Page 22 - bnemagazine bne_December 2021_20211203.pdf

22 I Companies & Markets bne December 2021
AK&M. During this period, 294 transactions were recorded – 38.7% more than in the first half of 2020 (168 transactions). In ruble terms, the amount of transactions increased more noticeably: by 20.4% to RUB1,279.5bn ($17.95bn) from RUB1062.6bn a year earlier, which is due to the fall in the ruble exchange rate, says AK&M.
“However, more transactions worth more than $1bn were concluded in the reporting period than last year – four against three. The largest transaction of the first half of 2021 was
the January purchase of Citrix Systems IT company Wrike, a developer of a collaboration platform, from Andrey Filev and Vista Equity Partners for $2.25bn. The second place was taken by the sale in May at competitive auctions of the property of the Antipinsky Oil Refinery, which was acquired by Anatoly Yablonsky's Rusinvest LLC for $1.51bn. In the third place was the March purchase by the Pipe Metallurgical Company of
its competitor – the ChTPZ group – from Alexey Komarov for $1.11bn. Completing the four billion-dollar deals is the May sale by Oleg Tkach and Vladimir Uzun of the largest Russian publishing house of educational literature "Enlightenment" to a consortium of state-owned companies, including Sberbank, RDIF and VEB.Russia, for $1.1bn,” AK&M reported.
In general, assets continue to fall in price. The average value of transactions (excluding the largest ones) decreased by 6.4% to $38.6mn from $41.3mn in January-June 2020, but analysts believe that as the economy recovers the number and value
of deals will pick up again, a renewed wave of the epidemic notwithstanding.
At the same time, in the last year Russia’s IPO boom has
seen a dozen companies list on international exchanges with billion dollar plus valuations. While tech and e-commerce are predominant, the newly issued stocks from other sectors of the Russian economy are also being snapped up by hungry portfolio investors.
All of this has combined to create a very fertile climate for venture capital, which is on the hunt for projects and is spoilt for choice in the largest consumer market in Europe, populated by a talented, highly educated and entrepreneurial population.
Venture Capital rising
Among the interesting trends observed by Dsight is the growing share of early-stage business angel investments in Russia. Individual investors were not after numbers, concede the analysts, who identified only 31 deals involving them in H1 2021 – but they were after volumes, with total deal value doubling to $49mn and average deal value reaching some $2mn (+160% year on year).
“Angel clubs in Russia and investment volumes are only growing,” confirmed Alexey Solovyov, a figure of the Russian VC scene, in an exchange with East-West Digital News. He cited the example of AngelsDeck, the biggest BA (business angel) community in the Russian-speaking space, which was involved in more than 70 deals this year.
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“Russian angels invest collectively together with tier-one international funds. The emergence of business angel networks is perhaps the most significant trend this year in Russia,” Solovyov said.
This year’s uptick in venture capital deals follows a mild downturn in the actual investments during the epidemic last year. Russia saw a 20% contraction in venture capital investments in 2020, according to Dsight.
Total venture capital investment came in at $703mn in 2020, down from $869mn in 2019, the firm said in a new report. Dsight attributes this fall to the “unpredictability of the pandemic” and “investors’ risk aversion.”
Despite the fall in investment volumes, the number of deals increased 14% from 2019, with a jump in deals registered at both the startup and growth stages. Most activity came in the second half of the year, after the end of the first wave of the pandemic in Russia.
Most investments went into the e-commerce, entertainment and healthcare sectors. Edtech, agrotech and fintech also seem to have taken off during the pandemic, accounting for small overall values but recording fast growth rates.
The pandemic has also catalysed the VC business with new players of all sizes entering the industry as part of a global boom. VC funds are creating a new “unicorn” (a company with a valuation of more than $1bn) on almost a daily basis, reports The Bell. In the first nine months of this year venture capitalists have invested almost $456bn worldwide in startups at various stages in more than 22,800 deals. According to KPMG's calculations, this is already 64% more in volume and 20% more in terms of the number of transactions than for
the entire 2020, and in comparison with nine months of the previous year, the growth is accelerating. In the US VC funds have invested $239bn in the first nine months of this year,
a 44% gain y/y. European VC funds have invested €74bn, up 150% more in volume and 65% in value over the same period.
As the enthusiasm for startups grows it now typically takes a startup only one or two years to reach unicorn status, whereas ten years ago it would take multiple rounds of financing over 7-8 years to be valued at $1bn. According to Crunchbase there are now over 1,000 unicorns with a combined valuation of $2.7 trillion.
Helicopter money boosts stock markets
Both the IPO market and VC business are being partly driven by the unprecedented amounts of liquidity that governments have poured into the global economy in the last two years,
a large share of which has ended up in the capital markets.
In the United States alone, $1.4 trillion was pumped into the economy at the height of the crisis in 2020, and another $1.9 trillion in 2021. Since the recent low at the end of February 2020, the Dow Jones index has added 41%, the S&P index 56%, and the NASDAQ 81%.