AirAsia Group Bhd (AAGB) ramped up its digital presence in Thailand with the purchase of two Thai technology companies for a total of $50 million cash consideration.
AAGB’s AirAsia ADS Sdn Bhd is buying 100 per cent of Velox Technology (Thailand) Co Ltd for $40 million from Velox South-East Asia Holdings Pte Ltd (VSEA), Go-jek Singapore Pte Ltd and Velox Technology South-East Asia.
AAGB also said AirAsia Digital Sdn Bhd had proposed to acquire the 100 per cent stake in Velox Fintech Co Ltd for $10 million from the three companies.
The acquisition of Velox Technology would be done via AirAsia ADS Sdn Bhd (AirAsia SuperApp). Velox Technology provides mobile applications to connect individual drivers, merchants and other service providers with registered users who request services.
AAGB intends to fund the purchase via new shares of AirAsia SuperApp to the sellers without incurring interest expense as compared to bank borrowings.
It explained that the issuance of new shares would allow it to preserve its cash reserves which can be utilised for its business and working capital requirements and for future potential opportunities to expand its existing businesses.
“The proposed acquisitions provide AirAsia Superapp with immediate access to an existing e-commerce business with registered food merchants, delivery partners, and on-ground resources to jump start AirAsia SuperApp’s e-commerce business and reduce cost and time to enter the Thailand consumer internet market.
“Subject to integration and successful migration of users and merchants, AirAsia SuperApp would have access to an incremental customer base, which it could cross-sell and up-sell other AirAsia SuperApp services to these customers and drive further topline growth for AirAsia SuperApp,” it said.
AAGB added the proposed acquisitions are part of AirAsia SuperApp’s strategy to expand its footprint in other ASEAN markets.
It added that with Thailand’s growing economy and the Thai government’s continuous efforts to become an upper-middle income country, there is an increasing awareness to improve the standard of living and develop a strong e-commerce and financial inclusion in Thailand.
“Based on this, our company believes that there are strong growth opportunities available in Thailand for the e-commerce and payment space,” it added.
As for the acquisition of Velox Fintech, AAGB said this would enable it to expand e-money products for AirAsia Digital group companies that currently operate e-money products and services.
It is anticipated the speed of deployment in the market will be accelerated by virtue of acquiring the regulatory assets.
“The proposed acquisitions would enable us to promote the superapp platform with lifestyle product offerings, which would further increase the value of AAGB’s digital assets thereby strengthening AirAsia Group’s position to recover on a stronger footing from the Covid-19 pandemic,” it said.
THE STAR (MALAYSIA)/ASIA NEWS NETWORK