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Venture Capital Activity from Asia-based Private Equity Firms - December 2013

by Gemma Morris

  • 13 Dec 2013
  • PE
  • VC

According to Preqin’s Venture Deals Analyst online service, there have been 2,124 venture capital financings, worth $23.9bn, made with the participation of Asia-based private equity firms from 2008 to 2013. 

After a drop from 316 deals valued at $4.9bn in 2008, to 252 deals with an aggregate value of $2.5bn in 2009, the year with the lowest number and value of deals with Asia-based investors across the time period, deal flow increased steadily to 322 financings in 2010 and 416 in 2011. Aggregate deal value rose over the two years, reaching a peak of $5.5bn in 2011. We witnessed a slight 6% drop in the number of deals between 2011 and 2012 and a 37% decrease in aggregate value to $3.4bn. 2013 has already overcome 2011 deal flow, with 429 financings having taken place so far. Despite the increase of 17% in aggregate value on the previous year, at $4bn so far, this figure is more than a quarter lower than that of 2011. 

When looking at venture capital financings that have involved Asia-based private equity firms with a focus on the portfolio company region, it becomes apparent that financings of companies based in Greater China have seen a decline. Between 2008 and 2011, the proportion of deals made in Greater China remained between 45% and 50% of all deals involving an Asia-based GP, while the proportion of aggregate value these deals represent stayed between 56% and 58%. However, recent years have seen a change in attention to the Greater China region. In 2012, financings in the region only contributed to 29% of all deals involving Asia-based GPs, and 38% of the aggregate deal value. This has further decreased in 2013 so far, with the proportion of all financings reaching only 23% of both the number and value, suggesting that Asia-based GPs are broadening their investment focus beyond Greater China. 

While deal flow in North America has remained fairly consistent since 2008, contributing to proportions of between 23% in 2010 and 27% of global aggregate deal flow this year so far, recent years have seen North American financings make up a larger proportion of the overall value of venture capital financings involving Asia-based private equity firms. In 2008 the figure reached 27%, this rose to 30% in 2009, and dropped to 22% in 2010. This proportion increased to 32% in 2011, 36% in 2012 and 38% so far this year. Consequently, North America has overtaken Greater China as the region to receive the most financings involving Asia-based private equity firms, and the most capital from these financings.

Financings made in India have also increased in proportion of the number and aggregate value over the past two years. From a low of 16% of all deals in 2009 and 2010, deals made by Asia-based GPs in Indian portfolio companies contributed to 31% last year and 29% this year so far.

Financings in India accounted for 16% of all financings involving Asia-based GPs in 2012, and make up 15% this year, having previously reached no higher than 13% in 2010 and only contributing to 7% of the total value in 2009. This year, regions other than Greater China, North America, Europe, India and Israel have contributed to the largest proportions of both the number and value of deals, at 18% and 9% respectively. Interestingly, the proportion of European financings has halved on the previous year to 2%, but the proportion of aggregate deal value has increased somewhat largely from 5% in 2012 to 13% in 2013.  One of the most significant venture capital deals since 2008, made with the participation of Asia-based private equity firms, occurred in Europe in 2013.This was the $400mn financing of Netherlands-based MobilEye, from China-based Sailing Capital International along with BlackRock Capital Partners, Fidelity Management & Research Company, and Wellington Management. 

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