Wednesday, June 10, 2015

Dow Jones Chinese Venture Capital Report 1Q 2015


Chinese Venture Capital Fundraising Improves in 1Q 2015 

  • Chinese venture fundraising rose to $922 million across 6 funds during 1Q 2015, two and a half times the amount raised in 4Q 2014 albeit through three fewer funds.
  • In comparison with the same period last year, dollars fell by 16% with the number of venture funds with closings declining by 40%.
  • Banyan Partners Fund II was the largest of 1Q 2015, raising $362 million and accounting for 39% of the total amount raised in funds for the quarter.

Venture Capital Investment in China - 1Q 2015 

Equity Financings into Chinabased, VC-backed Companies (2012 2015) 

  • Chinese venture-backed companies raised more than $6.5 billion in 215 deals during 1Q 2015, a decline of 5% in capital invested and 21% in number of deals completed from 4Q 2014.
  • Compared with 1Q 2014, however, dollars invested rose by more than two and a half times while deal flow improved by 56%.
  • Consumer Services was the strongest sector of the quarter in terms of attracting investment with Business and Financial Services in second. The sectors garnered 67% and 21% of all dollars invested during 1Q 2015 respectively.

Equity Financings into China-based, VC-backed Companies, by Industry Group (1Q 2015) 

  • Consumer Services companies took $4.4 billion through 94 deals during 1Q 2015, a rise of 17% in dollars invested from 4Q 2014 despite a 24% decrease in deals completed. The sector attracted 44% of all deals completed for the quarter and a 67% share of total amount invested.
  • Business and Financial Services companies raised the second highest proportion of investment during 1Q 2015. The sector garnered $1.3 billion across 50 deals; over three times the dollars accrued in 4Q 2014 with a 25% improvement in deal flow.
  • The Information Technology sector placed third for investment, receiving $524 million across 45 deals. Sector investment fell by 77% from 4Q 2014 while deal flow declined by 46%. The sector’s investment figure represents 8% of the total equity financing into China-based VC-backed companies for 1Q 2015.


Venture M&A and IPO Market Activity in China (1Q 2015) 

Exit Opportunities for Chinese VC-backed Companies

  • Seven M&As were completed by venture-backed companies in China during 1Q 2015, one more than in the previous quarter and four more than in 1Q 2014.
  • The largest M&A of the quarter was Hangzhou Songcheng Group’s acquisition of podcast services provider Six Rooms Holdings in March for $415 million.
  • 21 VC-backed companies went public during 1Q in China, 50% more than in 4Q 2014 but 22% fewer than those completed in 1Q 2014.

Chinese VC-backed IPOs (2012-2015)

  • 21 VC-backed companies went public during 1Q in China, 50% more than in 4Q 2014 but 22% fewer than those completed in 1Q 2014. Dollars raised through listings improved by 31% from the previous quarter to reach $1.7B, though the figure fell by 16% against the total amount raised during 1Q 2014.
  • Beijing Kunlun Tech Co. Ltd. had the largest IPO of the quarter, raising $229 million for its January listing on the ChiNext. The online video game developer’s IPO represents 13% of the total raised through VC-backed IPOs in China during 1Q 2015.

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