Key takeaways from the AsiaTech20 Treasurers’ Peer Group pilot meeting sponsored by MUFG.
By Joseph Neu
Be prepared for global optimism. The global economic outlook is overwhelmingly positive with Covid-19 vaccines nearing distribution. Plus, a new administration in the US brings an expectation for economic growth to take on a more global scope, with Asia expected to outperform.
- For this reason, tech treasurers in Asia have also pivoted from enduring the crisis through stockpiling capital and liquidity to preparing to go on offense, growing with the recovery and improving their standing in the market—with customers, distributors, suppliers or all three.
Growth dynamics in Asia capital markets. MUFG helped shed light on a number of interesting trends in Asia capital markets of which tech clients are taking advantage.
- First, the traditional strength of bank lending to tech in Asia remains, especially in Taiwan, China and Australia. Tech treasurers reported success with renewing credit facilities, up-sizing or adding new loans, as well as amending covenants favorably.
- Bond issuance by Asian tech firms has also grown and they find receptive investors in the US, especially if they get a rating, as well as in Asia. The depth of debt capital markets in Asia continues to grow, according to MUFG, so that issuers seen as investment-grade looking to raise over $300 million or even $500 million can get deals done in Asia.
- Two drivers of recent capital sourcing: M&A, such as Taiwanese tech manufacturers selling mainland China assets to fund new assets offshore; and Chinese tech firms funding take-private deals as US and other offshore listings draw more scrutiny.
- Growth optimism and positive sector tailwinds will likely drive broader acquisition financing as well as increasing capex to lean into post-Covid demand.
Standardizing processes in preparation for accelerating digitalization. A discussion of organizational change in the wake of Covid-19 revealed that tech treasurers in Asia have benefited from projects to standardize treasury processes ahead of the crisis.
- One member noted her proximity to a company shared services center and standardizing across integrated financial operations. Alongside this, her staff has been educating themselves on data analysis and automation tools that have also made it easier to improve cash forecasts over the crisis period.
- Her TMS has not delivered well with data integration, as system APIs on the enterprise side and on the bank side are not as open as they promise. This is where coming up with your own means of data integration, such as RPA, is important.
- One large fintech company treasurer has taken this even further by using software engineers at his firm to develop a mobile treasury app with three-click access to real time cash and debt levels. The aim of all such efforts is to scale support for rapid tech growth without growing treasury headcount.
