M&A deals likely to remain subdued in H2, PwC says

China's merger and acquisition deals will likely remain sluggish in the second half of this year, due to several factors like the  COVID-19 pandemic, weak stock and property markets and geopolitical tensions, according to global consultancy PwC.

There were 6,173 M&A deals in China in the first half of this year, a slight increase compared with 6,101 during the same period of last year, but their value fell to $236.7 billion from $295.6 billion a year ago, the report said.

David Brown, PwC deals leader for Asia-Pacific, said domestic M&A transactions declined in the first half of the year, but investor sentiment is still strong and activity in certain segments remains high. "If some adverse factors, such as COVID-19, weak stock markets and geopolitical concerns can start to ease, investor confidence will gradually recover," he added.

Domestic strategic M&A remained active in the first six months, with more than 2,400 deals. However, their overall value fell to less than $100 billion. Private equity or PE investment volume and value fell by 24 percent and 34 percent, respectively, compared with the second half of 2021, and the decline in value was across all sectors, with the exception of energy and power, the report said.

PE deal volumes remained strong in high tech, industrials and healthcare, which is in line with various government initiatives in these sectors.

"Various factors, including weak stock and property markets, have inhibited what was an active M&A environment. Unless some of these adverse factors are alleviated, inbound and outbound M&A transactions will remain subdued in the second half of the year. The volume of private equity fund investments will also be slightly lower than in the first half of the year," said Chris Chan, PwC Chinese mainland and Hong Kong financial services deals leader.

fanfeifei@chinadaily.com.cn