The total number of corporate-backed deals in July and August stood at 360 – 192 of them took place in July and 168 in August, both slightly up from the 185 and 151 funding rounds in the same months last year. Investment values were even larger than last year’s levels. An estimated $9.13bn was invested in July, up 155% from the $3.59bn invested last year, and $18.04bn in August, up 112% from $8.48bn in August 2016.
The deal count in July and August went down slightly compared with previous months this year. However, the relative slowdown was not as drastic as that registered earlier in April when we reported only 151 transactions. August also set a record in terms of estimated total investment in corporate-backed rounds for this year. Another record was registered in August with the largest acquisition of a formerly corporate-backed company yet recorded.
All these results make for a rather moderate summer slowdown of the disclosed dealflow compared with both last year’s levels and the previous months of 2017.
As usual the US came first in number of corporate-backed venturing deals struck, hosting 168 rounds, slightly less than half of the disclosed dealflow, while China was second with 55 rounds and India third with 24.
The leading corporate investors by number of deals were telecoms firm SoftBank, media and entertainment company Walt Disney and internet conglomerate Alphabet. The largest deals involved SoftBank, which also topped the ranking along with ride-hailing platform Didi Chuxing and Chinese language news provider Sina.
Deals
The most active corporate investors came from the financial services, IT, media and health sectors.
GCV Analytics data shows that emerging businesses in the IT, health, media, services and financial sectors secured the highest number of deals involving corporate venturers. The top deals by round size were not concentrated in any particular sector, however. They ranged from transport and services through consumer and media to health and fintech. SoftBank was the most frequent investor in the top deals for July and August. Eight of the top 10 deals by round size were above $1bn.
SoftBank and its $93bn SoftBank Vision Fund agreed to invest a total of $4.4bn in US-based working space operator WeWork. The two investors paid $3bn to acquire a mixture of primary and secondary shares, and provided $1.4bn in funding for three new regional WeWork subsidiaries in Asia. Founded in 2010, WeWork oversees a network of 160 co-working spaces across 50 cities in 16 countries. People can rent desks or full offices and have access to high-speed internet, office supplies and equipment. The company plans to move heavily into Asia through its new subsidiaries – WeWork China, WeWork Japan and WeWork Pacific, which will focus on Southeast Asia and Korea – and all three will be managed by local teams. Earlier in July, WeWork raised $500m from SoftBank and private equity firm Hony Capital for its new China-based subsidiary WeWork China.
The Softbank Vision Fund also has invested an amount reported to be at least $2.5bn in India-based e-commerce company Flipkart. Founded in 2007, Flipkart has built the largest e-commerce marketplace in India by market share. It lists about 80 million products in more than 80 categories including electronics, fashion, appliances and furniture.
Singapore-based ride-hailing platform Grab raised $2bn in a series G round from SoftBank, China-based on-demand ride service Didi Chuxing and carmaker Toyota’s Next Technology Fund as part of a series G round. Grab is seeking additional investors to complete the round targeting $2.5bn. The round reportedly valued Grab at more than $5bn. Founded in 2012 and originally known as GrabTaxi, Grab operates in 66 cities across seven Southeast Asian countries.
China-based Ant Financial, an affiliate of its former parent and e-commerce firm Alibaba, acquired a minority stake in Hong Kong-based financial services firm MassMutual Asia along with Yungfeng Capital, the family office investment firm of Alibaba’s founder Jack Ma, which acquired 60% . The other 40% were acquired by Ant Financial and a host of other investors including media group Sina and Singapore government-backed acquirer City-Scapes Pte, according to China Money Network. The total size of the transaction was $1.7bn, consisting of $1bn in cash and $700m in shares.
Entertainment and media group Walt Disney agreed to invest a further $1.58bn in portfolio company BamTech to take a majority stake in the US-based online video streaming technology provider. Disney paid $1bn for a 33% stake in BamTech last year as part of a deal that granted it an option to acquire a majority stake. This latest investment raised its share to 75%. BamTech was originally created by MLB Advanced Media, the interactive media arm of sporting league Major League Baseball (MLB). It powers the online video offerings of MLB and several other major sporting organisations that together have attracted about 7.5 million subscribers.
The Softbank Vision Fund also led a $1.1bn round for Switzerland-based drug developer Roivant Sciences that featured existing investors including pharmaceuticals distributor Dexxon. Founded in 2014, Roivant pursues a business model whereby it develops therapeutics through a range of subsidiaries. The subsidiaries in question include Myovant, which focuses on endocrine diseases and women’s health in general, Axovant (neurology), Dermavant (dermatology), Enzyvant (rare diseases) and Urovant (urology).
E-commerce firm Alibaba led a $1.1bn round for Indonesia-based e-commerce platform Tokopedia. The round included unnamed existing investors although reports suggested SoftBank and venture capital firm Sequoia Capital would take part. Tokopedia runs an online marketplace where online merchants and local brands sell a range of consumer products spanning categories such as fashion, software, electronics, cars and lifestyle products.
SoftBank and the SoftBank Vision Fund announced their intention to invest $1bn in US-based online sports e-commerce platform Fanatics. It is reported that the bulk of the funding will come from the fund and the deal will value Fanatics at $4.5bn. Fanatics operates an online platform that sells merchandise and apparel on behalf of sports teams. It is the official merchandise partner of the National Football League, National Basketball Association, National Hockey League, MLB and Nascar.
