Merger activity in Asia, China remains high even as regulatory uncertainty hangs over tech sector, JPMorgan says
- M&A, in some form, is happening in all sectors in China, according to JPMorgan’s Asia-Pacific deals co-head
- Companies will continue to focus on the sectors where outbound deals can happen
The level of activity is the same as it was coming into the year, if not “a little bit more intense”, according to Kerwin Clayton, JPMorgan’s Asia-Pacific co-head of mergers and acquisitions (M&A).
“A more challenging deal sentiment towards some sectors can lead to a misconception that things are slow broadly and that just hasn’t been the case. A big difference in China is that five years ago there were a limited number of sectors where M&A was active. Now, M&A, in some form, is happening in all sectors,” Clayton said. “These counterbalance, if not overcompensate for the areas that might be slower at any time.”
Domestic deals have been a major driver of activity this year, with more than 4,200 deals worth US$272.6 billion through August 12, according to financial data provider Refinitiv. That is the largest number of domestic deals in more than a decade.
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“Domestic consolidation in China is being driven in part by companies finding it harder to compete in their current state,” Clayton said. “Other areas in China where we are seeing more activity include sponsor-to-sponsor trades where one private equity fund is willing to buy from another; government-led consolidations or restructurings; and multinational divestitures.”