Investors who were beginning to show interest in the frontier market of Myanmar were thrown off course by the abrupt detention of the country’s civilian leaders last week.
“Myanmar was already going through a period where the rest of the Southeast Asian investment community basically wrote off the country as uninteresting, and now you add this political maelstrom. The country will be untouchable for foreign investors for at least the year of the state of emergency,” said early-stage investor Seed Myanmar chief operations officer and general counsel Field Pickering.
“Any company in Myanmar, who had fundraising plans for 2021 and was able to preserve through a tough 2020 due to COVID-19 is in for a one-two punch, and we are likely to see a number of casualties due to a dearth in fundraising,” he added.
The military seized power in the Southeast Asian nation last weekend and declared a national state of emergency for a year.
The coup came after conflicts surrounding Myanmar’s November election that awarded the National League for Democracy (NLD) a landslide victory. The Burmese military has alleged mass voting fraud.
NLD leader Aung San Suu Kyi and several state ministers were reported to be detained in the capital Naypyidaw.
Myanmar-based private equity funds that DealStreetAsia spoke to said they are currently “monitoring the situation closely” as they plan to adopt a wait-and-watch policy before parking fresh capital in the country.
“Our focus remains honed on understanding the impacts to the Myanmar investment community, including those companies in the country seeking to raise capital, particularly from institutional investors,” the Myanmar PE&VC Association posted on its LinkedIn account on Wednesday.
Funds with a focus on Myanmar
Fund manager | Inception/first deal in Myanmar | AUM/Fund size | Sectors | Portfolio in Myanmar |
---|---|---|---|---|
Delta Capital | 2013 | $120M | Consumer, telecommunications, manufacturing, financial services, diversified industries, energy & resources | Easy Microfinance, Frontiir, CPC |
Ascent Capital | 2018 | $88M | Consumer, education, financial services, healthcare, logistics, TMT | Frontiir |
Anthem Asia | 2012 | $34.5M | Agri-business, business & financial services, FMCG, education & training, F&B, healthcare, logistics & distribution | The Blink Agency, SolarHome, KyoPay, Piyawasa Influencer Management, Rangoon Tea House, ERA Myanmar, Thalun International School, Xavey Research Solutions, Shan Orchard |
Myanmar Strategic Holdings | 2013 | $15M | Hospitality, education, services | Wall Street English, Ostello Bello, Exera, Auston College |
EME | 2018 | $20M | Entertainment, education, human resources, commerce, finance, healthcare, agriculture | Kyarlay, Ezay, Joosk, CarsDB, Mote Poh, Lan Thit Masterpiece, Natural Farm Fresh, Yangon Broom, MPG Myanmar, AdsZay |
Seed Myanmar | 2016 | N/A | Digital services | Bindez, Chatesat, Karzo, Nexlabs, Flexible Pass, BetterHR, MM Digital Solutions, Marathon Express, MM Tutors |
Yangon Capital Partners | 2018 | N/A | Education, healthcare, agriculture | Yangon Broom, Flexible Pass, Kone Si |
Phandeeyar | 2015 | N/A | Agritech, e-commerce, education, F&B, healthtech, ICT, sharing economy, SaaS, transportation | RecyGlo, Chate Sat, Kone Si, HivePhing, Next Code, MMTUTORS, Pancasikha, GoP, EzStay, White Merak |
Nest Tech | 2018 | N/A | Internet, mobile-based services | Kone Si, Mote Poh, Flexible Pass, Joosk Studio |
Trust Venture Partners | 2016 | N/A | Education, healthcare, finance, lifestyle | "Yangon Broom, Flexible Pass, Kone Si, Bards, Frontier Myanmar Research, UniVege, Live the Dream |
CDC | 2014 | $78.4M (Myanmar) | Fund management, financial services, telecommunications | Delta Capital Myanmar, Insitor Impact Asia Fund, Fontiir, Irradwaddy Green Towers, Advans Myanmar, Alliance for Microfinance in Myanmar Limited |
Daiwa PI Partners | 2016 | $30M | Consumer goods & services-related sector, telecommunication, logistics Infrastructure | Frontiir, Oway, Rent 2 Own, Royal Golden Owls, DO Microfinance, CPC |
Emerging Markets Investment Advisers | 2015 | $90.15M (including $6M COVID-19 follow-on reserve) | Education, financial services, F&B, agri-processing | Oway, Myanma Food For Thought, Shwe Property, Microfinance Delta International |
Insitor Management | 2017 | N/A | Renewable energy, agriculture, financial inclusion, healthcare, education, water/sanitation, affordable housing | Alliance for Microfinance in Myanmar, SolarHome |
Beltroad Capital Management | 2017 | $50M | Financial services, technology, telecommunications | Oway |
Japanese corporate investors in Myanmar – from retail giant Aeon Co to automakers Toyota Motor and Denso Corp as well as business conglomerate Mitsubishi Corp – are reported to be assessing the turmoil in Myanmar, according to Nikkei Asia.
