KUALA LUMPUR (June 25): Great Eastern has made a “strategic” investment of US$70 million (RM299.36 million) in a newly formed digital financial services (DFS) unit of Axiata Group Bhd.

In announcing this today, Axiata’s digital services arm, Axiata Digital Services Sdn Bhd, said Great Eastern will hold a 21.875% stake in the new unit, Boost Holdings Sdn Bhd, with Axiata Digital controlling the remaining stake.

Boost Holdings comprises Boost (an e-wallet app available in Malaysian and Indonesia), Aspirasi (a micro-financing and micro-insurance digital financing provider that has disbursed US$20 million in loans to-date), apigate (a leading regional direct carrier billing (DCB) payments player) and Trust Axiata Digital Ltd (a joint venture with a local bank in Bangladesh).

Axiata Digital CEO Khairil Abdullah said the proceeds from the investment will fund expansion plans for the DFS business over the next year in Malaysia and the region, which includes securing Boost’s next level push to develop its ecosystem of merchants and customers, enhancing Aspirasi’s credit scoring technology, and potentially housing the digital bank.

“Over the past two years, we have been sharpening our focus on building and enhancing our digital financing services brand using digital technologies and our telco assets to serve the underserved.

“With the investment from an esteemed partner like Great Eastern, we hope to further leverage emerging technologies to develop distinct financial and insurance innovations for consumers at the bottom of the pyramid, as we continue on our journey to narrow the financial inclusion and protection gap in the country,” Khairil told a press conference.

Meanwhile, Axiata president and CEO Tan Sri Jamaludin Ibrahim noted that Great Eastern is a close insurance partner of Aspirasi with a long-term commercial agreement signed in 2019. 

“As a group committed to creating sustainable business value across all our markets, Axiata has been consistent in our pursuit to aggressively grow our digital ventures,” he said. 

Great Eastern CEO Khor Hock Seng said the strategic investment will enable the company to participate in Axiata’s growing fintech expansion plans in the region.

“By leveraging on Axiata’s network and digital capabilities, and partnering with them, we want to grow our reach into new customer segments to provide for their financial needs and ultimately improve their lives,” said Khor.

Notably, this marks the third strategic investment secured by Axiata Digital from well-established financial industry players. 

In 2018, Sumitomo placed an investment of US$20 million (RM85.53 million) into its digital advertising business ADA and in 2019, Mitsui channelled an investment of up to US$50 million (RM213.825 million) into the company.

Earlier this year, Axiata Digital expressed interest in the digital banking licences to be offered by Bank Negara Malaysia and has begun work to prepare for an application.

The company acknowledges the challenges faced in starting a digital bank. “We don’t believe that we can do it alone. We believe that we need to bring in strategic/consortium partners to bring in certain capabilities that we don’t have at Axiata Digital,” said Khairil.

Axiata’s share price closed nine sen or 2.59% lower at RM3.39, valuing the group at RM31.17 billion. Over the past year, the counter has fallen by 32% from RM5.