China overtakes US as top nation for technology acquisitions

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.