Date
23 September 2017
Private equity firms are looking for China-related acquisitions overseas, Christopher Chan says. Photo: EJ Insight
Private equity firms are looking for China-related acquisitions overseas, Christopher Chan says. Photo: EJ Insight

China M&A volume, value surge 55% to record high

Merger and acquisitions (M&A) activity in China reached record highs in 2014, increasing 55 percent in both the number of deals and their total value, data released by PwC showed Tuesday.

The number of deals surged to 6,899, and the total value climbed to US$407 billion.

Technology, consumer-related and financial services were among the major sectors that contributed to the growth, but performance was strong in all categories, David Brown, PwC China and Hong Kong leader in transaction services, said at a media briefing.

Private equity (PE) firms and financial buyers deployed their largest-ever amount of capital on new investments, US$73 billion last year, up 101 percent from 2013, while volume surged 51 percent.

Christopher Chan, PwC China and Hong Kong advisory partner, noted that the value was pushed up as local PE firms and financial buyers sought out overseas firms with a strong China angle in their growth strategies.

However, the business integration and management issues after the M&A deals remain a major concern when considering bids from Chinese investors, Chan said.

PwC said there’s a clear division between the outbound investment strategy of private firms and that of the state-owned enterprises (SOE): the SOEs continued to do deals in the resources and energy sectors, while the private firms focused on technologies and brands that can benefit their business in the domestic market.

The accountancy firm expects healthy growth in China M&A activity this year, with the SOEs continuing to make major domestic transactions while private firms lead the outbound charge.

Larger deals and buyouts are expected to be seen among PE firms, which are more deeply involved in outbound transactions.

– Contact us at [email protected]

MY/JP/FL

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Merger and acquisitions (M&A) activity in China reached record highs in 2014, increasing 55 percent in both number of deals and in total value, according to data released by PwC on Tuesday.

The number of deals surged to 6,899 and value climbed to US$407 billion in total. Technology, consumer-related and financial services are among major sectors contributed to the growth, while the performance was strong in all categories, David Brown, PwC China and Hong Kong Transaction Services Leader, said at a media brief Tuesday.

Private equities (PE) and financial buyers also saw their largest ever amount of capital deployed on new investments at US$73 billion in last year, up 101 percent from 2013, while the volume surged 51 percent.

Christopher Chan, PwC China and Hong Kong Advisory Partner, noted that the value was pushed up as the local PEs and financial buyers have sought out overseas businesses with strong China angle in their growth strategies.

However the business integration and management issues after the M&A deals remain a major concern when considering bid from Chinese investors, Chan added, saying asset purchase is an easier way for Chinese investors, instead of buying equities.

In addition, PwC said there’s a clear division in outbound investment strategies of private businesses and the State-Owned-Enterprises (SOE): the SOEs have continued to do deals in resources and energy sectors, meanwhile the private businesses focused on technologies and brands which can benefit their business in domestic market.

The auditor expects to see health growth for China M&A activity in 2015, with the SOE continue to feed major domestic transactions, private businesses to lead the outbound charge. Larger deals and buyouts are expected to be seen in PE industry with their deeper involvement into outbound transactions.

–Contact us at [email protected]

MY/JP

EJ Insight reporter

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