Razer has proposed to acquire South-east Asian virtual gaming credits and e-payment platform MOL Global – a company in which it already has a nearly 35 per cent stake – at a valuation of US$100 million.
It is a move market watchers said will do more than merely expand Razer’s gaming ecosystem and business in the region; it will also accelerate Razer’s growth in a new business category – e-payments – and put the company in a better position to make good on its proposal to Prime Minister Lee Hsien Loong to deliver a nationwide cashless solution by 2020.
Razer co-founder and chief Tan Min-Liang said on Monday that the acquisition will enable Razer to do three things:
- Take over one of South-east Asia’s largest e-payment networks;
- Deepen its presence in the currently “under-served” region; and
- Create one of the world’s largest virtual credits platforms for gamers.
In an exclusive interview with The Business Times, Mr Tan said: “The MOL acquisition gives colour to what we’re building for RazerPay. Now, we definitely have capabilities on a technical level, and merchants and key partners on board. We will also operate one of the largest e-payment operations in South-east Asia.”
Last August, he took up Mr Lee’s challenge over Twitter to draw up an e-payment proposal to propel Singapore into the ranks of cashless societies. The following month, Razer delivered a proposal to develop and deploy a new e-payment solution, RazerPay, for which it would commit S$10 million in seed funding.
On Monday, Mr Tan did not disclose when RazerPay will launch in Singapore, but said that when rolled out, it would enable cashless capabilities not just in Singapore, but also in South-east Asia. He also said it would be complementary and accretive to Razer’s current gaming business.
BT understands that up till Monday, market watchers had mostly dismissed Razer’s e-payment aspirations in Singapore as “a load of hot air” and “just another player jumping on the cashless bandwagon”.
But the gaming company’s announcement of its proposed buyout of MOL has made the naysayers sit up. Many among them now say the move will enable Razer to build up its e-payment capabilities.
Anthony Chiam, head of financial services at market research firm J. D. Power, said: “With MOL’s reach and access to mobile payment and electronic distribution channels, which accept major credit cards and online banking from over 100 banks worldwide, Razer will be in a stronger position to develop an e-payment platform strong enough to transform Singapore into a cashless society.”
Michael Yeo, research manager at market intelligence firm IDC, added that the deal will let Razer tap MOL’s “large breadth of experience in payments in South-east Asia” and “quickly get itself up to speed with its competitors on payment infrastructure and merchant relationships”.
But Adrian Chng, chief of fintech consultancy Fintonia Group, said the acquisition of MOL will help Razer “only in a small way”.
He told BT: “The benefit is relatively small, as MOL is primarily a gaming virtual credits and e-payment platform, not a comprehensive e-payment platform business with a significant number of merchants and consumers.”
He said it is nonetheless a savvy acquisition for Razer, as it will enable it to control more of its gaming payments and its own funds within the platform. “This is likely to be the primary driver, than to acquire the capabilities required to build a general e-payment platform, which would require significant investments in merchant acquisition, etc.”
Mr Chiam noted that another key challenge would be customer acquisition and competing with e-payment players such as Grab, which has the “added advantage of having a consumer base already established”.
On Monday, Razer, which is dual-headquartered in Singapore and San Francisco and listed on the Hong Kong Stock Exchange, said it will pay about US$61 million to acquire 65.1 per cent of MOL’s issued share capital, which represents the remaining shares in MOL it does not already own.
Its proposed acquisition of MOL will be by way of a statutory merger, upon which MOL will become a wholly-owned subsidiary of Razer, creating one of the world’s largest virtual credits platforms for gamers under a single entity, said Mr Tan.