China’s acquisition spree isn’t a bubble, it’s a boom, and one likely to grow 20pc this year, PWC forecasts
China shopping the world is picking up steam, PWC says
Even after a record year in 2015, PWC believes China’s outbound M&A momentum is far from peaking.
The momentum of Chinese buyers’ acquiring streak is set to sustain well into 2016, resulting in 20 per cent more deals than the all-time record of 382 deals amounting to US$67.4 billion in 2015.
Unlike the previous boom in leverage-driven M&A that peaked after 2007, China’s current acquisition spree is backed by hard cash - so while the wave of acquisition activity may be a little unusual, it shouldn’t be seen as a bubble.
Asked on how confident he is with PWC’s bullish forecasts, David Brown, transaction services leader for PWC in China and Hong Kong said he sees no cause for worry. What Chinese companies are buying these days is based on solid economic fundamentals, especially given their needs and the scale of the economic transformation underway.
“I’m running a M&A advisory business – and we are planning for that business to triple in size in the next five years,” Brown said.
“Four to five years ago, companies could grow organically at rates of 15 - 16 per cent. The economy then was very strong. But as the slowdown trend hits China, more buyers who may be inexperienced just four or five years ago now look to M&A as game changer.”