Renewable Energy: Lithium Batteries

Renewable Energy: Lithium Batteries

Over $100 billion has been invested into the lithium batteries sector since 2020. Global trends towards renewable energy have driven the growth of the sector. Forecasts indicate that the sector will grow at a compounded annual growth rate (CAGR) of 13% from 2022 to 2031, making this one of the fastest-growing energy sectors. Chinese companies have received over 50% of capital deployed within the sector showing the appetite for growth and geopolitical importance of the sector.
This report provides a capital market overview of the lithium batteries sector and capital investments according to region or deal types, in addition to how much firms have increased their capital investments as well as announced deals between 2020 and 2022.

Lithium Batteries: Market Breakdown

  • The lithium battery industry is a $48 billion industry with a five-year compound annual growth rate of 23%.
  • Lithium batteries can be used to power electric vehicles, households, personal electronics, and as a power backup storage. The technology allows lithium batteries greater energy storage because of the smaller and denser chemical structure. Of the energy stored in lithium-ion batteries, 95% is available for use, whereas lead acid batteries have 10% less voltage capacity.
  • Storage is important in renewable energies because it ensures there is always an availability of electricity. Batteries allow for energy to be stored during peak generation hours and used during off periods.

Lithium Batteries: Capital Market Analysis

  • Lithium battery companies have received notable capital deployment since 2020, with a total of $109 billion invested in the sector.
  • Capital invested per quarter has been increasing despite lower deal count, indicating that larger transactions are occurring in the market. This shows that the lithium battery sector is maturing and capable of raising large investments.
  • In Q2 of 2022, lithium battery companies raised a total of $15 billion across 127 deals with an average deal size of $12 million.
  • In Q4 of 2021, 145 deals were made with a total of $15 billion averaging each deal at $10 million; therefore, it can be assumed that the end of Q4 in 2022 would also have high capital investments.
  • Chinese lithium battery companies experienced the largest capital invested within the sector and raised a total of 54%, or $59 billion, since 2020.
  • Lithium battery companies from North America had the second largest capital investment in the sector with 24%, or $26 billion, since 2020.
  • Companies from other Asia countries such as Japan, India, and South Korea have also received notable capital deployment with a total of 11% of all funding in the sector.
  • IPOs (initial public offerings) and PIPEs (private investments into public enterprises) have the largest capital invested in the lithium battery sector at 36%, or $39 billion, since 2022, which indicates that the sector is maturing and large deals are occurring.
  • Mergers and acquisition deal types have the second largest capital investments with a value of 28%, or $31 billion, indicating high levels of consolidation in the market.
  • Private equity at 21%, or $23 billion, and venture capital at 6% indicates that although deal types are bigger in the private equity sector, venture capitals still consist of deals as well suggesting the vast size of the lithium battery sector.

The Company

Redwood Materials is a USA-based private company that is a developer of sustainable battery recycling technology. Redwood technology specializes in recycling and commercializing batteries and creating a sustainable solution. Redwood’s technology facilitates waste to be processed and converted into battery cells. These cells can then be implemented in consumer electronics.

Most Recent Financing Status

  • Redwood Materials raised $776 million based on a pre-money valuation at $3 billion of Series C venture funding in a deal on August 18, 2021.
  • The round was led by T. Rowe Price. Eleven other strategic and financial investors participated in the round including Ford, Amazon, Goldman Sachs Asset Management, and Fidelity Investments.
  • The funds will be used to expand the existing operations internationally and throughout North America.
The lithium batteries sector is critical for the future of the renewable energy market. The growth in demand for electric vehicles and household use of renewable energy has resulted in an expansion within the lithium battery sector, and a CAGR of 22%. Lithium batteries will continue to increase in popularity as the world shifts to more renewable energy. J&A forecast that the growth trends and investment in the sector will increase over the next decade making this a pivotal, high-growth industry.

Sources: Pitchbook Data, Inc.


Renewable Energy: Market Overview

Renewable Energy: Market Overview

Renewable energy is a rising sector and firms within the industry have experienced a 233% increase in capital raised between 2011 and 2021. With the continued focus on combating climate change and the transition to renewable energy, firms in the sector will continue to rise in importance within global capital markets.
This report provides a market overview of renewable energy from 2010 – 2022 and market size based on region and type of clean energy in 2020.

