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Private Equity & Venture Capital VOLUME 13, ISSUE 6 ■ AUGUST 2017 alternative assets. intelligent data. PRIVATE EQUITY & VENTURE CAPITAL SPOTLIGHT THE GROWTH OF VENTURE IN THIS ISSUE CAPITAL IN ASIA 47% Venture capital transactions in Asia account for 47% of global deals in 2017 YTD – the most of any region – with FEATURE 3 51% of fund managers surveyed in H2 2017 noting an increase in appetite from Asia-based LPs. The Growth of Venture Capital in Asia Find out more on page 3 FEATURE 8 Fund Terms: Finding the Right Balance FUND TERMS: FINDING THE RIGHT INDUSTRY NEWS 12 BALANCE THE FACTS 48% ■ Luxembourg, Belgium 14 of LPs think that performance fees are a key issues when and The Netherlands it comes to aligned interests with GPs. How much of an ■ Sample Investors to 17 impact is this issue in reality, and what are GPs doing to Watch keep both parties happy? Find out more on page 8 CONFERENCES 19 All data in this newsletter can be downloaded to RECENTLY RELEASED: Excel for free THE 2017 2017 PREQIN PRIVATE PREQIN PRIVATE CAPITAL FUND TERMS ADVISOR CAPITAL FUND TERMS ADVISOR alternative assets. intelligent data Sign up to Spotlight, our free monthly newsletter, providing insights into Order Your Copy Download Sample Pages performance, investors, deals and fundraising, powered by Preqin data: SIGN UP Alt Credit Intelligence European and US Fund Services Awards: Best Data and Information Provider | Africa Global Funds Awards 2016: Best Research and Data Provider | The Queen’s Award for Enterprise: International Trade | HedgeWeek Global Awards: Best Global Hedge Fund Research Provider | CAIA Corporate Recognition Award www.preqin.com/contact| [email protected] SuperReturn Middle East 2017 22 - 24 October, Hilton Capital Grand, Abu Dhabi Past lessons. Present opportunities. Future returns. 10% Reader Offer Dear Spotlight reader, The programme for SuperReturn Middle East 2017 is really shaping up with more speakers, sessions and senior non-investment decision-makers in attendance than any other event of its kind. Meet and learn from 400+ LPs, GPs and private equity experts from the Middle East, North Africa and beyond. For all bookings & enquiries, please contact the SuperReturn Middle East 2017 Team Quote VIP Code: FKR2443PRQW for your 10% discount Tel: +44 (0) 20 7017 7200 Email: [email protected] Visit website here THE GROWTH OF VENTURE CAPITAL IN ASIA THE GROWTH OF VENTURE CAPITAL IN ASIA In this article, we look at the record-setting quarter for venture capital transactions in Asia, and examine the impact this has had on the exit environment, fundraising and investor interest. enture capital deal value bounced DEALS ON THE RISE by India with 448 deals for $6bn. Within Vback during the fi rst half of 2017, Since 2013, Asia’s share of the number and Southeast Asia the majority (94) of with a record-setting second quarter in aggregate value of venture capital deals transactions took place in Singapore, Q2, which saw aggregate deal value rise globally has grown consistently. As at July while Indonesia accounted for the largest to $47bn – the highest amount in any 2017, Asia accounted for 43% of deal value proportion ($1.4bn) of deal value, the individual quarter on record (Fig.1). The for 2017 YTD – the most of any region – as highest in the Far East. largest proportion of deal value came well as 31% of all deals (Fig. 2). The majority from Asia: having increased to $23bn it of deals in the region occurred in Greater Managers looking to deploy capital represents almost half of the global value China, with 901 transactions representing in Greater China generally favour the of all deals completed in Q2. $28bn in aggregate deal value, followed telecoms industry, which makes up Fig. 1: Global Venture Capital Deals*, Q1 2012 - Q2 2017 Fig. 2: Venture Capital Deals* in 2017 YTD by Region (As at July 2017) (As at July 2017) 3,500 50 100% 45 3,000 ($bn) Value Deal Aggregate 90% 40 North America 2,500 35 80% 42% 41% 70% 2,000 30 Europe 25 60% 1,500 20 10% 50% Asia No. of Deals No. 22% 1,000 15 40% 10 Israel 500 5 Total of Proportion 30% 47% 0 0 20% 31% Other Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 10% 2012 2013 2014 2015 2016 2017 3%2% 1%1% Year 0% No. of Deals Aggregate No. of Deals Aggregate Deal Value ($bn) Deal Value Source: Preqin Venture Capital Online Source: Preqin Venture Capital Online Fig. 3: 10 Largest Asian Venture Capital Deals* Announced in 2017 Deal Deal Size Portfolio Company Investment Stage Investor(s) Industry Location Date (mn) Bank of Communications, China Didi Chuxing Apr-17 Unspecifi ed Round 5,500 Telecoms China Merchants Bank, Silver Lake, Softbank Ready-Go Jul-17 