August 10, 2020

Local Spotlight: Deal Drivers in Greater China - Pulse of the Market

By Robert Torio, Content Marketing Manager, APAC

Part 1 of a two-part blog series featuring insights from the Deal Drivers: Greater China – M&A in H1 2020 and beyond webinar hosted by Datasite and Mergermarket

 

As the earliest markets impacted by COVID-19 and the first to take steps toward recovery, Mainland China and Hong Kong SAR are being closely watched for M&A recovery momentum in the second half of the year.

At a live virtual briefing that we recently hosted with Mergermarket, more than 300 dealmakers shared their outlook for the M&A market in Greater China. The briefing was hosted by Yiqing Wang, China Editor and Head of APAC Editorial Operations at Mergermarket. She also moderated the discussions with our expert panelists:

  • Bagrin Angelov, Head of China Cross-border M&A, Executive Director, China International Capital Corporation Limited
  • Samson Lo, Managing Director, Head of Mergers & Acquisitions, Asia, UBS
  • James Parker, Partner, Norton Rose Fulbright Hong Kong
  • Eric Xin, Senior Managing Director, Managing Partner, CITIC Capital
  • Jacey Paik, Co-Head of Greater China and Head of South Korea, Datasite

 

Market Sentiment: Almost half of dealmakers positive about M&A in H2

The silver lining for Greater China M&A lies in continuous efforts to attract foreign investment and push for domestic industry restructuring. Inbound transactions value rose by 110.3% year on year in H1 2020 (US$15.8bn; 69 deals), while the resumed buyout activities of PE funds generated US$24.4bn across 64 deals over the same period, increasing 71.5% in value compared to 2019.

Among the dealmakers polled during the webinar, 45% had a positive outlook for M&A across mainland China and Hong Kong SAR in the coming months, while around a third are keeping a neutral stance about deal flows in these markets.

 
Asset purchase/sale, fundraising and mergers to continue keeping dealmakers busy

While 19% of dealmakers in the region expect fundraising to dominate transactions in the market during the second half of the year, 40% and 12% think asset purchase/sale and mergers, respectively, will be the dominant activity.

 

Our panel also see inbound and outbound M&A deals in technology, healthcare, biotech, consumer, and manufacturing pushing forward despite the pandemic, given that these sectors are becoming more important across Greater China.

According to the report published by Datasite and Mergermarket, Deal Drivers: China, technology, media and telecom (TMT) remained one of the top sectors for dealmaking in H1 2020, even amid (or perhaps in part due to) the coronavirus crisis. Of the 1,707 total deals announced in the mainland last year, 12.6% involved the TMT sector.

Meanwhile, Hong Kong's consumer sector opened the year with almost a 24% increase in value quarter-on-quarter. However, the largest deal of Q1 2020 in the SAR was in the real estate sector, worth over US$6bn.

 

Dealmakers are taking a creative approach to get M&A deals done

While many companies have dealmakers based in various countries to carry out on-the-ground activities, those who are not equipped with such resources have learned to become more creative in terms of how they conduct due diligence or how their deals are structured prior to execution and completion.

Dealmakers have certainly taken advantage of technologies for online meetings and due diligence, with 82% of webinar attendees saying that the capability to complete the due diligence process virtually/remotely as the most important aspect of technology in closing deals today.

 

End of Part 1

Watch this space for Part 2 of this two-part series, featuring expert insights from our panelists.

 

Deal Drivers: Greater China Webinar

In the meantime, you can watch the live briefing, Deal Drivers: Greater China – Mergers and acquisitions in H1 2020 and beyond, on-demand to learn more about how dealmakers across these markets are adapting to the COVID-19 crisis.

Watch On-demand

Deal Drivers: Mainland China

With the spread of the coronavirus in China largely under control and business confidence improving, dealmakers may turn their attention in H2 2020 towards distressed dealmaking and making opportunistic acquisitions, according to the new Deal Drivers: China 2020 report.

Read more

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