SoftBank Vision Fund II is injecting $250 million for more than 10% stake in bKash, according to Dr Ahsan H Mansur, chairman of Brac Bank, the majority stakeholder in the country's leading mobile financial services (MFS) provider.
The development has already raised bKash's valuation to over $1,700mn and as soon as the Japanese tech investment giant's subscription for the fresh shares completes, the valuation would increase to around $2 billion, equivalent to more than Tk17,000 crore, he said in a telephone interview with The Business Standard on Saturday.
Valuation is the total price of a company the market is ready to pay.
The Brac Bank board on Wednesday approved the share subscription agreement between bKash and the incoming foreign investor alongside the share purchase agreement among the existing stakeholders and the new investor.
SoftBank Vision Fund II is set to own a 20% stake in bKash and it would buy less than a 10% stake from the undisclosed existing shareholders other than Brac Bank which has already announced that the deal would not reduce its shares in the MFS provider.
Doubling valuation in less than four years
In 2011, bKash started its business as the pioneering MFS provider in Bangladesh by Brac Bank and Money in Motion LLC USA.
Later, the company got its shareholders International Financial Corporation in 2013, Bill and Melinda Gates Foundation in 2014, Alibaba Concern Ant Financials in 2018.
When Ant Financials bought bKash's 20% stake, the MFS provider was valued at $880mn and it took less than four years to more than double its valuation.
Asked why Brac Bank is holding its investment in bKash tight despite the growth in valuation, Dr Ahsan H Mansur said the private lender believes bKash is worth much more than the value discovered to date.
During Ant Financials' investment, bKash had less than 4 crore customers, Tk1,880crore in annual revenue and Tk2.5 lakh crore in transactions through cellphone accounts annually.
The customer base has now crossed the 5.1 crore mark, the revenue stood at over Tk3,000crore and the transactions at Tk5.2 lakh crore in the last 12 months.
However, bKash is counting moderate losses for the last two years mainly owing to its costs of business expansion amid growing competition by Nagad, another rising player in the MFS sector.
Last year, bKash incurred a loss of Tk81 crore and it seems investors are not bothered at all due to the nature of the business that prioritises scale for market leadership, growth, and innovation.
bKash is the first unicorn of the country and keeps growing to come up as a gigantic public company in the fintech arena someday.
Startups with more than $1bn in valuation are called unicorns.
Dr Ahsan H Mansur did not disclose the names of investors who are going to share some bKash stakes with the fund led by Japanese tech investment giant SoftBank.
SoftBank, which leads the SoftBank Vision Fund I and SoftBank Vision Fund II having a gigantic total size of around $150bn, is increasing its presence in the growing markets of the Indian subcontinent.
SoftBank is a significant investor in India's MFS giant Paytm and E-commerce giant Flipkart, while bKash is the first Bangladeshi company to attract it.
Brac Bank shares soared to the upper circuit breaker at Tk48.7, gaining 9.9% at the Dhaka Stock Exchange on Thursday following the bKash investment disclosure.
A circuit breaker does not allow a stock's price to move beyond a predetermined level in a single session.