Chinas private equity and venture capital markets are
accelerating despite a slowdown in economic growth.
Fundraising and investment hit record levels in the
worlds second largest economy last year, according to
PwCs China Private Equity/Venture Capital Review and 2017
Outlook. A total $72.5 billion was raised in renminbi and U.S.
dollars in 2016, up 49 percent from 2015, the PwC report
Traditional PE and VC fundraising was dominated by RMB
for the first time, with a plethora of mid-small RMB funds
raising money for domestic investing and A-share related
activities and exits, says Ni Qing, a PwC China Private
Equity Group audit partner based in Beijing.
The volume of private equity and venture capital-led merger
and acquisition deals in China rose steadily to reach $223
billion last year, a 66 percent increase year-on-year, even as
global deal volume fell 38 percent. Chinese bankers completed
1,767 deals last year, up from 1,063 a year earlier.
The strong growth was driven by the participation of
Big Asset Management investors who dominated the
list of large transactions, says Nelson Lou, a PwC
advisory leader based in Beijing. Offshore merger activity of
Chinese private equity and venture capital funds has risen
dramatically, Lou says, with a total 195 deals announced in
2016. Thats more than double the 95 seen a year
In terms of deal volume, technology remained private
equitys most favored sector in 2016, with 417
investments. The second most popular was manufacturing, which
saw 335 deals. Dealmakers also invested in 189 real-estate
companies, 145 consumer companies and 105 financial
Initial public offerings remained the primary way investors
exited their deals, with a total 165 IPOs last year, a 38.7
percent increase over 2015.
Amanda Zhang, the North China leader of PwCs China
Private Equity Group, expects growth in private equity and
venture capital will continue this year.
As the pressure to invest large sums of available
funds increases, we expect an increase in PE/VC led M&A
activities, Zhang says, adding that a constraining factor
will be exits as there is a long queue for public listings on
Mainland exchanges. Chinese private equity investors, however,
still tend to prefer Mainland listings as valuations tend to be
higher than those listed offshore, either in Hong Kong
elsewhere, Zhang says.