WHO WE ARE

AC Ventures is Ayala’s platform for peeking into new technologies and business models that are relevant to the group. It aims to be an enabler by investing in adjacent businesses that are complementary to Ayala’s existing business units and a pathfinder by investing in new sectors, emerging trends, and innovative businesses. Through AC Ventures, Ayala intends to embrace disruptive technologies and business models as it endeavors to grow its existing businesses and explore new verticals. In 2020, AC Ventures together with various Ayala group business units, launched a US$180 million fund called Ayala Corporation Technology Innovation Venture Fund or ACTIVE Fund. The fund is managed by Globe’s corporate incubator, Kickstart Ventures.

AC Ventures holds a 44.7% stake in Zalora Philippines, the largest fashion and lifestyle ecommerce platform in the country as well as a 5.9% stake in Mynt, a fintech venture with Globe and Ant Financial that operates the fast-rising digital wallet GCash. In 2019, AC Ventures in partnership with BPI and the Indivara Group of Indonesia invested in fintech platform Cartera Exchange.

Further, AC Ventures oversees Ayala’s offshore investments through AG Holdings. Over the past several years, AG Holdings has served Ayala’s vehicle for its investments in the US and Asia as well as its interests in private equity and real estate funds, property co-investments, and technology business ventures. In 2019, Ayala made its first significant foray into Myanmar through AG Holdings, investing US$237.5 million for a 20% stake in diversified conglomerate Yoma group.

MARKET OUTLOOK

The ASEAN region holds tremendous potential in reaping the benefits of this digital shift, with a young and tech-savvy population boosted by improving economic fundamentals. According to a 2020 study by Google and Temasek, Internet usage in South East Asia continues to grow, with 40 million new users in 2020. COVID-19 has ushered in an era of “massive digital adoption” with eight out of 10 Southeast Asians viewing the Internet and technology as very helpful amidst the pandemic. The study also forecasts that the Internet sector will remain resilient and is poised to grow to over US$300 billion in gross market value by 2025.

The same study cites that the internet economy in the Philippines has a lot of upside among the six largest ASEAN economies. It is expected to grow to US$25 billion by 2025. The country continues to have the second largest internet user base of 68 million users in Southeast Asia. However, challenges such as the speed and affordability of internet access and the insufficient adoption of digital payment solutions continue to persist.

Lastly, Myanmar has moved to liberalize its economy and catch up with its ASEAN counterparts. Myanmar’s underpenetrated market is the second fastest growing in the region, with GDP growth of over six percent over the last three years. With its unique geographic location between India and China, Myanmar incentivizes the construction of multiple infrastructure projects and Special Economic Zones. Its government’s broad liberalization initiatives have also opened several key sectors to foreign investment, with real estate alone acquiring over US$4 billion in foreign investments since 2012 when Myanmar transitioned to a democratic rule.

However, on February 1, 2021, following a general election where Aung San Suu Kyi, State Counsellor of Myanmar, won by a landslide, the military seized control of the parliament on claims of election fraud. A one-year state of emergency was announced where the military will take over the affairs of the country, pledging a new election after while it operates in the meantime in the bounds of law.

Protestors took the streets of Yangoon, calling for the release of Suu Kyi and the legitimacy of the previous elections.

The ongoing protests has led to the arrest of over 2,000 individuals and a death toll of more 300 people as of the time of this writing. The political tension has affected many parts of the country’s economy such as supply chains that have been affected by boycotts of workers, banks with intermittent operations leading to disruptions in payrolls, and agriculture that has seen farmers struggling to move their crops to the market. Moreover, the incident has prompted sanctions from other nations, particularly the western world, putting further stress on foreign investments into Myanmar.

CAPITALS

Financial

  • Capital / investments

Manufactured

  • Logistics infrastructure 
  • Real estate development
  • Payments systems
  • Industrial facilities

Social and Relationship

  • Affiliation with Ayala brand
  • Loyal active customer base
  • Partnership with retailers, agents, and suppliers
  • Investor and other professional networks

Intellectual

  • Proprietary software systems
  • Brand
  • Innovative mindset
  • Tech-grounded business models

Human

  • Zalora: 353 employees
  • Mynt: 746 employees

GCash serves as a safe payment channel that eliminates person-to-person contact and money handling in physical transactions.

HOW WE CREATE VALUE


Pathfinder
Explore new disruptive trends, businesses, and relationships

Enabler
Enable adjacencies and synergies that complement the strategies of current businesses

BUSINESS REVIEW

AG Holdings
In Asia, AG Holdings has committed a total of US$30 million in varied funds that would serve as windows to disruptive technologies, evolving trends, and new markets. These include AG Holdings’ investments in Alibaba’s New Retail Strategic Opportunities Fund, an investor in traditional brick-and-mortar retail businesses in China, Arbor Ventures Funds I and II, global fintech-focused venture capital funds, Ikhlas Capital, which focuses on investments in sectors that are expected to benefit from ASEAN megatrends such as consumer, financial services, transportation and logistics, and Indies Pelago, a private equity fund investing in mid- to late-stage pre-IPO tech companies in Southeast Asia.

AG Holdings also continues to hold its investments in various private equity and venture capital funds, the largest of which is with ARCH Capital, a real estate-focused fund with projects in Hong Kong, Macau, China, Taiwan, Australia, Thailand, Vietnam, and the Philippines. In 2020, AG Holding’s investment in the ARCH Funds received US$3.2 million in distributions. ARCH Funds I and II are in the late stage of the funds’ life and are currently in the process of exiting its remaining investments in Macau and China, while ARCH Funds III and IV are in the value creation stage for capital deployed.

