Dissecting this Indonesian digibank’s high risk pursuit of profitability

Opening Bell 🔔 is Tech in Asia’s free newsletter, which brings you the biggest news and latest trends around publicly listed Asian tech companies. [Read from your browser]( Opening Bell 🔔 Welcome to the Opening Bell! Delivered every Monday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and latest trends on Asia’s publicly listed tech companies. If you’re not a subscriber, get access by [registering here](. Hello {NAME} It’s fascinating to track which industries overseas firms place their bets on when a country opens itself up to foreign investment. It is a vote of confidence for sectors that receive heavy investment from external investors - a sign that there remains unfulfilled growth in those spaces and plenty of money to be made. So when Indonesia loosened foreign ownership rules last year, the rush to grab a slice of the archipelago’s digital banking sector came as no surprise, given the tech-savvy nation’s large unbanked and underbanked population. Yet from super apps and ecommerce platforms to VCs and fintech firms, the sheer number of stakeholders that have thrown their hats in the ring is staggering. You can find a comprehensive list and analysis of the firms bankrolling Indonesia’s digital banks in [this Tech in Asia visual story](. Today, we turn to loss-making Bank Neo Commerce (BBYB, IDX), a digibank in which fintech unicorn Akulaku has a 40% stake. Bank Neo Commerce is on course to post an operating loss of over US$120 million for 2021 and 2022 combined. However, the firm has a high risk, high reward strategy, which it believes will help it to turn a profit next year. Bank Neo Commerce has placed its bets on consumer loans, unlike Gojek-backed rival Bank Jago (ARTO, IDX), which [stayed in the red for seven years and only turned profitable]( in 2021 by focusing on lending to SMBs. In this edition’s feature piece, my colleague, Aditya, not only delves into what a focus on the riskier consumer loans entails for Bank Neo Commerce (given the worsening economic climate) but also whether the strategy will lead the Indonesian digibank to profitability. -- Shravanth --------------------------------------------------------------- THE BIG STORY [Bank Neo Commerce looks past losses with plan to get into the black]( Focus on consumer loans has become the main strategy for the Akulaku-backed digital bank to turn the tide, but it’s not without caveats. --------------------------------------------------------------- 3 TRENDS TO KEEP AN EYE ON Hot stocks, earnings reports, restructuring, pressure from activist investors, and more. 1️⃣ Brave souls and wise heads: It’s no secret that IPOs have taken a hit this year. Global listings have raised only US$101 billion since the start of 2022, down from US$338 billion in the same period in 2021. Rising interest rates, sluggish economic growth, and geopolitical tensions have dampened the market for first-time stock offerings. Even Carsome has fallen victim to unfavorable macro conditions as it [put its IPO plans on ice]( for this year. The used-car marketplace is delaying its dual listing plans to raise US$400 million at a valuation of US$2 billion in Singapore and the US. See also: [Carsome and Carro: A neck-and-neck race to transform how people buy cars]( However, the Malaysia-based firm will resume its goal to list next year if market conditions improve. Another startup that will [look to realize its IPO dreams]( in 2023 is beauty and babycare brand Mamaearth. The India-based company is looking to raise US$300 million at a US$3 billion valuation and may file the draft papers for the IPO by the end of this year. 2️⃣ Riding EV wave with next-gen batteries: Contemporary Amperex Technology Co Ltd (CATL) (300750, SHE), the world's biggest battery maker, is [set to begin]( the mass production of the latest version of its product in 2023. The new battery, called Qilin, promises greater efficiency that lets electric cars drive longer distances on each charge. While the Chinese battery giant, which is a supplier to automakers such as Tesla (TSLA, NDAQ), Volkswagen (VOWG, DE), and Nio (NIO, NYSE), has been boosted by waves of national support for electric vehicles, it is scrambling to retain its top position against intensifying competition from rivals such as BYD (002594, SHE) and LG Energy Solution (373220, KRX). 3️⃣ Not repeating the same trick: Uber (UBER, NYSE) strongly [rebutted suggestions]( that the company plans to exit India, claiming such reports are “categorically false.” The US-based firm had supposedly considered leaving the South Asian country because of the limited potential for profitable expansion in the country. Uber's denial comes in response to reports that the firm explored options for its Indian ride-hailing business, including a sale, but suspended discussions after valuations of tech startups cratered. However, the ride-hailing giant is no stranger to quitting markets while keeping an equity stake in a dominant local player. Uber struck such deals with Didi Global in China and Grab (GRAB, NDAQ) in Southeast Asia. Read more: [Moladin was ‘almost dead.’ Then it pivoted to used cars – and raised $137m]( --------------------------------------------------------------- 2 EYE-POPPING FACTS Tech in Asia scours the internet to bring you head-turning numbers from the world of business. - [54%]( - EVs will make up more than half of global vehicle sales by 2035 as demand accelerates in most major markets, according to AlixPartners. Furthermore, it forecasts EV sales to make up 33% of vehicle sales globally by 2028. While EVs accounted for less than 8% of global sales in 2021, AlixPartners sees the acceleration of EV sales being boosted by at least US$526 billion in investments into EVs and batteries from automakers and suppliers between 2022 and 2026. - [US$2.6 billion]( - Breakups are painful, but they can be expensive too, as ​​Bang Si-hyuk, founder of Hybe (352820, KRX), the label that manages seven-member boy band BTS, found out last week. The announcement that South Korean pop sensations are going on a hiatus to focus on solo projects probably broke millions of hearts and took billions of dollars out of Bang’s net worth. Hybe’s stock hit a record low last week, even though BTS has promised to reunite one day. --------------------------------------------------------------- THE 1 YOU DIDN'T SEE COMING We spotlight the unusual, not-your-everyday kind of story that has got everyone talking and social media buzzing over the past week. Fruit analogies, money furnaces, and Tesla's Beidaihe ban Faced with the prospect of explaining to disgruntled shareholders why massive bets on loss-making tech firms have gone awry, SoftBank Group (9984, TYO) CEO Masayoshi Son was oddly philosophical. "Peaches and chestnuts take three years and persimmons take eight years, even fruit takes that long (to bear fruit)," Son told shareholders at the company's annual general meeting, quoting a Japanese proverb. "I'm confident if you wait five to 10 years there will be something delicious." That’s a long wait. More so given that strawberries and raspberries have shorter yield times - I guess it depends on what you’re looking for in the market. Somewhere in all that, Son also [revealed]( that the Japanese investment group was most likely to list Arm, the UK-based chip designer unit, on the Nasdaq. Meanwhile, the lush beach resorts of Beidaihe, east of Beijing, will [no longer]( be graced by the sight of a Tesla - at least for two months. Beidaihe also happens to be the site of a secretive annual summer party leadership conclave, where China's senior leaders discuss personnel moves and policy ideas behind closed doors. However, CEO Elon Musk has bigger worries after [labeling]( Tesla's new factories in Austin and Berlin as “gigantic money furnaces” that are “losing billions of dollars” amid supply-chain disruptions and challenges in battery manufacturing. --------------------------------------------------------------- That’s it for this edition - we hope you liked it! Not your cup of tea? You can unsubscribe from this newsletter by going to our preference center at the bottom of this email. Happy investing and see you next week! Disclaimer: This content is for informational purposes only. Kindly do not construe any such information as legal, tax, investment, financial, or other advice. [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. 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