Yoma Strategic to buy Telenor’s stake in Myanmar’s Wave Money for $76.5m

YSH Anual Report

Singapore-listed Yoma Strategic Holdings will acquire Telenor Group’s 51 per cent stake in Myanmar’s mobile financial services provider Wave Money for $76.5 million, it said in an announcement on Wednesday.

Yoma Strategic will set up a new holding company, Yoma MFS Holdings, to acquire the additional stake in Wave Money. Upon completion of the transaction, it plans to invest up to $25 million in the fintech company.

Wave Money runs a network of more than 58,000 agents in urban and rural areas across the country. Users can transfer money through their mobile phone or any of the Wave agents. The company claims to have tripled transfer volume year-on-year to 6.4 trillion kyat ($4.3 billion) in 2019.

The proposed acquisition will allow Yoma Strategic to strengthen its interest in Myanmar’s financial services sector, it said.

The development comes on the back of a $73.5 million investment by Ant Financial in Wave Money in May this year for a significant minority stake.

“This is an opportune time for Telenor Group to divest. Both Yoma Group and Ant Group’s core operation is financial services and technology and they are, therefore, the strongest owners to take Wave Money forward,” said Lars Erik Tellmann, Head of Financial Services at Telenor Group.

The new holding company will raise capital from a consortium of investors led by Yoma Strategic to buy the stake from Telenor, according to a statement.

In March 2018, Yoma Strategic acquired a 34 per cent stake in Wave Money at a valuation of $57 million. In November last year, it announced it was picking up an additional 10 per cent stake in the company at a valuation of $78 million.

“This acquisition is part of our goal to build a strong financial technology ecosystem in Myanmar. Wave Money continues to see sustained growth in its agent and digital platforms, with Wave Pay gaining strong traction during the COVID-19 pandemic through the acceleration in and adoption of cashless payment solutions,” said Yoma Strategic CEO Melvyn Pun.

Wave Money is expected to become a subsidiary of Yoma Strategic following the completion of the proposed acquisition of Telenor’s interest subject to certain conditions, including regulatory approval.

WaveHold Co will hold 51 per cent in Wave Money while Yoma Strategic and Yoma Bank will own 44 per cent and 5 per cent, respectively. This shareholding structure is pre-Ant Financial’s investment.

“Over the last three years, Wave Money has built a strong team with its own capabilities to provide financial services bringing financial inclusion for the people of Myanmar,” said Wave Money CEO Brad Jones.

Of Myanmar’s 53 million residents, 80 per cent remain unserved by the banking system.

In a recent interview with us, Jones said that Wave Money aims to leverage its investors’ experience in building mobile payment platforms to enhance its digital competence, capabilities, user experience and service offerings in Myanmar.

Wave Money also plans to re-launch its mobile wallet in a few months with newly added features and better user experience and expand to other countries like Thailand, Vietnam and Singapore by offering cross-border transactions where regulations allow.

Edited excerpts of a recent interview with Wave Money CEO Brad Jones:-

What do you think attracted Ant Financial to your business?

Ant Financial shares a common purpose with Wave Money, which is to drive greater financial inclusion.

Since launching in 2016, Wave Money has grown as the leading mobile financial services provider in Myanmar. With its solid track record, outstanding business performance and empowering mission, Wave Money proved to be a natural fit for Ant Financial as it continues to look for strategic partners to help add value in certain markets.

How are you going to leverage experiences from Ant Financial as well as existing shareholders?

Wave Money aims to leverage Ant Financial’s experience in building mobile payment platforms to enhance its digital competence, capabilities, user experience and service offerings in Myanmar. The partnership is set to future proof and accelerate Wave Money’s transformation in line with the mass adoption of digital payments in the country.

How has COVID-19 led to an increase in the use of digital payments in Myanmar? How is the pandemic impacting your business?  

During COVID-19, everyone had to practice social distancing and as a result, find ways to reduce cash handling as much as possible. With that, people also started realizing how everything can be connected and operated seamlessly via mobile phones.

