Asia’s Private Equity News Source avcj.com March 03 2015 Volume 28 Number 08 EDITOR’S VIEWPOINT Investors flock to join China VC gold rush Page 3 NEWS Accel, AlpInvest, Alibaba, Carlyle, CLSA, Cool Japan Fund, CPPIB, CVC, GGV, GIC, Goldman Sachs, KKR, LACERA, Matrix, Navis, Northstar, OTPP, PEP, Sumitomo Mitsui, TPG Page 4 FUNDS Shunwei broadens scope by entering RMB space Page 9 LP INTERVIEW Arizona PSPRS’ patient approach to Asia PE Page 10 The next big thing AVCJ RESEARCH VCs want to help firms collect big data and show them how to use it Page 6 Data f ile Page 11 DEAL OF THE WEEK FUNDS Therapeutic returns Bigger and better? Bain targets Japan hot spring phenomenon Page 8 Baring Asia closes Fund VI at bumper $3.9b Page 9 EDITOR’S VIEWPOINT [email protected] Managing Editor Tim Burroughs (852) 3411 4909 Staff Writers Andrew Woodman (852) 3411 4852 Winnie Liu (852) 3411 4907 Venture in bloom Holden Mann (852) 3411 4964 Creative Director FLIPPING THROUGH THE PAGES OF A billion, is a good example. Asia is no stranger Dicky Tang men’s magazine in an airport lounge, I can’t help to the VC mega-deal, however, India’s FlipKart , Designers but notice that double-breasted suits being which is said to be eyeing a $1.7 billion round of Catherine Chau, Edith Leung, Mansfield Hor, Tony Chow hailed as one of the next big trends in menswear. funding, is valued at $15 billion, while in China Yes, the Gordon Gekko look, with some updates, smart phone maker Xiaomi (which is profitable), Senior Research Manager is back. And like the fashion industry, certain recently received a $1.1 billion injection at $45 Helen Lee investment themes will undergo a reboot and billion post money valuation. Research Associates Herbert Yum, Jason Chong, come back into favor. This story wouldn’t be complete without Kaho Mak One of the best recent examples is the plenty of liquidity events, which are also at record Senior Marketing Manager resurgence of investments into internet and highs, even though the Alibaba Group IPO threw Sally Yip technology companies, in particular those with the dollar proceeds figure completely out of Circulation Administrator more innovative models. This is of great benefit whack. Prudence Lau to the venture capital industry, which until a The gold rush to find the next big start-up has Subscription Sales Executive couple of years ago had largely fallen out of favor even spread to Asian governments. From funding Jade Chan with LPs. The tough times are mostly behind the schemes to incubators to mentorship programs, Manager, Delegate Sales industry now and the future looks bright. Or there is no shortage of initiatives intended to Pauline Chen does it? attract talented people capable of starting their Director, Business Development In China, arguably the most successful own companies. Venture capitalists are also Darryl Mag venture capital market outside of the US, the being courted as preferred investors for their Manager, Business Development amount of capital raised for new funds reached roles in providing risk capital and nurturing this Anil Nathani, Samuel Lau $7.2 billion in 2014, about twice the previous next generation of entrepreneurs, although some Sales Coordinator year’s figure. There has been a similarly large of these incentives may not necessarily attract Debbie Koo increase in investment. For 2014, AVCJ Research top-tier firms. Conference Managers has records of 677 VC deals worth a cumulative It is truly good news that venture capital Jonathon Cohen, Sarah Doyle, $8.2 billion. That’s an average of $12 million per is shining once again. The industry’s role in Conference Administrator investment – higher than the comparable 1999 identifying, investing and nurturing the next Amelie Poon figure ($10 million per investment) but still lower generation of innovators is important if Asia is Conference Coordinator Fiona Keung, Jovial Chung than the $14 million per deal average posted in to continue on its current growth trajectory. 2003. There are some signs – and concerns – about Publishing Director Is it a sign that investments are getting more overheating but certainly the investors of today Allen Lee expensive or are there simply more very large have a better understanding of long-term deals taking place? The answer is certainly a bit of business models. both, but the latter phenomenon is the one really Incisive Media Unit 1401 Devon House, Taikoo Place moving the needle. 979 King’s Road, Quarry Bay, In the US, there is no shortage of still unlisted Hong Kong T. (852) 3411-4900 (and unprofitable) companies with valuations Allen Lee F. (852) 3411-4999 in excess of $1 billion raising money from Publishing Director E. [email protected] URL. avcj.com investors. Four-year-old Uber, last valued at $40 Asian Venture Capital Journal Beijing Representative Office No.1-2-(2)-B-A554, 1st Building, No.66 Nanshatan, China VC investment Chaoyang District, Beijing, People’s Republic of China 10,000 1,000 T. (86) 10 5869 6203 F. (86) 10 5869 6205 E. [email protected] 8,000 800 6,000 600 The Publisher reserves all rights herein. Reproduction in whole or 4,000 400 Deals in part is permitted only with the written consent of US$ million AVCJ Group Limited. 