2nd Runner up at Metvy's case study competition

1. Biswadeep Ghosh
Hazra
Devark Chauhan
College: XIMB
Team Name: DeadlyDuo
Team Leader: Biswadeep Ghosh Hazra
Email Address: UM19148@stu.ximb.ac.in
Contact Number: 9051707408

2. 59
41
Banking Sector Penetration (2017)
Banked Population Unbanked Population
70
30
Banking Sector Penetration (2020)
Banked Population Unbanked Population
4.4
7.8
2017 2020
Fintech Market Valuation (in US$ Bn)
Fintech Market Valuation (in US$ Bn)
41
45
53
58.14
70.35
2014 2015 2016 2017 2018
Internet Penetration as a % of Population
Internet Penetration as a % of Population
CAGR: 17.9%
30
52
68 78 84
70
48
32 22 16
2012 2014 2015 2016 2017
SMARTPHONE PENETRATION
PERCENTAGE (AS A % OF
POPULATION)
Smart Phone Non-Smart Phone
Lack of
regulatory
clarity
Capital
Limitation
Management
Knowledge
Constrains
Awareness
and Trust
Barriers to entry
CAGR: 45%
Industry Analysis of Fintech in Vietnam
Source: Statista, UN, BBG Vietnam
Industry
Analysis
Porter’s Five
Forces
Scorecard-I Scorecard-II
MoMo vs
MOCA
MoMo &
Synergy
Valuation |
MoMo
Rural
Opportunity
B2B
Application
Strategic
Timeline

3. Porter’s Five Forces | Fintech Industry
Competitive Rivalry
Bargaining Supplier Power
Bargaining Buyer Power
Threat of Substitution
Threat of New Entry
The Threat of new entry is low by a startup as the existing companies in Vietnam’s fintech
sector are well funded and have established great user base. Government has been very
cautious in rolling out licenses, hence it is a rocky road for a company starting from scratch
Vietnam has low banking penetration, Cash is the biggest substitute of online payment
and is widely used. Threat of substitution is high. Companies will have to offer the right
incentives to increase year on year usage penetration for online financial services.
There are 136 companies in Vietnam fintech space, offering different benefits. Buyers
have a good bargaining power as they can easily switch to a different brand. The
switching cost will have to curated to ensure retention of customers in the long run.
There are no product supplier but government will act as a license and regulatory
supplier. With political instability in Vietnam this parameter can be tricky to judge as
rules and regulations would be really effective to thrive.
FinTech in Vietnam mostly focuses on payments with 47 % of Vietnamese companies
working on payment services. This makes payment services the most competitive of all
fintech functions.
Industry
Analysis
Porter’s Five
Forces
Scorecard-I Scorecard-II
MoMo vs
MOCA
MoMo &
Synergy
Valuation |
MoMo
Rural
Opportunity
B2B
Application
Strategic
Timeline

4. Scorecard-I [From Felix’s POV]
Acceptance from the local
population
Vietnamese are pretty sceptical of foreign companies. Case in point : Mc Donald's after repeatedly trying to
penetrate the lucrative Vietnamese Market, failed to do so as they fell behind on their schedule to open 100
stores in the country
Fierce Local Competition
The local homegrown Fintech Market is flourishing in Vietnam with funding (36%) only second best to
Singapore (56%). With 130 plus start-ups in the fintech space, Vietnam poses a significant competition
If Felix decides to move into the Vietnamese market on its own-
Government Regulations
There are a number of rules and regulations that need to be followed, from Registration of the company,
Licensing and Sublicensing, gathering specific licences like Non-Bank Credit Institution (NBCI) or an
Intermediary Payment Service Provider (IPC), to Data protection, piracy and storage, and cybersecurity
Marketing and Other
Expenses
Being a new entrant, the marketing expenses would run high for Felix as it would need to establish itself in a
competitive market. In addition, tie-ups with other organizations and discounts would lead to more spending
Inexperience
Felix has been used in developed nations such as the United Kingdom, Switzerland, Canada. The only
developing nation that it has experience operating in is India. The market of India is far different from
Vietnam; as Indians are more open to western companies that Vietnamese. This will pose new challenges
Industry
Analysis
Porter’s Five
Forces
Scorecard-I Scorecard-II
MoMo vs
MOCA
MoMo &
Synergy
Valuation |
MoMo
Rural
Opportunity
B2B
Application
Strategic
Timeline

5. Scorecard-II [From Felix’s POV]
Acceptance from the local
population
The combined entity will ensure that Felix has access to the entire Vietnamese Market along with a majority
stake in the company (~40%)
Fierce Local Competition “If you cannot defeat them, join them”
If Felix decides to move into the Vietnamese market with an Acquisition-
Government Regulations
Regulated by Law on Enterprise No. 68-2014-QH13- Article 18 (rights of companies and individuals to
establish an enterprise, purchase shares, and supply capital), Article 195 (outlines the limitations and
process of a merger) & Law on Investment No. 67-2014-QH13- Article 25 (foreign investor’s rights to
contribute capital and buy capital or shares) and Article 26(procedure to contribute capital and buy capital
or shares). In addition, Law of Securities, Law of Competition are also important when it comes to Mergers
and Acquisitions
Marketing and Other
Expenses
Companies spend more in order to increase the Brand Connection and Recall. This won’t be a problem as
the company being Acquired is already synonymous with the masses
Inexperience
Felix will get insights regarding the local Vietnamese Markets & how they function. This will enable it to have
a first mover advantage against any other company coming to Vietnam after Felix. This will in turn prove to
be a competitive advantage for Felix. Any company that has cracked being close to consumer has made it big
Industry
Analysis
Porter’s Five
Forces
Scorecard-I Scorecard-II
MoMo vs
MOCA
MoMo &
Synergy
Valuation |
MoMo
Rural
Opportunity
B2B
Application
Strategic
Timeline

