Driven by a lack of mega deals, total global investment in fintech dropped during the first half of 2019 reaching only $37.9 billion, said a report that also observed investments into India’s fintech sector falling nearly 50 per cent to about $300 million in the same period. Lower investments were not only recorded in India but across the entire Asia Pacific region, the report by consultancy KPMG said, with investment in the region reaching about $3.6 billion across 102 deals during the first half of the year, against nearly $25 billion in the same period of 2018.
Both venture capital investment (VC) and mergers and acquisitions (M&A) activity in the region witnessed a significant downturn during the first half of 2019 compared to the same period last year. The drop was due to lack of mega deals in China with investors holding back as result of escalating trade war between the US and China. Increasing regulatory focus by Beijing was another reason for the drop in investment, the report pointed out.
However, the fintech space has witnessed heightened activity in India post-demonetisation in 2016, with companies like Paytm, MobiKwik, PhonePe and PayU raising substantial capital. Fintech investment in Europe, meanwhile, reached $13.2 billion across 307 deals during the period, with the United Kingdom recording the highest volume of deals in the region.
In South and North America, fintech investments reached $21 billion with more than 500 deals. VC fintech investments in the region hit a record high of $4.8 billion in Q2 2019. While investment into the sector plunged in the United States during H1 2019, reaching $18.3 billion across 470 deals, for the second quarter alone, VC investment reached a record high, bolstered by $300 million funding rounds to Carta and Affirm.
“The payments space continues to be hot, demonstrating there’s plenty of long-term growth potential in the sector, including verticals like healthcare payments,” said Robert Ruark, Financial Services Strategy and Fintech leader, KPMG. The payments space is expected to be a key area of focus for investors, along with B2B services, said the report. Security will also likely be a hot area, and online gaming could also see growth.
Investments drop in entire Asia Pacific region
Lower investments were not only recorded in India but across the entire Asia Pacific region with investment reaching about $3.6 billion across over 100 deals during the first half of this year, against nearly $25 billion in the same period last year.