Over 20 more unicorns on S-E Asia horizon

Report by growth equity firm Asia Partners predicts that at least half will go on to pursue public listings


SOUTH-EAST Asia might see the rise of more than 20 unicorns over the next decade, with up to eight from fintech and specialty e-commerce sectors.

At least half of these 20 unicorns will go on to pursue initial public offerings (IPOs), according to a 2019 Internet report by growth equity firm Asia Partners released on Tuesday, citing analysis based on China's growth over the past decade.

Asia Partners co-founder and managing partner Nick Nash cited RedDoorz as one of the soon-to-be unicorns on their radar.

One of Asia Partners' first investments, the Singapore-based hotel booking and management platform is shooting to be Ebitda-positive by 2023, according to a previous report by The Business Times.

Asia Partners predicts that the most number of unicorns - around three to four - will emerge from categories such as fintech and e-commerce.

Newer categories such as online health, e-commerce logistics and online travel - such as RedDoorz - will trail right behind at around two to three unicorns per sector by 2029.

In the same vein, its analysis projects an additional US$400 billion of public equity value that will be generated as the region catches up to China in terms of the market cap to GDP ratio.

This comes as catalysts such as education levels, physical connectivity through flights and trade-flows in South-east Asia continue to rise, and have reached the sweet spot of a "golden age" - resembling exponential growth periods in both the China and US markets 10 and 20 years ago respectively.

For example, the Asia Partners report says that the region's gross domestic product (GDP) per capita has hit an average of US$3,500- US$7,000, a level at which countries such as China, Korea and Japan have seen many of their technology companies go public.

Coupled with the rise of an initial "critical mass" of eight to 10 unicorns in South-east Asia, the report says the region has now reached a tipping point where exponential growth starts.

As a roadmap for South-east Asia, China provides many clues as to the emergence of new technology companies.

The report draws many parallels between South-east Asia's and China's tech industry a decade ago.

Similarly, South-east Asia too has "laid the foundation" with tech companies in more mature industries such as telecommunications and television, and has been building on that base with more specialised firms emerging in sectors such as e-commerce and video game like Sea and AsiaSoft.

Riding on this trend, the growth equity firm predicts the rise of more mobile and offline hybrids in new sectors such as online health, online book and mobile ecosystems similar to China's PingAn Healthcare, China Lit and Meitu.

Asia Partners focuses on investments in technology and technology-enabled companies that are transforming South-east Asia's economy. It has helped grow eight multi-billion dollar companies, including Sea, Flipkart, and Bukalapak.