Asian investors could have a transformative effect on the European technology industry, according to analysis by Magister Advisors.
In recent months, Chinese consumer-tech giant Tencent acquired Finnish games developer Supercell for USD9B and Softbank paid USD32 billion for the UK mobile chip company ARM.
Both are real “platform deals,” creating entirely new European business units for two very well-funded Asian buyers.
But the Asia-into-European tech trend is much more broad-based. Asian buyers will snap up USD2-3 billion worth of smaller (sub USD500 million) European tech companies this year, up nearly 10x from 2013 levels, according to Magister Advisors.
Areas of specific interest are broadly based, and overall activity is growing fast. Horizons Ventures, the Hong Kong VC, has led two European Fintech investments in 2016 so far – N26 (USD40 million) and friendsurance (USD15 million).
Beijing’s Kunlun Technology acquired Norway’s Opera Software browser operations for USD575 million, in addition to leading a GBP22 million funding round for LendInvest, a UK online lending platform.
Investors as diverse as Khazanah (Malaysia’s sovereign wealth fund), Temasek (Singapore’s investment arm) and Cocoon Networks (investment vehicle for UK investments of China Equity) are expanding European offices to access tech deal flow.
Magister Advisors predicts that in five years up to 30 per cent of European tech M&A and investment will be driven by Asian buyers; translating into circa USD100 billion annually into Europe.
Victor Basta, managing director of Magister Advisors, says: “Across Europe, technology stands out as the fastest growing sector in an under-performing continent. Asian interest may therefore seem to some like ‘selling out’ the family jewels. However, there is no greater validation for how far European tech has come in the last 20 years, than how much interest it is now attracting from world class strategic investors 10,000 miles away. We predict that this investment will have a transformative effect. Asian dragons will put talk of unicorns in the shade."
