Daiwa Securities Group will set up a venture capital fund in Myanmar, in a first for a major Japanese financial institution.
The Southeast Asian country’s economy is growing at a roughly 6% clip, and information technology startups are emerging. This makes Myanmar an attractive market for Japanese institutional investors seeking relief from persistently low interest rates at home.
Taiyo Life Insurance has already decided to contribute to the fund. Daiwa is thinking about launching more such funds, depending on how the first one performs.
The fund is likely to amount to $30 million, with an investment period of about 12 years. The plan is to invest around $1 million in each promising Myanmar startup the fund targets.
Daiwa hopes to help the companies grow for a few years, ushering them toward initial public offerings — from which it would reap profits. The listings would be supported by the Myanmar Securities Exchange Centre, a joint venture between Daiwa and state-run Myanma Economic Bank.
Myanmar is hungry for foreign investment, especially after the total authorized in the year through March fell 37% on the year to $3.6 billion. Money inflows slowed after the military crackdown on the country’s Rohingya Muslim minority made global headlines.
Daiwa, an early entrant into the Myanmar market, aims to take advantage of its deep local knowledge. Daiwa and Japan Exchange Group were among the investors that backed the Yangon Stock Exchange when it opened in 2015.
The securities house started to invest its own money in Myanmar startups in 2017. So far, it has injected a combined $25 million or so into five companies, including an internet service provider and an online travel service.
This article was first published on Nikkei Asian Review.