Asian firms lead as Vc-backed deals scale fresh peak in Jul-sep quar­ter

Mint Asia ST - - News Dealstreetasia - B Y I S H I TA R USSELL Ven­ture cap­i­tal deals*

Asian com­pa­nies en­joyed the spot­light again in the third quar­ter of 2017 with more than half of the top 10 deals in July-septem­ber com­ing from the re­gion.

Ac­cord­ing to the lat­est Pre­qin re­port, ven­ture cap­i­tal (Vc)-backed deals re­ported a sec­ond con­sec­u­tive record-break­ing quar­ter with 2,362 deals worth a com­bined $49 bil­lion.

Th­ese were led by Sin­ga­pore-based Uber ri­val Grab’s $2 bil­lion fundrais­ing from Ja­pan’s Softbank Group Corp. and China’s top ride-hail­ing firm Didi Chux­ing. An­other prom­i­nent deal was the Gen­eral At­lantic’s $2 bil­lion in­vest­ment in Se­quoia Cap­i­tal­backed Chi­nese news ag­gre­ga­tor Toutiao in Au­gust.

Chi­nese firms Go-ready and Cainiao Net­work were also in the list along with In­dian and In­done­sian e-com­merce gi­ants Flip­kart and Toko­pe­dia.

Among in­vestors, Asia’s Softbank proved to be most ag­gres­sive by par­tic­i­pat­ing in half of the top 10 deals in the quar­ter. Chi­nese in­ter­net giant Alibaba was also prom­i­nent on the list with 2 bil­lion dol­lar-plus deals to its name. In the April-june quar­ter too, among the largest 10 ven­ture cap­i­tal deals, eight were struck in Asia.

While th­ese fig­ures are likely to rise by around 5% as more in­for­ma­tion be­comes avail­able, they have al­ready crossed the pre­vi­ous record of $48 bil­lion in ven­ture cap­i­tal­backed deals recorded in the pre­ced­ing quar­ter. This has put to­tal deal ac­tiv­ity in the first three quar­ters of 2017 at $128 bil­lion, on course to be­com­ing an all-time an­nual high.

“2017 now seems as­sured to set new records for ven­ture cap­i­tal-backed deal ac­tiv­ity, as the in­dus­try has wit­nessed its sec­ond con­sec­u­tive record-break­ing quar­ter. Driven by the ris­ing num­ber of late-stage multi-bil­lion dol­lar fi­nanc­ings—eight in Q3 alone—the in­dus­try is set­ting new records with in­creas­ing reg­u­lar­ity. In­creased op­por­tu­ni­ties in emerg­ing mar­kets and in­creased ap­petite from in­vestors are com­bin­ing to pro­pel the ven­ture cap­i­tal in­dus­try to new heights,” said Felice Egidio, head of ven­ture cap­i­tal prod­ucts at Pre­qin.

The in­vest­ments are how­ever now more se­lec­tive as in­di­cated by the de­clin­ing num­ber of trans­ac­tions, with this re­ported quar­ter rep­re­sent­ing the sixth con­sec­u­tive quar­terly de­cline. In the first nine months of the 10 largest VC deals* an­nounced glob­ally in Q3 2017 Port­fo­lio com­pany Grab Hold­ings Toutiao We­work Com­pa­nies Inc Ready-go Flip­kart PT Toko­pe­dia Roivant Sci­ences Gmbh Fa­nat­ics, Inc. Cainiao Net­work We­work Com­pa­nies in Q3 2017 (by re­gion) Other Is­rael In­dia Greater China Europe Month July Au­gust Au­gust July In­vest­ment stage Un­spec­i­fied round Un­spec­i­fied round Un­spec­i­fied round Se­ries B/round 2 year, 7,552 ven­ture cap­i­tal-backed deals were an­nounced, com­pared to 8,792 in the equiv­a­lent pe­riod of last year, showed the Pre­qin re­port.

“The bulk of deal ac­tiv­ity re­mains fo­cused on the ear­lier part of the fund­ing cy­cle, with an­gel and Se­ries A in­vest­ments ac­count­ing for al­most half of to­tal deal num­bers. How­ever, deal val­ues are in­creas­ingly be­ing driven by large late-stage fi­nanc­ings and debt is­suances. In fact, while the av­er­age value of fi­nanc­ings up to Se­ries C have all fallen in 2017, av­er­age Se­ries D deals are at a record high, while the av­er­age ven­ture debt is­suance is more than twice as large as it was in 2015,” added Egidio.

While ven­ture cap­i­tal in­vest­ment ac­tiv­ity touched record lev­els, ex­its con­tin­ued to de­cline. The largest ven­ture cap­i­tal-backed exit an­nounced in Q3 2017 was the $1.4 bil­lion sale of China-based Mango TV to Hap­pigo. The top 10 ex­its were dom­i­nated by Us-based trans­ac­tions bar­ring Flip­kart’s stake sale in In­dia and Chi­nese firm Best Lo­gis­tics Tech­nol­ogy (China) Ltd’s IPO. Ger­man firm De­liv­ery Hero AG’S stake sale was also among the top 10 ex­its in the quar­ter.

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