2022-01-31-普华永道-China_M_A_2021_review_and_2022_outlook_37页_3mb

PwC 2021 China M&A Review & 2022 Outlook Summary

1. Overview of 2021 China M&A

• Transaction Volume: 12,790 deals, up 21% from 2020, setting a new record.
• Transaction Value: $637bn, down 19% from 2020’s record.
• PE Dominance: For the first time, private equity (PE) deals accounted for more than half of M&A by value.
• Key Themes: Industrial upgrades, dual-circulation initiatives, and environmental, social, and governance (ESG) focus drove deal activity.

2. Strategic Buyer Activity

• Domestic Strategic Deals: Repeated a record high (5,143 deals) but value declined to its lowest since 2015 due to fewer super-mega deals and pandemic impacts.
• Sector Focus: High technology, consumer, and healthcare sectors saw significant activity.

3. Financial Buyer Activity (PE & VC)

• Fundraising: Continued growth, with non-renminbi-denominated funds surpassing renminbi funds for the fourth consecutive year.
• PE Activity: PE deals reached an all-time high in volume and value, driven by capital deployment pressures and targeted sectors like technology and ESG.
• VC Activity: Deal volume surged 46% YoY, with high adoption in tech and consumer sectors.
• PE Exits: Trade sales and IPOs remained strong, with Shenzhen and Shanghai STAR markets as top listing destinations.

4. Mainland China Outbound M&A

• Activity: Moderately increased, but hindered by COVID-19, geopolitics, and travel restrictions.
• Sector Focus: Consumer and technology sectors were primary targets.
• Investor Type: Financial buyers (including PE) surpassed state-owned enterprises (SOEs) in outbound deals for the first time.

5. Outlook for 2022

• Overall M&A: Expected slight decline due to regulatory scrutiny (e.g., tech sector), economic dislocations, and geopolitical tensions.
• PE/VC Activity: Continued strong demand for capital, but regulatory risks and market dislocations may constrain growth.
• Outbound M&A: Likely to remain subdued unless travel restrictions ease; BRI-related deals in Asia-Pacific may increase.
• Domestic Trends: SOE reforms, regional cluster investments, and consumer-driven growth will sustain M&A.
• Challenges: Geopolitical tensions, US equity market access issues, and potential valuation adjustments may pressure deal activity.