Renewable Energy

  • The renewable energy sector may be placed into 4 key sectors; solar energy, wind energy, fuel cells and batteries.
  • Wind energy is divided into two sections, onshore and offshore energy this is generated through wind turbines. Onshore wind achieved the largest market size in the renewable energy sector in 2020. The total market size was estimated at $51 billion. The offshore wind is another major industry within renewable energy with a market industry is approximately $14 billion.
  • Solar energy involves the conversion of light into energy and involves photovoltaic panels. Solar energy is the second largest market within the sector with an estimated value of $31 billion.
  • Batteries are a source of electrical power that stores and converts chemical energy to electrical energy. Batteries are a rapidly growing segment of the renewable energy market with a global estimated market value of $26 billion in 2020.
  • Fuel cells help store electricity that is produced by renewable sources such as solar energy, onshore or offshore wind, and other renewable energy technologies.
  • The battery segment is forecast to have the highest market size for clean energy technologies with $123 billion in 2030 and $169 billion in 2050, with $123 billion in 2030 and $169 billion in 2050. The market increase between the years 2030 and 2050 for batteries is forecast to be 37%.
  • The onshore wind segment is forecasting significant growth between 2030 and 2050. The sector is expected to increase by 37% while offshore wind is forecast to decreasing by around 8%.

Renewable Energy: Market Breakdown

  • Renewable energy experienced an increase in capital market activity in 2021 with $429 billion invested across the sector. A total of 7,863 transactions occurred in the sector with an average deal size of approximately $54 million.
  • 2022’s data refers to the first 9 months of the year and 4,654 deals have been conducted with a total of $265 billion invested.
  • The trend shows that investments in renewable energy capital market deals are rising, hence, suggesting an increase in investments more into this sector.
  • Renewable energy firms from the USA have received the largest capital in the first three quarters of 2022 with 35% invested into the sector.
  • Europe received the second largest capital deployment in the sector with renewable energy firms on the continent raising 34% of capital invested in the sector.
  • Asian, Canadian, and Middle Eastern renewable energy companies have received 16%, 4% and 3% of capital in the sector in 2022 respectively.
  • In 2022 the Asia Pacific region shows a market size of $62 billion dollars conveying that they have the largest market size for clean energy.
  • Asia is seen to have the largest market size for clean energy due to the large value made toward the sector compared to other regions.
  • Europe’s market size is USD33 billion making their value about half of Asia’s which emphasizes the high market size of clean energy investments in Asia.
  • In 2030 and 2050 Asia Pacific is still estimated to hold the highest market share for clean energy based on the stated policies scenario.
  • Asia Pacific is predicted to increase by 36.6% in market size from USD142 billion in 2030 to USD194 billion in 2050.
  • Moreover, Asia Pacific has the highest percentage increase compared to other regions’ 2030 and 2050 numbers.
Renewable energy is growing rapidly especially in Asia Pacific. According to forecasts, Asia Pacific is expected to invest the most money into renewable energy and driving growth within the sector. Onshore wind had the higher market size in 2020 but the emergence of lithium batteries will drive the renewable energy sector. J&A forecasts continued growth within the renewable energy sector.

Sources: Pitchbook Data, Inc., iea.org.


Sportswear Investments in the Middle East

Sportswear Investments in the Middle East

The Middle Eastern sportswear market was valued at $5 billion in 2020 and is expected to grow with a compound annual growth rate (CAGR) of more than 6% from 2021 to 2025. The sportswear market gained rapid growth during the global COVID-19 pandemic in 2020 as a result of an increased focus on health and wellness. Manufacturers and retailers have expanded their business in production and categories in sportswear as a result.

Sportswear or activewear is clothing, including footwear, worn for sport or physical exercise. Sports clothing is divided into 3 main sectors which are women’s wear, men’s wear, and children’s wear. Women’s sportswear is the top sector in terms of growth, and it is projected to continue to grow up to 7% by 2025. The sportswear market is projected to grow to over $17 billion by 2028. In this article, J&A will analyze the capital market activity conducted within the sportswear market in the Middle East between 2011 and 2022.

 

Overview of the Middle East Sportswear Market

Key Segments of the Industry

  • Sportswear in the Middle East maintained a market size of $5 billion in 2020 with more than 6% CAGR; it is projected to reach more than $17 billion by 2028.
  • Puma led the overall sportswear market in 2020 with market share followed by Nike and Adidas.
  • Women’s sports clothing is one of the crucial categories of sportswear that has growth potential. The sector is forecast to expand at a CAGR of 7% between 2021 and 2025.
  • The COVID-19 pandemic in 2020 affected the wealth and wellness market, which drove sportswear manufacturers to expand into new verticals and product offerings.
  • Strategic partnerships and the technology in the textile industry will grow the market.

The Middle East’s Sportswear Market by Key Categories

The sportswear market is categorized into sports clothing, sports footwear, and sports accessories. Sports clothing accounted for the largest share in 2020, followed by sports footwear and sports accessories. Sports clothing share has been increasing and it is expected to grow at a slow pace during the forecast period.

