Foreign investor deals down from last year
Data compiled by the Centre for Asia Private Equity Research shows there have been 127 private equity deals done by foreign investors on the mainland in the first half of this year against 278 in all of last year. On a simple annualised basis, total deal value for the first half of this year of US$4.74 billion was running behind the US$10billion deal value recorded for the whole of last year.
Last year's most favoured target of foreign equity investors, the services sector, fell out of the top-three rankings in the first half, with technology and telecoms taking over as the sectors that attracted the largest deal value (thanks to the single biggest deal of the first half), followed by construction and energy and natural resources (see table).
The data shows that in the number of deals and transaction amounts, the dominance of foreign equity in private capital raising slipped in the first half - to 77 per cent against 80 per cent for the whole of last year in value terms; and to 66 per cent against 71 per cent in the number of deals.
The top-valued deal done in the first half was US$430million committed by Japanese IT group Softbank for a 35 per cent stake in Oak Pacific Interactive, a Chinese holding company that owns social networking sites Xiaonei.com (the Facebook of China), Mop.com, an entertainment portal and DoNews.com, an IT blogging site.
That compares with last year's top-valued deal, which was an US$840million investment by private equity firm Permira in the Galaxy Entertainment Group that is building the world's second-largest casino in Macau.
Centre for Asia Private Equity Research spokesman Philip Chan says deal pace will be sustained in the second half.
'Due to the vast pool of capital in China, both from abroad and at home, deal pace will continue, although we will see increased activities from domestic investors. Significantly, domestic investors are competing against foreign investors in mid-size [US$10million to US$50million] deals. For foreign investors, the key is their ability to partner with domestic investors in deals,' he says.
