BEIJING, April 23 /Xinhua-PRNewswire/ -- ChinaVenture recently issued the '2006 Venture Capital Report for the Chinese Market'. Statistics show that the total VC investment in the Chinese market was USD2.181 billion in 2006, with 63.3% for the TMT industry. Among the 99 VC/PE-backed exit deals, the exit type for 33% of the deals was overseas IPO. There were 41 newly raised funds in the Chinese VC market with a total financing of USD4.443 billion.
ChinaVenture's '2006 Venture Capital Report for the Chinese Market' is an annual research report that ChinaVenture produced after comprehensive investigation and analysis to the policy, fund raising, investment, exit and other investment behaviors of the venture capital market in China. The data used for the report was generated from the ChinaVenture database, VC Research Questionnaire and interviews with professionals and experts within the industry. The data included disclosed information as well as the undisclosed information as per the request of VC institutions.
I. Total VC investment of 2.181 billion USD for Chinese market in 2006
with 85.2% of foreign venture investment
There were 362 VC deals in the Chinese market in 2006, an increase of 21.5% compare with the 298 deals in 2005. Total VC investment for 2006 was USD2.181 billion, an increase of 52.5% compare with the USD1.43 billion in 2005. The average investment per deal was USD6.03 million, an increase of 25.6% compare with the USD4.8 million in 2005.
2002-2006 VC Investment and Growth for Chinese Market
Average
Investment investment Average
deals Investment per investment
growth Investment growth deal growth
No. of rate by (million rate (million rate per
Year Deals year USD) by year USD) deal by year
2002 178 N/A 534.32 N/A 3.00 N/A
2003 164 -7.9 % 746.20 39.7 % 4.55 51.7 %
2004 194 18.3 % 873.56 17.1 % 4.50 -1.1 %
2005 298 53.6 % 1,430.40 63.7 % 4.80 6.7 %
2006 362 21.5 % 2,181.38 52.5 % 6.03 25.6 %
Report statistics show that 85.2% of total investment was foreign investment, and only 6.8% was local investment.
2006 VC Investment Proportions for Chinese Market
Fund Type Investment (unit: million USD) %
Foreign 1858.83 85.2 %
Local 147.89 6.8 %
JV 119.46 5.5 %
N/A 55.20 2.5 %
II. Investment for TMT industry, which was 63.3% of the total
investment for the year, was much higher than that for Non-TMT
industry
VC deals and investment for the TMT industry in the Chinese VC market in 2006 was much higher than that for the Non-TMT industry. 237 deals for the TMT industry, of which 65.5% of the total were VC deals, raised USD1.381 billion, which was 63.3% of the total VC investment. 117 deals for the Non-TMT industry, accounting for 32.3% of the total VC deals, raised USD755 million, which was 34.6% of total VC investment. Average investment per deal for the Non-TMT industry was USD6.45 million, slightly higher than the USD5.83 million for the TMT industry.
2006 China VC Investment Comparison of TMT Industry and Non-TMT Industry
No. % of Investment Average investment
of total (million % of total per deal
Deals deals USD) investment (million USD)
TMT 237 65.5 % 1380.54 63.3 % 5.83
Non-TMT 117 32.3 % 754.84 34.6 % 6.45
N/A 8 2.2 % 46.00 2.1 % 5.75
Total 362 100.0 % 2181.38 100.0 % 6.03
III. 84.8% of VC exit in 2006 were IPOs and equity transfers
There were 99 exit deals in 2006 in the Chinese VC market. IPOs and equity transfers were the 2 main exit channels, which accounted for 84.8% of the exit deals. There were 43 overseas or local IPO exits in 2006, 43.4% of total exit deals. Among the 43, 33 exits went overseas IPOs, which was 33.3% of total exit deals for 2006. Local IPOs gradually matured with the number of exit deals at 10, or 10.1% of the total.
There were 41 equity transfer exits in 2006, which was 41.4% of total exit deals. Among them, 25 deals, or 25.3%, were joint ventures, 4 deals, or 4%, were management buy-outs, and 12 deals, or 12.1%, were trade sales.
In addition, there were 6 exits of liquidation in 2006, which was 6.1% of total exits, 7 exits of second offerings, or 7.1%, and 2 exits of unknown type, or 2%.
2006 VC Exit Statistic for Chinese Market
% of total exit
Exit Type No. of Deals deals in 2006
IPO Overseas IPO 33 33.3 %
Local IPO 10 10.1 %
Equity Joint venture 25 25.3 %
Transfer Management Buy-Out 4 4.0 %
Trade sale 12 12.1 %
Others Liquidation 6 6.1 %
Second offering 7 7.1 %
N/A 2 2.0 %
Total 99 100.0 %
IV. 41 newly raised funds for the Chinese VC market in 2006 with a
total financing of USD4.443 billion
There were 41 newly raised funds for the Chinese VC market in 2006 with a total financing of USD4.443 billion and an average financing per single fund at USD108.36 million. Among the 41 newly raised funds, 27 funds, or 65.9%, were foreign investment dominant with a total financing of USD3.386 billion, or 76.2% of total, and an average financing per single fund at USD125.43 million. 11 funds were local investment dominant, which was 26.8% of total funds with a financing of USD961.4 million, or 21.6% of the total, and an average financing per fund at USD87.4 million. 3 funds were joint venture investments, which was 7.3% of total with a total financing of USD95 million, or 2.1% of total, and an average financing per fund at USD31.67 million.
Newly Raised VC Funds and Comparison of Local Investment vs Foreign Investment for the Chinese Market 2006
Average
% of the Financing % of the financing for
total (million total single fund
Capital Type Quantity quantity USD) amount (million USD)
Foreign
Investment 27 65.9 % 3,386.50 76.2 % 125.43
Local
Investment 11 26.8 % 961.40 21.7 % 87.40
Sino-Foreign
Joint Venture 3 7.3 % 95.00 2.1 % 31.67
Total 41 100.0 % 4,442.90 100.0 % 108.36
The gap between foreign investment and local investment is still wide for the newly raised funds in 2006. 76.2% of the total newly raised funds were foreign investment dominant, 21.6% were local investment dominant and 2.1% were joint ventures.
Comparison Chart of Local Investment vs Foreign Investment for
Newly Raised VC Funds for the Chinese Market 2006
Fund Type Fund Raised (unit: million USD) %
Foreign 3386.50 76.2 %
Local 961.40 21.6 %
JV 95.00 2.1 %
Legal Statement
This report is produced by ChinaVenture Investment Consulting Ltd (“ChinaVenture”) by using some data from disclosed information. We are committed to provide accurate and reliable reports, however, we don't make any commitment or offer any warranty on the preciseness and integrality of the content and quotes in the report. This report only serves as a reference for investment. None of the information or viewpoint in this report is to provide basis for investment decisions.
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