  • The Middle East’s sports clothing includes women’s wear, men’s wear, and children’s wear, with a 57% market share. Women’s wear is expected to show the highest growth rate during the forecast period. In 2020, activewear was the dominating sportswear type, followed by sports-inspired cTasual wear and technical sportswear types.
  • The Middle East’s sports footwear includes women’s footwear, men’s footwear, and children’s footwear, with a 32% market share. Women’s footwear is expected to show the highest growth rate during the forecast period, while children’s footwear showed the lowest growth rate.
  • The Middle East’s sports accessories include bags, sunglasses, hats, scarves, gloves, belts, and other accessories. Sports accessories have 11% of the market share. In 2020, sports-inspired casual wear was the dominating sports accessories type, followed by technical and active sports accessory types.
  • Global capital deployed in the sportswear sector increased by 262% between 2012 and 2022.
  • In the sector, $10.432 billion was deployed across 178 deals, with an average deal size of $586 million. Significant acquisitions in 2012, 2019, and 2020 drove the fluctuations within the amount of deployed capital.
  • The 2020 focus on health and wellness, due to the global pandemic, led to a spike in deal flow in the sector. In that year 14 deals were done in the space and over $5 billion was invested in the sector.
  • There was a notable decrease in 2021, but in the first five months of 2022 over $2 billion has been invested into the sector, a trend that J&A anticipates will continue.
  • So far in 2022, eight IPO deals were announced in the sportswear sector in the Middle East.
  • Over 80 deals occurred within the private equity sector showing the growing maturity of the market. Venture and pre-venture capital represented 45% of capital deployed in the sector (113 deals). This trend highlights the potential in the sportswear sector as new entrances into the market receive notable capital deployment.
  • There were 48 mergers and acquisitions announced within the sportswear sector. This indicates that there are large firms that are interested in mergers and acquisitions deals.

Deal Spotlight: The Giving Movement


THE COMPANY

Dominic Nowell-Barnes made the UAE his home in 2017, where he found his purpose for making a change. Seeing the fashion industry’s impact on climate changes and in some areas unethical practices he made it his mission to create a vehicle of positive change that everyone can be a part of. The Giving Movement launched in April 2020, created as a way to alter the way fashion is consumed and to shed light on conscious consumerism. The goal was to create a new model where sustainability is curated for youth, a disruptive brand that creates meaningful apparel — making an impact with every purchase.

RECENT FUNDRAISING

The Giving Movement, a sustainable sportswear company, raised $15 million of Series A venture funding in a deal led by Knuru Capital on March 13, 2022. Other undisclosed investors also participated in the round. The funds will be used to further its category growth to include children’s wear, and the recently announced baby wear lines, as it eyes expansion into new markets.

Global trends towards health and wellness will continue to drive demand for sportswear products. J&A predicts a continued increase in capital market activity within the sportswear sector in the Middle East as economies become more interconnected and companies expand into new international markets.
Sources: PitchBook Data, Data Bridge, Global Data.


Cross Border Investments: The Middle East and China

The Middle East and China

This report investigates cross-border investments made between the Middle East and China since 2020. The Middle East serves as a strategic economic hub due to the strength of the energy sector and geographic positioning. Countries like the United Arab Emirates and the Kingdom of Saudi Arabia have held strong historic ties to the West, but are experiencing increased levels of economic relations with China. With current oil and gas shortages and rapidly increasing prices, the Middle East will continue to be a valuable economic battleground.

Capital deployed by Chinese-based investors in the Middle East focused on early-stage companies, with 81% of deals in the sector occurring in venture capital transactions. This highlights the desire to invest in the future growth of the region.
Many deals in the sector are unannounced, so this data may under-represent actual deal volume and size. This report outlines the type, deal count, dollar volume, and industries of Chinese investments in Middle Eastern companies. 

Chinese Investors Capital Market Activity: Middle Eastern Companies

Since 2020, 132 cross-border deals were announced between Chinese investors and Middle Eastern-based companies, in which a total of $9.7 billion was deployed. The chart below shows the deal count and capital raised in this cross-border category.

  • Deal count within the sector remained consistently ranged between 10 and 20 deals per quarter, with a mean value of $7.35 million. Chinese investors’ mean value of deals with Middle Eastern companies has increased over time, showing an increased appetite to invest in the Middle East.
  • The graph excludes the $4.31 billion secondary investment into Saudi Aramco (pipeline business) conducted by China Merchant Capital and Silk Round Fund, as well as a syndicate of other institutional investors including BlackRock, which skews the data.
  • Capital deployment peaked in Q1 2021 with a total of $4.74 billion, including the secondary transaction into Saudi Aramco (pipeline business), and over 14 investments. In 2020, Q1, which largely occurred before the pandemic, was the next most active period.
  • Information technology was a leading sector for deal counts conducted by Chinese investors in Middle Eastern companies. Over 45% of transactions in the categories were in the information technology sector, though it received less than 13% of capital deployment.
  • The energy sector received the most significant capital deployment of over 44%, mostly due to the Saudi Aramco transaction.
  • The health care sector received significant capital, 27%, through 27% of deals conducted by Chinese investors. This shows the high level of interest that Chinese investors have in the Middle Eastern health care sector.
  • Chinese investors deployed $3.37 billion into venture capital deals in the Middle East since 2020 in over 107 transactions. Of the total deal flow, 36% went into later-stage venture capital deals while early-stage venture capital and seed investments received 34% and 11% of the deal count, respectively.
  • The secondary deals sector received the most significant capital deployment of over 45%, mostly due to the Saudi Aramco transaction, but contributed to less than 5% of the total deal count.

