Liu Minxia

    mllmx@msn.com

    AGAINST the backdrop of a decrease in the scale of global private equity and venture capital (PE/VC) fundraising and investment, China’s PE/VC activity saw a record year in 2016 as both investment and funds raised hit new highs, a latest PwC report showed.

    Driven by a substantial increase in the amount of yuan fundraising, US$72.51 billion was raised by China PE/VC in 2016, a new record and up 49 percent from a year ago. The scale of global PE/VC fundraising fell to US$336 billion in 2016 from US$347 billion a year ago.

    The yuan funds valued at US$54.89 billion represented a 177 percent growth over the previous year. The proportion of yuan funds surged from 40 percent to 76 percent in 2016.

    “Traditional PE/VC fundraising was for the first time dominated by yuan, with a plethora of mid-and-small yuan funds raising money for domestic investing and A share related activities and exits,” said Tracy Cao, a PwC asset management partner in southern China.

    As global trading value fell 38 percent, total China PE/VC-led merger and aquisition deal value continued growing steadily to reach US$223 billion, accounting for 73 percent of global PE/VC deal values in 2016.

    Venture capitalists have increased dramatically from 2012 to 2016, PwC said. Today, VCs are six times more active in the Chinese market than they were four to five years ago.

    “The strong growth was driven by the participation of ‘Big Asset Management’ (BAM) investors who dominated the list of large transactions,” said Brenda Yip, a PwC transaction services partner.

    In terms of deal volume, high technology is still PE funds’ most favored sector in 2016, followed by industry.

    “We expect that fundraising will keep growing in 2017,” said Vincent Cheuk, a PwC private equity leader in Southern China. “Overseas listings will also increase, especially in the high tech industry.”