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April 26, 2016

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Chinese firms set for record M&As

CHINA is expected to see record outbound mergers and acquisitions this year as the government encourages overseas expansion by companies which also need to bolster their competitiveness, PricewaterhouseCoopers said yesterday.

In the first quarter of the year, 115 outbound M&A deals were announced, up 51 percent from the same period of last year, PwC said in a report. Boosted by several high-profile deals, the total value hit US$82.6 billion in the first quarter, beating all previous annual figures.

China outbound M&As will continue to set historical highs in 2016, PwC said.

“Chinese mainland enterprises continued to actively engage in outbound M&A deals, spurred by their inherent need to step up transformation, bolster competitiveness and diversify overseas asset allocation,” said Andrew Li, leader of PwC China advisory services in China.

“Outbound M&As have become part of the long-term strategy for many Chinese companies, and is less likely to be affected by temporary fluctuations in the Chinese economy or yuan depreciation.”

The momentum will be buoyed by China’s Belt and Road initiative to boost Chinese investment in central and eastern Europe, as well as government efforts to streamline approval process for outbound investment by Chinese companies, PwC said.

Private companies were the drivers with 67 deals in the first quarter, against 27 deals by state-owned enterprises and 21 for financial buyers.

SOEs topped with outbound deal value of US$56.4 billion, or 68 percent of the total, outpacing US$15.1 billion by private firms and US$11.1 billion by financial buyers, data showed.


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