Japan's SMBC kicks off $200 mln fund to fuel Asian fintech startups

Japanese megabank SMBC has co-founded the corporate venture capital fund “SMBC Asia Rising Fund” with Tokyo-based venture capital firm Incubate Fund (IF) in Singapore while it expands across Asian markets, including Vietnam.

The new vehicle, shortly called CVC by the megabank, aims at accelerating business development and partnerships through investments in high-potential Asian start-ups, SMBC announced Tuesday. The fund, during a 10-year period, will invest in start-up companies that contribute to the growth of SMBC Group’s business.

This includes financial institutions in Asia in which SMBC Group has an equity stake through collaborations or business development in lending tech, payment, supply chain finance, Banking-as-a-Service, digital assets, and others.

SMBC on March 27 signed a deal with Vietnamese lender VPBank to buy a 15% stake for about $1.5 billion through a private placement to become a strategic investor in the Hanoi-headquartered bank. In October 2021, the Japanese major finished its acquisition of a 49% stake in VPBank’s consumer credit firm FE Credit for about $1.37 billion.

Given Asia’s medium- to long-term growth potential, under its Asia multi-franchise strategy, SMBC has been expanding its business through investments in or acquisitions of local financial institutions while also enhancing its existing regional operations.

The strategy aims “to build a second and third SMBC Group over the medium-to-long term in Asia’s emerging markets by offering full-banking services, including retail, and transferring SMBC’s know-how and developing personnel,” the Japanese megabank said.

Given this backdrop, the CVC was established in Singapore in order to carry out investments in leading Asian companies by bringing together the robust global network SMBC possesses as a major financial institution with the advanced expertise in start-up investments that IF has accumulated through its various investment activities in India and Southeast Asia, including Vietnam, a popular market for venture capital.

IF is a leading Japanese venture capital firm specializing in early-stage startups. Since its establishment in 2010, IF has invested more than JPY98.3 billion ($727.84 million) in more than 450 startups. IF possesses a robust network in Asia and has the ability to execute or manage investments in and outside of Japan.