Investor Spotlight: MSA Capital


The Company

MSA Capital, formally known as Magic Stone Alternative Investments, was founded in 2014 and has made 127 investments. MSA Capital is headquartered in Beijing, China, and invests in global companies from seed to early growth phases.

  • MSA Capital completed 10 deals since 2020 with Middle Eastern companies.
  • MSA Capital has an industry focus on apparel and accessories, commercial services, healthcare technology, pharmaceutical and biotechnology, retail, and software.
  • The firm’s median capital invested is $15.6 million and has deployed capital into 53 companies in the last 12 months.
The expansion of capital market activity between the Middle East and China is something that firms in both regions will help drive growth in global markets. Large energy deals dominated total capital deployment by Chinese investors into Middle Eastern companies since 2020. However, over 80% of deals in the sector were in venture capital deals, demonstrating the demand to invest in the future of the region. J&A expects the capital market activity between China and the Middle East to increase over time as these emerging markets continue to develop.


Fintech Capital Market Activity in the Middle East and Southeast Asia

Fintech Capital Market Activity in the Middle East and Southeast Asia

The fintech industry in the Middle East and Southeast Asia is poised for strong growth. Innovative payment processors, financial services companies, and digital transaction management platforms are already disrupting the traditional finance sector and are gaining traction in domestic and international financial markets.

Blockchain companies and investments dominated Southeast Asian fintech capital market activity while Middle Eastern investors preferred later-stage investments within the sector. Jahani and Associates (J&A) forecast the continued expansion of Middle Eastern and Southeast Asian fintech companies and capital market activity.
J&A is an international investment bank headquartered in New York City with offices and operations across the Middle East, Southeast Asia, and Central America. J&A specialized in cross-border capital market activity between the regions in which we operate.

  • USA-based fintech companies conducted significantly more capital market activity than their Middle Eastern and Southeast Asian counterparts in 2021. The abundance of capital has accelerated the growth of USA-based fintech companies, but a burgeoning set of growth companies in these emerging markets will drive global fintech capital market activity in 2022 and beyond.
  • USA-based fintech companies conducted 2,978 deals in 2021 with a total of $178 billion and a median deal size of $60 million. Middle Eastern and Southeast Asian fintech companies conducted 244 and 411 deals respectively and raised a combined total of $21 billion in 2021.
  • USA-based investors have been more active in the fintech sector than Middle Eastern and Southeast Asian investors in 2021 in absolute terms. However, Middle Eastern and Southeast Asian investors conducted significantly higher deal counts in proportion to the number of fintech company deal counts in their domestic markets, demonstrating an appetite for investments.
  • Average check size deployed by Middle Eastern and Southeast Asian investors in fintech deals in 2021 was significantly lower than USA-based investors. Early-stage companies in the emerging markets are receiving significant deal flow showing the growth potential of these regions.
  • Community management platforms, which include several key blockchain companies, experienced the largest capital deployment in the Middle Eastern and Southeast Asian fintech markets in 2021. Grab dominated deal size with a $5 billion PIPE conducted in December 2021.
  • Payment processing services and financial services are growing sectors in both emerging markets and received approximately $5 billion and $2.6 billion respectively. Vietnam Payment Solution conducted a $250 million round in July 2021, the largest transaction in the payment processing sector.

2021 ASEAN Fintech Deals by Month

Fintech companies headquartered in Southeast Asia conducted significant capital market activity in Q4 of 2021. The sector has produced consistent deal flow despite strict economic lockdowns and travel restrictions. Blockchain transaction dominated deal count among the Southeast Asian fintech market. The growth of early-stage venture capital deals in the sector highlights the emergence of new companies in the market and the growth potential of the Southeast Asian fintech sector.

  • $17.28 billion was deployed into Southeast Asian fintech companies across 411 deals in 2021 with a median deal size of $5.3 million. December 2021 saw the largest capital deployment of over $5 billion representing approximately 29% of capital deployed over the period.
  • The largest deal in the sector was the $750 million acquisition of OVO, a developer and operator of payment and financial services platforms Grab, which was announced on October 4, 2021.
  • Cryptocurrency dominated deal count among the Southeast Asian fintech market with 351 deals, or approximately 80%, in the sector where cryptocurrency-related deals focused on seed and early-stage venture capital funding.
  • Approximately 34% of capital raised by Southeast Asian fintech companies was deployed into early-stage companies. This showcases the emergence of new companies, an increase in competition, and the growth potential of the sector.
  • Mergers and acquisitions, including the acquisition of OVO, raised 21% of capital invested into Southeast Asia despite only seven deals being conducted.
  • Sixteen Southeast Asia fintech companies raised late-stage venture capital funding, demonstrating the emergence of mature companies and a well-balanced funding ecosystem.

