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3 April 2012

First quarter corporate exits boom

This data summarise March 2012's deal activity with a corporate venturing involvement and the first quarter statistics. To report a deal or add your data, email Toby Lewis at tlewis@globalcorporateventuring.com

Author: Toby Lewis, Editor

Corporate venturing exits in March made up for 68% of the $5.3bn raised by portfolio companies in the first quarter.

Corporate venturing-backed companies took advantage of an improved exit environment in March, as valuations on the public markets boomed during the quarter. (click for tables)

The companies headed for the exit as technology stocks were powered by positive sentiment, which propelled the share price of US-based computer and mobile device maker Apple to new heights, while US-based social network Facebook filed to list.

Last month there were 16 exits worth $3.6bn, roughly four times the value of the 14 exits worth $906m in February and 2.4 times the value of the nine exits worth $1.5bn in March last year.

This ensured activity was strong in the first three months of 2012, with 41 exits worth $5.3bn - up by number and value from the last quarter of 2011, when there were 34 exits worth $4.6bn, and against the first quarter of 2011, which had 35 exits worth $4.4bn.

Investment activity was more subdued. In the first quarter of 2012, Global Corporate Venturing tracked 236 investments in corporate-venturing-backed companies worth $4.7bn.

This was down both by value and number from the 260 investments worth $5.4bn in the final quarterof 2011 and down by value, but up by number, from the 226 investments worth $6.4bn in the first quarter of 2011.

There were 57 investments in March worth $997m, down by value and number against the 80 investments in February worth $1.7bn, and down by number against the 60 investments in March last year worth $1.1bn.

Of the exits in the quarter, eight of them were initial public offerings and included a secondary offering by US-based games company Zynga of $515m of shares.

Zynga is backed by search engine Google and Japan-based marketing company Transcosmos. The largest investment of the quarter was by industrial conglomerate China Wanxiang Holdings, which reportedly invested in a $420m series D round for US-based coal conversion company GreatPoint Energy, as part of a $1.25bn partnership between the two companies, according to news provider VentureWire.

The deal was the largest investment by a Chinese corporation into a US company, according to data provider VentureSource. The largest investment in March was UK-listed payments company Monitise's merger with smaller US-based rival Clairmail, in an all-share deal, for a value of $173m based on the trading price of shares exchanged.

Monitise is backed by payments companies Visa and Visa Europe, which own a combined 21% stake.The largest exit of the quarter and in March was China-based and Nasdaq-listed video website Tudou's all-share merger with larger Nasdaq rival Youku, which valued the smaller company at $1.1bn, based on its trading price after the offer was announced.

Many have called 2011 the year of social media, and corporates seem to have responded to this trend emphatically, with media being the most active sector during the first quarter, representing 51 investments (21.8%). The sector overtook both IT and healthcare, usually the dominant venture sectors, which boasted 47 (20%) investments each.

The fourth most active sector was consumer with 29 deals (12.4%), followed by clean-tech's 21 (9%), and financial services' 16 (6.8%). There were seven in transport, six in services, and five in industrial and utilities.

The most popular rounds in the quarter, were series A, representing 58 (24.8%) of investments, while stake purchases were the next most common at 35 (15%), followed by series C rounds at 31 (13.2%), then B rounds, with 28 (12%). There were 19 D rounds, 13 mergers and acquisitions, seven E rounds or later, 10 seed, 5 miscellaneous, and 28 undisclosed investments.

As is typical of corporate venturing, the US market dominated the quarter's activity, with 155 deals (66.2%). The next most active location was the UK with 15 deals (6.4%), followed by China and India, with 12 (5.1%) each, and Germany, with 10 (4.3%). Canada, Israel and Switzerland had four deals each. France had three, and Belgium, Brazil, Japan and Vietnam had two. There was one in each of Afghanistan, Korea, the Netherlands, Norway, Singapore, Spain and Sweden.

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