China’s private equity deals surged in 2020 as country emerged from Covid-19 crisis, Bain survey finds

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Fund managers face an uphill battle to conclude more lucrative deals this year amid escalating competition, said the global consultancy

Companies in the technology, media, telecoms and health care sectors with solid earnings and high growth potential were the primary targets, the study found

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China’s private equity investors benefited from the country’s swift action to contain the Covid-19 pandemic, the survey found. Photo: Bloomberg

Daniel Ren

Published: 10:00am, 28 Apr 2021Updated: 10:46am, 28 Apr 2021

China’s private equity investors benefited from the country’s swift action to contain the Covid-19 pandemic, enjoying a jump in investment value and deal numbers last year, according to global consultancy Bain & Co.

But the fund managers face an uphill battle to conclude more lucrative deals this year amid escalating competition.

“Higher selling prices of targeted firms are expected this year,” said Lucia Li, a partner with Bain said. “High-growth companies are actively chased by many funds, hence they are raising their valuations and prices.”

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In 2020, private equity funds in China sealed deals worth US$97 billion, up 40 per cent from a year earlier, Bain’s survey found. The total number of transactions climbed 53 per cent to 857.

Companies in the technology, media, telecoms and health care sectors with both solid earnings and high growth potential were the primary targets of the cash-rich investors.

The figures in Bain’s report included deals conducted in Hong Kong and Taiwan as well as mainland China.

Bain said a strong recovery of private equity deals in China began in the second quarter of last year when the mainland emerged from the coronavirus outbreak to become the lone bright spot of the global economy.

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