China and private equity fuel Asia’s tech dealmaking in Q1

Emerging technologies attract increasing interest from dealmakers, buoyed by strong economic fundamentals and healthy macroeconomics

Dealmaking within Asia’s technology sector delivered a strong performance in the first quarter of the year. A total of 164 deals valued at US$37.3 billion were announced—more than three times Q1 2020’s value of US$12.6 billion, while accounting for 34 more transactions.

Dealmaking involving firms based in China was a key driver of this growth. A total of 48 deals valued at US$17.8 billion targeted Chinese firms in the first quarter, more than double the US$7.2 billion announced in Q1 2020, and representing 18 more deals than those in the period.

PE deal value in Asia doubles YOY

Private equity activity in the tech sector had a promising start to the year in Asia. A total of 61 deals went forward—an increase of 36% over Q1 2020’s deal count—to reach the second highest quarterly volume on record (since 2006). Q1’s deal value of US$13.8 billion, meanwhile, more than doubled the US$5.8 billion in deals recorded in Q1 2020.

Investment in online HR portals resulted in some notable deals during the first three months of the year. The largest announced deal saw Chinese PE firms FountainVest Partners and Primavera Capital acquire a 76.5% stake in online recruitment platform Zhaopin from SEEK Ltd. and Hillhouse Capital Management. The deal, valued at US$1.3 billion, highlights the promise seen in online employment platforms in the post-pandemic era.

Another trend that has accelerated due to the COVID-19 pandemic is the continuing growth of ecommerce, including in the grocery segment. Tata’s acquisition of a 64.3% stake in India’s Supermarket Grocery Supplies, which trades as BigBasket, exemplifies this trend. The US$1.3 billion transaction will represent an exit for PE firm Abraaj Group and Chinese ecommerce giant Alibaba, and will allow conglomerate Tata Group to enter into the online grocery business for the first time.

Ecommerce continues to skyrocket

The largest inbound tech deal of the year in Asia is another example of Asian ecommerce’s continued expansion. The US$4.1 billion deal is a proposed take-private of China Youzan by a consortium led by the company’s CEO and founder, Zhu Ning. Youzan provides payment services for many of the China’s online retail giants, including and Taobao, as well as providing the software to allow SMEs to sell on WeChat, the ubiquitous messaging service.

Already, ecommerce in China had widespread adoption, but the pandemic has kicked growth into an even higher gear—for the first time, more than 50% of all retail sales in China are expected to be through ecommerce in 2021, according to industry research firm eMarketer.

Meanwhile in Japan, competition among e-retailers is prompting new investment. Ecommerce pioneer Rakuten—which also provides entertainment, fintech services and more—received US$2.2 billion in investment from a group of investors that includes Japan Post, Walmart and Chinese tech giant Tencent. The capital injection is expected to allow Rakuten to invest in its delivery network to better compete with Amazon, and the partnership with Tencent is expected to help expand Rakuten’s gaming ecosystem.

Software deals drive China’s M&A activity

Activity within the computer software segment fueled China’s dealmaking in the first quarter. A total value of US$8.3 billion in deals were announced in the first quarter—the highest Q1 value for Chinese software activity on record. Volume, meanwhile, increased by seven deals over the same timeframe.

The largest of these deals was the acquisition of mobile and video games developer Moonton by ByteDance’s video games unit Nuverse, which valued Moonton at US$4 billion. The expansion into the video gaming business puts ByteDance, owner of TikTok and short video platform Douyin, in direct competition with Tencent—currently China's biggest video game company.

The software space also attracted SPAC activity—a trend that grew rapidly in 2020—as seen in US-listed East Stone Acquisition Corp. merger with merchant enablement services platform JHD Technologies. Following completion of the deal, valued at US$1 billion, the combined company will be listed on the NASDAQ stock exchange.

JHD’s platform is designed to support financial inclusion by helping established banks extend their network into rural areas. “We believe the highly fragmented, lower tier economy of China represents one of the biggest potential growth stories of this decade and we are in the middle of it," JHD’s founder and Chairman, Alan Clingman, said in a statement.


The COVID-19 pandemic has profoundly shifted behaviors in the region. In countries like India that are fighting outbreaks and in those like China and Singapore where the pandemic is very much under control, the way people shop, entertain themselves, work and learn has changed.

Technology is at the heart of making these long-term behavioral changes possible, and dealmaking in the sector is set to continue. Strong economic fundamentals will underpin this heightened activity: In its latest projection, published in April, the IMF predicts that the economy of Asia and the Pacific will expand by 7.3% in 2021.

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