2021 ASEAN Deal Spotlight: Alami – Sharia Compliant Financing for SMEs

The Company

Alami is an Indonesia-based fintech platform designed to serve small to mid-sized businesses with access to sharia-compliant financing organizations. Alami’s platform provides in-depth data analytics to businesses regarding financing from various institutions allowing them to make informed and up-to-date transactions.

Recent Fundraising

  • Alami completed a Series A round of $17.5 million on August 13, 2021, at an undisclosed valuation.
  • Quona Capital and EV Growth led the round with Dubai International Financial Center and other undisclosed investors participating.
  • Alami had previously raised $24.7 million through three rounds of seed funding.

2021 Middle East Fintech Deals by Month

Fintech companies headquartered in the Middle East have conducted notable capital market activity over 2021 with peaks in April and December. The sector has produced consistent deal flow despite strict economic lockdowns and travel restrictions that have eased and resurged over the year. J&A forecasts continued growth in 2021 Q4 activity into 2022 and beyond.

  • In 2021, $4.66 billion was deployed into Middle Eastern companies across 251 deals, with a median deal size of $3.1 million.
  • November 2021 saw the largest deal count with 25, but low capital deployment of $400 million representing approximately 8% of capital deployed over the period.
  • Notable deals in the sector include the PIPE, private investment into a public company, and subsequent reverse merger of Pagaya, an online lending platform provider, on September 15, 2021.
  • Approximately 30% of capital raised by Middle Eastern fintech companies was deployed into early-stage companies.
  • Middle Eastern Fintech companies conducted notable IPOs in 2021. The largest IPO was that of the Saudi Stock Exchange (SAU: 1111), on December 8, 2021, in which over $1 billion was raised.
  • Mergers and acquisitions, as well as reverse mergers, accounted for 18% of capital market activity in the space. The acquisition of Simplex, the Israeli bitcoin payment processing company, by Nuvei, was one of the largest Middle Eastern fintech acquisitions in 2021.

2021 Middle East Deal Spotlight: Tarabut Gateway Dubai Banking Regtech

The Company

Tarabut Gateway is a Dubai-based financial technology and software development company that has created a platform to regulate the banking sector. The platform is designed to connect a regional network of banks and other fintech companies through a universal applications programming interface (API). Tarabut’s platform utilizes the API to assist in the transfer of data and to create a greater level of integration within the finance sector in the region.

Recent Fundraising

  • Tarabut Gateway completed a pre-Series A round of $12 million on November 2, 2021, at an undisclosed valuation.
  • Tiger Global Management led the round with Dubai International Financial Centre and other undisclosed investors participating.
  • Tarabut Gateway had previously raised $13 million through seed funding in February 2021, which was also led by Tiger Global Management.

2022: What to expect this year

Southeast Asia and the Middle East are two of the world’s best-performing emerging markets. Financial markets are becoming increasingly sophisticated in these regions and the disruption of the traditional financial sector is a trend that will continue and accelerate in 2022.
The cryptocurrency sector experienced a high level of deal flow in Southeast Asia in 2021. Later-stage Middle Eastern fintech companies saw significantly larger capital deployment than early-stage competitors.
Fintech companies should be mindful of the commercial and financial opportunities available in these regions and the appetite that investors in the markets possess for early-stage deals. Companies operating within these markets will continue to grow and become attractive acquisition targets for strategic acquirers looking to enter the market.
J&A forecasts the continued expansion of capital market activity within the Southeast Asian and Middle Eastern fintech markets.


E-Commerce

E-Commerce

E-commerce has experienced a surge in capital market activity driven by an increase in demand due to the COVID-19 pandemic. From 2019 to 2020, e-commerce capital transactions increased from $42 billion to $57 billion. The expansion has escalated in 2021, with capital raised already increasing by 28.6%, surpassing $73 billion by the end of Q3 and expected to increase substantially before the end of the year.

J&A has tracked the activities of the market to find e-commerce trends relevant for retailers, brands, and potential investors seeking opportunities. This report analyses historical data and explores upcoming trends in the post-pandemic e-commerce world.

Why Companies Have Opted for E-Commerce

Traditional retail required updates to meet the needs of the current globalized and tech-savvy world, especially in 2020 due to the effects of the COVID-19 pandemic. Retail trends are moving towards e-commerce in developed nations, and the effects of economic lockdowns accelerated the process. Established retailers use cross-border e-commerce as a strategy to broaden their business presence, enlarge their customer base, strengthen brand awareness, and tap into new markets.

