VC investment in Asia continued to rebound in Q4’20, driven primarily by a continued surge in investment in China, where VC investment rose to an eight-quarter high. Chinese companies accounted for five of the top ten largest VC funding rounds globally during the quarter, including a $1.7 billion raise by truck-hailing company Manbang Group, a $1.6 billion raise by edtech Zuoyebang, a $1 billion raise by edtech Yuanfudao, a $907 million raise by e-commerce company Yunwang Wandian, and a $736 million raise by electric vehicle maker Enovate motors.
IPO activity was very strong in Hong Kong and Shanghai during Q4’20, despite the sudden cancellation of Ant Financial’s IPO two days before listing. Given ongoing tensions with the US and concerns about the potential de-listing of a number of China-based companies in the US, many China-based companies looking to exit set their sights on regional exchanges. Healthcare and biotech were big winners in the IPO market in Asia during the quarter. In December, JD Health raised $3.5 billion in its IPO on the HKSE - the largest healthcare IPO ever seen in Asia. The company’s stock rose 72% in first day trading17. The HKSE also hosted one of the world’s largest biotech IPOs of the year when China-based biotech RemeGen raised $515 million in October18.
The HKSE was not the only exchange to see significant activity in Asia. The Shanghai Stock Exchange’s recent Star Market, introduced in 2019 to help innovative companies leverage public markets, saw its 200th listing in December 202019. The Shenzhen Stock Exchange’s ChiNext market also saw increased activity and interest from China-based startups following changes to its listing rules in Q3’20.
During 2020, edtech attracted a significant amount of attention and VC investment in Asia, including a $1.6 billion raise by China-based Zuoyebang, a $1 billion raise by China-based Yuanfudao, and an $87 million raise by UnAcademy in India during Q4’20. Yuanfudao’s raise made it the most valuable private edtech company in the world at $15.5 billion20, surpassing India-based Byju, which was valued at $11 billion in September21. Over the next few quarters, edtech will likely continue to be a hot area of investment in Asia, with India potentially starting to see some consolidation in the space.
VC investment in Asia is expected to continue to rebound heading into Q4’20. Health and biotech are expected to remain very hot areas of investment, in addition to edtech, logistics, and marketplace platforms. IPO activity is also expected to remain strong in Asia, particularly with respect to secondary listings by China-based companies already listed in the US.
While big VC funds are expected to continue to attract capital more readily than smaller funds in Asia, heading into 2021, there is also expected to be increasing fundraising activity focused on niche sectors – such as sustainability or inclusive finance.