6. MoMo vs MOCA
Founded: 2013
Funding: US$ 133.8 Mn
Monthly Downloads: 5,77,087
Usability: Mobile, e-Wallet, Payment
App
User Base: 13 Mn
Tie-ups with banks: 24
Download Growth: 111.11%
OTC Agents: 4,000
Founded: 2013
Funding: US$ 200,000
Monthly Downloads: 18,707
Usability: Mobile Payments
User Base:
Tie-ups with banks: 12
Download Growth: 154.45%
OTC Agents: None
Given the comparison above, it would make sense for Felix to
acquire a stake in MoMo given its size and the fact that it has a
huge OTC Agent size at its disposal. Studies show that 35% of its
population is internet illiterate. OTC agents therefore can help in
this regard.
MoMo has the highest level of PCI-DSS certification,
something that Felix can make use of as they heavily rely on
security themselves to differentiate their product offerings
 MoMo’s tie up with more number of banks give it a leverage
over MOCA’s 12 tie-ups
Felix decides to enter
the Vietnamese
Market
Felix enters
independently
Felix enters into
the market with
the help of M&A
Felix M&A with
MOCA
Felix M&A with
MoMo
Flow chart of decisions
Industry
Analysis
Porter’s Five
Forces
Scorecard-I Scorecard-II
MoMo vs
MOCA
MoMo &
Synergy
Valuation |
MoMo
Rural
Opportunity
B2B
Application
Strategic
Timeline

7. Why MoMo and the Synergy
• A
• Acquiring Stake in MoMo will give us Instant access to the
Vietnam Fintech market and 13Million Existing customers
and with Felix’s already 50+Mn userbase it would give a
total of 63 Mn users
• We will be able to by pass the greenfield operations of
starting from scratch
• We won’t have to worry about government licenses, the
license to operate in the fintech space can take
considerable amount of time considering the bad Ease of
doing business ranking in Vietnam
• This is help save time and start pumping efforts in growth
straight away
• MoMo has core competencies which are missing in Felix
and these core competencies will be complementary to
Felix core competency.
WHY MoMo? Synergy
• Felix brings in a set of expert talent pool,
which could help MoMo trump the
competition
• Felix is pioneer in Security and digital
payments, this will help ramp up MoMo
security and make it more lucrative to people
who are concered about online transactions
• Felix’s already developed API and banking
platforms in place will help develop more
products for the Developing Vietnam market
• Felix has integrated shopify, wix, amazon, ola
and other major online players this will help
us pass on the benefits to MoMo
v
Industry
Analysis
Porter’s Five
Forces
Scorecard-I Scorecard-II
MoMo vs
MOCA
MoMo &
Synergy
Valuation |
MoMo
Rural
Opportunity
B2B
Application
Strategic
Timeline

8. Valuation | MoMo
• We have valued MoMo, the method used is multiple method. Revenue has been used as a base. Multiple has been arrived using various favorable factors.
• Felix has raised $657 Million in the past four years. We assume Felix would be able to acquire 40% Stake in MoMo by paying $330 Million, The figure has been
rounded to account for un expected expenses and paperwork.
• MoMo already has investments from 3 funding rounds, we assume to get the major stake holding in MoMo at 40% and it becomes a subsidiary of Felix, but would
continue to run under the same name.
Company loss ( Source vir.com.vn)
FY2014 ( in Mn $) 1.87
FY2016 ( in Mn $) 6.4
FY2017 ( in Mn $) 10.6
Loss growth factor 50%
FY2018 ( in Mn $) 15.9
FY2019 ( in Mn $) 23.85
Total Loss ( in Mn $) 58.62
(B)
Percentage Change in Loss Weights
242% 0.2
66% 0.8
Taking weighted average of the two
Calculating Loss growth factor
Rise in loss from 2014-16
Rise in loss from 2016-17
(A)
We have decided to acquire stake in MoMo!
Valuation ( Amount in $ MN)
Revenue 2017 ( in Mn $) 75.4
( Source
vir.com.vn)
Growth YOY (Fintech
Sector) 25%(Source BBGV.org)
Estimated Revenue 2018 94.25
Estimated Revenue 2019 117.8125
Estimated Revenue 2020 147.2656
Multiplying factor (A) 6
Valuation 883.5938
Loss (B) 58.62
Valuation 824.9738
Multiplying factor
Weights
Assigned Basis Source
0.5 Population 100 Mn
0.5 Population Under 25 25%
0.5 Existing Investments $133.8 Mn
0.5 Smartphone penetration 72% Vietnam Digital 2019 report
0.5 Internet User Penetration 69% Vietnam Digital 2019 report
0.5 Bank Account Penetration 59% Medium.com
1
Growth in Mobile bankng over
last 5 years 144% BBGV
1
Grrowth transactions by
digital wallet over 5 years 161%
Department of payment statistics
vietnam
0.5
Vietnam Payment market size
by 2025 $70,937 Mn https://asia.nikkei.com/
0.5 User Base 13Million
6
Industry
Analysis
Porter’s Five
Forces
Scorecard-I Scorecard-II
MoMo vs
MOCA
MoMo &
Synergy
Valuation |
MoMo
Rural
Opportunity
B2B
Application
Strategic
Timeline

