The sector hit a three year high in its deal numbers for the first half of 2021, though total deal value is shrinking.
Some 72 deals totalling $614.2 million were transacted for Singapore fintechs from January to June this year – 22 percent higher from the 59 deals in 1H 2020 and 50 percent higher than the 48 deals in 1H 2019, according to audit and tax advisory firm KPMG.
The three year high was boosted by corporates who were busy acquiring or partnering fintechs to transform their companies digitally, KPMG said in its «Pulse of Fintech 1H 2021» report, published on Tuesday.
Fintechs focusing on the payments segment were the top choice for investors, particularly those in the «buy now pay later» subsegment.
Smaller Value Deals
While there are more deals compared to previous years, KPMG noted that Singapore fintechs are now transacting smaller value deals. It explained this was in part due to a pull-back in financing from corporates and their venture arms, as a result of consolidation and the emergence of clear category leaders across countries and regions
In fact, there has been a been a year-on-year downward trend in investment figures by corporates and their venture arms in Asia-Pacific. In 1H 2021, just $2.8 billion was invested, compared to $10.3 billion in 2019 and $24.9 billion in 2018.
«As we head into H2’21, we anticipate more consolidation will occur, particularly in mature fintech areas as fintechs look to become the dominant market player either regionally or globally,» Anton Ruddenklau, KPMG’s global fintech co-lead, said.
Strong Activity in APAC
Dry powder cash reserves, increasing diversification in hubs and subsectors, and strong activity across the world contributed to the record start to 2021, KPMG said in the report. Total fintech investment in the Asia-Pacific region reached $7.5 billion, largely driven by venture capital activity.
India saw the highest amount of fintech investment, at $2 billion. China was next, at US$1.3 billion, followed by Australia at $900 million.
