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Private Equity Investing Soared in China Last Year

Private Equity Investing Soared in China Last Year

Patrick Boehler

Last year was a bumper year for private equity in China with new investments reaching record volumes and the value of deals more than doubling from a year earlier as investors rushed to profit from the continuing reforms of state-owned enterprises, according to PricewaterhouseCoopers LLP.

The overall value of private equity deals in China reached US$73.2 billion last year, up 101% from 2013, according to figures released by PwC Tuesday . The firm counted 593 private equity deals last year, 51% more than the prior year.

The opening of some state-owned enterprises to private investment spurred last year’s rally, PwC said. In November 2013, President Xi Jinping announced his plan at the Third Plenum of the Communist Party Central Committee to use private capital to push for SOE reform, starting a series of sales of stakes in units of state-owned titans such as Asia’s biggest oil refiner Sinopec.

Outbound deals increased thirteen-fold to US$14.3 billion last year from US$1.1 billion in 2013, reaching a historic high. The number of such deals almost doubled to 49 from 25 over the same period.

Consumer and technology-oriented sectors accounted for more than half of private equity deals as purchasing power is on the rise and the government is trying to push consumption to maintain growth. “PEs sought out overseas businesses with a strong China angle in their growth strategies,” said Christopher Chan, PwC China and Hong Kong Advisory Partner.

Fundraising increased by 33% to US$44 billion, almost reaching 2011 levels.

Private equity exits rose 84% to 232 last year from a year earlier, but didn’t reach the record levels of 2010 and 2011 despite the resumption in initial public offerings in China with 45 exit listings in Shenzhen and 17 in Shanghai. Listings in Hong Kong and New York also increased to 51 last year from 35 in 2013.
PwC said it expected to see larger deals and buyouts this year.