Private equity investments hit record

Number of deals grew 51% from 2013

The scale of private equity (PE) activity in China reached a record level in 2014, a survey released by PricewaterhouseCoopers (PwC) on Thursday showed.

According to the report, 2014 was a banner year for new investments by PEs with a record amount of 593, a growth of 51 percent from the previous year, and the total value increasing by 101 percent to $73 billion.

Meanwhile, the total amount of venture capital (VC) deals shot up by 81 percent compared with one year earlier, reaching 1,334 deals, the highest number since 2008.

Between 2004 and 2014, fundraising for the Chinese markets dominated Asian PE with around $365 billion raised, excluding allocations from non-China specific funds, said the report, followed by Japan with $77 billion, and India of $62 billion.

The record-high of PE investments in China is mainly driven by the reform of State-owned enterprises, and outbound deals, Nie Lei, PwC China Consulting Partner, said at the press conference, adding that the PE deals in the technology and consumer-related sectors accounted for more than half of the total, which is in line with the strategic direction of the macro economy.

China has been the largest PE investment destination in Asia since 2008 and accounted for 41 percent of Asian PE deal values in 2014. In detail, the value of China deals increased by 103 percent in 2014 from 2013, compared with a 10 percent increase in global deal value.

In 2014, there were 15 PEs valued at more than $1 billion, hitting another record.

In July last year, Beijing-based private equity firm Hony Capital announced it would buy UK restaurant chain PizzaExpress Ltd for about 900 million pounds ($1.54 billion), which was regarded as an example of the growing appetite of Chinese firms for overseas investments.

The outbound investment by local PEs and financial buyers almost doubled from 25 deals in 2013 to 49 deals in 2014, the report said, noting the outbound deal value also reached a record high of $14.3 billion, up 1,300 percent in 2013.

"The big players in China are growing to compete with their global [peers]…, and the outbound trend is happening much faster than many people predicted," says Ni Qing, PwC China Private Equity Group Funds Audit Partner.

The report also indicated that capital from PE could be an important channel for the private sector, resulting in a strong outlook for PE in China.