China overtakes US as top nation for technology acquisitions

PUBLISHED : Friday, 29 April, 2016, 8:28pm
UPDATED : Friday, 29 April, 2016, 8:43pm

China has overtaken the United States for the first time as the world’s biggest “acquiring nation” for mergers and acquisitions in the technology industry, accounting for a 45 per cent share of the market in the first four months of this year, according to a report from Dealogic.

It estimated that Chinese technology acquisitions reached a new high of US$65.7 billion through 456 transactions, up from the previous record of US$41.6 billion through 434 deals in the same period last year.

“Historically, the US had consistently been the biggest buying nation per year-to-date period and annually since 1995 [in technology mergers and acquisitions],” the report said.

US mergers and acquisitions in the technology sector totaled US$45.6 billion in the first four months of this year.

China’s new record came amid the increasing deal sizes in the tech sector led by Chinese technology companies, which are making a big foray into the global information technology industry.

China’s outbound technology-related mergers and acquisitions reached a new annual high of US$17.6 billion for 69 transactions in the first four months of this year, topping the US$14.9 billion recorded for the whole of last year.

Chinese aviation and logistics conglomerate HNA Group took over Ingram Micro, a US-based hi-tech products distributor, in a deal worth US$6 billion in February, becoming the biggest China outbound technology acquisition on record.

On Tuesday, Alibaba Group affiliate Ant Financial Services Group completed a US$4.5 billion round of funding. It is the largest private funding round on record in the global technology sector, as well as the biggest China domestic technology M&A deal so far this year, Dealogic said.

Alibaba is owner of the South China Morning Post.

Goldman Sachs leads the China technology M&A advisor rankings so far in 2016, with US$15.5 billion, followed by China International Capital Corp and Morgan Stanley with US$15.2 billion and US$8.4 billion, respectively.

There are also a growing number of China outbound mergers and acquisitions in the technology hardware manufacturing industry.

In late March, Wanfeng Technology Group, a privately-owned Zhejiang-based robotics maker, had acquired a 100 per cent stake in US industrial robot manufacturer Paslin for US$300 million.

“Such China outbound acquisitions are a win-win. It helps both Wanfeng and Paslin move into each other’s markets and compete for more market share within a short term,” said Jiang Yuhua, general manager of Wanfeng.

There would also be an increasing number of domestic technology companies looking for mergers and acquisitions in the virtual-reality (VR) market in the coming year, according to Bryan Ma, vice president of client devices research at market research firm IDC.

He said a large number of Chinese tech start-ups and private investors are racing to be VR suppliers and developers, now that Chinese tech companies have made early progress in tethered HMDs (head-mounted displays) as well as standalone HMDs.

“Many M&As would be seen in the [VR] market this year,” Ma added.