China's private-equity (PE) firms deployed the largest-ever amount of capital on new investments with a total of $192.1 billion in 2015, up 169 percent from the previous year, PricewaterhouseCoopers (PwC) said in a report released Thursday.
Between 2005 and 2015, the China market dominated the Asian PE market, having raised more than $430 billion (excluding allocations from non-China specific funds). In 2015, yuan-denominated funds fell by 7 percent from the previous year to $19.8 billion. Overall, the proportions of -yuan-denominated funds and those denominated in other currencies have been relatively consistent.
Buoyed by the "new economy" and government encouragement of entrepreneurship, many financial investors have been quite active, which resulted in a high investment figure. Regarding the record high value, "we saw that a number of companies which had previously listed abroad had acted on their intention to come back to the A-share market, a dynamic which contributed substantially over the last 12 months,"said Vincent Cheuk, PwC China Private Equity Group North China Leader, in a note sent to the Global Times.
According to the report, high-technology and consumer-related companies remained the two hottest PE deal industry sectors, with PE deal volume in high technology particularly noteworthy, having seen an increase of 42 percent in 2015. Deal values in the high-technology sector reached $76.8 billion in 2015, with an increase in value of almost six times the figure recorded in 2014. There were 27 PE/financial-buyer deals valued at more than $1 billion in 2015, another record.
In terms of exits, overseas listings were no longer popular for PE- and VC-backed issuers, while the A-share market is attracting more companies to go public, PwC said.
The numbers of PE- or VC-backed IPOs in China exceeded that of the US in 2015 - the first year this has happened since 2012. The dynamic reflects the fact that traditional exit routes alone are not sufficient to accommodate the cumulative overhang of investments, the PwC report said.
Consequently, industry experts are looking into additional exit plans, such as the New Third Board in China.