We are also seeing increasing numbers of mobile wallet registration and active users during the COVID-19 period. Compared to the same period from March to May in 2019, Wave Money saw a significant increase in digital transactions through our mobile wallet WavePay application by over 800 per cent.

Many people in Myanmar started to embrace digital payments in their daily lives for money transfer, mobile bill top-up, donation, and other social-related financial activities.

What are the advantages of Wave Account and Wave Shop Transfer compared to other money transfer services in the market?  

Wave Money operates over 58,000 Wave shops across Myanmar covering 89 per cent of the country and a customer base of more than 21 million. We have a footprint in 85 per cent of rural areas including very remote locations of the country. This has allowed customers to move money from and to almost any place in Myanmar.

Remittance (cash in-cash out) service remains one of our leading products but a key contributor to growth is our mobile wallet WavePay application which can be used not just to send and receive money but buy airtime, settle utility bills and for merchant payments as well as donate.

Since launching in October 2018, Wave Pay’s monthly active user base has been increasing steadily at 14 per cent per month-on-month.

How many transactions have been made through the Wave Account and Wave Shop Transfer last year?

In 2019, Wave Money’s transfer volume more than tripled year-on-year, reaching 6.4 trillion kyat  ($4.3 billion). During the same period, revenue and transaction numbers also tripled.

Wave Money is reportedly looking to grow from a simple remittance service to a widely used digital payment platform. Could you please share more details on this plan? 

We have already introduced our mobile wallet, WavePay, since October 2018 and Wave Pay’s monthly active user base has been increasing steadily at 14 per cent month-on-month. We plan to re-launch our mobile wallet in a few months with newly added features and a better user experience.

With a 70 per cent unbanked population in Myanmar, do you think that it is a big challenge to roll out a digital payment plan?

When we started planning to provide financial services in Myanmar back in 2015, less than 20 per cent of the population in Myanmar had access to formal financial services. And Myanmar is a huge country with a population of over 53 million people.

One of the biggest challenges for Wave Money was how to reach this population in such a large country. To do this, we have built a network of 58,000 agents in 295 of the 330 townships in the country. This has allowed customers to move money from and to almost any place in Myanmar.

Whilst there has been a significant growth in digital penetration, both financial and digital literacy have been challenging. To address that, we have invested heavily in education, including TV commercials and events to educate consumers on things such as PIN security.

Another challenge has been conducting KYC [know your customer] processes on customers, as it is estimated that approximately 30 per cent of the population lack proper identity cards. This is a challenge and it keeps some people excluded from the formal financial system.

What do you think about the current developments in the mobile financial services market in Myanmar? Are you seeing much competition or consolidation in the sector?

Myanmar is a frontier market that gives innovative companies in mobile financial services an opportunity to promote financial inclusion and empower the unbanked.

Since 2014, we’ve seen unprecedented growth in mobile penetration, with new players in the Myanmar telecom industry; and with that, the opportunity to leverage the power of mobile and introduce a social impact-driven mobile financial service that facilitates secure, easy, and reliable real-time transactions. Myanmar is the fastest growing mobile money market compared to other emerging markets in the region.

Along with the rapid growth of mobile money service providers, people are getting familiar with mobile money services and usage rate is visibly increasing. Nowadays, online shopping and other e-payment services like in-game payments for games, fast and easy mobile top-ups, food ordering and so on have become common and people use mobile money not only for remittance but also for these payments.

But we are still seeing that digital adoption is low outside of Yangon and other cities, especially in rural areas. People are still using primarily cash because it gives them a sense of security. The other side of this mindset is the lack of awareness/familiarity with new technology. The introduction of new technology needs to run in parallel with regulatory as well as market education towards greater adoption, which in turn would activate more investments and innovation.

Do you have any overseas expansion plans at this time? 

There is a very large Myanmar diaspora in countries such as Thailand, Malaysia, and Singapore. We are keen to offer cross-border transactions when regulations allow.

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.

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.