Dow Jones VentureSource 2Q’15 China Venture Capital Report

The following report presents Dow Jones VentureSource’s quarterly findings for Chinese venture capital fundraising, investment, valuation, and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market. 

Highlights for 2Q 2015 include: 

• Chinese venture capital fundraising halved from previous quarter despite an increase in fund closings;
• Venture capital investment into Chinese companies eclipses amount raised in each of the previous two quarters to reach record high;
• Exit activity improves as mergers and acquisitions (M&As) rise and initial public offerings (IPOs) surge to highest number since 4Q 2010.

 
FUNDRAISING 

Chinese Venture Capital Fundraising Falls in 2Q 2015 Despite Rise in Closings 

• Chinese venture fundraising fell to $1.2 billion across 18 funds during 2Q 2015, a decline of 50% in dollars raised despite a 50% increase in the number of fund closings.
• In comparison with the same period last year, dollars raised fell by 62%. However, the number of venture funds with closings improved by 29%.
• Huochai Kuailu Investment Fund was the largest of 2Q 2015, raising $484 million and accounting for 39% of the total amount raised in funds for the quarter.
• Chinese VC Fundraising 20 (2012 – 2015)

 

FINANCING 

Equity Financings into China-based, VC-backed Companies, by Industry Group (2Q 2015) 

• Consumer Services companies took just over $5 billion through 173 deals during 2Q 2015, a rise of 11% in dollars invested and 47% in deals completed from 1Q 2015. The sector attracted 48% of all deals completed for the quarter and a 60% share of total amount invested.
• Business and Financial Services companies raised the second highest proportion of investment during 2Q 2015. The sector garnered $2.2 billion across 99 deals; a 52% increase in dollars accrued and a 77% improvement in deal flow from the prior quarter.
• The Information Technology sector placed third for investment, receiving $852 million across 57 deals. Sector investment rose by 54% from 1Q 2015 while deal flow improved by 21%. The sector’s investment figure represents 10% of the total equity financing into China-based VC-backed companies for 2Q 2015.

LIQUIDITY 

Venture M&A and IPO Market Activity in China (2Q 2015) 

Exit Opportunities for Chinese VC-backed Companies

• 17 M&As were completed by venture-backed companies in China during 2Q 2015, eight more than in the previous quarter and nine more than in 2Q 2014.
• The largest M&A of the quarter was Jiangsu Sanyou Group’s reverse merger with healthcare check-up services provider Meinian Onehealth Healthcare Group in April for $894 million.
• 44 VC-backed companies went public during 2Q in China, the most in a single quarter since 50 IPOs were completed during 4Q 2010.

Chinese VC-backed IPOs

• 44 VC-backed companies went public during 2Q in China, doubling the number for 1Q 2015 and quadruple the number completed in 2Q 2014. Dollars raised through listings more than tripled the previous quarterly total to reach $5.6B. The figure doubled the $2.75 billion raised through IPOs during 2Q 2014 and is the highest quarterly figure since 1Q 2011 ($6B).
• China National Nuclear Power Co. Ltd. had the largest IPO of the quarter, raising over $2.1 billion for its June listing on the Shanghai Stock Exchange. The nuclear power provider’s IPO represents 38% of the total raised through VC-backed IPOs in China during 2Q 2015.