Yang Yunfei

    yyunfei@yahoo.com

    CHINA’S merger and acquisition activities performed at record-beating levels last year and are expected to continue to grow at a steady pace this year, according to a report by accounting and consulting firm Price Waterhouse Coopers, or PwC.

    Merger and acquisition activities by Chinese investors surged to record highs in 2014, with the number of deals jumping 55 percent from a year ago to 6,899 and the value of all deals surging 55 percent to US$407 billion, both record highs since PwC started compiling data in 2008, the PwC report shows.

    Roger Liu, PwC’s Chinese mainland and Hong Kong deals private equity leader, said mergers and acquisitions among China’s domestically listed firms and the government’s efforts to improve efficiency at the country’s State-owned enterprises drove last year’s strong performance.

    Technology, consumer-related services and financial services were the most active sectors, partly reflecting China’s economic development. But the real estate sector remained the biggest sector by value, with the combined deal value reaching US$44.4 billion, as falling home prices and high inventories forced many developers to seek new sources of capital, the report says.

    The report also shows that last year was a banner year for investments by private equity firms, which saw their announced deal volume rise 51 percent to a record 593. The total deal value also surged 101 percent to hit US$73.2 billion.

    Gabriel Wong, head of PwC’s China corporate finance, said the number of announced international merger and acquisition deals by Chinese companies surged by more than a third to reach a record level of 272 in 2014. North America overtook Europe last year in attracting Chinese investment with 96 completed deals.

    Wong said the deal flow was driven by a rising number of Chinese private firms turning to foreign investment in search for growth amid an increasingly mature domestic market.

    Looking ahead, Liu said he expected China’s merger and acquisition activities to continue to be strong this year, driven by the government’s reform of State-owned enterprises.

    The government is seeking measures to diversify ownership and improve management at the country’s inefficient State-owned enterprises, which dominate China’s economy. The reform is expected to see stake sales to portfolio and private investors, particularly in the country’s most competitive sectors, which will offer tremendous opportunity for various types of capital, including domestic and private sector capital.