China M&A deals hit US$46b
Values surge 34pc last year as big banks take strategic investors before HK listing
China's mergers and acquisitions deals increased 34 per cent in value last year to US$46.6 billion, powered by one-off investments in the financial services sector and significant activity in Hong Kong.
The figure was well above the US$34.6 billion recorded in 2004.
However, research from PricewaterhouseCoopers suggests China will not see M&A mega deals this year despite strong growth expected in the manufacturing, retailing and transport sectors.
'[Last year] was notable for a series of major investments in the financial services sector which boosted deal values substantially,' the transactions group at PwC said.
'Major deals added some US$12 billion to the year's tally for that sector as China's Big Four state-owned commercial banks and the city commercial banks sought strategic investors prior to listing in Hong Kong.'
The landmark deals saw more than US$1 billion invested in three of the state-owned banks - China Construction Bank, Industrial and Commercial Bank of China and the Bank of China.
China Construction Bank, after receiving investments worth US$3.9 billion last summer, launched a US$9.2 billion initial public offering in Hong Kong in October.
At least four large deals - signed with Carlyle Group, Temasek Holdings and Goldman Sachs Capital Partners - related to financial services and showed significant activity in the heavy machinery and computer-related sectors.
Deal values in the financial services sector surged US$17.1 billion, with 154 deals announced or completed.
PwC partner Danny Po said he expected more M&A activity in China as corporates searched for strategic partners to help defray the cost of their ambitious expansion plans.
Mr Po said activity was likely to enter a mature phase after the introduction of new regulatory measures last month and that within 18 months, A-share companies would take an important role in M&A activities.
China's outbound investment activity is expected to keep increasing in size and scope.
It gained momentum last year with an unprecedented number of deals in energy and information technology.
One deal was CNPC's acquisition of PetroKazakhstan.
The Ministry of Commerce's new M&A measures allowing foreign investors to make strategic acquisitions in newly listed A shares or shares in companies that have undergone shareholding reform helped restore investor confidence in the fourth quarter last year.
