Deal focus: TNG targets Asia’s unbanked

Five companies – out of 20 applicants – were awarded stored value facility (SVF) licenses in August 2016 when the Hong Kong government took a first step toward regulating the electronic payment industry. Four were the usual suspects: Alibaba’s Alipay, Hong Kong Telecom’s Tap & Go service, Tencent Holdings’ WeChat Pay, and Octopus Cards, controlled by several local transit companies. The fifth was an independent outlier: TNG FinTech Group.

Thirteen groups now have SVF licenses, but TNG’s early endorsement is testament to its rapid growth. The company was founded in 2013 and launched the TNG Wallet towards the end of 2015. Since then, the app has been downloaded 600,000 times in Hong Kong. It is widely accepted in retail outlets, has 370,000 registered users in its peer-to-peer (P2P) network, and is the only non-cash way of paying for a local taxi.

“It’s a combination of being in the right place at the right time,” says Carlos Salas, co-founder & CEO of Nogle, a Taiwan-based VC firm and accelerator. He adds that TNG’s emergence coincided with an attitude change by the Hong Kong government and the encouragement of fintech start-ups. This was formalized through the “sandbox” initiative that enables fintech products to be tested in a controlled environment, but the mobile wallet space is evolving quickly.

“Now if a company wanted to go into this market it would require a lot of capital, more requirements and compliance, and so only the big companies would be able to do it,” Salas notes.

Nogle provided seed funding to TNG last year and recently re-upped in the company in a $115.3 million Series A round led by NewMargin Capital. A strategic partnership between Chinese PE firm Infinity Group and Hong Kong’s KBR Fund Management also took part in the round, which gives TNG a post-transaction valuation of $565 million.

While the company was awarded a license alongside the likes of Alipay and WeChat Pay, its ambitions are different. TNG positions itself as a financial services provider to Asia’s estimated 1.2 billion unbanked population. The company formed a “global e-wallet alliance” last year that covers China, the Philippines, Indonesia, Singapore, Malaysia, Thailand, Vietnam, India, Sri Lanka, Bangladesh, Nepal and Pakistan.

Many of these markets have local incumbents offering certain mobile wallet services like money transfers, remittances, bill payments and SIM card top-ups, but Salas argues TNG is differentiated by its technology. “Those remittance businesses are not really in the technology space, they are brick-and-mortar and more expensive,” he says. “You have to convert consumers from brick-and-mortar to technology solutions, and that’s what TNG is doing.”

This technology advantage is also expected to prove significant in the next generation of fintech solutions that TNG is in the process of adopting, such as blockchain technology, artificial intelligence, chatbots, and electronics know-your-customer (KYC) platforms.

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• Topics
• Greater China
• Financials
• Technology
• Consumer
• Early-stage
• Hong Kong (China)
• NewMargin Ventures
• Infinity Group
• TMT