Asian deals prop up global VC activity to record highs

Dhaka,  Sun,  20 August 2017
Published : 08 Jul 2017, 21:23:32
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Asian deals prop up global VC activity to record highs

33 venture capital-backed IPOs hit the mkt in Q2
Record levels of activity in the Asian region in the second quarter drove the venture capital-backed deal market to record its largest ever quarter, reports dealstreetasia.com.

According to a recent report by Preqin, a total of 2,062 venture capital-backed deals were announced worth a combined $47 billion in the second quarter of 2017. While these figures are likely to rise by around 5 per cent as more information becomes available, they have already crossed the previous record of $43 billion in venture capital-backed deals recorded in Q3 2015.

This strong growth in deal making can be attributed to the record levels funding in the Asian region, which witnessed deals worth $22 billion being announced, almost half the global total. For the fourth time in six quarters, Asia recorded the highest deal value of any region with $22 billion across 550 deals, which was higher than $19 billion through 936 deals in North America. Within Asia, it was the mega deals that propelled this growth, led by the $5.5 billion financing of Didi Chuxing in April, the largest venture capital-backed deal ever recorded.

Among the largest ten venture capital deals in the Apr-Jun quarter, eight took place in Asia. These included the $1.4 billion funding round raised by Indian e-commerce giant Flipkart and the $1 billion funding by SoftBank in leading digital payments firm Paytm. Indonesian transport hailing major GoJek's $1.2 billion funding from Chinese internet giant Tencent was also one of the top three deals globally. Early stage investments continued to dominate the VC investments as angel stage investments accounted for 28 per cent of total deal flow, while Series A deals represented an equal proportion. And while the average value of series A-C deals in 2017 till date has fallen from levels seen in 2016, the average Series D deal size has hit a record $99 billion. EXITS While venture capital investment activity touched record levels, exits declined in the second quarter of 2017. The period saw 244 exits globally, worth a combined $14 billion. This is a decline from 293 exits worth $18 billion in the previous quarter. "With an increasing number of companies choosing to stay private rather than being sold or going public, it is perhaps not surprising that we have seen a slowdown in the volume of exits since they last peaked in the latter part of 2015. However, venture capital funds, unlike private companies, have defined lifespans after which investors will expect to see return from their investments," said Felice Egidio, Head of Venture Capital Products, Preqin.

Also in contrast to the venture capital investments in the quarter, majority of the large exits globally took place in the US, while from Asia, there was only one exit deal that made it to the top 10 list.  According to the Preqin data, thirty-three venture capital-backed IPOs were announced in the quarter, worth 30 per cent of overall exit value. "Fund managers will be looking for exit activity to regain some momentum in the coming quarters, or they may have to start looking for alternative ways to release capital back to investors," said Egidio.
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