Tencent Holdings increased its bets on India with an investment in a start-up that helps the country’s blue-collar workers manage their finances, as it sought to build an overseas presence to supplement its dominant China market.
Shenzhen-based Tencent, one of China’s most active corporate investors, led a US$35 million funding round in Bangalore-based digital banking company NiYO, which also serves outbound tourists with a foreign exchange service.
The company, founded by Pony Ma Huateng, is expanding beyond its core gaming and social media business, into services to business and industry, which it calls the industrial internet. In India, it made a US$1.4 billion joint investment in leading Indian e-commerce marketplace Flipkart together with Microsoft and eBay in 2017.
Tencent teamed up with SoftBank to invest US$1.1 billion in ride-hailing service Ola the same year. In 2018, it joined South Africa’s Naspers in a US$1 billion investment in Swiggy, an Indian food-delivery firm.
NiYO was founded in 2015 by Vinay Bagri, who worked for ICIC Bank and Standard Chartered Bank, and Virender Bisht, previously with MakeMyTrip.com. The start-up currently has 1 million users and aims to expand the number of users to five million in the three years, according to a statement on Tuesday.
The just completed Series B funding round also included investors like Hong Kong-based Horizons Ventures, the private investment arm of the city’s richest man Li Ka-shing, and existing shareholder, Israel’s JS Capital.
Chinese investors including Tencent have been stepping up their investments in India. Venture capital funds from China pumped in over US$5 billion to India in 2018, surpassing the US and Japan, according to data research firm Tracxn.
Tencent, along with Chinese e-commerce giant Alibaba Group Holding, smartphone maker Xiaomi and its founder Lei Jun’s investment firm Shunwei Capital. were among the most active investors.
For most young Indians, the first computer and phone that they own will be a smartphone. The number of internet users is expected to increase by more than 50 per cent to 650 million by 2020 as broadband prices become more affordable, according to Google.
The country’s telcos have slashed prices to attract users amid stiff competition with the entry of new broadband providers, which has driven sign-ups.
That in turn should drive online consumer spending in India, which is expected to grow over twofold to US$100 billion by 2020, driven by the growth in e-commerce, travel, financial services, and digital media, according to a report by Boston Consulting Group and Google in February.
Hangzhou-based Alibaba, which owns the South China Morning Post, invested in India’s leading payment firm Paytm with its affiliate Ant Financial, and boosted its stake in Paytm to 62 per cent in 2017.