Digital connectivity enabled marketplaces and online shopping platforms to thrive. Globally, 48% of people own a smartphone, and 60% have regular internet access. That access has empowered 80% of consumers to make purchases online. With B2B purchases also on the rise, J&A expects the revenue generated from businesses to hold a larger revenue share than B2C sales.

  • The global e-commerce market is expected to generate close to $5 trillion in 2021.
  • Pre-pandemic expectations for e-commerce sales in 2021 will be exceeded by over $147 billion.
  • In 2021, an estimated 19.5% of all sales revenue will be generated from online sales, increasing by 45.8% in just two years.
  • In 2024, 21.8% of all retail sales are forecasted to be from online sales.

E-Commerce Capital Market Activity

Capital markets transitioned in 2019 and 2020 to sustain the changes generated from the COVID-19 pandemic.

  • Private equity and venture capital-funded deals saw a decrease from 2017 through 2020.
  • In 2021, private equity and venture capital activity increased by 130% due to the sector’s increased customer engagement and thus, revenue increases per company.
  • Mergers and acquisitions transactions yielded over $8 billion more capital in 2020.
  • IPO activity increased by 390% and reached $12 billion in 2020.
  • All capital raised by every transaction type increased post-pandemic, while the overall deal count plateaued.
  • Mergers and acquisitions activity increased by almost 75% in 2021 as e-commerce platforms increased their customer base through the COVID-19 pandemic.

E-Commerce Segments

Segments that raised capital from private equity and venture capital in the e-commerce industry vary in trends. Non-essential online shopping and e-commerce platforms acquired more financing than traditional staple online sales. The low interest in food products from investors reflects this trend. J&A expects this trend to amplify the overlap between non-essentials and day-to-day products.

E-Commerce-Related Industries

  • As catalogs are often showcased in marketplaces and websites, catalog retail is the most common industry related to e-commerce.
  • Platform software includes large firms like Shopify, WooCommerce, BigCommerce, Ecwid, FastSpring, and others. Capital raised and M&A deals for online marketplaces are close to 10% of all e-commerce deals, and J&A expects this trend to hold for the upcoming years.
  • Clothing, along with application software services, comprises over 13% of the e-commerce capital market activities.

The Future of the E-Commerce Sector

The e-commerce market changed visibly throughout the COVID-19 pandemic. Most trends, such as the interest and capital deployed from investors, allowed the market to get more visibility and exposure to new deals. J&A expects e-commerce platforms and marketplaces for non-essential products will continue overshadowing the online shopping trends for consumer staples.


Middle Eastern Investors and USA Startups

Middle Eastern Investors and USA Startups

Fintech as a sector increased its cross-border capital market activity in 2021. The first 10 months of 2021 saw a 300% increase in capital deployed by Middle Eastern investors into USA startups at 2020 levels. (In this report, startups are classified as private organizations that raise capital through venture capital or growth-stage private equity rounds.) Middle Eastern investors have an appetite to invest in USA-based early-stage fintech companies. Stripe and Square may be grabbing the headlines, but smaller companies have been successful in raising early-stage funding internationally.

Capital Market Activity

Middle Eastern investors have deployed approximately $6.5 billion into early-stage fintech companies based in the USA since 2020. Within the segment, 164 announced deals have been conducted. Middle Eastern investors’ desire to diversify their portfolios away from oil and natural gases and into high-growth private companies drives the increase in market activity.

  • Deals between USA-based fintech companies and Middle Eastern investors increased significantly between 2020 and 2021. In 2020, a total of $1.45 billion was deployed across 67 deals. In the first 10 months of 2021, $5.1 billion has been deployed across 97 deals.
  • Between Q2 of 2020 and Q2 of 2021, capital deployment increased 10-fold while deal count more than doubled. In 2020, Q2 was the least active quarter of the year due to the economic effects of the global lockdowns. Deal count and capital deployment has increased steadily over the remainder of 2020 and 2021.
  • The largest deal in the sector was SpotOn’s $300 million Series E round. Mubadala Investment Company participated in the round, alongside Andreessen Horowitz and a consortium of other investors. The Series E saw SpotOn’s valuation increase from $1.875 billion to $3.15 billion, and the funds will be allocated towards acquisition financing.

Active Type of Transactions and Company Sizes

 

Active Investors and Their Latest Deals

Israeli venture capital funds lead the region with respect to deal count in the sector. Connections between the USA and Israeli capital markets remain strong with significant activity across software and technology sectors. Investors from the United Arab Emirates and other Gulf states are also increasing investments in USA-based fintech companies.