“The primary concern is that international businesses and investors will lose confidence, and decide to leave the country and relocate or refocus elsewhere in the region,” a regional fund manager with a Myanmar mandate told DealStreetAsia.
While investors may continue to pursue deals in the short term, parking long-term capital would take even more due diligence.
“Longer-term is much harder to say; there is still so much that we don’t know about what will happen in the coming months,” he asserted.
What’s clear is the latest turn of events is a major setback to the economic development progress that the Southeast Asian nation was making.
The significant economic reforms in the last two years was stirring interest among foreign investors. “Pre-COVID and even during 2020, we saw client interest not just from MNCs and private equity, but also sovereign wealth funds that typically have lower risk appetites,” said Daniel Patton, director at Control Risks.
And, the second victory of the NLD in November was expected to boost confidence among international investors, thanks to the anticipated positive changes in the risk profile, Delta Capital Myanmar managing partner Nick Powell told DealStreetAsia in an earlier interview.
“You will find new private equity names coming in, including larger ones, who have been looking at Myanmar from afar to see what was possible,” YGA Capital founder Thura Ko Ko had earlier told DealStreetAsia while sharing his take on the investment potential in the country.
Major investments in Myanmar in 2019-20
Major investments in Myanmar in 2019-20
Companies | Sector | Funding | Investors | |
---|---|---|---|---|
2019 | Yoma Strategic Holdings, First Myanmar Investment | Multisector | $238M | Ayala Corporation |
Frontiir | Telecom | $30M | CDC Group | |
KOSPA | Logistics | $4M | SF Holding | |
Shwe Property | Technology | $3M | EMIA, others | |
Shan Orchard | Agribusiness | Over $1M | Anthem Asia | |
SolarHome | Energy, Tech | $1M | Trirec | |
Kargo | Logistics | $800,000 | Cocoon Capital, others | |
eSchool | Technology | $700,000 | Blue Tech Venture, others | |
Royal Golden Owls | Technology | Undisclosed | Daiwa PI Partners | |
Frontiir | Telecom | Undisclosed | Delta, IFU, Norfund | |
DO Microfinance | Financial services | Undisclosed | Daiwa PI Partners, OK Myanmar | |
2020 | Yoma Bank | Financial services | $88.7M | GIC, Norfund |
Wave Money | Financial services | $73.5M | Ant Group | |
Frontiir | Telecom | $26M | Ascent Capital, others | |
Proximity Finance | Financial services | $14M | Finnfund, Nordic Microfinance Initiative, Proparco | |
CPC Plastics | Manufacturing | $12.6M | Delta Capital, Daiwa PI Partners | |
Asia Royal | Healthcare | $12.2M | Deutsche Investitions- und Entwicklungsgesellschaft | |
DAWN Microfinance | Financial services | $7.5M | FMO | |
Yoma Micro Power | Energy | $7M (plus $50M loan) | IFC | |
Myanmar Strategic Holdings | Multisector | $6M | Verlinvest | |
SolarHome | Energy, Tech | $2M | Trirec, Insitor Partners, Anthem Asia, others | |
Bagan Innovation Technology | Media | 7-digit USD | Kyuu Roku, Hotto Link, UMJ Ikeya | |
NearMe | Technology | 7-digit USD | Sumitomo Corporation |
Credit rating firm Fitch labelled the current situation in Myanmar as “a substantial backtracking” of the democratic process in the country in recent years, which will “weigh heavily on policymaking, social stability as well as international perceptions of the country.”