9. Rural Opportunity
Opportunity:
Vietnam is a mobile-first market, with nearly all internet
users owning a smartphone and ¾ using it as their
preferred connection device. Mobile is also the primary
digital platform in rural Vietnam. At present, up to 70% of
the population in each province of Vietnam live in rural
areas. In rural Vietnam, 68% of mobile phone owners
have a smartphone. The rural Vietnamese demographic
spends on average three hours connected to the internet
each day.
Mothers are one of the key demographics in Vietnam,
with their media habits and life priorities being guided by
a strong desire to see their children succeed. YouTube is
seen as a tool for mothers to groom their children for
success and help them to achieve the aspirations they
consider themselves as not having fulfilled
~Source : The State of Mobile in Rural Vietnam Report
Capitalizing on the Opportunity:
MoMo has 4000+ OTC salesperson, we will leverage them
to reach rural audience. A distribution based strategy of
customer acquisition will be followed.
The sales force of agents and distributors will perform the
following key functions-
• Empower the customer by first being empowered (by
leveraging technology)
• Use design thinking to put themselves into the
customer’s shoes
• Making the entire process simple and easy to understand
for the customer
• Having the technical know-how of the end to end process
of using the MoMo application for payments and other
financial services.
Felix also offers an e-wallet payment solution for
marketplaces, by using Hyperlocal payment solutions and
identifying the wants of the consumer in their hyperlocal
area and payment window for the vendor directly appears.
This will help rural people find utility in the application
Industry
Analysis
Porter’s Five
Forces
Scorecard-I Scorecard-II
MoMo vs
MOCA
MoMo &
Synergy
Valuation |
MoMo
Rural
Opportunity
B2B
Application
Strategic
Timeline

10. Business to Business Application
Opportunity:
The Vietnamese also feel distrustful of corrupt local banks. As such,
many Vietnamese businesses will use wire transfers to send funds.
The government aims to make Vietnam “cashless by 2020” and the
plan is to provide the infrastructure for such a system, increase the
fees on cash payments, and decrease fees related to electronic
payments. Lack of Cyber Security is also a challenge for Fintech
startups and companies in Vietnam
Capitalizing on the Opportunity
Security is our top priority which helped Felix product to reach great
heights. Felix being pioneer in cyber security would develop an
Application and interface for B2B transactions.
Felix already has API integrations and 24X7 banking modules. The
already existing core competencies will help Felix develop an
application that can capture the untapped market of business
transactions.
The integrations which are simple to use coupled with high grade
security features will help us encourage businesses to use our special
platform for major transactions instead of wire transfer, this will also be
a major revenue driver as B2B transactions are huge, commission on
Industry
Analysis
Porter’s Five
Forces
Scorecard-I Scorecard-II
MoMo vs
MOCA
MoMo &
Synergy
Valuation |
MoMo
Rural
Opportunity
B2B
Application
Strategic
Timeline

11. Strategic Timeline
Team Felix has decided to enter
Vietnam fintech market. Team has
decided to acquire stake in a
domestic startup names MoMo, due
to the synergy that would be created
by acquiring 40% majority stake in
the company. The funding would be
obtained by the funds Felix has
generated from VC over the period of
last four years
Present
Immediate Actions
Felix would help MoMo by helping ramping by the security features. Improving App
utility by providing APIs and hassle free banking modules. A team of top leaders
from Felix would be made to help MoMo with our expertise. A HR agency would be
hired to help two companies gel up without any hiccups
Market Penetration
The first milestone would be market penetration of the
existing market as additional features from Felix would
help MoMo bring in a plethora of new features and help
it expand its offerings
Tapping the Rural
Next would be using the sales workforce of
MoMo to tap the lucrative rural market of
Vietnam. Our marketing communication would
be focused on rural mothers as they are a major
influence on the household.
Market Development
The next would be market development by creating
a new B2B application exclusively for business
payment. This will help them use a better alternative
to Wire Transfer
Acquisitions
The road ahead
would be acquiring
more fintech startups
in Vietnam and hold
the major stake of
Industry
Analysis
Porter’s Five
Forces
Scorecard-I Scorecard-II
MoMo vs
MOCA
MoMo &
Synergy
Valuation |
MoMo
Rural
Opportunity
B2B
Application
Strategic
Timeline

12. Thank