Ant-Backed Fintech Startup Buys E-Wallet Firm in Push Toward IPO

(Bloomberg) -- M-DAQ, a fintech startup backed by Jack Ma’s Ant Group Co., agreed to buy e-wallet operator Wallex to expand its reach in Southeast Asia and pave the way for a possible public listing.

Most Read from Bloomberg

• Macron Says He Had Frank, Quick Talk with Putin: Ukraine Update

• Russia Invasion of Ukraine Ignites European Security Crisis

• Russia Hits Airfields; Kyiv Imposes Martial Law: Ukraine Update

• Stocks Rise as Oil Pares Gain After Biden Address: Markets Wrap

• Six Early Thoughts on Russia's Invasion of Ukraine

The deal marks the first in a potential series of acquisitions in the Southeast Asian payments space by the Singapore-based fintech company, said Jeremy Sng, a former head of Southeast Asia investment banking at CLSA who joined M-DAQ as its general manager in December. M-DAQ will inject over S$7 million ($5.2 million) of working capital into Wallex, said Sng, declining to disclose the total value of the deal.

M-DAQ is looking to snap up about two companies annually over the next two to three years before it guns for a listing in the U.S., London or Singapore, said Sng, who heads the company’s corporate finance and strategy. Potential targets include those with an enterprise value of $50 million to $250 million.

The acquisition will allow M-DAQ to tap thousands of Wallex’s customers -- mostly small businesses and vendors on e-commerce platforms -- and diversify its revenue streams. The company currently draws about two-thirds of its revenue from Ant, according to Sng.

Wallex operates an e-wallet which allows merchants to collect, convert and store money in different currencies. If the deal -- subject to regulatory approvals -- goes through, the combined entity is expected to process over S$15 billion in online transactions this year, Sng said. Wallex will continue as an independently operated business and brand.

M-DAQ’s technology guarantees foreign exchange rates in advance based on customer data, so that its clients -- platforms like JD.com Inc. and Alibaba Group Holding Ltd.’s AliExpress -- can in turn display prices of goods in local currencies for consumers. Merchants are also able to receive payments in their preferred currency. Affinity Equity Partners invested S$200 million in M-DAQ last year.

The startup is expanding its footprint as e-commerce gains ground in Southeast Asia. The region’s internet economy is set to double to $363 billion by 2025, research from Google, Temasek Holdings Pte and Bain & Co. shows.

Most Read from Bloomberg Businessweek

• A Pandemic Baby Bump Shines a Spotlight on the Nordic Welfare Model

• Removing Résumés From Hiring Process Can Improve Diversity

• Wall Street Is Buying Starter Homes to Quietly Become America’s Landlord

• Cyberwar: How Nations Attack Without Bullets or Bombs

• Elon Musk’s Boring Company Plots Texas Tunnels

©2022 Bloomberg L.P.