China opened new fronts in its regulatory blitz against tech companies this week, this time targeting the edtech and ride-hailing sectors.
The country has asked online tutoring firms offering core school subjects to become not-for-profits, a move that could erase much of the billions that PE and VC investors — from Tiger Global to Temasek and GIC — have staked on the much-extolled sector.
PE-backed investments into China’s education sector had hit a record high of $8.1 billion last year as pandemic-induced lockdowns boosted demand for online education, Refinitiv data shows. Tencent Holdings-backed Yuanfudao and SoftBank-backed Zuoyebang accounted for the biggest chunk of the private capital raised in 2020.
While the startups face a markdown on their businesses — the TAL Education Group, for instance, said its operations could take a hit — the investors may be left to scramble for exits or look for alternatives such as non-academic tutoring.
China is also ramping up scrutiny of its online ride-hailing firms under plans to protect workers’ rights and prevent anti-competitive practices.
Meanwhile, food delivery platforms in China will be required to guarantee riders an income above minimum pay, insurance, and relaxation in delivery deadlines, under reforms by the market regulator.
The regulatory moves prompted the SEC to declare that Chinese companies listed on US exchanges must disclose the risks of Chinese government interference in their businesses.
The new model appears to place common prosperity, as President Xi Jinping has put it, ahead of helter-skelter growth, investors say.
“China’s tightening grip on the tech and internet sectors could cast a shadow over the investment landscape in the months ahead,” noted a report by DealStreetAsia – DATA VANTAGE released this week.
The Greater China Deal Review: Q2 2021 report also pegged the funds raised by Chinese startups from PE-VCs in April-June at nearly $17 billion. The report also estimated that there were 176 listings on Chinese and US bourses by China-based startups, which raised a cumulative $40 billion.
In sharp contrast to their Chinese peers, Indian edtech startups continue to make the most of the post-pandemic boom.
Unicorn Byju’s continued its acquisition spree by buying after-school learning app Toppr and upskilling platform Great Learning in a cash-and-stock deal, showed regulatory filings by the company. With this, Byju’s has acquired six startups, shelling out over $2.2 billion, in 2021 alone.
Now, a look at deals, fundraisings, and other stories that made the headlines this week.
Based on data culled from the DealStreetAsia-DATA VANTAGE platform, our team got wind that Indonesia’s HappyFresh, backed by Grab Ventures, has raised about $65 million in its latest funding round.
Singapore-based cross-border payments firm Nium raised over $200 million in a Series D funding this week, making it Southeast Asia’s first B2B payments unicorn.
Singapore-based cryptocurrency platform Vauld raised $25 million in a Series A funding led by Peter Thiel’s Valar Ventures.
Vietnam-based VNLIFE Corporation raised over $250 million in a Series B funding round led by General Atlantic and Dragoneer Investment Group.
Droom, an online automobile marketplace, closed the first leg of its pre-IPO growth funding round of up to $200 million at a valuation of $1.2 billion.
Deals in clean and sustainable tech
Funding in clean and sustainable technologies seems to be gaining pace.
Chicago-based alternative protein maker Nature’s Fynd plans to open a manufacturing facility in Singapore — its first in Asia — within the next two years, its founder Thomas Jonas told DealStreetAsia.
Singapore’s GIC said it will invest $240 million in Arctic Green Energy to support the renewable energy firm’s Asia expansion.
Southeast Asia Clean Energy Facility (SEACEF), a Singapore-based fund managed by Clime Capital, raised $15 million for its first clean energy fund from Microsoft and several international foundations.
In India, the IFC has provided a loan of $250 million to HDFC to promote affordable green housing finance. The IFC, and two funds managed by IFC Asset Management Company, also made an equity investment of $126 million in India’s Federal Bank to grow and strengthen the lender’s ESG portfolio.
Meanwhile, PE firm TPG has raised $5.4 billion for its inaugural fund under its climate investing strategy, while Toronto-based Brookfield Asset Management closed an initial $7 billion for the new Brookfield Global Transition Fund (BGTF), which helps businesses cut their carbon emissions.
Mohalla Tech, the parent company of ShareChat, raised $145 million as an extension to its Series F round led by Temasek, Moore Strategic Ventures (MSV) and Mirae-Naver Asia Growth Fund.
On the fundraising trail
French alternative investment manager Tikehau Capital is currently raising capital from external investors for its maiden Asia-focused fund Tikehau Asia Opportunities, its top executive Jean-Baptiste Feat told DealStreetAsia.
Indonesian VC firm Kejora Capital is focusing on follow-up investments in its portfolio companies and is seeking to raise $300 million for a new fund.
Hong Kong asset manager Ares SSG closed its third secured lending fund at more than $1.6 billion, making it twice as large as its predecessor fund. DealStreetAsia had reported in July last year that Ares was targeting to raise $1.5 billion for the third lending fund.
Singapore-based PE firm Crescent Point Group has filed with the US SEC to raise up to $900 million for its latest deep value fund — the Crescent Asia Consumer & Deep Value Fund III, LP.
Global alternative asset manager Blackstone has raised $5.24 billion so far for its second Asia private equity fund and has begun raising a third real estate fund for the region, it said during a Q2 2021 earnings call.
Swedish alternative investment firm EQT is seeking to raise 2 billion euros ($2.36 billion) for its Asia Pacific strategy, significantly larger than the $800 million it previously raised for an Asia mid-market fund.
Swiss multifamily office Ibex Capital Partners is planning to establish a $200 million fund targeting secondary equity buyouts in Asia. The fund will initially focus on China and India, although the firm also highlighted Southeast Asia as a region with promising possibilities.
Interviews and analysis
Malaysia’s integrated digital media group iMedia is betting big on the inorganic route and is looking to announce at least one more merger or acquisition this year, said its CEO and co-founder Voon Tze Khay. Since its inception early last year, iMedia has already confirmed six acquisitions.
DealStreetAsia also spoke to Pandu Patria Sjahrir, the commissioner of the Indonesia Stock Exchange (IDX) and Indies Capital co-managing partner, this week. Even as the IDX is seeking to tap the growing interest in the tech sector, Pandu said guidelines related to dual-class share regulation are underway. Meanwhile, marketplace Bukalapak has officially started offering shares to the public on the IDX after completing its book-building exercise.
Singapore-based private equity real estate firm Q Investment Partners is exploring student accommodation and co-living assets in developed Asian markets such as Japan and Singapore, its head of investment Abhinav Swamy said. “There are countries in the region that have domestic, but transient populations. The students need accommodation when they move to another city to study, so these are pockets of credible opportunities that we would be eyeing,” he said.
Nasdaq-listed global alternative asset manager Hamilton Lane is betting big on the secondaries market in Asia as the asset class becomes more mainstream, said its vice president Juan Delgado-Moreira.
Inflexor Ventures managing partner Venkat Vallabhaneni in an exclusive interaction with DealStreetAsia explained the VC’s reasoning behind investing in B2B enterprise startups leveraging deep technology capabilities.
Executives in Southeast Asia are giving up the comfort of plush corporate jobs to become fund managers as the startup ecosystem in the region is throwing up significant investment opportunities. We examined this trend in this analytical piece.
And finally, the re-emergence of COVID-19 in Vietnam, which had a stellar record of containing the virus during the first wave, is disrupting ride-hailing and on-demand delivery services in the country. We examined the impact on the startups, their investors, and workers in this analytical report.