Warburg-Backed Vietnam E-Wallet Raises $100 Million

Vietnam’s startup payment app MoMo has raised a new funding round of more than $100 million, according to two people familiar with the investment.

The company, M-Service JSC, creator of MoMo, confirmed that it raised money from investors without specifying how much.

Warburg Pincus LLC, MoMo’s largest backer, is part of a group of investors involved in the company’s Series D round that also includes Silicon Valley’s Goodwater Capital LLC, Affirma Capital Singapore Pte, Kora Management, Macquarie Capital and Tybourne Capital Management, according to the company.

Warburg Pincus, Tybourne Capital and Affirma Capital are existing shareholders, the company said. The latest round is co-led by Warburg Pincus and Goodwater, it said.

“Given the high internet penetration rate in Vietnam, a rapidly growing middle-class population and a strong push for a cashless economy, we strongly believe MoMo has the opportunity to win the mobile payments market and replicate the growth story of the top mobile platforms in Asia,” Jeffrey Perlman, Warburg Pincus managing director and head of Southeast Asia, said in a video call during a briefing in Hanoi.

The startup previously raised $33.7 million in Series A and B rounds from Goldman Sachs Group Inc. and Standard Chartered Private Equity, MoMo said, declining to disclose the value of the Series C round backed by Warburg Pincus.

The startup sees huge potential in a youthful and tech-savvy nation of 97 million people where just 5% of the population uses credit cards, said M-Service co-founder Nguyen Manh Tuong.

“Our revenue grew 2.5 times in 2020 compared with the previous year, even during Covid, and our registered users doubled to 23 million,” he said. MoMo, which handled $14 billion in transactions last year, forecasts it will have 50 million registered users in two years, the company said.

MoMo began in 2010 as a SIM-card application that allowed people to transfer money and buy mobile top-up and game scratch cards. In 2014 it started a smartphone e-wallet that has expanded into a super app with an array of services, including insurance payments, digital marketing for merchants and processing of small donations for everything from children’s programs to flood victims.

The company plans to use the new funding to upgrade its app with biometrics technology and for strategic acquisitions, said Tuong, who is also co-chief executive officer.

MoMo is working to create a platform connecting financial institutions and asset management companies with users for investments and small loans this year, he said. The loans would be no more than 5 million dong ($217) and subject to a credit rating generated on the basis of in-app behavior. MoMo has direct partnerships with 28 banks, according to the company.

Vietnam’s government has approved more than 30 e-payment providers, including M-Service, as Hanoi pushes citizens to move away from cash. Sixty-nine percent of Vietnamese do not have bank accounts, according to a 2019 joint report from Alphabet Inc.’s Google, Temasek Holdings Pte and Bain & Co.

The country’s e-commerce sector expanded 46% last year, according to another report by Google, Temasek and Bain & Co. Vietnam’s internet economy is expected to reach $52 billion in 2025, the report said.

During the global pandemic, Vietnam has experienced an economic slowdown with overseas orders for domestically-made products, from smartphones to sweaters, stalling. While sales for movie tickets and travel dried up, demand for grocery deliveries and meals soared, Tuong said.

©2021 Bloomberg L.P.

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