  • AltaIR Capital, a Tel Aviv–based venture capital firm with $600 million in assets under management, has conducted 14 deals with USA-based fintech companies since 2020.
  • Mubadala Investment Company, Abu Dhabi’s sovereign wealth fund, invested in eight USA-based fintech startups. The group maintains a median check size of $200 million across sectors.
  • VentureSouq is the only investor on the most active list whose most recent deal in the sector was a seed-stage investment. The Dubai-based venture capital fund has made 141 investments since its inception in 2013 and has a median check size of $4 million.
  • Later-stage venture capital deals dominated capital deployed by Middle Eastern investors into USA-based fintech companies. Later-stage venture capital accounted for 69% of capital deployment and 34% of the deal count within the sector.
  • Growth and early-stage venture capital deals saw the largest percentage of deals with 36%, while accounting for 20% of capital deployed.
  • Incubators, pre-seed, seed, and angle rounds were not a significant contributor in the sector. This highlights the need for a proven business model, established products and services, and small yet stable income streams before raising capital from international sources.
Overall, the fintech sector is progressively increasing its capital market activity. Despite the pandemic slowing down other businesses’ activities, fintech deals from the USA received over $5 billion in capital in the first three quarters of 2021 from the Middle East alone. As the need for strong technology increases in the Middle East, J&A expects deal size and deal count to increase over the upcoming years. As the early-stage companies develop and establish new technology trends, funding for acquisitions will increase for the entities with a longer presence in the international markets.

USA Investors and Middle Eastern Startups

USA Investors and Middle Eastern Startups

Middle Eastern fintech companies have experienced a boom in capital market activity since the start of 2021 and the reopening of the global economy. The fintech industry is rapidly developing and disrupting traditional banking and financial institutions. Fintech startups in the United Arab Emirates, Egypt, and Saudi Arabia have conducted significant capital market activity since the start of 2020. Notably, groups in the segment have attracted investments from USA-based venture capital sources.

This report explores the investments made by USA investors into Middle Eastern fintech startups since 2020. Only announced deals are analyzed. This report will outline the type, volume, and industry of deals conducted by USA investors into Middle Eastern companies.

  • USA investor activity in the Middle East slowed down in 2020, as it did for most other cross-border investments. After the normalization of the global capital markets, fintech startups in the Middle East capitalized on the USA investor appetite. Transactions grew steadily in 2021, leading to over 20 investments in four quarters, from Q3 of 2020 to Q3 of 2021.
  • In Q4 of 2021, the average capital invested per deal more than doubled. Due to this, the overall capital deployed increased by 1,750% in 2021 compared to 2020.

Cross-Border Fintech Venture Capital Investments: USA Investors and Middle Eastern Companies

  • Significant deal count (37%) and capital deployment (39%) by USA-based investors into Middle Eastern fintech startups occurred within seed-stage investments. This shows the development of new companies designed to serve an underserved market and the strong potential for growth in the space.
  • Incubator funding made up 39% of the total sector deal count but less than 1% of capital raised. This suggests that most deals in the incubation phase were conducted without capital being injected into the business.
  • Early-stage venture capital accounted for 22% of deal count and 69% of capital deployment. The growth and funding of Middle Eastern fintech startups will lead to a boom in the sector as traditional banking and financial institutions are disrupted.

Deal Spotlight: Tarabut Gateway

The Company

Tarabut Gateway is a financial technology and software development company that has created a platform to regulate the banking sector. The platform is designed to connect a regional network of banks and other fintech companies through a universal applications programming interface (API). Tarabut’s platform utilizes the API to assist in the transfer of data and to create a greater level of integration within the finance sector in the region.

Recent Fundraising

  • Tarabut Gateway completed a pre-Series A round of $12 million on November 2, 2021, at an undisclosed valuation.
  • Tiger Global Management led the round with Dubai International Finance Center and other undisclosed investors participating.
  • Tarabut Gateway had previously raised $13 million through seed funding in February 2021, which was also led by Tiger Global Management.
The fintech sector is rapidly developing in the Middle East, and early-stage companies will drive transformation within the banking and financial sectors. International investors should be mindful of the growth potential of the sector and the opportunities that well-funded startups can capitalize on. J&A forecasts the continued expansion of capital market activity between USA-based venture capital funds and Middle Eastern fintech startups.

Last-Mile Delivery and Third-Party Logistics

Last-Mile Delivery and Third-Party Logistics

Last-mile delivery and third-party logistics capital market activity has expanded by over 175% since 2019. The sectors, and related capital markets, have surged due to the increase in demand due to the COVID-19 pandemic. In this report J&A analyzes last-mile delivery and third-party logistics capital market activity and determines potential trends for the upcoming years.

Last-Mile Delivery

Last-mile delivery conducts the delivery of final products to end-consumers within the logistic supply chain. It most often accounts for 50% or more of the total delivery costs.

