China M&A value drops to 10-year low at US$164b in H1 2019

Outbound M&A value was down as cross-border deals from Chinese buyers dried up.

China's merger and acquisitions (M&A) saw the largest drop in value during the last decade by 18% to US$164b in H1 2019, PwC revealed. The decline was driven by outbound M&A values being almost halved, as well as a 33% decrease in private equity (PE) deal values to US$87b coupled with a 46% decrease in transactions.

Also read: China's outbound M&A likely to slide further in 2019

The decrease of outbound M&A in value was attributed to large-sized cross-border deals from Chinese buyers almost drying up.

The drop in the investment activity of private equity (PE) and venture capital (VC) and financial buyers were seen as comparable with 2017 and H1 2016.

RMB funding dropped to almost zero whilst big US$ funds held plenty of dry powder, PwC said.

Also read: China's PE activity hits record highs at $222b in 2018

However, domestic strategic M&A increased in value by 8%, with mega-deals climbing to 28 from 18 in H2 2018, and deal volumes climbing 12%.

Volume-wise, deals increased in most sectors except for PE, which fell by 46%.

Foreign inbound investments increased by 64% in volume but dipped by 29% in value.

PwC projected a continued soft M&A activity by H2 2019 if the uncertainties around the trade war persist, but domestic strategic M&A could serve as a bright spot.