Asia’s largest companies try to sell down stakes in start-ups

Asia’s largest companies are selling their stakes in the region’s most promising tech start-ups, including Gojek in Indonesia and Didi Chuxing in China, as they refocus their resources to deal with the coronavirus crisis.

The venture capital arm of a large Asian company has approached secondary market investors to sell a slice of Gojek worth between $ 50 million and $ 100 million, said two people with first-hand knowledge of the offer.

Mitsubishi, Rakuten, Samsung and Tencent are all investors in Gojek, as well as several other corporate venture capital funds. The start-up is Indonesia’s most valuable, providing a range of services, including hail tour, food delivery and financial services. Gojek declined to comment.

“We had a number of approaches to companies we spoke to in December to buy their assets, which now say,” Oh, it looks like my board is now considering the transaction you are considering ” said Michael Joseph, founding partner. Ion Pacific, a Hong Kong-based asset manager specializing in the secondary venture capital market.

He declined to comment on specific start-ups for sale, but other aftermarket investors said a stake in Didi was also recently offered.

Samsung Ventures and Kakao Ventures in South Korea, as well as SBI Investment and Mitsubishi UFJ in Japan, were among the top 10 most active players in the world last year. NTT in Japan and Singapore in Aviva have also been active in recent years.

The share of corporate venture capital funded transactions in Asia has been increasing since 2014 and, in 2019, the region surpassed the United States for the first time in terms of the share of global venture capital transactions, according to CB Insights data.

But many corporate investors and their venture capital firms have little experience on how to manage these investments during a severe crisis, noted Joseph.

Instead, the desire to sell holdings – often at a discount – has become a reflection of the rapidly changing outlook.

The most significant business-backed deal in 2019 was the $ 1.25 billion D-Series roundup to the satellite communications company OneWeb led by Airbus and Qualcomm Ventures. Last week, OneWeb filed for bankruptcy after failing to obtain new financing from investors, including its largest funder SoftBank.

Darren Massara, managing partner of NewQuest Capital Partners, a private equity firm, said the secondary market provided a useful outlet for investors with the future trajectory of many companies in doubt, including their ability to enter the markets. public.

Massara added that investors who sell can expect an imminent traditional exit route such as an IPO or other fundraiser “but because of the coronavirus, such an event is now delayed.” It’s in times like this that the secondary market can fill the void. ”

“Many new venture capital funds in Asia in 2020 are reminiscent of hedge funds that were created between 2001 and 2007 before the global financial crisis,” said Joseph.

“They will probably underperform managers who have been tested in cycles. I expect that over the next few months, many people will close their doors and return home. “

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