PwC Private Equity / Venture Capital 2015 Review and 2016 Outlook 3 March 2016

Transcription

1 Private Equity / Venture Capital 215 Review and 216 Outlook 3 March 216

2 Table of contents Fund raising 3 Investments 8 Exits outlook 22

3 Fundraising

4 PE and VC fundraising remained at healthy levels; the capital available for financial investing is considerably greater than implied by these numbers because of the direct investment activities of insurers (and other financial institutions); government and industry funds; SOE funds; private-company funds; and HNWI vehicles. PE/VC fund raising for China investment* * Excludes PEs investing in China from non-region specific funds No. 3 $277 US$ billion $ $ $118 $ Renminbi Fund Size Nonrenminbi Fund Size Fund Volume Source: Thomson Reuters, China Venture and analysis 4

5 In 215, renminbi fund size fell by 7% from the previous year to US$ 19.8 billion. Overall, the proportion of non-renminbi fund size to renminbi fund size appears to have reached a broadly steady state. Funds: The growth of Renminbi funds ( ) 1% 8% 6% 36% 51% 6% 58% 6% Renminbi Fund Size Non-Renmibi Fund Size 4% 2% 64% 49% 4% 42% 4% % Source: ThomsonReuters, ChinaVenture and analysis 5

6 25-215, Fundraising for the China market dominates Asian PE with more than US$43 billion raised (not including allocations from non-china specific funds). Funds: Total funds raised by fund country, with geographic preference in Asia (25 215) US$ billion $43 $76 $69 $59 $41 $39 $28 China/HK Japan India S Korea Singapore Australia Others Source: AVCJ 6

7 China focused funds were almost 1% of global PE fundraising in a slight percentage points drop compared to last year. Funds: PE/VC funds raised in China vs ROW ( ) US$ billion $341 $39 $532 $486 $496 World China $47 $42 $32 $5 $ Source: ThomsonReuters, ChinaVenture, Preqin and analysis 7

8 Investment

9 With so many financial investors active, the number and value of PE deals (which includes other categories of financial investors) increased 79% (by volume) and 169% (by value). Private equity deals ( ) No. 1,2 US$ billion 25 1, $ $ $ $ $ , Announced Deal Volume Announced Deal Value Source: ThomsonReuters, ChinaVenture and analysis 9

10 The VC industry (and tech investing generally) was especially hot with investors chasing tech opportunities in China in search of perceived high growth opportunities as the general economy slowed; early through late stage funding rounds were closed, with some larger deals (recorded in our PE numbers) coming from consolidation in the tech sector. Venture capital deals by volume ( ) No. 3, 2,5 2, 1,5 1, 5 2,735 1, Announced Deal Volume Source: ThomsonReuters, ChinaVenture and analysis 1

11 China represented a 17% sharp increase of PE/VC deal values compared to 214 and grabbed 48% world market share, while globally there was only a nearly 18% increase. Deals: PE/VC deal values China vs ROW ( ) US $ billion World China Source: AVCJ, Preqin and analysis 11

12 High technology and consumer-related are still the top two hottest PE deal industry sectors, especially PE deal volume in high technology increased by 4% in 215 PE deal volume by industry sector No Others Retail Energy and Power Media and Entertainment Materials Healthcare Real Estate Financial Services Consumer related Industrials High Technology Source: Thomson Reuters, ChinaVenture and analysis 12

13 and deal values in high technology sector reached US$ 76.8bn last year, a notable high increase in value of almost six times was recorded. There were 27 PE / financial-buyer deals valued at more than US$1bn in 215, another record. PE deal value by industry sector US$ billion Others Retail Telecommunications Energy and Power Media and Entertainment Healthcare Industrials Real Estate Consumer related Materials Financial Services High Technology Source: Thomson Reuters, ChinaVenture and analysis 13

14 The outbound trend for PEs and financial buyers is now well established, almost doubling in number in 215 from the previous high; these investors are mainly seeking overseas assets with a China angle. China mainland PE/Financial buyer backed outbound deal value and volume No. US$ billion $16 $14 $12 $ $ Announced Deal Volume Announced Deal Value Source: Thomson Reuters, ChinaVenture, AVCJ and analysis 14

15 Exits

16 215 first half year was the most strongest period of PE-backed IPO over the last three years - there was 89 IPOs and domestic (A-Share) IPOs continue to be the preferred exit route the IPO activity slowed down in the second half year. In 215, PE/VC backed investment in Three New Board listed companies reached 793. PE/VC backed deal exit volume by type ( half yearly) No H1 213H2 214H1 214H2 215H1 215H2 IPO M&A - trade M&A - PE Source: Zero2IPO, AVCJ and analysis 16

17 Trade sale exits by M&A has reached a lowest level since 211, but IPO activity remains positive as last year. PE/VC backed deal exit volume by type No IPO M&A - trade M&A - PE Source: AVCJ and analysis 17

18 An increased trust in the IPO in China market was seen and Shenzhen Stock Exchange launches its largest domestic IPO in June of 215. Exits: China PE/VC backed IPO exits amounts raised by bourse ( ) US$ billion Source: AVCJ Others NYSE/ NASDAQ Shenzhen Shanghai A Hong Kong 18

19 Overseas listings are no longer popular for PE/VC backed issuers while A share market attracts more companies to go public. Especially, a new board of strategic emerging industry is going to be launched, which is intended to bring back overseas-listed Chinese high-growth and innovative companies. Exits: China PE/VC backed IPO exits number of exits by bourse ( ) No Others NYSE/ NASDAQ Shenzhen Shanghai A Hong Kong Source: AVCJ 19

20 The numbers of PE or VC backed IPOs in China exceeded in the US in 215 the first year overtaking after 212. Exits: PE backed IPO exits China vs US number of exits ( ) No US China Source: AVCJ,Thomson Reuters and NVCA 2

21 The cumulative overhang of investments to exits remains a problem for the industry. While the number of exits remained the same level as last year, PE/VC deal volume doubled at the same time. PE/VC deal volume vs number of exits No. 4, 3,5 3, 2,5 2, 1,5 1, 5 1, , , VC deals PE deals M&A exit IPO exit Source: Thomson Reuters, ChinaVenture, AVCJ and analysis 21

22 216 outlook

23 216 outlook Traditional PE faces increasing competition from other classes of direct financial investors including insurers (and other financial institutions); government and industry funds; SOE funds; private-company funds; and HNWI vehicles. In some industry sectors, there are also diverse modes of business cooperation, and new areas of investment actively explored at the same time. Despite ongoing disruption in the domestic equity capital markets, A-share related exits are often preferred due to better multiples, and this tends to favour domestic PEs over their foreign counterparts. We expect outbound PE and financial buyer investment to continue to grow. We do expect exits to increase especially if markets stabilise, and also with more secondary (PE to PE) activity. 23

24 216 outlook Overall, full-year 216 will likely be a record year for financial M&A, albeit not necessarily for traditional PE taken alone. According to Shanghai Stock Exchange, Strategic Emerging Board will be launched in the first half of 216. It will be conducive to the construction of domestic multi-level capital market, and provide the growth opportunities for innovative companies. The traditional exit route cannot satisfy the cumulative overhang of investments. The industry experts are seeking to other exit plan, such as New Three Board, etc. 24

25 Thank you 216 PricewaterhouseCoopers Zhong Tian LLP. All rights reserved. refers to the China member firm, and may sometimes refer to the network. Each member firm is a separate legal entity. Please see for further details.