The investment was made through Ascent Myanmar Growth Fund I (AMGF), the firm’s debut fund that has attracted the Asian Development Bank and Singapore’s state investor Temasek as limited partners.
“The telecom, media and technology (TMT) sector is part of our focus, and this landmark investment is driven by our belief that internet access is an essential service which can improve lives, reduce inequalities and drive economic growth, especially in emerging markets like Myanmar,” commented Lim Chong Chong, founder and managing partner of Ascent Capital.
The general partner said in a statement that it will set aside additional financing from its Ascent CSR Fund, which is separate from AMGF’s investment into Frontiir, to mitigate the economic impact of the COVID-19 pandemic in Myanmar.
Through Frontiir, the CSR capital will focus on enhancing gender inclusiveness, ensuring equitable access to quality education, and furthering the company’s vision to bridge the digital divide in Myanmar.
“AMGF’s investment, along with the additional CSR fund, are timely and can provide the stimulus needed to increase access to affordable internet especially in lower-income regions of the country,” added Wai Lin Tun, Frontiir’s chairman and CEO.
The global health crisis has led to a sharp increase in demand for Frontiir’s services, according to the statement. The Myanmar government has made e-commerce a priority in its COVID-19 Economic Relief Plan, encouraging retail businesses to move to online commerce and pledging to develop a central e-commerce platform for local businesses.
Frontiir has provided Internet services to 1.6 million users in over 360,000 households across four states and regions of Myanmar, including Yangon, Mandalay, Mawlamyaing and Bago.
Prior to Ascent Capital’s investment, the company had raised funding from UK-based CDC Group, Japan’s Daiwa PI and Delta Capital Myanmar, another local PE firm.
Earlier this year, Frontiir acquired US-based cloud services firm Termaxia, one of a very few outbound investments made by Myanmar businesses.
“The deal was significant in the sense that Frontiir is acquiring global expertise. With this, they are able to bring the cost of cloud and data centre services to a level that is relevant for a frontier market like Myanmar,” Lim told DealStreetAsia in an online interaction.
Myanmar’s Digital Economy Roadmap aims to accelerate Internet penetration from 40 per cent in 2019 to 50 per cent by 2025. The country has also witnessed a 29.3 per cent year-on-year increase in average fixed broadband download as of May 2020.
In addition, fixed broadband penetration in the country remains low at single digits, translating to continuing opportunities to exploit for Frontiir.
AMGF, which was set up in 2018, claims it is the world’s largest Myanmar-focused private equity fund. Ascent Capital had earlier targeted to raise up to $100 million for its debut vehicle.
Anchor investors include Myanmar’s Aung Moe Kyaw, founder and co-chairman of Myanmar Distillery, and Singapore’s Tony Chew, co-founder of MDC Group and chairman of Asia Resource Corporation apart from JG Summit Holdings from the Philippines.
AMGF is looking to invest at least $5 million in companies in the consumer, education, financial services, healthcare, logistics and TMT sectors.