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Investors look to Australia as Asia-Pacific tech deals soar

Wednesday, 15 February 2012 | By Michelle Hammond

The Asia-Pacific is the second top region for global deals in the internet and technology sector, a new report reveals, with US investors becoming increasingly interested in Australian companies.


In a report by Sydney-based venture capital fund Right Click Capital, which analysed 2,400 deals, it’s revealed acquisitions and investments sealed last year were worth more than $US104 billion ($97 billion).


Deals involving software and services companies were the highest priced, the report said.


Meanwhile, the Asia-Pacific region came second only to Europe on global comparisons, with deals valued at an average $US60.4 million.


Average deal value in Europe was $US114 million, while deal size in North America averaged $US59.2 million.


But North America remains at the centre of the world when it comes to investment in technology firms, with deals in 2011 worth $US72 billion, representing 71% of the global total.


According to James Whalley, of Right Click Capital, 2011 was particularly interesting in Australia due to the increased interest from American investors in Australian companies.


The rise of daily deals sites was also apparent. The $84 million investment in shopping website Catch of the Day, by a consortium led by James Packer, ranked as the 18th largest in the region.


Phaedon Stough, co-founder of Australian investment network Innovation Bay, and currently living in San Francisco, says it’s a “really interesting time” in Silicon Valley at the moment.


“[There are] so many funded start-ups who will all be competing for… Series A investment opportunities in about 12 months,” Stough says.


“I also caught up with the guys at Accel Ventures [recently] – they invested in 99designs, Atlassian and OzForex.”


In 2011, the largest deal in the Asia-Pacific region was Digital Sky Technologies’ $US1.5 billion investment in Chinese eCommerce site 360buy.com.


This also represented the largest joint raising of the year, alongside a raising by Facebook last January.


The biggest technology deal was Hewlett-Packard’s $US10.3 billion acquisition of enterprise software maker Autonomy, followed by Microsoft’s $US8.5 billion acquisition of Skype.


Whalley believes the “Facebook factor” is likely to have an impact on continued high investment activity in the internet and technology sector throughout 2012.


“We saw signs of a good upward trend towards the end of last year, which we expect to continue, particularly in the lead-up to the Facebook IPO,” Whalley told The Australian Financial Review.


“If that continues to go well, it will have a bearing on the level of activity in the market. Overall, I would be surprised if we didn’t see a stronger first quarter than last year.”