Sunday, July 12, 2020

Yoma Strategic Plans To Acquire Majority Stake In Wave Money For US$76.5M

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Myanmar’s Wave Money says its revenue, transaction numbers, and transfer volume have more than tripled in 2019

 

By Monika Ghosh

 

Yoma Strategic Holdings, which owns a diversified portfolio of businesses in Myanmar, announced today that it plans to acquire a controlling stake in Wave Money, a leading mobile financial services provider in Myanmar.

 

Wave Money is a joint venture between Yoma Strategic (34% ownership), First Myanmar Investment Public Company Limited (10%), Yoma Bank (5%) and Telenor, a subsidiary of the Norwegian Telenor Group (51%).

 

Further, Yoma Strategic will be establishing and investing up to $25 million in a new company, Yoma MFS Holdings. Yoma MFS Holdings plans to raise funds from a consortium of investors led by Yoma Strategic for the remaining investment, and acquire the entirety of Telenor Group’s currently held 51% stake in Wave Money for $76.5 million.

 

Upon the completion of the transactions, Yoma Strategic aims to invest up to an additional $25 million, and become the largest controlling shareholder in Wave Money, which is expected to become a subsidiary of Yoma Strategic.

 

Yoma Strategic had earlier announced In November 2019 that it planned to acquire First Myanmar Investment Public Company Limited’s 10% stake in Wave Money at a valuation of $78 million. This acquisition is to be completed prior to the proposed acquisition of controlling stakes by Yoma MFS Holdings, and will increase Yoma Strategic’s stake in Wave Money to 44%.

 

Ant Financial Services Group, currently the world’s most valuable unicorn, also entered into a strategic partnership with Wave Money in May this year. It is expected to invest $73.5 million in the company for a substantial minority stakeholder, in a transaction that is also to be completed before the proposed acquisition by Yoma MFS Holdings.

 

Wave Money was the first mobile financial services operator to be granted a Mobile Financial Services (MFS) license by the Myanmar central bank in 2016. The regulation allows licensed companies to provide electronic money transfer and other tech-based financial services within the country.

 

Wave Money is a dominant mobile financial services provider in Myanmar, where more than 70% of the population is underbanked, and the country is expected to experience significant growth in the non-bank fintech market in the coming years.

 

According to a 2018 research which was part of the nationwide Making Access Possible (MAP) financial inclusion study in Myanmar, adults with access to at least one formal financial product increased from 30% in 2013 to 48% in 2018, surpassing the initial 2020 target of 40%.

 

This implies that over 6 million more adults have access to formal financial services now than in 2013, while adults with more than one formal financial product also increased to 17%.

 

Moreover, according to a report published by We Are Social, 126% of Myanmar’s population has a mobile connection, while only 41% of the country’s population have access to Internet services, indicating vast potential for the growth of fintech.

 

With the latest acquisition proposal, Yoma Strategic aims to strengthen its interest in Myanmar’s financial services sector.

 

CEO of Yoma Strategic Melvyn Pun said in the statement that the acquisition formed a part of the company’s to “build a strong financial technology ecosystem in Myanmar.

 

He also said that, “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.”

 

“The investment by Ant Group will further fuel Wave Money’s growth trajectory and will help to create a greater value for our shareholders in the longer term,” Pun added.

 

Wave Money claims to run a network of more than 58,000 agents or “Wave Shops” in urban and rural areas, across 295 of Myanmar’s 330 townships. Since Q1 2017, the company’s money transfer transactions and volumes grew by 65% on a quarterly basis.

 

In 2019, Wave Money’s transfer volume more than tripled year-on-year to reach $4.3 billion. During the same period, revenue and transaction numbers also tripled, the company claims.

 

Wave Money became profitable in September 2018, just two years after its launch, and has continued to maintain its profitability, according to the press statement. Yoma Strategic’s share of profits from its 34% stake in Wave Money, which it acquired in March 2018, grew from $200,000 to $6.1 million within a year.

 

“Telenor has been a great strategic partner and we look forward to building on this partnership as Wave Money continues to provide an efficient and reliable method for people to conveniently pay or transfer money in Myanmar,” Wave Money CEO Brad Jones said in the statement.

 

“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,” Head of Financial Services at Telenor Group Lars Erik Tellmann said in the statement.

 

“Wave Money has built a leading position in money transfer and will continue to be a strategic distribution channel for our mobile operator, Telenor Myanmar,” he added.

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