SOE reform, industrial consolidation drive M&A
Transactions in the M&A sector hit a record high in the first half of 2015 in China, with the total climbing to $352 billion, a 57 percent half-on-half expansion, a report released by PricewaterhouseCoopers (PwC) on Thursday showed.
According to the report, domestic M&A continued to be the main driver behind the growth, and these deals were up 60 percent by value on the previous six months.
The value of private equity (PE) deals also grew strongly, with the sum rising by 60 percent. The total number of PE transactions reached 4,559, 10 percent higher than the record levels achieved in the second half of 2014.
PwC attributed the robust growth to the nation's booming stock market, consolidation across sectors and ongoing reform of State-owned firms.
Leon Qian, PwC China Transaction Services Northern China Leader, said that the hottest sectors for domestic and foreign inbound deals have been technology, financial services and real estate.
Also, the report said PE M&A achieved record growth on the back of what has been a buoyant A-share market. Technology - especially Internet-related plays - has been one of the main focuses.
China outbound M&A also reached new heights. The number of deals increased 17 percent to a record of 174 transactions for the half-year, and their value was up by 24 percent. As in previous periods, private-sector companies dominated: they were up 50 percent by deal volume and jumped 148 percent in terms of value.
Private companies are looking overseas primarily for new products and technologies that they can bring back to the domestic market as it becomes more and more driven by consumer demand, Carol Wu, PwC China Transaction Services Partner, said at a press conference. "But these deals are also a way to expand into new markets. Australia and Asia are often the first steps for businesses that are transforming into multinationals."
However, the report said, while 2015 looks set to be a record year overall, M&A activity may slow slightly due to uncertainties in the equity markets.
