PE sector unlikely to match record year
Print Edition
CHINA’S private equity market is this year unlikely to repeat the record numbers achieved in 2015 due to the economic downturn and increased competition, consulting firm Bain & Co said in a study released yesterday.
The value of PE deals in 2015 rose 56 percent year on year to US$69 billion, while the number of transactions increased by 26 percent to 488, the report said.
The growth was largely driven by a 100 percent rise in multi-billion dollar deals — from seven to 14 — but the momentum is unlikely to continue in 2016, it said.
“While increased activity means more opportunities for investors, we can also expect more vigorous competition as economic conditions deteriorate,” Michael Thorneman, managing director of Bain China, was quoted as saying.
Of the 125 PE executives polled, more than 60 percent cited macro-economic conditions as the key challenge going forward, while 54 percent pointed to increased competition.
Sourcing opportunities and high valuation expectations are also among the factors hampering the investment outlook.
Despite the fading optimism, strong growth is still possible in sectors that are set to benefit from China’s ongoing economic restructuring, including health care, agribusiness, tourism, online retail and Internet financial services, the report said.
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