A man walks past the entrance of the Central Bank of Malaysia in Kuala Lumpur, Malaysia on July 31, 2019. Reuters
South Korean conglomerate SK Group’s Southeast Asian investment arm has joined a consortium for AirAsia’s digital bank business in Malaysia, reports said Tuesday.
SK South East Asia Investment has participated as a financial investor in a consortium led by the Malaysian budget airline’s financial technology unit BigPay vying for a digital banking license in the Southeast Asian country, according to Malaysian news reports.
Due to SK’s nondisclosure agreement with BigPay, the size of the South Korean firm’s investment has yet to be disclosed.
According to a Reuters report earlier this month, more than a dozen bidders involving over 50 global businesses submitted bids by the deadline of June 30. Other bidders included Malaysian multinational telecommunications giant Axiata and Chinese tech firm Tencent, Reuters said.
Southeast Asian mobile taxi service provider Grab and Singaporean telecommunications conglomerate Singtel were among other bidders, according to a Korean news outlet.
Malaysia’s central bank plans to issue up to five digital banking licenses by early 2022.
Other members of the “BigPay consortium” include Malaysia’s largest asset manager Permodalan Nasional Berhad unit MIDF and Singapore-based private equity firm Ikhlas Capital.
SK has been eyeing to expand its presence in the fintech sector in recent years. Its flagship mobile carrier SK Telecom worked with local banking giant Hana Financial Group in 2016 to launch a joint venture called Finnq, focused on mobile financial services.
The Korean conglomerate apparently has turned its eyes to the digital banking business in Southeast Asia, after failing to clinch the license in Korea twice in the past.
In 2015, SK Telecom was part of a consortium led by local e-commerce operator Interpark vying for a license for South Korea’s first and second internet-only banks, but failed. The licenses went to consortiums that went on to form KakaoBank and K bank. KakaoBank has since amassed more than 16.5 million users, as of May this year, thriving as the most popular digital lender here and backed by its ties to the nation’s dominant messaging app KakaoTalk.
A general view of AirAsia headquarters, amid the coronavirus disease (COVID-19) outbreak in Sepang, Malaysia October 6, 2020. (Reuters)
KakaoBank is currently planning an initial public offering -- the first among digital banks here -- on Aug. 6, with its price set at the upper end of 39,000 won ($33.90) as of last week, the firm said.
SK had also jumped in the competition for the nation’s third digital banking license in 2019 through a consortium led by local brokerage Kiwoom Securities, but a team led by fintech company Viva Republica won the spot in the end. Viva Republica’s Toss Bank is slated to be launched in September.
Malaysia has attracted global investors for its digital banking bid through its relatively low bar for capital funding needed for the business entry. With a population of more than 32 million, it is considered a largely untapped market for digital banking. Some 55 percent of Malaysia’s adult population is unbanked or underbanked, Bain & Company said, despite growing use of mobile phones there.
