Southeast Asia

Why you should pay attention NOW

Adrian Vanzyl, CEO Bangkok, Thailand October 2013

2

More people live inside this circle than outside

3

• Head office in Bangkok

• Portfolio companies must have team and customers in Southeast Asia

• Prefer transactional e-commerce businesses generating real revenue

• Two key areas of focus

– Venture fund (6 investments to date)

– Labs business (similar to Idealabs/Science, currently with 80 staff in Bangkok)

• Core founding team has over 10 years of experience in Southeast Asia,

with 3 major exits over 100m USD

Focused exclusively on Southeast Asia

Ardent Capital

4

Southeast Asia is bigger (2x) than the US and bigger than the EU

Southeast Asian Population

5

Source: International Telecommunications Union (Geneva)

Internet penetration grew significantly from 2000 to 2012

Singapore 36% 74%

Vietnam 0.25% 40%

Thailand 4% 26%

Indonesia 1% 15%

Malaysia 21% 66%

Philippines 2% 36%

2000 2012

6

By 2020, over 60% of Southeast Asians will be online

24M

31M

18M

4M

55M

34M

194m New internet

users

360m Internet users

Source: We are Social, Accenture

2010 2020

62% Estimated

internet

penetration

25% 2010 internet

penetration

7

Source: The Digital Media and Attitudes of Southeast Asian Consumers 2011, Nielsen; eMarketer

14

19.8 21.5

25

16.6 16

20.53 20.3

10.6

13.3 12

10.9

16.6

35.7

8.3

5.8 6.3 7.5

5.2 4.8

14

4 4.3 3.6 5

3.7 3.9 2.22

Indonesia Malaysia Philippines Singapore Thailand Vietnam USA

Hours Spent per Week on Media

Internet TV Radio Newspaper

Unlike the US, internet has surpassed TV in most

Southeast Asian countries as the #1 medium

8

37%

40%

38%

40%

21%

45%

23%

27%

26%

31%

33%

30%

24%

30%

24%

26%

22%

17%

15%

20%

27%

14%

21%

22%

9%

7%

9%

8%

19%

7%

18%

14%

6%

5%

6%

2%

9%

4%

15%

11%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Malaysia

Indonesia

Vietnam

Philippines

Singapore

Thailand

Europe

Worldwide

Ag

e d

istr

ibu

tio

n o

f in

tern

et

users

15-24 25-34 35-44 45-54 55+

Southeast Asian internet users are younger than the rest of

the world’s

In Thailand, 75% of internet users are under 35

Source: Southeast Asia Digital Future in Focus 2013, ComScore

9

28.3 27.7

18.2

16.5 16.4

13.5

24.2

22.2

14.5 16

15.2

13.6

0

5

10

15

20

25

30

Thailand Vietnam Singapore Philippines Malaysia Indonesia

Usage hours per week

Age under 35 Age over 35

…and young people spend more time on the internet

Source: Southeast Asia Digital Future in Focus 2013, ComScore

10

Smartphone sales have

been robust and are

expected to have a

compound annual growth

rate of 43% from 2008 to

2016, reaching 59 million

units in 2016

Source: GoogleResearch, Euromonitor 2013

11 Southeast Asians are more willing to do all internet surfing

on their phones

65%

61% 60%

55%

37% 36%

31%

Indonesia Philippines Thailand Vietnam Singapore Malaysia Global

% of Consumers Who Say They Would be Happy to Do All Their Internet Surfing on Their Mobile Devices

Source: Surfing Southeast Asia’s Powerful Digital Wave, Accenture

65% of the Indonesian population would be happy to do all their internet

surfing on mobile devices, compared to only 30% of the global population

12 Southeast Asia is outpacing the US toward an equal

mobile/desktop traffic share…

92 91 91 90

86 85 82

76 71 69

8 9 9 10

14 15 18

24 29 31

95 94 93 92 92 91 89

86 88 85

5 6 7 8 8 9 11

14 12

15

0

10

20

30

40

50

60

70

80

90

100

2010-06 2010-09 2010-12 2011-03 2011-06 2011-09 2011-12 2012-03 2012-06 2012-09 2012-12 2013-03 2013-06

Mo

bile

vs.

