Fatfish readies giant new ‘ASEAN Fintech Group,’ eyes more iCandy success

Following the successful spinout of listed gaming company iCandy, Fatfish says its latest corporate restructuring is expected to yield similar results for its fintech businesses.

Tech venture builder and investor Fatfish (ASX:FFG) is embarking on a major corporate restructuring exercise that will position the company for the next phase of its growth.

Fatfish has announced plans to consolidate all of its fintech businesses under the flagship holding company, ASEAN Fintech Group (AFG).

By having all its fintech related businesses and employees under a single holding company, Fatfish expects to bring about more efficient and effective management, as well as achieve cost savings in managing its fintech holdings.

After consolidation, AFG will become a fledgling regional fintech company that employs more than 120 full-time employees across four key markets.

Consolidation synergies

Fatfish has cemented its footprints in the Southeast region by actively investing in and acquiring gaming and fintech firms, with the latter making the bulk of its investments.

The company sees Southeast Asia as a blue ocean opportunity for fintech plays, but acknowledges there are challenges specific to the region such as culture differences of each country.

Fatfish says the corporate exercise undertaken today will see AFG become a regional fintech business builder, operating an ecosystem across three core verticals of lending and BNPL, digital payment, and insurtech.

The portfolio companies within the AFG ecosystem are envisioned to be highly integrated and complement each other, such as sharing common back office functions.

This includes synergies such as having a common technology stack, data warehousing, and data mining.

Other advantages include common e-KYC and client onboarding functions, risk assessment and management, as well as debt collection and recovery.

AFG’s growth strategy

Building a seamless fintech ecosystem under one umbrella will make AFG a one-stop provider, catering to the financial needs of modern consumers who are increasingly digital.

Southeast Asia’s modern consumers and its fintech industry are indeed growing very rapidly, due to the high percentage of the population being connected online.

According to a report from ratings company Fitch, 70% of the Southeast Asian population now have access to the internet, compared to just 46% in 2016.

After consolidation, AFG will have more than five licensed fintech platforms under its belt in the ASEAN region.

In total, the portfolio companies under the AFG umbrella have generated gross transaction value (GTV) of approximately US$82 million (A$113 million) in January 2022 alone.

Fatfish says it intends to grow the portfolio further by following a three pronged strategy.

First, it will keep identifying, attracting and acquiring early-stage fintechs in Southeast Asia that have clear synergies with AFG’s existing three core verticals.

Secondly, Fatfish will integrate the talents, business, and technologies of the newly acquired fintech companies into the AFG’s fintech ecosystem by removing duplicated functions and operations.

And thirdly, it will leverage on the common front office function as well as cross marketing opportunities available within the AFG fintech ecosystem to achieve rapid business growth.

Looking ahead

The restructuring exercise will involve AFG acquiring additional stakes in Smartfunding and Fatberry from FFG’s Swedish listed subsidiary, Abelco Investment Group.

The Smartfunding stake is expected to increase from 40% to approximately 89.4%, while its Fatberry stake will increase from 11.4% to approximately 60.9%.

In return, FFG’s direct stake in AFG is expected to be diluted from 100% to approximately 70.8%, while Abelco will hold a 17.5% stake and the remaining 11.7% being held by minority shareholders.

Fatfish believes the restructuring exercise will yield significant results for shareholders, as this integrated business vertical strategy has been tried and tested by FFG’s management before.

Fatfish had previously built a gaming vertical strategy that eventually became the successful spin-out iCandy Interactive Limited (ASX:ICI), which is now one of the largest game developers in Australia, New Zealand and Southeast Asia.

The FFG management says it strongly believes the fintech business vertical will now be the next business vertical the company can build and grow upon.

This article was developed in collaboration with Fatfish Group, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.