China’s unicorns tap US$240 billion in private-market funding as they face IPO freeze
- The 2021 private-market fundraising for Asian entrepreneurs doubled to over US$240 billion from 2017, driven largely by Chinese firms, according to JPMorgan’s estimate
- Firms such as Blackstone, PAG and TPG have stepped up in doing more pre-IPO or growth-stage investments in Asia, according to UBS
China’s recent crackdowns on overseas listings have thrown a wrench in the works of start-ups looking to go public, driving them to pursue investors in Asia’s rapidly growing private capital markets.
JPMorgan Chase & Co estimates the fundraising amount in private capital markets for entrepreneurs in Asia surged to over US$240 billion last year from about US$100 billion in 2017, driven largely by Chinese firms.
For years, the private market for stakes in the hottest companies in Silicon Valley has pumped ever-increasing sums into start-ups, and more recently, investors such as Blackstone and Temasek Holdings have swarmed toward China’s unicorns ahead of initial public offerings. Now, sectors such as education and consumer technology have fallen under Beijing’s steely gaze, throwing initial public offering (IPO) plans off course and sending cash-burning firms back to square one.
“A higher number of companies will be considering private markets as a potential fundraising avenue,” said Selina Cheung, co-head of Asia equity capital markets and head of private financing markets for Asia-Pacific at UBS Group. “It’s getting more difficult to raise funds in the public market amid the regulatory headwinds and Sino-US tensions.”
