Mergers and acquisitions (M&A) enjoyed another record year in China in 2016, with outbound M&A soaring 246 percent by value to 221 billion U.S. dollars, more than the previous four years combined, said accounting firm PricewaterhouseCoopers (PwC).
According to a PwC report released on Thursday, the overall value of deals in China's M&A market rose 11 percent to 770 billion U.S. dollars, and deal volumes jumped 21 percent to 11,409 transactions last year.
In value terms, China's outbound M&A grew nearly 3.5 times the previous record set at the end of 2015. There were 51 outbound transactions valued at over 1 billion U.S. dollars, more than double the previous year's record.
"The growth in large outbound deals is offset to some extent by a decline in domestic and inbound strategic M&A," said Leon Qian, PwC China Transaction Services Northern China Leader.
"Domestic and inbound deals valued at over 1 billion U.S. dollars almost halved from 68 in 2015 to 36 in 2016. But this is partly because domestic strategic buyers were looking overseas more for their acquisition targets," he said.
M&A in real estate grew strongly to reach new highs in value. This helped offset declines in technology and financial services, which both came off strong peaks in 2015, the report said.
M&A activity driven by financial buyers hit new records in 2016 despite very strong growth in 2015 -- up 38 percent by volume and 23 percent by value to 229 billion U.S. dollars.
Financial buyers' involvement in outbound M&A continued to grow rapidly, more than doubling in 2016 to over 38 billion U.S. dollars.
"As in recent years, we see Chinese companies acquiring overseas know-how and brands to bring back to China, as well as looking overseas for inorganic growth," said George Lu, PwC China Transaction Services Partner.
"Privately-owned enterprises have tripled deal volumes this year and overtaken SOEs in total amount of transactions for the first time," Lu added.
Looking forward, the report concluded that China M&A in 2017 will track 2016 closely, with perhaps even a small decline, partly due to a longer approval time for the outflow of foreign currency and stricter scrutiny over certain sectors.
However, the report said that strategic outbound investment will continue to be encouraged. As a result, PwC said outbound M&A will continue to reach new records in 2018.
