Overseas M&As by Chinese mainland companies fall from level seen in 2016

Chinese mainland companies saw outbound mergers and acquisitions in the first three quarters of the year fall from the surge in 2016.

But the government and market welcomed strategically significant cross-border M&As and they remained stable over the period, PwC said in a report yesterday.

Companies in the mainland sealed 572 overseas M&As worth US$97.7 billion in the first nine months, PwC said .

The total number of deals and value so far this year almost matched the annual figures for 2014 and 2015 combined, but are down 14.8 percent and 38.9 percent respectively from the first three quarters of 2016. 

Andrew Li, China deals domestic leader of PwC China, said that "overseas M&As declined from the scale seen in 2016" due to stricter Chinese regulations over the past year as well as companies facing overseas regulatory reviews and uncertainties impacting the global economy.

"However, cross-border M&As with strategic significance were encouraged by the government and welcomed by the market, and so remained stable over the period," he said.

Chinese privately-owned enterprises were especially active by clinching 359 M&As in January to September, accounting for 63 percent of the total deals. The proportion is nearly five times that posted by state-owned enterprises, which is similar to the prior year.

Concurrently, there were 135 overseas M&As dominated by financial companies in the first three quarters which accounted for a record high of 24 percent of the total. The trend indicates the increasingly active role that financial companies are playing in overseas M&As, according to PwC.

Meanwhile, Chinese listed companies were still major players in securing overseas M&As, with the number of deals exceeding 58 percent of the global total in the first three quarters.

“For China’s overseas M&As, 2017 is proving to be a period of adjustment. Overseas M&As will stay active with the deepening supply side reforms, industrial upgrading and the Belt and Road initiative,” Li said.

"Cross-border M&As by Chinese enterprises will become more steady and orderly in 2018, (and) on course for a bright outlook by 2020," he added.

By industries, large-sized M&As were concentrated in energy, electricity and logistics, the report said.