Weekly digest - May 31 2023
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31 May 2023
COVER STORY
The conservative virtues of private credit relative to private equity are appealing in a risk-off world, but global participation in Asia may be limited.
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LP INTERVIEW
AUSTRALIA'S ESCALA PARTNERS
 Escala Partners is one of a cluster of Australia-based wealth management platforms attracting more attention from private equity fundraisers. Getting on its approved list requires push as well as pull.DEAL FOCUS
GO AIMS TO BRING JAPAN'S TAXIS UP TO SPEED
 Goldman Sachs-backed taxi-hailing platform Go wants to address Japan’s taxi driver shortage and bring digitalisation to an industry that remains rooted in an analogue world.DEAL FOCUS
KKR BRINGS IMPACT TO THE CLASSROOM
 EQuest Education has enlarged its K-12 school footprint in Vietnam through a string of acquisitions. KKR continues to support this consolidation effort via its global impact investment strategy.DEAL FOCUS
U POWER WINS BACKING FOR EV TURNKEY PROPOSITION
 China’s U Power has developed an integrated chassis as a cost-effective foundation on which electric vehicle makers can build their own creations. Government and independent investors are piling in.DEAL FOCUS
CHALO THINKS BEYOND THE BUS STOP
 India bus-tracking app Chalo is helping fleet operators eliminate fraud and improve efficiency while giving passengers greater visibility on services. It is keen to scale – geographically and vertically. |
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By the Numbers
AVCJ RESEARCH
EXITS GRIDLOCK
China Youzan, an e-commerce software-as-a-service (SaaS) business, represents one of the more protracted and complex private equity exit stories in the region. The company received several rounds of funding in the early to mid-2010s – from investors that might have been expecting it to follow the standard offshore IPO route.
Instead, China Youzan was acquired by Hong Kong-listed China Innovationpay Group in 2018. This listed entity was renamed China Youzan and the e-commerce SaaS operating business, Youzan Technology, became its key subsidiary. It was an all-share deal, with investors in the start-up swapping some of their equity for shares in the listed entity. They still owned a significant piece of Youzan Technology directly. Part two of what had effectively become a trade sale appears to have been thwarted by COVID-19 and global tech selloffs. China Youzan stock peaked at HKD 4.19 in 2021 but then fell sharply, reaching HKD 0.07 in late 2022. A founder-led take-private bid for China Youzan – which included a proposal to divvy up shares in the Youzan Technology, essentially creating a standalone business – failed in 2021. Now, though, there has been a breakthrough. China Youzan has agreed to take full control of Youzan Technology for HKD 2.6bn (USD 334.5m), creating a liquidity event for the likes of Hillhouse Capital, Matrix Partners China, and Gaocheng Capital. They will receive yet more China Youzan stock. The resolution coincides with efforts to stabilise China Youzan’s business, notably a raft of cost-cutting measures, including job cuts, that ended years of escalating losses. Assuming the investors’ now liquid positions can turn into distributions, it would add a touch of much-needed gloss to a bleak environment. In the eight years to 2021, annual average exit proceeds from private equity-backed Chinese companies amounted to USD 25.1bn. Proceeds feel to USD 5.2bn in 2022 and the first few months of 2023 have been little better. 
All of the trends featured here were sourced from AVCJ's proprietary database, AVCJ Research, featuring comprehensive information on private equity deals, fundraises and exits.
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