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August 20, 2019

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High-tech investments lead M&A

Deal volumes of China’s mergers and acquisitions increased in most sectors, with high technology investments remaining in the number one position in volume terms, according to a PwC report released yesterday.

The report showed an 8 percent increase in the value of domestic strategic M&A with 28 mega-deals and deal volume climbing 12 percent.

Foreign inbound investments rose by 64 percent in volume but declined by 29 percent in value, according to the report.

“With outbound opportunities limited and the trade-war in play, China’s renewed focus on its domestic economy drove an increase of domestic strategic M&A both in deals value and volume,” said George Lu, PwC Chinese mainland and Hong Kong outbound deals leader.

“A number of large transactions and reorganizations in the industrial sector were seen in the past six months. In addition, the consumer, technology and health-care sectors appeared to be active,” Lu said.

High technology investments ranked first as China’s big technology companies were active buyers in this sector, said Effie Yang, PwC China deals north private equity leader.

China outbound M&A almost halved in value, while a more normal level of smaller-sized transactions remained active, according to the report.

“Multiple factors are weighing on outbound M&A from China,” said Lu.

“If there are favorable developments on these factors, we anticipate some rebound in 2020 as the fundamental drivers of Chinese outbound M&A remain in play.”

Investment activity of PE/VC and financial buyers fell steeply with 46 percent fewer transactions and a 33 percent decrease in deal value to US$87 billion, albeit these numbers are still comparable with 2017 and the first half of 2016.

Consumer-, industrials- and high technology-related investment activities were the most popular for financial buyers, accounting for more than 50 percent in terms of value in total, the report said.


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