China’s Ant Financial, a fintech affiliate of e-commerce giant Alibaba Group Holding Ltd, has quietly acquired a sizable stake in a Vietnamese e-wallet eMonkey, people familiar with the matter said.
The move, negotiated over the summer, is not being announced due to concerns that anti-China sentiment in Vietnam could result in possible pushback, three people with knowledge of the situation said.
The strategic investment, Ant‘s eight international payments deal, will allow the firm to gain entry to Vietnam’s booming market of nearly 100 million people, a quarter of whom are under 25, and where e-commerce growth is among the highest in the region.
Vietnam’s rapid growth is drawing global technology giants, but Chinese firms have to operate cautiously given tensions with Beijing which often fuel anti-Chinese sentiment despite deep economic ties between the two countries.
Beijing and Hanoi have clashed over disputed maritime claims and concerns over China-backed special economic zones have triggered nationwide protests in Vietnam.
“This is a hot button issue and is something that Vietnamese authorities have to balance themselves,” said Nick Marro, global trade lead at the Economist Intelligence Unit.
“It makes sense that Chinese investors — including those who see the Vietnamese market as having a ton of consumer potential, as well as those diversifying into that country as part of the trade war — may want to keep a low profile.”
Ant will not control more than 50% of eMonkey, but is expected to have significant influence and provide technical expertise to the e-wallet, which was created by small Vietnamese fintech firm M-Pay Trade, one of the sources told Reuters.
The source did not disclose the size of the deal.
Despite having its own office in Vietnam, Ant chose to invest in eMonkey because it had already obtained all its operating licences from the State Bank of Vietnam (SBV), the person said.
M-Pay additionally holds partnerships with most of the country’s largest banks and telecoms.
Its eMonkey competes against intensifying competition in Vietnam’s digital payments industry, with the market being led by Standard Chartered [STANB.UL]-backed local e-wallet Momo.
M-Pay and Ant Financial did not respond to requests for immediate comment. The sources declined to be named, as the deal remains confidential.