“With the military leadership’s attention focused on preserving its power over the near term, we think that little political energies will be directed towards the formation and enactment of reform-oriented economic or social policies,” Fitch said in its Tuesday note, predicting a rise in public unrest over the coming weeks.
If democracy is not restored swiftly, the New York-based agency said, Myanmar could fall under sanctions again. The US government on Tuesday has threatened to impose sanctions on Myanmar with regard to the ousting by the country’s military force, according to Financial Times.

Fitch has revised its GDP growth forecasts for Myanmar to 2% in both FY2020/2021 and FY2021/22, from 5.6% and 6% previously. Infrastructure projects and foreign direct investment, which have been the key drivers for the local economy, could be delayed or cancelled altogether if sanctions are implemented and if foreign entities decide to pull the plug amid elevated political risks, it said.
Myanmar’s military reportedly said later on Monday it will hold another election and will return power to the winning party. However, it remains unknown when the ballot will be held.
Businesses that could suffer
The crackdown in Myanmar has resulted in an internet and mobile connection blackout even as the country has grown to become a mobile-native market, where mobile phone penetration reached 126 per cent and internet penetration reached 41 per cent by January 2020, according to the Digital 2020: Myanmar report by We Are Social and Hootsuite.
“The events of [the overthrow] will cause extra hardship, on top of an already stiff set of COVID-19 related challenges,” said Dominic Scriven, founder and executive chairman of Dragon Capital, a Vietnam-based fund manager that set up Yangon-based Ruby Hill Microfinance with Loi Hein Group Myanmar in 2017.
“Presumably it would be a different situation from past events such as the Rakhine crisis when the rest of the country could just do what they were doing,” added another investor in Myanmar.
Seed Myanmar, which invests in digital startups in the country, expressed concern that its portfolio companies would not be able to deliver services if the armed forces shut down or limit access to the internet.
“The customers are deprived of the benefit of these digital services that enhance their daily lives, and the companies are deprived of the revenue they need to continue to grow,” said Pickering.
The military leadership probably has little clue about how the boom in the Burmese economy goes hand-in-hand with the digital revolution, according to content agency DigFin.
“This isn’t Myanmar 2008. The Burmese people have tasted from the fruit of fintech: access to finance, empowerment embedded in consumer lifestyles, convenience, connection to one another and the outside world,” the firm wrote in a commentary on the situation.
A local business told DealStreetAsia it is trying to continue business as usual to ensure the safety of the people, assets and extended partners.
Separately, one of Myanmar’s largest conglomerates Yoma Strategic Holdings said late on Tuesday that some of its businesses “were disrupted intermittently” on 1 February due to outages in the telecommunications network.
“As at the date of this announcement, cities in Myanmar remained calm and the group’s business services including Wave Money, the KFC and YKKO restaurants and logistics businesses have resumed operations, and the business heads are working closely with the frontline staff to monitor the situation closely. The Yangon Stock Exchange has halted trading since 1 February 2021 and is expected to reopen on 3 February 2021,” it said in a statement filed with the Singapore Exchange.
The group’s SGX-listed shares dropped 25.5% to S$0.2 on Wednesday as trading resumed after a two-day halt. This is the lowest price of the stock since May 2020.
“As the situation evolves, there could potentially be a change in business sentiment,” Yoma said in its Tuesday announcement.
The company added that it has asked its employees to work from home and “take any necessary precautions to stay safe.”
The MYANPIX Index on the Yangon Stock Exchange, which houses seven listed stocks, lost 26.5 points on Wednesday to 417.25, reaching its lowest since May 2019.
Restoring business confidence in Myanmar, yet again, is going to be an intractable task for the military. “There is such a big trust deficit to overcome, and potential scenarios such as protests and all the risks those entail will make any investor cautious,” Control Risks’ Patton said. ” Aside showing it will bring in competent, civilian officials to manage the economy, they need to show a commitment to putting the country back on the path to democracy and that they will manage the country’s ethnic conflicts responsibly. It’s a tall order.”
Quynh Nguyen contributed to this article.