Unicorns, pre-IPO startups valued above $1 billion, are meant to be rare. Asia now has a herd of them and a cull may be in the offing.
Across the region new industries such as fintech, social media and big data are flourishing by supplying services to a burgeoning middle class in super-wired cities. These relative newcomers include Xiaomi (consumer electronics), Lufax (peer-to-peer lender), Flipkart and Coupang (e-commerce).
What used to be the stuff of legend is now relatively commonplace. According to CB Insights, there are 29 Asian unicorns with an aggregate value of $149 billion, which equates to 30% of the price of all unicorns globally.
There are many more narwhals, companies valued at around $500 million to $800 million. Asia even has a few decacorns, the latest buzzword in the tech world meaning a company valued above $10 billion.
As they grow, these hugely disruptive companies will consume more and more capital. Investment bankers are chasing mandates to raise funding for expansion on their behalf.
2016 will be the year many of these companies prepare for listing and a few may even have their stock-market ticker code by this time next year.
However, the stampede could also come to a halt. Many of these companies are still unprofitable and rolling out business plans; regulation is catching up. And valuations are always subject to the vagaries of sentiment. Too many expensive IPOs could burst the pricing bubble. Already, prices in private fund rounds are starting to wobble.
Many tech entrepreneurs would be advised to take advantage of the ample liquidity available now in the region, especially in China. When US interest rates rise institutional investors could take flight to higher-yielding assets elsewhere with less risk attached. For investors, the shoe is on the other hoof: the desire to access these exciting stories must justify high premiums.
Unicorns are rare for a reason; best ride the trend while you can
About FinanceAsia Magazine
Established in 1996, FinanceAsia is the leading publisher of financial news in the Asia-Pacific region. Our combination of print and online products provide the latest news, analysis and insight into Asia’s financial markets.
Published monthly from our office in Hong Kong, FinanceAsia magazine provides our readers with the latest financial trends, interviews, features and investigative reports. The publication has a readership of key decision-makers at corporations, governments, investment and commercial banks, institutional investors, asset managers, brokers, traders and financial intermediaries.
Our regular sections include:
We look at the key data behind a topical theme in Asian finance, showcased with an array of graphs and tables.
A monthly opinion column from the FinanceAsia editorial team. We provide our thoughts on a topic making the headlines.
Deal of the Month
Our regular two-page spread with its signature artwork and in-depth analysis examines the equity, debt or M&A deal that we feel has had the biggest impact on the Asian capital markets that month.
For company CEOs and CFOs, what investors think is a critical concern, and in this column we help them understand just this. Each month we speak to a Chief Investment Officer of a top fund and outline their views on corporate governance, what stocks they like and where they expect to generate the best returns.
A monthly opinion piece from a respected author or commentator on Asian business, finance or economics.
People on the Move
Here we summarise the key hires, fires and moves at the region’s banks, highlighting at least one major move each month.
We examine the major primary markets deals of the month and comment on the quality of the debt or equity transaction and the secondary market performance.
The Arts of Finance
A light-hearted look at investment opportunities surrounding the arts business in Asia.