Series B/Round 2 1,625 Beijing Automotive Group Internet China Flipkart Internet Private Limited Apr-17 Unspecifi ed Round 1,400 eBay Inc., Microsoft, Tencent Internet India Business Go-Jek Indonesia May-17 Unspecifi ed Round 1,200 Tencent Indonesia Services Zhejiang Koubei Network CDH Investments, Primavera Capital, Silver Jan-17 Unspecifi ed Round 1,100 Telecoms China Technology Co., Ltd. Lake, YF Capital Ele.me Jun-17 Unspecifi ed Round 1,000 Alibaba Group Internet China One97 Communications Limited May-17 Unspecifi ed Round 1,000 Softbank Capital Internet India CCB International Asset Management, Toutiao Apr-17 Series D/Round 4 1,000 Telecoms China Sequoia Capital Alibaba Group, CITIC Private Equity Funds Ofo Bicycle Jul-17 Series E/Round 5 700 Management, Didi Chuxing, DST Global, Telecoms China Hony Capital Ucar Mar-17 Unspecifi ed Round 666 PICC Asset Management Telecoms China Source: Preqin Venture Capital Online *Figures exclude add-ons, grants, mergers venture debt and secondary stock purchases. 3 Private Equity & Venture Capital Spotlight | August 2017 © Preqin Ltd. 2017 / www.preqin.com THE GROWTH OF VENTURE CAPITAL IN ASIA $14bn of deal value in the region. Three Fig. 4: Asian Venture Capital-Backed Exits, Q1 2013 - Q2 2017 individual transactions anchored the 120 30 telecoms industry, each worth more than Aggregate Exit Value ($bn) Value Exit Aggregate $1.0bn. The largest completed deal was a 100 25 $5.5bn deal for Didi Chuxing, the mobile 80 20 transportation platform, which raised fi nancing from new investor Silver Lake as 60 15 well as existing investors SoftBank Group, China Bank of Communications and of Exits No. 40 10 China Merchants Bank. The other largest deals involved Zhejiang Koubei Network 20 5 Technology Co., Ltd. ($1.1bn) and a late 0 0 stage round for Toutiao ($1.0bn). Zhejiang Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Koubei Network Technology Co., Ltd. is a 2013 2014 2015 2016 2017 joint venture between Alibaba Group and Ant Financial Services Group, off ering a No. of Exits Aggregate Exit Value ($bn) mobile platform for food and beverage services, while Toutiao is among the most Source: Preqin Venture Capital Online popular news aggregation platforms in Group in March 2016. Since the beginning INVESTOR APPETITE China. of 2016, trade sales accounted for 55% of According to Preqin’s H2 2017 fund exits and 66% of aggregate exit value in manager survey, 51% of GPs have seen EXITS the region (Fig. 6). an increase in appetite for venture capital While venture capital deal value in Asia among Asia-based LPs (Fig. 9). The results continues to grow, exit value has been FUNDRAISING of Preqin’s latest investor surveys indicate relatively stagnant since Q1 2016 when 74 Asia-focused venture capital fundraising that LPs are signifi cantly more likely to venture capital-backed exits accounted increased slightly over Q2 2017: 31 funds target investment in their domestic region for $4.8bn in aggregate value. From Q2 secured an aggregate $4.2bn, one-quarter than funds focused elsewhere, and this 2016 onwards, the region has seen an of all funds closed and 18% of capital remains true for Asia-based investors. average of 51 exits worth just over $1.0bn raised globally (Fig. 8). The largest fund Of investors headquartered in Asia, the per quarter (Fig. 4). Greater China has focused on the region to reach a fi nal majority (85%) are targeting Asia-focused generated the majority ($7.6bn) of capital close in Q2 was Sequoia Capital India IV, funds in the next 12 months; however from exits since the start of 2016, while which surpassed its target size by $350mn more than half of North America-based India has seen the most exits (144) over to secure $850mn in commitments from investors also plan to target the region, the same period (Fig. 5). University of Michigan Endowment, followed by a third of those based in Rockefeller Foundation and Liberty Mutual Europe (Fig. 10). Among all investors The largest exit for an Asia-based portfolio Retirement Benefi t Plan, among others, for surveyed, 47% indicated they would be company since the start of last year was investments in consumer technology and targeting Asia-focused funds over the next the $2.7bn merger of YTO Express, which healthcare companies in India. 12 months (Fig. 11). provides courier services, with Dayang Fig. 5: Asian Venture Capital-Backed Exits by Location, Fig. 6: Asian Venture Capital-Backed Exits by Type, 2016-2017 YTD (As at July 2017) 2016-2017 YTD (As at July 2017) 160 7.6 8 100% 144 11% 140 7 90% 24% 123 ($bn) Value Exit Aggregate 80% 120 6 28% 70% 10% Write-Off 100 5 60% 5% 80 4 IPO 50% 60 3 No.
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