global fintech investment hit US$57.9B

Globally, fintech investment roared ahead at a record pace in the first half of 2018, with US$57.9 billion invested across 875 deals, up from US$38.1B invested in all of 2017, according to the report.

Highlights of the first half included the successful closing of two massive deals: the record-setting US$14B raise by Ant Financial in Q2'18 and Vantiv's acquisition of WorldPay for US$12.9B in Q1'18.

Overall deal volume was robust, rising from 834 in H2'17 to 875 deals in H1'18. Further, global median size of late-stage venture financings rocketed to US$25M during H1'18, up from the US$14M annual median size seen in 2017. Early stage deal size jumped as well, from a median of US$5M in 2017 to US$9.2M at the mid-point of 2018.

In Europe, fintech investment hit US$26billion across 198 deals in 1H 2018, fueled by substantial deals by WorldPay, Nets, iZettle and IRIS software  - which together accounted for US$22.4B of the European total, the report says.

US fintech companies attracted US$14.2B in investment in the said period, including over US$5billion in VC investment, the report adds.

Fintech sub-sectors to watch

“Large deals at all stages powered fintech investment in the first half of 2018,” said Ian Pollari, Global Co-Lead, KPMG Fintech. “But just as notable is the breadth of investment. A mix of fintech sub-sectors are increasingly drawing interest, including data, AI and regtech—these horizontal capabilities have appeal across the full spectrum of the financial services industry.”

“Not only is more investment flowing into emerging technologies like AI and subsectors like regtech, we are also seeing efforts to combine fintech capabilities and embed them within broader digital transformation programs,” added Anton Ruddenklau, Global Co-Lead, KPMG Fintech.

Venture capitalists remain excited about funding fintech start-ups across a wide range of fintech subsectors, but M&A activity is also growing as more mature fintechs seek exits, said KPMG, adding that current M&A activity has easily matched the most active M&A periods seen to date.  

Payments and regtech shine

As one of the most mature sub-sectors of fintech, payments witnessed a number of large exits in 1H 2018, including successful IPOs by EVO Payments and GreenSky, Paypal's US$2.2 billion acquisition of iZettle and  Vantiv's  acquisition of WorldPay in the UK, the report says.

The regtech sector also got off to a hot start in the said period, with US$1.37 billion invested, already surpassing the 2017 total, the report adds.

Blockchain moving beyond experimentation

Blockchain continued to draw a significant amount of attention from investors in 1H 2018, with investment typically focused on more experienced companies and consortia looking to obtain additional rounds rather than on new market entrants, said KPMG.

Large rounds in blockchain companies were seen during the first half of 2018, including US$100M+ rounds to R3 and Circle Internet Finance in the US, and US$77M to Ledger in France, the firm noted.

Strong outlook 

With a significant amount of capital waiting to be deployed, a growing diversity of fintech hubs across the globe, and a growing number of corporates looking to leverage fintech in order to drive innovation, investment in fintech will remain strong heading into the second half of 2018, KPMG predicted.