Former college dropout has come long way since selling PC components to classmates
Vision to be dominant e-payment platform across emerging markets of Brazil, SEA, Turkey
WITH the filing of its initial public offering (IPO) prospectus with the US Securities and Exchange Commission on Monday (July 15) in New York, the wheels are set in motion for an expected September listing of MOL Global Inc on the Nasdaq market.
It is expected to raise US$300 million (RM960 million) with a market valuation of US$1 billion (RM3.2 billion).
For founder Ganesh Kumar Bangah, his entrepreneurship journey which began in the mid-1990s when he used to take a bus into Singapore to buy PC accessories to sell to his high school classmates in the southern Malaysian state of Johor, is about to culminate with MOL Global becoming the first South-East Asian Internet company to list on Nasdaq.
Ganesh, a Digital News Asia Digerati50, currently has 11.3% of MOL Global – not bad for a college dropout. His stake will get diluted after the listing process but will likely be much more valuable.
The prospectus for MOL Global makes for fascinating reading, with detailed information about its history, the risks to its business, the opportunities ahead, and the acquisition price of all the investments it has made in the past.
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There is also a new vision statement for the company that previously described itself as Asia’s leading e-payments provider. In the prospectus however, Frost & Sullivan, which provides a market analysis, describes MOL Global as the largest alternative e-payment enabler for online goods and services in South-East Asia by payment volume.
Yet, if you add Turkey and Brazil into the picture, MOL Global is already one of the leading e-payment platforms across emerging markets. And it has incorporated its desire to dominate this space into its vision statement which declares, “Our vision is to be the dominant e-payment platform for digital services across emerging markets.”
It is using online gaming as the key hook to entice consumers. As Ganesh (pic) has noted in the past, “Gaming is the first activity that leads people to pay for goods and services online.”
Consumers will typically pay for games and for virtual goods to be used in the games. Virtual goods purchased via PCs are called in-game purchases, or in-app for mobile purchases.
In the MOL Global prospectus, it mentions having “thousands of online games and other digital content, from over 450 content providers.” The company already claims 25% of the online gaming revenue across this emerging market segment.
In no small part, this has been due to its strategic acquisitions in Turkey in March 2013, and before that in the United States with Rixty.com in October 2012. Rixty’s main interest to MOL Global was its strong market presence in Brazil. And let’s not forget its acquisition in Vietnam in April 2013.
Having the content is one thing, as is making acquisitions for market share. What is now clear is that MOL Global’s understanding of the characteristics of its South-East Asian markets, together with Turkey and Brazil, has been key to its success as it went about building a payment platform that offered both physical and virtual channels to customers.
Building a physical payments channel may not have been sexy for an Internet company but it addressed a key characteristic of its markets – that is, the low penetration of credit cards and bank accounts among consumers.
Frost & Sullivan reports that more than one-third of the population of Thailand and Malaysia do not use financial services. In Brazil and Turkey, that metric is nearly half of the population, while in the Philippines, Vietnam and Indonesia over two-thirds of the population do not have a bank account or credit card.
Having covered MOL and Ganesh over the years, I remember being surprised by his statement a few years back that MOL’s core value is in the distribution platform it provides.
Ganesh is happy with this direction because “you cannot copy distribution, especially the physical outlets. Technology, on the other hand, can be copied,” he shared with me then.
The prospectus clearly paints this picture, stating that MOL Global offers a payments platform that facilitates online and mobile commerce for consumers in emerging markets by providing “a vast network of payment channels that accepts payment using cash and online methods.”
The physical distribution network comprises more than 920,000 physical locations in 13 countries across four continents, with physical locations in other countries through aggregators that distribute their products.
In the past, Ganesh has described the physical outlets MOL Global has as a “formidable barrier to entry.”
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