E-commerce group Alibaba co-led a $700m series E round for China-based bicycle-sharing service Ofo. The round was co-led with Hony Capital, the private equity firm formed by conglomerate Legend Holdings, and Citic Private Equity, a branch of asset management firm Citic, and also featured on-demand ride platform Didi Chuxing and investment firm DST Global. Founded in 2014, Ofo operates a service that enables users to rent bikes using a mobile app. It has more 100 million registered users across 150 cities, and manages roughly 2 million transactions each day.
Exits
GCV Analytics tracked 31 exits involving corporate VC investors globally over July and August. The majority of those exits were acquisitions (20) along with seven initial public offerings, four mergers and two other transactions. Almost half the exits (15) were companies based in the US. The value of these transactions varied from $1m to a record-setting $15.3bn.
The largest acquisition yet of a company previously backed by corporate investors was completed by Intel, which acquired Israel and US-based developer of vision driver assistance systems Mobileye for $15.3bn. It bought 84% of the company’s outstanding ordinary shares. Mobileye had previously received backing from financial firms Goldman Sachs and Morgan Stanley in the 2000s as well as car rental services Enterprise Rent-a-Car and financial firm Fidelity in 2013 before it floated on the New York Stock Exchange in 2014. Founded in 1999, Mobileye develops a collision avoidance system, offering computer vision and machine learning, data analysis, localisation and mapping for advanced driver assistance systems and autonomous driving.
Germany-based online food ordering platform Delivery Hero went public in a €996m ($1.13bn) IPO that gave a partial exit to e-commerce holding company Rocket Internet. The IPO consisted of 18.95 million new shares and 20 million shares held by the Rocket Internet-founded Global Online Takeaway Group, all at €25.50 each. Delivery Hero has built an online food ordering and delivery platform serving customers in more than 40 countries across Europe, Latin America and the Middle East and North Africa, and Asia-Pacific.
Enterprise software provider Sage Group agreed to acquire US-based financial management software provider Intacct in an $850m deal, giving exits to payment services provider American Express and professional services firm Deloitte. Founded in 1999, Intacct has built a cloud-based platform for enterprises that incorporates cash, inventory, contract and vendor management as well as accounting, purchasing, financial consolidation, revenue recognition, subscription billing, financial reporting and project and fund accounting.
Waimai, the food delivery service launched by China-based internet company Baidu, was acquired by Rajax, the operator of food delivery company Ele.me. Baidu will continue to own a small stake in the business. The transaction reportedly valued Waimai at about $800m, according to TechCrunch. Waimai operates an online platform for ordering food from local restaurants and fast food outlets.
China-based prenatal genetic testing company Berry Genomics, backed by conglomerate Legend Holdings, completed a reverse merger with Shenzhen-listed automotive parts manufacturer Chengdu Tianxing Instrument and Meter. The transaction valued Berry Genomics at RMB4.3bn ($653m), down from its 2015 valuation of RMB10bn. Tianxing issued approximately 203 million new shares at RMB21. Founded in 2010, Berry Genomics offers non-invasive prenatal genetic testing and diagnostics such as DNA sequencing for disease screening.
Cybersecurity software producer Symantec agreed to acquire Israel-based mobile threat detection platform Skycure for a reported $250m, allowing insurance firm New York Life to exit. Skycure has created an artificial intelligence and machine learning-equipped software platform that combines crowdsourced threat intelligence with device and server-based analysis to predict and combat cyberthreats to mobile devices.
US-based ride-hailing service Uber agreed to invest $225m in a company that will merge its operations in Russia and some of its neighbouring countries with that of Russia-based internet company Yandex. The entity will consist of Uber’s on-demand ride and food delivery assets in 21 cities across Russia, Azerbaijan, Belarus and Kazakhstan and Yandex’s analogous subsidiary, Yandex Taxi, which was founded in 2011 and is present in six countries, including Armenia and Georgia.
Canada-based bone disease treatment developer Clementia Pharmaceuticals raised $120m in an IPO in the US that provided an exit for biopharmaceutical company UCB Pharma. The company priced 8 million shares at $15 each, at the top of the $13 to $15 range it had set. Clementia plans to put $65m of the proceeds toward phase 3 clinical trials for its lead product candidate, a small-molecule therapeutic called Palovarotene that will combat fibrodysplasia ossificans progressiva by preventing abnormal bone or tissue formation.
Calimmune, a US-based gene therapy developer backed by an undisclosed pharmaceutical firm, is set to be acquired by biopharmaceutical firm CSL Behring for an upfront payment of $91m plus $325m in milestone payments over a period of about eight years. Founded in 2006, Calimmune is working on a gene therapy for sickle cell disease and beta-thalassemia, inherited chronic disorders that affect the protein in red blood cells.
China-based bicycle-sharing company Youon Bike raised $87m in an IPO on the Shanghai Stock Exchange that provided an exit to Ant Financial. The company’s shares were priced at RMB26.85 ($4) each, and rose as high as RMB38.66 on its first day of trading. It is the first time a China-based on-demand bicycle service provider has gone public. Founded in 2010, Youon began life as an operator of government-funded bicycle rental offerings in small cities and towns.
Note: Monthly data can fluctuate as additional data are reported after GCV goes to press
