Daiwa PI Partners kicks off microfinance JV in Myanmar

A farmer with his son in his field in Myanmar. Photo: Sasint/Pixabay

Daiwa PI Partners, a subsidiary of Japan’s Daiwa Securities Group, on Friday launched its microfinance business in Myanmar through a joint venture with electronics retailer OK Myanmar Limited (OKM).

The joint venture, DO Microfinance, obtained the licence for its Myanmar operations in July 2019 and provides loans to low-income people and SMEs in the country.

OKM, which started its microfinance business in 2014, completed the transfer of its operations to DO Microfinance last month.

The microfinance JV will expand into other cities in addition to Yangon, and offer new products in order to serve the local needs and drive financial inclusion in Myanmar. The company currently only provides credit products but looks to add savings, micro-insurance, remittance and digital financial services as well as financial education in the future.

DO Microfinance plans to cover 100 towns across 10 states and regions, with 36 branches serving around 130,000 customers and lending as much as 150 billion kyats ($99 million) within the next five years. The firm currently has about 8,000 customers with a loan portfolio of 1.7 billion kyats.

The joint venture is 55 per cent owned by Daiwa PI Partners, which will have three board seats in the company.

“Daiwa Securities Group will continue to contribute to the achievement of the social development goals through microfinance and other activities,” the Japanese investor said in a statement.

“Impact is embedded in our business strategy and the way we design our products. There are great opportunities in Myanmar for us to bring social impact to the customers,” Savoeung Chann, CEO of DO Microfinance, told DealStreetAsia.

Adults with access to financial products in Myanmar increased from 30 per cent in 2013 to 48 per cent in 2018, leaving space for microfinance institutions to tap the remaining 52 per cent, according to a nationwide Making Access Possible study.

The average loan size is about 300,000 kyats while the demand is much bigger than that, according to DO Microfinance.

The business will leverage Daiwa PI Partners’s expertise in terms of governance and practices and OKM’s knowledge of the local market. Daiwa is also expected to help DO Microfinance partner with Japanese banks in the country.

Daiwa has joined other investors and financial institutions in backing Burmese microfinance companies, such as BRAC Myanmar Microfinance, Easy Microfinance, Hayman Capital, Proximity Finance and Myanmar Finance International.

The Japanese firm recently set up a $30-million Daiwa Myanmar Growth Fund in partnership with Taiyo Life Insurance. The firm told DealStreetAsia on the sideline of the joint venture launch that it is actively looking at a number of companies in the pipeline.

The vehicle focuses on consumer goods and services-related sectors, which are driven by the country’s attractive demographics, rapid urbanization and rising middle-income class, as well as telecommunication and logistics, which are essential to Myanmar’s economic and social development.

Daiwa PI Partners’s latest investment in the country is fashion e-commerce company Royal Golden Owls.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.