China accounts for six of the top ten global venture financing deals in Q4 2022, KPMG analysis finds

Hong Kong is poised to benefit as crypto comes under global scrutiny

Hong Kong is poised to benefit as crypto comes under global scrutiny

3 February 2023, Hong Kong (SAR), China ("Hong Kong") - Venture capital investment in Asia has remained relatively steady quarter-over-quarter. In the fourth quarter of 2022 (Q4'22), VC-backed companies in Asia raised USD 22.6 billion across 2,157 deals, according to the latest KPMG’s Venture Pulse Q4 2022 report. In Q4'22, China accounted for the majority of USD 500 million+ megadeals globally.

The megadeals in China included a USD 2.56 billion raise by GAC Aion, a USD 1 billion raise by SHEIN, a USD 631 million deal by SPIC Hydrogen Energy, a USD 631 million deal by Voyah Car Technology, a USD 562 million deal by ESWIN Material and USD 537 million going to Fei Hong Technology.

The energy sector continued to be one of the hottest sectors for investment among global and China VC investors. Following on trends seen earlier in 2022, VC investors in China continued to pour money into electric vehicles (EV) and new energy companies during Q4'22. 

Zoe Shi

Zoe Shi, Partner, KPMG China, says:

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China’s central government is very keen on boosting the economy. There seems to be a real change in mindset, which is going to make 2023 a very interesting year. Investment will likely remain cautious in Q1’23, but we’ll start to see how the lowering of restrictions changes the investment climate, whether and how government policies change, and the areas where cross border investment comes up again. The real impact, however, will be seen in Q2’23 and beyond.

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The IPO market in China performed remarkably well in 2022, with IPO activity and value comparable to 2021. Shanghai and Shenzhen were the top two fundraising exchanges globally last year, highlighting the uniqueness of China’s public markets compared to other, more integrated, global markets.

On the other hand, IPO activity in Hong Kong remained slow in Q4’22, bringing an end to a lacklustre year for IPO exits. In Hong Kong, the industrials and EV related sectors showed the most resilience compared to other sectors making up 7 of the top 10 IPOs in Hong Kong, but still saw a decline in IPO value.

Irene Chu

Irene Chu, Partner & Head of New Economy and Life Sciences, Hong Kong, KPMG China, says:

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Historically, a lot of the larger fundraising rounds in Hong Kong have been fintech related but that is expected to shift in the coming quarters with the introduction of a new listing regime under Chapter 18C for specialist technology businesses. The new regime comes in the right time when we see maturing and wider application of artificial intelligence, new energy, and food and agriculture technologies as well as increasing VC investments in those areas.

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Hong Kong is well positioned to attract crypto-focused startups wanting to regain the confidence of increasingly skeptical investors and VC investors looking to validate investment opportunities. In particular, the city passed a new licensing and regulatory regime in December 2022 to regulate virtual asset service providers which will come into force on June 1, 2023.  The new regime includes more elements of capital and investor protection including the requirement for a sound business model, risk management policies and counter-market manipulation measures and reporting of liquid assets.  On the other hand, the relaxation of mainland China’s COVID-19 restrictions could also spark additional activity in Hong Kong. 

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