HANOI -- Oway, Myanmar's largest online travel and ride-hailing company, is in the market to raise capital to ramp up its expansion across the country.
Founded in 2012, Oway started out as an online travel platform and entered the ride-hailing market in 2015. The company has to date raised total funds of $24.7 million from investors including the International Finance Corporation, Singapore-based private equity firm Northstar Group, Japan's Daiwa PI Partners Openspace Ventures, Emerging Markets Investment Advisers and Belt Road Capital Management.
The next financing round, according to Oway's CEO Alok Kumar, will be one of the most sizable fundraises in the country. However, he did not disclose their target amount.
Since earlier this year, a couple of Myanmar companies have completed large funding rounds. Frontirr recently announced a $30-million investment led by the U.K.'s development finance institution CDC. Micro-finance company Proximity Finance has also secured $10 million in debt financing.
Kumar told DealStreetAsia that in the next three years, the company would focus on three strategic pillars: of beefing up its core operation, expanding its adjoining businesses and pushing the market transition to digital.
"We are now in the process of making the behavioral shift from physical to digital. There is a huge opportunity to convert this physical market to digital, given the level of mobile penetration and good access to high-end connectivity in Myanmar," he said.
Mobile penetration in this frontier market reached 95 per cent in 2018, a drastic increase from only 7 per cent in 2013, according to Myanmar's second largest network operator Telenor.
However, when it comes to the travel business, as much as 80 per cent of local consumers are blind to digital trends and still rely on a traditional offline system, according to Kumar. "We are bringing education to this set of customers both by ensuring that we are present in the physical agent network and migrating them to online."
He claimed that Oway’s ride-hailing business is close to profitability.
The company's strategy is to make big inroads into other regions of Myanmar, while its rivals are centered in Yangon, a market where major Southeast Asian ride-hailing group Grab has gained the biggest market share.
Oway is currently present in five cities: Yangon, Mandalay, Bagan, Pwin O Lwin and Mawlaymine, where, with the exception of Yangon, it has the biggest market share.
"Nobody is looking at the rest of Myanmar. That's where the next big phase of growth is expected for Oway," said Kumar.
"Yangon and Mandalay cover roughly 12 million people, whereas the remaining 42 million population in the rest of Myanmar have no public transport nor convenient and economical transport system," he explained.
Kumar also pointed out the impediments to ride-hailing in Myanmar, including the complicated traffic system, especially in smaller cities, and the massive investment required in terms of improving drivers' digital literacy and designing tailored services, including discounts, for each customer segment.
In addition to its travel business, Oway operates Oway Ride for retail consumers and Oway Fleet for corporate customers. In June, the company teamed up with Telenor to offer free wifi services on journeys on Mini Oway, a three-wheeler tuk tuk service in Mandalay.
"We believe that this is an important step in Myanmar's digitalisation journey to establish future smart cities in Myanmar, as this exciting country is currently witnessing an accelerated pace in digitisation by the mass adoption of smart and connected [information and communications technoology] by consumers, businesses and governments," said Daw Yin Yin Htay, chief business officer of Telenor Myanmar, in a statement.
Oway has also partnered with local mobile financial services provider Wave Money to tackle the challenge of enabling digital payments. Adult access to formal financial services was only 48 per cent in 2018, according to Making Access Possible, a national financial sector diagnostic.
Consumers can tap the latest payment service not only through Oway's travel platform, but Oway Fleet drivers can also digitally process any advance payments, including tolls, maintenance and repair costs.
These recent partnerships, Kumar said, would expand Oway's scope of interaction with consumers and accelerate the transition from physical to digital.
He added the company would also leverage its next fundraising to explore opportunities in adjoining businesses to its core operation through both organic growth and acquisitions.
DealstreetAsia is a financial news site based in Singapore focused on corporate investment activity in Southeast Asia and India. Nikkei recently announced the acquisition of a majority stake in the company.