Zalora Philippines
In 2020, Zalora Philippines’ net merchandise value, the value of goods traded through its platform net of discounts and returns, continued to trend upward. Despite the disruptions brought about by COVID-19, NMV still grew over 31% year-on-year as a result of a strong rebound in consumer demand in the second half of 2020 supported by the introduction of top brands such as H&M and new segments, specifically, essentials, home living, and kids. During the year, Zalora Philippines through Entrego, finished construction of a new state-of-the-art e-fulfillment center. The new facility is set to centralize Zalora Philippines’ operations and double overall productivity.

31%Growth in Zalora’s NMV

Mynt
Mynt is been well-positioned to assist millions of Filipinos to cope the pandemic, providing ease and convenience. The lockdowns and social distancing measures highlighted the value proposition of GCash to a wider user base, generating great momentum for adoption and further expansion. The app has been the top Finance App currently throughout 2020 according to AppAnnie, surpassing competition in the Philippine mobile wallet space while recording a 3.6x year-on-year increase in engaged monthly transacting users. By the end of the year, the GCash ecosystem had grown with over 120,000 accepting merchants, over 33,000 cash-in agents, enabling transaction growth to cash-in, buy load, transfer cash to and from bank accounts and wallets via the Instapay facility, pay monthly bills, save money at good rates, borrow money, buy insurance, and invest in funds.

2020 was also a banner year for fundraising. Mynt raised over US$175 million of fresh capital in the year, both from its existing shareholders Globe and Ant Financial, as well as new investor ASP Philippines LP, a limited partnership fund managed by investment firm Bow Wave Capital Management. The fundraise places Mynt to near-unicorn status, earning a post-money valuation of close to US$1 billion. Proceeds will be used to further spur the growth of the business, thereby contributing to the digitization of the economy and the financial inclusion of more and more Filipinos, especially in the post-pandemic world.

$175MFresh capital raise by
Mynt in 2020

3.6XIncrease in Gcash’s
engaged monthly
transaction users

Cartera
In July 2019, AC Ventures invested in a 25.5% stake in Cartera, another fintech venture in partnership with BPI and the Indivara Group, one of the largest technology investment holding companies in Indonesia. Cartera aims to provide a digital payment and loyalty exchange platform which integrates various payment systems, including e-wallets, credit cards, and banks. The Cartera platform will have the capability to allow for interoperability between different payment ecosystems, which would promote a more extensive adoption of digital payments in the country.

ACTIVE Fund
AC Ventures committed to invest US$100 million out of the US$180 million in the Ayala group’s newest venture capital fund, ACTIVE Fund. In partnership with Kickstart Ventures, ACTIVE Fund will invest globally in tech and traditional areas such as data and analytics, artificial intelligence, cloud computing, real estate, retail, and water. Through the ACTIVE Fund, the Ayala group hopes to build on an ecosystem that can provide visibility into these emerging trends and gear up its businesses for the future. In 2020, the ACTIVE Fund deployed US$5 million in capital across three new deals that present compelling visions for the future of entrepreneurship, education, and point-to-point laser communication.

$100Mcommitted out of the
US$180 million in the
Ayala group’s newest
venture capital fund,
ACTIVE Fund

Yoma Group
Founded by Serge Pun in 1962, the Yoma group operates over 30 different subsidiaries with operations primarily in Myanmar and is listed in the Singapore Stock Exchange. The US$237.5 million investment of Ayala supports its strategy to pursue international expansion opportunistically, particularly in markets and sectors where it can bring its strengths and expertise. Myanmar is an underpenetrated frontier market with a promising economic growth story, supported by its government’s broad liberalization initiatives. As a diversified conglomerate in Myanmar with overlapping interests in real estate, power, financial services, automotive, and healthcare, the Yoma group will serve as Ayala’s platform for strategic investments in the country.

In relation to the events that transpired in Myanmar on February 1, 2021, some of the Yoma group’s businesses were disrupted because of power and telecommunications networks going offline momentarily. Some of the group’s operations such as Wave Money were disrupted intermittently due to the outages in the infrastructure but remains in operation today. Its restaurants such as KFC and YKKO continue to be open on limited capacity albeit due to COVID-19 restrictions. Construction activities for its real estate projects likewise continued save for Yoma Central, which is located in the city center, to avoid congregation of large masses of people during this time.

STRATEGY 2020 PERFORMANCE 2021 PRIORITIES
Enable new opportunities for the Ayala group
Invest in adjacent business that complement the group’s portfolio
  • Launched and deployed first investments in the ACTIVE Fund
  • Gained exposure in Myanmar’s emerging economy through the Yoma investment
  • Consider co-investment opportunities alongside the ACTIVE Fund
  • Engage and strengthen relationship with the Yoma group to realize synergies and identify co-investment opportunities
Gear up tech businesses for scale and profitability
Support tech investees to attain sustainable and profitable growth
  • Reached positive margin after direct cost in Zalora
  • Significantly grew active user base of GCash and onboarded a new strategic investor in Mynt
  • Launched the Cartera joint venture with BPI and Indivara
 Forge partnerships with the wider Ayala group through the Cartera platform and accomplish budget and operational ambitions for Zalora and Mynt
Strengthen AG Holdings’ offshore investments
Manage offshore investments to maximize gains for Ayala Existing investments generated value and returns Strengthen existing relationships with partners and remain open for pockets of co-investment opportunities
THE VALUE WE CREATE
  • Develop synergies within the Ayala group
  • Grow Ayala’s portfolio of businesses and enter into new ventures, technologies, and sectors
  • Explore innovative trends and business models that could transform the Ayala group’s various businesses

Zalora expanded its offerings during the pandemic to better cater to the needs of customers. It introduced other product line, such as Essentials, which brought in numerous brands in 2020.

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