Cross Border Capital Markets Report: SEA Investors and USA Companies in 2020
Cross Border Capital Markets Report: SEA Investors and USA Companies in 2020
This report highlights investments made by Southeast Asian (SEA) investors into USA companies throughout 2020. Only announced deals are analyzed in this report. This report outlines the type, deal count, dollar volume, and industries of deals conducted by Southeast Asian investors into USA companies. Singtel Innov8 is part of the investor spotlight feature, and Stack Overflow is analyzed as the deal spotlight.
Southeast Asian Investors and USA Deals: Deal Count and Volume
In 2020, 248 institutions and individual investors from Southeast Asia closed 373 transactions in USA companies and invested a total of $32 billion. The following graphs show deal count and deal amounts in 2020.
FIGURE 1: Deals by SEA investors in USA Companies Investments Over Time
Number of Deals by SEA investors in USA Companies: 2020
- Compared with private equity firms and corporations, SEA venture capital firms closed the most deals in USA companies. In 2020, deal counts were 10% lower compared to 2019, largely due to the COVID-19 pandemic.
- Transaction volume decreased by 30% as a direct result of the pandemic in Q2 of 2020. Transaction volume increased in Q3 and Q4.
- The number of venture capital deals in Q2 did not significantly decrease as a result of the pandemic. However, M&A and private equity deals did decrease in Q2 2020 as a result of the pandemic.
Dollars Invested by SEA Investors in USA Companies: 2020
- In 2020, 96 USA companies raised a total of $7 billion from SEA investors, for an average deal size of $73 million in Q1. Despite the decrease of deal counts in Q2, 68 USA companies raised $19 billion from SEA investors for an average deal size of $289 million.
- Private equity firms from SEA closed major investments into USA companies in Q2 at the height of pandemic tensions at a total of $14 billion.
- In Q3 and Q4, a total of 177 companies raised approximately $4 billion in each quarter from SEA investors.
SEA Investors and USA Investments: Investments by Industry
SEA investors’ capital infusion in USA companies are predominantly seen in fast-changing and popular verticals like fintech, AI, machine learning, and technology, media, and telecom (TMT). Most of the investments in these verticals are SaaS-based solutions.
FIGURE 2: Capital Breakdown
- Ultimate Kronos Group in the $11 billion leveraged buyout round was the largest deal closed by a North American company in which an SEA investor participated in 2020. Formerly known as Ultimate Software Group, the company was acquired by Kronos through its financial sponsors Hellman & Friedman, Blackstone Group, JMI Equity, and the Government of Singapore Investment Corporation (GIC).
- The following SEA investors also participated in other well-known USA companies:
- GIC invested in Affirm, in its $510 million Series G round completed in September.
- Temasek Holdings, a Sovereign Wealth Fund in Singapore, invested in Impossible Food in its $200 Million Series G round completed in August.
Investor Spotlight: Singtel Innov8, Singapore
Singtel Innov8, a wholly-owned subsidiary of the Singtel Group, is a corporate venture capital fund based in Singapore with offices in San Francisco and Tel Aviv. Singtel Innov8 invests in companies that create next-generation devices and digital content services that enhance customer experiences. Their investments are in all stages of the company’s life cycle.
Figure 3: Singtel Innov8 Investments by Industry: 2018-2020
- Singtel Innov8’s assets under management were $256 million from 2018 to 2020, and they made a total of 128 investments. To date, Singtel Innov8 has done 45 exits and maintains 45 active portfolios.
- Singtel Innov8’s preferred ticket size is between $100 thousand to $23 million, and their preferred vertical is TMT software. They prefer minority stakes and will lead on a deal.
- In 2020 Singtel Innov8 made 12 investments with an average deal size of $36 million.
Deal Spotlight: Stack Overflow (Cloud Tech DevOps)
Stack Overflow is a New York-based Series E company that provides an online community created to help developers learn and share their knowledge. The platform is a free and open forum that hosts a collaborative library of coding knowledge, which includes real-time interactive software, advertising opportunities, and services for technology recruiters helping users build their careers in tech.
SEA Investors Feature: Government of Singapore Investment Corporation (GIC)
GIC is a global investment management firm established in 1981 to manage Singapore’s foreign reserves. GIC invests in public and private equity with a focus on healthcare, financials, and business services. Additionally, it focuses on natural resources, real estate, fixed income, and alternative markets including foreign exchange, commodity, and money market sectors across the globe.
- GIC led Stack Overflow’s $85 million Series E round on July 28, 2020, putting the company’s post-money valuation at $685 million.
Most Southeast Asian investors initially invest in USA-based companies at Series C round and later. Singapore sovereign wealth funds like Temasek Holdings and venture funds such as Wavemaker Group were active investors in USA-based companies’ capital raise during 2020.