BIZCHINA / VC Industry in China
China likely to see rise in mergers in 2006
(AP)
Updated: 2006-03-21 16:46
China will likely see an increase in mergers and acquisitions deals this
year, helped by relaxed regulations that will lure private equity
transactions, a research report by the consultant group
PricewaterhouseCoopers says.
The number of merger and acquisition deals last year rose to 857, up 14.5
percent from 749 in 2004, the report said.
Overall, merger and acquisition volumes totaled US$46.4 billion in 2005,
up 34 percent from 2004 as China's top four state-owned banks and some
commercial banks sought strategic investors ahead of Hong Kong stock
exchange listings.
But aside from the financial sector, China's merger and acquisition
activity showed little growth in terms of deal value, the company said.
"In the absence of a comparable number of financial services deals, we
expect gross deal values to be lower in 2006," PricewaterhouseCoopers
said in a statement.
Private equity and venture capital transactions in China slowed down
after China's State Administration of Foreign Exchange issued regulations
in early 2005 requiring private equity firms to get approval from the
central government for any investment in offshore companies.
The change left many deals waiting in the pipeline, said David Brown,
transactions partner at PricewaterhouseCoopers. But investor confidence
has improved since Beijing eased control on the regulations late last
year in response to market concerns, he said.
Companies are now required to register any deal with the State
Administration of Foreign Exchange instead of obtaining its approval,
Brown said.
The swift regulatory response, an increase in private equity deals and a
continued surge in overseas investment by Chinese companies "bode well
for future merger and acquisition activity," he said.
Brown said sectors such as information technology and electronics,
manufacturing, retail and transportation are likely to record significant
merger and acquisition activity in 2006.
He also forecast that overseas investment by mainland Chinese companies
could double this year as state-owned enterprises continue to seek
partnerships with overseas energy firms and private companies seek access
to technology and brands.
Outbound investment from China totaled US$6.9 billion in 2005, including
China National Petroleum Corp.'s US$4.2 billion acquisition of
Canadian-owned PetroKazakhstan Inc. in August, the biggest cross-border
deal of the year.
(For more biz stories, please visit Industry Updates)
Most Popular Stories in 48 Hours
� Baidu's Li smells fortune in mobile phone users
� Shanghai Auto turns around
� DVD royalty agreement signed
� Central bank raises lending rate
� American way of life
Today's Top News
� President ends African tour by drumming for dancers
� Housing fund ups mortgage rates
� Militants warn Chinese oil companies
� Q1 urban unemployment rate at 4.2 pct
� Pay rises by 16% for State sector workers
Top Biz News
� China's state pension fund permitted to invest overseas
� Lower Q1 NPL ratio for major banks
� Housing mortgage loan rates raised
� China builds railway corridor in rust belt region
� Pay rises by 16% for State sector workers
Learn mandarin