2,000 200 ISSN 1817-1648 Copyright © 2015 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20142013 No. of deals Investment (US$m) Source: AVCJ Research Number 08 | Volume 28 | March 03 2015 | avcj.com 3 NEWS India gives PE funds tax set up this year – utilize the HK$220 billion ($28 ASIA PACIFIC billion) land fund generated from government pass-through status land sales, plus one quarter to a third of annual TRS Illinois backs RRJ, Private equity funds are to be given tax pass- budget surpluses as periodic top-ups. Carlyle Japan funds through status as part of reforms outlined in India’s first full budget since Prime Minister China’s online drugstore US-based pension fund Teachers’ Retirement Narendra Modi swept to power in May last year. System (TRS) of the State of Illinois is backing Finance Minister Arun Jaitley said that all 7LK raises $48m from VCs RRJ Capital’s third flagship fund and The Carlyle alternative investment funds (AIFs) under Chinese online drugstore 7LK.com has raised Group’s third Japanese buyout fund as part of category I, which includes infrastructure vehicles, RMB300 million ($48 million) in a Series A $900 million worth of commitments. RRJ Capital and category II funds, which include sector- round of funding from Govtor Capital, Grand Master Fund III will get $75 million while $30 specific and sector-agnostic funds, will be Yangtze Capital and TusPark Ventures. The million will go to Carlyle Japan Partners III. included in the reform. This means that dividends site was launched by Guangzhou Qilekang from such vehicles will not be taxed at the fund Pharmaceutical Chain, a privately-held pharmacy Navis agrees to Domestic chain, in 2010. Group carve-out Alibaba to launch fund for Malaysia-based GP Navis Capital Partners has agreed to buy Domestic Medical Division Taiwan start-ups (DMD), the cold chain medical equipment unit Chinese e-commerce giant Alibaba Group has of Sweden’s Domestic Group. DMD makes and earmarked NT$100 billion ($316 million) for a distributes a range of cooling and freezing not-for-profit fund that will be used to boost medical equipment. The financial terms of entrepreneurship among young people in the deal were not disclosed. DMD generated Taiwan.. approximately EUR43 million ($49 million) in revenue in 2014. 58.com acquires Chinese level; the tax liability will simply flow through to real estate platform AUSTRALASIA the limited partners. Category III funds, which Chinese online marketplace 58.com, a VC-backed includes hedge funds, will not receive pass- classifieds website, has acquired Anjuke, an KKR’s Australia head Justin through status. online real estate listing platform, for about $267 In addition, Jaitley announced the deferment million. 58.com has issued about five million Reizes retires of taxation under the controversial general anti- new ordinary shares and paid an additional $160 Justin Reizes, head of KKR Australia, is retiring avoidance rule (GAAR) by two years. The rule has million in exchange for 100% of Anjuke. after more than 15 years with the firm. He will caused concern within the investor community, depart at the end of March. Reizes joined KKR in particularly because of the lack of clarity it offered N5 Capital launches $200m 1999 and played a key role in investments such over the taxation of private equity funds. as Tenovis, Maxeda, Seven Media, and Santanol. It Steps have also been taken on the taxation debut VC fund is not yet known who will take up Reizes’ role. of real estate investment trusts (REITs) and N5 Capital, a Beijing-based venture capital firm, infrastructure investments trusts (INViTs). has launched its debut US dollar-denominated PEP exits the last of its Provisions include the exemption of long-term fund with a target of $200 million. N5 Capital capital gains tax on disposal of units, and pass- backs early-stage companies across various stake in Australia’s Veda through status for REITs with respect to rental segments in the mobile internet space. Pacific Equity Partners (PEP) has sold its entire income from trust-owned assets. remaining 20% stake in Australian Securities Online drugstore 7LK raises Exchange-listed credit-checking firm Veda Group. The A$382 million ($301 million) transaction saw other functions needed to run a small business. $48m from VCs the Australian GP sell 165 million shares at A$2.31 The investment will give Xero a cash balance of Chinese online drugstore 7LK.com has raised apiece.