Des

kto

p %

Tra

ffic

Southeast Asia Desktop Southeast Asia Mobile USA Desktop USA Mobile

Mobile and desktop usage are rapidly converging in Southeast Asia

Source: StatCounter 2013

13

Southeast Asians are Social

With 13.8m registered users, there are more Facebook users in Bangkok than any other city in the world

(One cannot overstress how social Southeast Asia is)

Source: Accenture

14 Southeast Asians spend a large share of their internet time

on social networks

16.1%

19.7%

21.6%

25.4%

30.8%

32.3%

41.5%

0% 10% 20% 30% 40% 50%

Singapore

Worldwide

Vietnam

Indonesia

Thailand

Malaysia

Philippines

Social Network Share of Time Spent Online

Source: Southeast Asia Digital Future in Focus 2013, ComScore

15

43%

25% 20%

12% 9% 6%

19% 14%

52%

58%

56%

52% 58%

47%

54%

46%

5%

17% 25%

36% 34%

47%

27%

39%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Vietnam Philippines Thailand Malaysia Indonesia Singapore SE Asia Global

% of People Who Say They Are…

Not at all influenced Somewhat influenced Highly influenced

Source: Nielsen

73% of Southeast Asian consumers are influenced by ads on

social media, compared to 60% globally

73% 60% 95% 83% 76%

16

Source: Nielsen

Almost 70% of Southeast Asian consumers have ‘liked’ or

followed a brand, company or celebrity on a social network

79% 75%

69% 69% 61% 61%

69%

52%

17% 19%

26% 27% 35% 33%

26%

42%

4% 6% 5% 4% 4% 7% 5% 6%

Vietnam Philippines Malaysia Thailand Indonesia Singapore SE Asia Global

% of People Who…

Don't Know Have Never 'Liked' or Followed a Brand

Have 'Liked' or Followed a Brand

17

1.95 2.71

3.86

4.80 5.07

7.57

9.90

13.05

2005 2006 2007 2008 2009 2010 2011 2012

Online Retail Sales Value in Indonesia, Malaysia, Philippines, Thailand (US$ Billion)

E-commerce has seen spectacular growth in Southeast Asia

Source: Online Retailers in Emerging Asia to 2015, ICD Research

18

Most e-commerce segments in Southeast Asia had

double-digit growth rates from 2005-2012, with

Sports & Leisure Equipment

and Electronics growing

over 63% and 47% on a

compound annual basis

Source: Online Retailers in Emerging Asia to 2015, ICD Research

19 The ASEAN Economic Community (AEC) represents a

tremendous opportunity for business in Southeast Asia

Free flow of

goods

Free flow of

services

Free flow of

investment

Free flow of

capital

What it

means…

Free flow of

skilled labor

What it is

comprised of…

More attractive to foreign direct

investment

Easier to obtain/move capital across

the region

Easier to recruit talent from countries in

Southeast Asia

Cheaper and easier to sell goods across

borders

Easier to provide services and establish

companies in the region

In 2015, Southeast Asia will transform into an integrated market, making it easier

for businesses in Southeast Asia to expand

Source: ASEAN

20

Online advertising is totally out of line

In Southeast Asia, people spend 44% of their media time online, but only 2%

of advertising spending is devoted to online advertisement; however,

e-commerce is changing this

Source: Euromonitor, Nielsen

50.87%

34.48%

4.79% 1.88%

32.32%

9.46%

14.63%

43.59%

0%

10%

20%

30%

40%

50%

60%

TV Print Radio Online

% of Total Ad Spend vs % of Total Time Spent on Media

% Ad Spend % Time Spent

out of line

21

1. Big and Young – bigger than US (2x), bigger than EU, with a younger

population than both

2. Internet Focused – more time spent on the internet than on TV

3. Mobile – well over 100% penetration in most markets

4. Social and Socially Influenced – everyone is on social media (read

Facebook), and social advertising strongly influences purchase decisions

5. Growing fast – eCommerce CAGR of 31%

6. Disproportionately Spending Ad Dollars – significant disconnect

between time and money spent online vs TV

Southeast Asia also has:

• Less competition

• Available capital

Southeast Asia is:

Summary

22

Expand into Southeast Asia

Start a company in Southeast Asia

Invest in Southeast Asia

Come and visit us in Bangkok

Next steps

23

Adrian Vanzyl

adrian@ardentcap.com

This presentation is available at www.ardentcap.com