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Chinese firms see outbound M&As up 30%
Print Edition
CHINESE companies are more confident in making outbound mergers and acquisitions, despite volatility in the international financial markets, consultancy Deloitte said in its latest report.
For the first five months of 2014, there were 106 Chinese outbound M&A deals worth a total US$31.7 billion, Deloitte said in the report.
The majority of the surveyed M&A practitioners believe that the number of Chinese outbound M&A transactions will grow as much as 30 percent in the coming year, it said.
The number of China’s outbound investment deals has grown for four consecutive quarters since the second quarter of 2013, said Patrick Yip, head of Deloitte China M&A Services.
“US economic recovery and renminbi internationalization may provide favorable conditions for Chinese investors seeking more premium assets and larger market share abroad,” he said.
In addition, distressed assets and depressed valuations in the eurozone will probably attract more bargain hunters from China, particularly in the manufacturing, technology, media and telecommunications sectors, which are the primary beneficiaries of Chinese investment in the eurozone, Yip said.
The report said the number of small-sized M&A deals with a value of up to US$50 million grew the most — by 65 percent annually — in the first five months of 2014.
The proportion of mid- and large-sized M&A deals with values ranging from US$50 million to US$1 billion dropped, and the share of mega-deals valued at over US$1 billion climbed gradually.
Surveyed respondents, however, seem to have a different view about the trends for the remainder of 2014. They expect a higher deal volume for mid- and large-sized M&A transactions alongside a reduction in the number of small-cap M&A transactions.
The findings indicate Chinese investors may develop an appetite for larger deals, said Dennis Chow, head of Deloitte Global Chinese Services Group.
It may indicate positive expectations due to easing regulations on capital transfers out of China, he said.
However, when compared with other developed countries from January 2013 to May 2014, the total value of Chinese outbound M&A transactions was comparable with that of Germany and Japan, and only reached a quarter of that of the US and half of that of the UK.
The report also found that Western Europe overtook the US as the most popular market for Chinese funds in the first five months of 2014.
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