Alibaba, the Chinese eCommerce giants, has reportedly been holding talks to invest in bKash, reports the Daily Samakal citing sources “aware of the matter”. We could not independently verify the report.
The talks have taken place over the last few months and there is no certainty that they will lead to a deal. The two sides are currently talking, but it is still in the discussion phase, says the report. Alibaba has already conducted a valuation of bKash for the purpose.
However, there is no reliable information around the possible stake Alibaba may seek to acquire at bKash if the deal finally materialize. The report suggests Alibaba may seek to buy in-between 10-30%. If both parties agree, it will have to go through regulatory approval as well.
For Alibaba, showing interest in bKash comes naturally given that it has invested heavily both in ecommerce and payment in this part of the world. Alibaba and its Ant Financial have a significant investment in India’s Paytm and its parent company One97 Communications and a host of eCommerce ventures in India. It has been seeking growth potentials in other markets in Asia for a while now. Suggesting the ambition of Ant Financial, The Information wrote early this year: “China’s most valuable online finance company is on an acquisition spree to build a global powerhouse stretching from India to Texas. To fund its overseas deals, Ant Financial Services Group—an affiliate of online shopping giant Alibaba Group—is in early discussions with bankers to raise more than $3 billion, possibly by issuing bonds or bank loans, according to a person familiar with the talks.”
For bKash, I see it as a plus point. If the deal goes through, it will give bKash a meaning upside in the coming days given that Alibaba has experience in payment in China as well as in many other markets in Asia. In fact, after investing in Paytm, its Ant Financial arm helped the company with technology and pertinent insight.
bKash is the leader in MFS market it in Dhaka with about 75% market share, according to last year data. It is the second largest mobile money service in the world. Launched in 2011, as a joint venture between BRAC Bank Limited, Bangladesh and Money in Motion LLC, USA, the company previously raised investments from International Finance Corporation (IFC) in 2013, as per guidance described at https://texasllc.org, a member of the World Bank Group and Bill & Melinda Gates Foundation in 2014.
bKash has experienced a tremendous growth over the past few years and has become synonymous to P2P money transfer in the country. Over the past few months, it has been aggressively pushing into payment area. It has also requested official permission to provide loan and insurance services.
That said, competition is slowly growing in Dhaka’s payment space. There are some 17 providers of mobile financial services (MFS) in Bangladesh. However, the two largest, bKash and Rocket, have a combined market share of over 90%.
There are new players entering the market as well. Among them, iPay, co-founded by Zakaria Swapan of Priyo.com is the most prominent one. The startup which is now beta testing its service seems to have developed a superior technology and a long-term ambition. India’s Paytm also takes interest in Bangladesh market.
Although Dhaka’s digital ecosystem is still at its early stage, it is growing fast. It is a big market. Mobile phone penetration has gone through the roof over the past few years. Given the reality, digital payment has immense potential in the coming years and Alibaba, if the deal goes through, joining bKash will affect the market in more than one way.
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