VC investment in Asia shows signs of recovery – but Q2 is still likely to be rough

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Venture capital investment activity in the Asia-Pacific region has shown signs of recovery towards the end of the coronavirus-hit first quarter – but there are reason to fear Q2 will remain a rough time for the region, new research shows.

Big-ticket VC deals remained mostly non-existent in Q1, figures from GlobalData reveal, with low value deals involving investments of less than $10m continuing to account for the majority of the VC investment volume.

Larger deals did begin to surface in February, and especially March, however, with the latter month seeing $1.2bn raised by Go-Jek and $1bn by Yuanfudao.

The data provider said VC investment volume with disclosed deal value decreased from 227 in January to 219 in February, before rebounding to 291 in March, primarily due to decline in new COVID-19 cases and easing of lockdown in China.

Aurojyoti Bose, Lead Analyst at GlobalData, said, “Despite the recovery towards the end of Q1, Q2 is likely to be a rough quarter with several media reports indicating at a second wave of the virus hitting China.

“April 2020 also failed to maintain the momentum set during the previous month with deal volume mostly remaining flat.”

The share of low value deals as a percentage of the total deal volume in Q1 was more than 65% in Q1 2020. In contrast, the share of deals valued more than $100m stood at 2.3%. while the share of billion-dollar deals stood at just 0.14%.

Deal volume declined by 3.5% in February 2020 compared to the previous month, but rebounded well in March by growing 32.9%, the report said.

The share of low value deals as a percentage of the total deal volume stood at 67%, however.

AltAssets reported last month that overall M&A deal activity in the Asia-Pacific region had also rebounded following weeks of decline at the hands of the coronavirus pandemic.

The number of deals announced in the Asia-Pacific region increased by 56.7% during the week ended April 5, compared to the previous week, according to data and analytics business GlobalData.

It said the growth in deal announcement was a sign of revival of optimism following volatile market conditions in the region – and globally – since the Covid-19 crisis took hold of the world’s economies.

Copyright © 2020 AltAssets

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