Return of the Rising Sun: MUFG fuels rebound in Japanese investments in SEA fintech

Geopolitical tensions and economic headwinds do not seem to have affected Japanese funding in Southeast Asia’s fintech industry.

Data provided by Tracxn shows that in 2022, the value of Japanese investments in the region’s fintech sector jumped 80% compared to the previous year, resuming an upward trend that was interrupted by the pandemic in 2020.

One major contributor to this revival was Mitsubishi UFJ Financial Group (MUFG), a Japanese banking institution.

In 2020, the Japanese bank’s VC fund MUFG Innovation Partners (MUIP) co-led the US$23.5 million round of Indonesian peer-to-peer lender Investree, together with Bank Rakyat Indonesia’s BRI Ventures.

Since 2021, MUFG has been one of several Japanese backers that have spurred the rebound in Southeast Asia’s fintech investments.

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Last year, it injected US$200 million into Akulaku, an Indonesian fintech major backed by Ant Financial. Other Japanese investors include Mizuho Bank, which led the US$270 million round of buy now, pay later player Kredivo, and Tokio Marine, which led the US$196 million round of insurtech firm Bolttech.

This positive trend is expected to continue – MUFG has just announced that it’s acquiring Indonesia-based lending firm Mandala Multifinance, with the US$467 million deal expected to close in 2024.

This year, the region has raised US$522 million so far in disclosed rounds for fintech companies where at least one Japanese investor participated.

Singapore and Indonesia top recipients

While Japanese investments in the fintech sector are common across Southeast Asia, some countries have been receiving more attention than others.

Singapore emerged as the primary recipient of these deals, accounting for over 46% of the investments made since last year. Following closely behind is Indonesia, which secured 35% of investments.

MUFG has made strategic moves in these two countries over the past few years. In 2020, it partnered with Singapore-based Grab to take on “the challenge of providing next-generation financial services,” an MUFG spokesperson tells Tech in Asia. The bank reportedly committed over US$700 million for the venture.

Expanding horizons of local startups

What’s driving the influx