By Kirby Lam Nov 15, 2022
Globally, the digital economy plays an important role in driving inclusive growth. With close to 60% of the global population digitally connected today, digital tools have helped to increase access to financial services, healthcare, education, employment, and improve the efficiency and quality of some of these services.1 This impact has been particularly pronounced in Southeast Asia, as it is projected to be the fourth largest economy in the world by 2030 with a large digital native population.2 The pandemic has also accelerated Southeast Asia’s digital transformation, adding some 70 million online consumers across the region3, and more importantly accelerated technology adoption given its criticality in addressing public health challenges during the pandemic4. From signing a document to opening a bank account, digital transformation is changing how citizens of major emerging economies interact with their governments, businesses, and each other.
Recognizing the favorable macro tailwind, new companies have emerged with innovative digital solutions to meet a wide range of consumer and enterprise needs. For investors like KKR, particularly through our Asia New Generation Technology (NGT) strategy, we look to invest behind these growing opportunities across a broad range of areas including enterprise software, cyber security, consumer internet, and FinTech, and work with visionary founders who are looking to make a difference by scaling their pioneering technology solutions and become homegrown, regional champions and global leaders.
In Indonesia, the government has shown strong commitment to accelerate its digital transformation through four strategic sectors – digital infrastructure, digital governance, digital economy, and digital citizenship – including through implementing its 2021-2024 Digital Roadmap. As the fourth largest population globally5, Indonesia’s leadership in this area will also meaningfully drive the development of Southeast Asia’s digital community, with Indonesia’s digital economy is expected to reach US$300 billion by 20306, becoming the largest part of Southeast Asia’s digital economy.
This strong macro backdrop is one reason why we have strong conviction in Privy, Indonesia’s leading digital trust platform and a pioneer in the digital trust space. Founded in 2016, Privy provides a wide range of software offerings that enable trusted digital identities, legally binding digital signatures, electronic Know-Your-Customer (eKYC) and document management, applicable across sectors including the financial services, healthcare, education, technology and government sectors. In 2018, Privy became the first non-governmental institution to be licensed as a Certificate Authority (CA) by Indonesia’s Ministry of Communication and Information Technology7 and, in 2019, the first eKYC service provider to be registered under Indonesia’s Financial Services Authority.8 Privy’s strong capability in regulatory compliance and consistent focus on product quality has allowed the company to penetrate into highly regulated industries and extend its first mover advantage in the space. Today, Privy is a clear market leader and serves more than 30 million individual verified users and 1,800 enterprise consumers on a wide range of products and services securely and reliably, and plays a critical role in enabling business digitization and supporting the Indonesian government’s digital roadmap. Where Privy particularly excites us is its potential to act as a platform for consumers and enterprises to grow their user base. We have seen this play out favorably in our other NGT software investments in Southeast Asia, such as KiotViet, a Point-of-Sale software and merchant platform for SMEs in Vietnam, and Growsari, a business-to-business e-commerce platform serving SMEs in the Philippines. KKR looks to draw on its team’s deep technological and operational expertise, as well as leverage its extensive global and regional network across Southeast Asia and beyond, to support Privy’s next phase of growth.
Our investment in Privy marks our first investment in Indonesia under our Asia NGT strategy, a key geography for us within Asia, and reinforces our thematic approach towards software investing. On top of KiotViet and Growsari, our other software company investments in Asia Pacific include dataX, a CRM software provider in Japan, Education Perfect, an education software platform in New Zealand, and NetStars, the operator of Japan’s largest QR code payment gateway.
We are proud to be the lead investor in Privy’s Series C funding round, and be part of the journey to help the company achieve its long term vision.
1. World Economic Forum (2022): How digitalization is accelerating the growth of MSMEs in Indonesia
2. World Economic Forum (2022): ASEAN is poised for post-pandemic inclusive growth and prosperity – here’s why
3. Bloomberg (2022): Southeast Asia Added 70 Million Online Consumers During Pandemic
4. World Economic Forum (2022): How digitalization is making South and Southeast Asia engines of growth
5. World Bank (2022): Population, total
6. ANTARA (2022): Indonesia to be largest digital economy in SE Asia by 2030: Minister
7. Kontan (2019): Hadapi sandbox OJK, fintech PrivyID rancang sken
8. Privy (2019): Indonesia’s Ministry of Communication and IT officially inaugurated 6 Certificate Authorities