Finquest, a big-data company based in Singapore established in 2016, wants to elbow its way into Asia’s mid-market M&A industry, particularly in the tech space. It has just acquired another fintech startup, Detecq, and is incorporating its client base.
Tanguy Lesselin, co-founder and CEO, said Finquest uses data points on 1.2 million companies to suggest target companies for investors, advisors, or businesses. It also helps companies identify avenues to raise capital. It does not advise or perform due diligence.
Finquest, which focuses on Asia’s mid-market M&A space (meaning deal sizes from $10 million to $200 million), has acquired another startup, Detecq, in order to bolster its focus on technology, one of the hottest M&A segments in the region: the first nine months of 2016 saw global tech M&A aggregate value stand at $349.4 billion, a 30% increase versus the same period in 2015, Finquest says.
According to Clifford Chance, Asia Pacific saw total M&A activity touch $738 billion in 2016, although this aggregate was down 22% from 2015 values. Inbound M&A to Asia Pacific was $78 billion, and outbound totaled $337 billion.
As for the mid-market segment in Asia Pac, Mergermarket tallies $187.3 billion of mid-market M&A, or about 40% of the global total for mid-market deals in 2016.
Detecq was founded in 2015 by Zi En Wong to serve as a digital marketplace for Asian tech M&A. Finquest covers all sectors.
Lesselin, an ex-Boston Consulting Group consultant and co-founder of a number of companies in his native France, told DigFin Finquest’s clients are primarily in Europe and Asia Pacific.
They include around 13,500 people working as institutional investors (including private equity firms, family offices, and large fund groups, including those looking to make direct investments), about 3,000 M&A advisors (such as investment bankers and lawyers) and mid-sized companies looking to either buy or sell.
Finquest helps all of the above customers identify counterparties via algorithms that scour data, much of which the company pays to access, or scrapes from social media and corporate or news websites. Contact information is particularly useful. It charges $10,000 to $50,000 flat fees, scaled by frequency of use or number of searches, in order to fine tune a customer’s shortlist of counterparties and related contact points. Finquest’s small team of founders adds a layer of human experience to ensure its curated shortlist meets a client’s requirements.
“Private equity firms aren’t used to paying for a service up front,” Lesselin said. “There is a leap of faith: they only see the value from our service after the introductions are made.” Nonetheless he says the company has done work for private-equity firms, private banks, investment banks and multinational corporations, but he declined to name them. He says initial deals have been focused on equity, but Finquest is now getting search requests for pre-IPO and debt financings too.
Reliance on data analytics can create far more potential deal ideas than relying on human networks, Lesselin says; indeed, the next phase for his company is to optimize the data because it sometimes throws up too many ideas about relevant target companies.
Finquest opened a Hong Kong sales office and has a presence in Luxembourg. At some point it might expand its business beyond Asia Pacific back to Europe, but Lesselin was non-committal about timeframes. For now the focus remains on helping European companies connect with Asian companies “they never heard of”, Lesselin said – and especially in the tech sector.
“Tech is now 15% of M&A but it is very specific, with its own investor base,” he said. “Demand is growing for tech acquisitions, because all kinds of multinationals are looking to add digital assets.” Hence the recent deal to acquire Detecq and fold it into the Finquest platform.