VC investment in Asia-Pacific holds strong in H1 2021, China accounts for more than half of total, finds KPMG analysis

China sees a variety of deals over USD 100 million Secondary listings in Hong Kong see continued momentum

China sees a variety of deals over USD 100 million Secondary listings in Hong Kong see...

28 July 2021, Hong Kong – Venture financing levels continued at a robust pace throughout the Asia-Pacific ecosystem in the first half of 2021, with a growing number of jurisdictions across regions attracting mega VC funding rounds in Q2’21, according to KPMG analysis.

KPMG’s Venture Pulse Q2 2021 report found that VC-backed companies in the Asia-Pacific raised USD 38 billion across 1,998 deals in Q2’21. Top 10 deals were spread across Indonesia, India, China, Singapore and South Korea, with China accounting for more than half of the total VC investment. Exit activity surged in the region during Q2’21, particularly in China, which saw a ten-quarter high in exit value. 

Egidio Zarrella, Partner, Clients and Innovation, KPMG China, says:

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The VC market in China is diversifying, with a broader range of sectors attracting investments, including delivery, artificial in intelligence, life sciences and healthcare, B2B services, and others. The absence of major megadeals provides an opportunity for other companies to scale and grow, which will likely help spur additional investments in the future.

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VC investment in China held steady during Q2’21, with a wide variety of deals over USD100 million, including Horizon Robotics (USD 1.5 billion corporate venture capital), Dingdong Maicai USD 700 million), digital supply chain provider Xingyun Group (USD 600 million), retailer Zhuanzhuan (USD 390 million) and e-grocery company Dingdong Machai (USD 330 million), home fitness company Fiture Technology (USD 300 million), and cloud services provider Beisen Cloud Computing (USD 260 million).

Given recent regulatory developments, there is also a growing opportunity in China for second and third tier tech companies focused in areas such as e-commerce, the sharing economy and logistics to attract more attention from VC investors.

Patrick Chu

Irene Chu, Partner, Head of New Economy and Life Sciences, Hong Kong, KPMG China, says:

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The new anti-competition law in China will help to level the playing field in the longer run and provide more room for other platform players to enter the market to encourage competition and innovation, making Chinese companies even more competitive locally and globally.

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Secondary listings in Hong Kong continued apace in Q2’21, with 2021’s total value of secondary listings already surpassing 2020’s previous peak. Hong Kong has also started to see some SPAC interest with a number of investors and family offices in Hong Kong looking to create SPACs. Many of these investors are taking a cautious approach to SPAC planning and the HKSE is planning to issue a consultation on the listing of SPACs in Hong Kong. 

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About KPMG China

KPMG member firms and its affiliates operating in Mainland China, Hong Kong and Macau are collectively referred to as “KPMG China”.

KPMG China is based in 28 offices across 25 cities with around 12,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Hefei, Jinan, Nanjing, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Tianjin, Wuhan, Xiamen, Xi’an, Zhengzhou, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.

KPMG is a global organisation of independent professional services firms providing Audit, Tax and Advisory services. We operate in 146 countries and territories and in FY20 had close to 227,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG’s appointment for multidisciplinary services (including audit, tax and advisory) by some of China’s most prestigious companies.

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