Singapore-based Senjo Group, a young payments operator and fintech investor, is looking to acquire payments-related businesses across Southeast Asia. Its goal is to create a pan-Asia payments ecosystem.
It’s likely first target is a payments gateway in Southeast Asia associated with the gaming industry, says Sam Evans, head of Senjo Ventures, the group’s investment arm.
He defines a payments gateway as a company, such as an e-commerce player, that accepts payments and works with credit and debit cards or services such as PayPal.
Senjo Group was established in 2015 by private investors. It has about 20 portfolio companies across payments, trade finance and e-commerce.
The heart of the firm’s venture investing is in payments, and its goal is to invest in and combine digital payment platforms, in order to bring scale to the region’s fragmented markets.
Betting on gaming
But it is building this strategy on an acquisition made in the U.K., not Asia: in December 2016, it announced a €29 million deal for Kalixa from GVC Holdings, which it closed earlier this year.
Kalixa provides payment services to gambling concerns, among other clients, and this made it attractive to Senjo’s Asia ambitions. “We really wanted Kalixa’s people, because they understand gaming platforms and how to mitigate risk and fraud,” Evans told DigFin. “As gaming expands in Asia, we’ll continue to make investments” in payment gateways or other players.
The reason Senjo likes gaming is because its related payment gateways must deal with any card, any issuer, or any scheme, because these companies deal with so many types of customers, and require sophisticated risk management.
Southeast Asian governments are looking at digital currencies, and have many unbanked citizens who could convert cash into digital assets. “That represents a huge opportunity for prepaid cards and debit cards,” Evans said. “We’re looking to invest in a payments processor with a modern platform that caters to digitalization.”
The aim is for Senjo to use its various acquisitions to create something bigger than the sum of the parts. Local gateway companies may know nothing about gaming, but they’ll understand local payments transactions. Kalixa’s expertise is in controlling risk and fraud in gaming payments, but it wouldn’t know how to onboard a customer in local markets.
If an initial deal in an emerging Southeast Asian market that Evans is now focused on is a success, Senjo will look to other gambling-related gateways in Asian markets with casinos.
Going for the middle
But Evans says this is not a niche play; gaming is just an inroad. “We’re looking at separate gateway companies for more generic retail payments. Banks are leaving this space. They only want to process payments for big, low-risk companies. This is about the middle market.”
Senjo has a variety of other companies in areas as diverse as payments for sovereign airlines to a company in India that is digitalizing anti-cheating processes on school exams. Sometimes the companies don’t easily fit together and some may be standalone investments.
But Senjo’s venture arm is engaged in fintech investments, as technology is often the thread that can bind these disparate assets. “We invest in both processing companies and in disruptive tech,” Evans said, such as Tjaara, a B2B commerce platform connecting China-based manufacturers to global customers. It is considering a similar deal for supply-chain financing in a large Southeast Asian market.