Last-mile delivery companies have experienced notable capital market activity and interest from venture capital firms. The sector experienced outsized deployment of capital from private equity firms and strategic investors in 2020. This was due to the increase in relevance for the industry during the pandemic, when most e-commerce sales carried a delivery fee directly to the end consumer.

  • Deal count increased by over 33% in the past decade, starting with three deals in 2012, and continuing with 40 deals closed so far in 2021. This number is expected to increase with additional deals announced in Q4 of 2021.
  • Private equity and venture capital invested over $900 million in 2018 and 2020 in the sector. The spike in 2020 was due to the increase of last-mile delivery usage for large companies all over the world as a result of the COVID-19 pandemic.
  • The years 2017 through 2019 saw an over 40% increase in deal count, from 15 to 35 deals in 2017 and 2019, respectively. J&A expects this to continue after 2021.

Companies with the Most Capital Raised

Omni Logistics, Jacobson Companies, and St. George Logistics raised over $1.5 billion in total between 2012 and 2021. Below is a summary of these companies, their operations, and their latest capital market activities.
  • Well-established, specialized logistics companies grew over the COVID-19 pandemic in 2020. The capital raised in 2021 grew by 174% compared to 2020.
  • Though 2020 had almost twice as many deals as in 2021 year to date, as of October the capital raised grew from $111 million to $305 million over the same period of time.
  • J&A expects capital market activity for third-party logistics companies to increase in Q4 of 2021 and in the first two quarters of 2022. After the pandemic effects recede, capital market activity might plateau and continue being active for several years thereafter.
The economic effect of COVID and lockdowns have rapidly escalated growth in the last-mile delivery and third-party logistics sector. Capital deployment into the sector more than doubled. J&A expects activities to remain as active as in the past year, and interesting developments to come as well-established companies acquire smaller entities in the same space.

Logistic Technology in Southeast Asia

Logistic Technology in Southeast Asia

Southeast Asia is one of the world’s best-performing emerging markets. The combined GDP of the region has grown from $29 billion in 1970 to $2.97 trillion in 2020, a remarkable 10,116% increase. International trade has been a driving force behind the region’s development. Several Southeast Asian countries rank among the most open to trade with the highest GDPs per capita of any nation.

Southeast Asia is strategically poised to link the manufacturing centers of the East to the consumer base in the West. This article outlines trade in Southeast Asia, the key role of technology within the sectors, and capital market activity in Southeast Asian logistic technology

Market Overview

In 2020, $2.8 trillion of international trade occurred in Southeast Asia. The region has increased the quantity of internal trade through the Association of Southeast Asian Nations (ASEAN) and strengthened external trade.

  • Southeast Asia’s largest trading partner is the Asia Pacific region, which compromises over $1 trillion in trade annually.
  • The United States and the European Union are significant partners. Over $300 billion of trade was conducted between each of these regions and Southeast Asia.
  • Internal trade between members of ASEAN (which includes Singapore, Indonesia, Malaysia, Thailand, the Philippines, Vietnam, Laos, Brunei, Myanmar, and Cambodia) accounted for $600 billion, or 22% of total international trade.

The logistics market in Southeast Asia is being driven by technological innovation. Logistics technology companies increase the speed, ease of use, and transparency of the supply chain process for customers, businesses, and logistics companies. The continued development of the region’s logistic technology will be a key factor in the market’s future growth.

Capital Market Activity in Southeast Asia – Logistic Technology

  • Capital deployed in the freight technology sector increased 17-fold between 2014 and 2021 and was largely insignificant before 2014 in Southeast Asia.
  • More than $27 billion was deployed in the sector across 302 deals, with an average deal size of $9 million. Deal count and capital deployment have increased steadily over time, and the first three quarters of 2021 have seen the most significant market activity over the period.
  • Ninja Van is a last-mile logistics technology platform that has conducted several investment rounds over the period. The most recent raise was a $578 million Series E round, in which B Capital Group, Brunei Investment Agency, Burda Principal Investments, Carmenta Management, and five other groups invested.
  • Late-stage venture capital deals represented 71% of capital deployed in the sector. This shows the abundance of growth-stage companies in the market.
  • Mergers and acquisitions represented only 5% of capital deployed since 2010 in the sector. Most acquisitions have been conducted by large logistics corporations, but the limited activity shows a lack of consolidation in the market.
  • Just 6% of capital deployment went to early-stage venture capital deals. This statistic shows that early-stage companies are present in the sector, but funding is difficult to acquire.
Southeast Asia is one of the world’s best-performing emerging markets, and trade has provided the basis for the region’s growth. Logistic technology will play a critical role in improving the efficiency and transparency of supply chains and the delivery process. Southeast Asia logistics firms will need to remain globally competitive and logistics technology will allow them to do so. J&A forecasts an increase in capital market activity in the Southeast Asia logistics technology market in 2022 and beyond.

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