What does SoftBank buying bKash shares mean for Bangladesh?

Japanese multinational conglomerate SoftBank Group Corporation has decided to invest in leading mobile financial services provider bKash through the purchase of 20% of its shares.

But what does that mean for the Bangladeshi economy?

Experts and industry insiders think that apart from having the potential to develop the local fintech market and enable more financial inclusion among consumers, the investment will also pave the way to attract global investment for other entrepreneurs and innovators. 

They also believe that this could induce market standardization and knowledge transfer.

“We always welcome foreign partnership as it helps transfer of knowledge and technology,” said Syed Almas Kabir, president of Bangladesh Association of Software and Information Services (BASIS). 

“We also want to adopt the best practices from their management. Investment by renowned foreign tech giants helps build confidence in our industry, both locally as well as internationally. This also enhances the image of the country,” he added.

Kabir further said that this means that Bangladesh will be witnessing bKash becoming its first unicorn — a startup having a valuation worth $1 billion.

Kamal Quadir, founder and CEO of bKash, said in a statement that this is a significant vote of confidence on the current and future growth trajectory of bKash, as well as the economy. 

“This will also pave the way to attract global investment for other entrepreneurs and innovators of Bangladesh with the precedent of the successful digital transformation of our country and the economy," he added.

According to bKash, the investment will be used to further propagate financial inclusion by building a stronger digital financial ecosystem in Bangladesh through its existing robust and customer-friendly platform, increase digital adoption and enhance consumer experience with the best technology adoption available in the world.

Greg Moon, managing partner at SoftBank Investment Advisers, also believes that by broadening access to financial services to both banked and unbanked populations in Bangladesh, bKash will play a critical role to sustain the economic development of the country. 

Launched in 2011 by founding shareholders Brac Bank Limited and Money in Motion LLC, bKash now provides a range of mobile financial services with a large network of agents contributing to livelihoods throughout urban and rural areas of Bangladesh. 

Currently, it serves 56 million registered customers according to the mobile financial service provider.

"We believe that bKash is strengthening Bangladesh's financial system by providing a safe and convenient way for people to adopt digital payments and the investment will enable bKash to be more affordable and reliable, as well as accessible and safe,” Moon stated.

As per an agreement, both primary and secondary investments will be made by SoftBank in bKash, whereby SoftBank will acquire 20% fully-diluted shares of the MFS provider. 

However, there will be no changes in the number of shares held by Brac Bank in bKash, keeping it the majority voting shareholder.

The existing shareholders of bKash are Brac Bank, Money in Motion LLC, the International Finance Corporation, Bill and Melinda Gates Foundation, Alipay Singapore E-Commerce Private Limited, and Board of Trustees of bKash Employee Share Option Plan Trust.

The new investor will get some fresh shares and buy stakes from other existing investors.

Brac Bank has already approved the execution of a share purchase and subscription agreement among bKash and its existing shareholders.

Following the announcement, Brac Bank saw a 9.97% rise in share prices to Tk48.7 on Wednesday at the Dhaka Stock Exchange.