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April 21, 2017

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M&As by Chinese firms dive

THE number and value of overseas mergers and acquisitions made by Chinese mainland enterprises plunged in the first quarter of 2017 amid tougher regulatory requirements on authenticity and compliance, PricewaterhouseCoopers said in a report released yesterday.

Chinese mainland enterprises concluded 142 M&A deals worth US$21.2 billion overseas from January to March, a year-on-year drop of 39 percent and 77 percent, respectively, according to PwC.

“There was a downward trend in overseas M&As by Chinese companies in the first three months of this year since Chinese regulatory authorities pushed ahead with tougher requirements on authenticity and compliance of overseas investments by Chinese enterprises in the fourth quarter of 2016,” said Andrew Li, PwC’s advisory service leader in central China.

He predicted that overseas acquisitions will likely return to a rational track in 2017 after the blistering growth in 2016.

Overseas M&A deals by Chinese mainland companies rose 142.1 percent from 2015 to 920 last year. The cumulative transaction value soared to US$212.5 billion, almost 3.5 times that of 2015, PwC data showed.

Privately owned enterprises, which reported 609 M&A deals valued at a combined US$107.9 billion, became the most active investors last year, outperforming their state-owned counterparts for the first time.

Looking ahead, Chinese companies will continue to seek strategic overseas investments despite the tougher regulatory requirements, PwC said.


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