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Chinese M&A Activity Dropped In 2017 But Levels Still High - PwC
These liquidity events did not generate quite as much liquidity in 2017 as a year earlier, but activity was near the previous record it hit in 2015.
Merger and acquisition activity in China – important liquidity events that wealth managers track – fell 11 per cent in 2017 from the high levels of the previous year, coming in at $671 billion. While a year-on-year fall, the amount was about equal to the previous record set in 2015, PricewaterhouseCoopers said in a statement.
The value of deals declined for the China outbound, foreign inbound and financial buyer segments. But the overall total was supported to some extent by a 14 per cent increase in the value of domestic strategic deals, PwC said.
“While deals are down by both value and volume compared to a bumper 2016, the trend is still strongly upward on a five-year view,” David Brown, PwC China and Hong Kong Transaction Services leader, said.
The number of mega-deals (those with a value in excess of US$1bn) declined from 103 in 2016 to 89 last year. This fall was accounted for entirely by China outbound deals.
“The government’s policy guidance on outbound deals has had an undoubted effect,” Brown said. “There has been a re-focussing on strategic outbound deals and away from passive or trophy assets. That said, the total value of outbound deals still exceeds 2014 and 2015 combined,” he said.
Technology, industrial and consumer products continue to be the main sectors targeted in outbound deals. The main aim is to bring technologies back to the domestic market in order to upgrade the industrial base, as well as to introduce new IP, brands and products to China.
PwC said traditional private equity and venture capital fund-raising continued a strong upward trend in 2017, but noted that this did not capture the full amount of capital made available by various bodies, including the investment arms of large corporates and state-owned enterprises, financial institutions and government-backed funds. The Asset Management Association of China reported $1.5 trillion of assets under management by private equity funds at the end of 2017 – a seven-fold increase over the last three years.
