AAA Robust activity continues as M&A gets buyout boost

Robust activity continues as M&A gets buyout boost

Corporate venturing activity in February was broadly unchanged from January, although broader mergers and acquisitions were handed a boost by the re-emergence of the private equity buyout, with a $24.4bn bid for US-based computer maker Dell and a $23bn offer for US-based consumer goods company Heinz.

There were 51 investments involving corporate venturing units worth $1.3bn during February, tracked by Global Corporate Venturing, which compared with 76 investments worth $1.3bn during January and 79 investments worth $1.7bn in February last year. Our graphic data round-up can be found here.

Last month there were seven exits and one initial public offering (IPO), the $101m flotation of Xoom on Nasdaq.

The largest disclosed exit was the sale of Verizon-backed Skyfire Labs, a US-based mobile video optimisation company, for up to $155m to Opera Software, a Norway-based technology company spun out of Telenor in 1995.

This compared with four exits and two IPOs in January, and eight exits and six IPOs in February last year.

The largest investment during the month was the $700m round of private equity funding for China-based e-commerce site 360Buy, which was backed by Kingdom Holdings, founded by Saudi Arabia’s Prince Alwaleed Bin Talal Alsaud, which we classify as quasi-corporate venturing, as it has previously been backed by US-based investment firm Tiger Global Management and Russia-based investment firm Digital Sky Technologies.

The second biggest investment was the $200m raised by Pinterest, a US-based online scrapbooking website backed by Japan-based e-commerce company Rakuten, at a company valuation of $2.5bn.

The third biggest round was the $42m raised by US-based small business loans company On Deck, which is backed by Germany-based technology company SAP’s corporate venturing unit, SAP Ventures.

In an unusual shift, more than a quarter of the sectoral split swung towards IT, accounting for 27% of activity. The next busiest sector was consumer with 17%, followed by media with 14%. Healthcare activity was unusually subdued, accounting for only 8%, while clean-tech dealmaking continued to be moribund, accounting for 4% of activity.

B rounds accounted for 19% of activity, D rounds 16%, and A rounds, often the most common type of investment, amounted to 15%. The limited A round activity may suggest there is a greater degree of risk aversion among corporates.

We tracked 33 deals in the US (62% of activity), ensuring the market secured a typical share of corporate venturing activity. The next most active location was Japan, with four deals, followed by Germany, with three investments. We tracked two investments in China, Israel and Switzerland.

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