Asian unicorns are trading 40% cheaper in private markets

ASIA'S most well-known startups are trading 40 per cent cheaper than 6 months ago in private transactions amid a rout triggered by Chinese regulatory headwinds and the global economic slowdown.

The affected billion-dollar companies range from financial technology and e-commerce to mobility and consumer, according to AJ Patel, a senior member of the venture capital secondaries team of the Toronto-based advisory firm Setter Capital.

"For some of the unicorns, we are seeing very limited demand," Patel said, adding that bid offers are 25 to 50 per cent lower compared with the firms' latest fundraising valuations. He declined to disclose names.

Asia has attracted more than US$1 trillion of venture capital money since 2012, according to researcher Preqin, buttressing the valuations of companies including ByteDance and Shein. Yet both are now trading at significant discounts. Investors are seeking for opportunities in North America out of concerns about China's regulatory environment, Patel said.

The region represented 28 per cent of the 1,170 private businesses valued above US$1 billion, according to the CB Insights global unicorn list. China is home to 174 unicorns alone, making it the largest base of such startups after the US.

ByteDance's valuation dropped at least 25 per cent to well below US$300 billion, people familiar said last month. Buyers of Shein are evaluating bids 30 per cent cheaper than its US$100 billion valuation in April, people familiar said. The third quarter may see further declines.

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"There will be down rounds, or companies will revalue their shares lower for internal reporting," said Patel. "Public mutual funds will re-mark their portfolio at lower valuation" in the third quarter. BLOOMBERG