StockTalk(7.11): DBS sells majority stake in AXS to Tower Capital Asia: what's next for payment services in Southeast Asia?
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DBS Bank has agreed to sell a 77.8% stake in payment services provider AXS to private equity firm Tower Capital Asia. While DBS will retain a minority stake of 9.9%, Tower Capital Asia will become the largest shareholder of AXS. The private equity firm plans to support AXS in its growth plans, which include expanding its presence in the Southeast Asian payments ecosystem and transforming it into a regional cloud-based payment solutions provider.
According to Tower Capital Asia, AXS' current operations will not be immediately impacted by the acquisition. However, the private equity firm plans to invest in technological innovation and expand AXS's services while strengthening its business operations. Jeffrey Goh, co-founder of AXS and former CEO of Nets Group, is set to return to the company after regulatory clearance.
The sale of DBS' stake in AXS is expected to close by August and will not significantly impact the bank's earnings or net tangible assets. Shares of DBS were up after the news.
With plans to expand AXS' services and transform it into a regional cloud-based payment solutions provider, how will this acquisition impact the payments industry?
And with Jeffrey Goh returning to the company, how will his experience drive innovation in the payment services sector?
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ZnWC : DBS is not the first time to sell stake to focus on core business. Last year Singtel to sell 3.3% stake in Bharti Airtel for S$2.25 billion also received some attention. Although the reason for trimming the stake was different, I'm tempted to make a comparison.
What make DBS selling AXS's share surprising is the bank is no longer the largest shareholder and the timing of the sale. I don't think DBS is going to deposit more fund in MAS after the sales. My speculation is DBS wants to focus on it's core business.
I don't think payment business will be affected by this sales. What's important is what Jeffrey Goh will do to bring positive impact to the company.
Kopikarp : The acquisition of AXS signifies a notable shift in the payments industry, particularly due to the fact that AXS seems to lack an economic moat and has been somewhat tardy in entering the cloud payment arena. Established players like Grab and the interbank system, PayNow, have already captured significant market share, making it challenging for AXS to secure a strong foothold. Additionally, DBS Bank's decision to sell a majority stake in AXS could be interpreted as an acknowledgment that the company may struggle to compete in this increasingly crowded market. Therefore, while the acquisition could potentially transform AXS into a regional cloud-based payment solutions provider, its overall impact on the payments industry may be limited.