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

03 February 2023

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, Partner, KPMG China, says:

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.

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

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.

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.

-Ends-

Media inquiries

Dyna Yu
+852 3927 5798
dyna.yu@kpmg.com

Gemma Ho
+852 3927 3171
gemma.ho@kpmg.com

Isaac Yau / Isabel Kwok
+852 3103 0112 / +852 3103 0123
KPMG@citigatedewerogerson.com

Connect with us

Find office locations kpmg.findOfficeLocations
kpmg.emailUs
Social media @ KPMG kpmg.socialMedia

About KPMG China

KPMG China has offices located in 31 cities with over 15,000 partners and staff, in Beijing, Changchun, Changsha, Chengdu, Chongqing, Dalian, Dongguan, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Hefei, Jinan, Nanjing, Nantong, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Taiyuan, Tianjin, Wuhan, Wuxi, Xiamen, Xi’an, Zhengzhou, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.

KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. KPMG is the brand under which the member firms of KPMG International Limited (“KPMG International”) operate and provide professional services. “KPMG” is used to refer to individual member firms within the KPMG organization or to one or more member firms collectively.

KPMG firms operate in 143 countries and territories with more than 273,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. Each KPMG member firm is responsible for its own obligations and liabilities.

KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

In 1992, KPMG became the first international accounting network to be granted a joint venture license in the Chinese Mainland. KPMG was also the first among the Big Four in the Chinese Mainland to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to this market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in KPMG’s appointment for multidisciplinary services (including audit, tax and advisory) by some of China’s most prestigious companies.