M&As in Energy and TMT Garner US$5.29B and US$2.57B
BEIJING, Jan. 23 /Xinhua-PRNewswire/ -- The deepening influence of the western secondary debt crisis, emerging new economies, and the power-driven PE funds and sovereign wealth funds are facilitating the entry of capital funds into the Chinese M&A market.
Zero2IPO Research Center, the research wing of Zero2IPO Group, recently released the Zero2IPO -- China Merger & Acquisition Annual Report 2007. This report says that 2007 witnessed 117 transactions closing in TMT, bio/healthcare and energy sectors. Of these, 81 deals disclosed an aggregate value of US$8.35B. There were 84 cross-border M&A deals, of which 63 disclosed a transaction value of US$18.67B.
The report concluded highlights of the Chinese M&A market in 2007:
Cross-border M&As Grew Dramatically; Domestic Enterprises Became More Active
The growing Chinese macro-economy, RMB appreciation, and the impact of western countries by the secondary debt crisis brought the emergence of large- size cross-border M&As. Eighty-four cross-border M&A deals were recorded, of which 63 disclosed a transaction value of US$18.67B -- an increase of 105.4% from US$9.09B in 2006. The sound internal and external environments enable Chinese enterprises to acquire overseas partners. Among 84 cross-border M&A deals, Chinese enterprises launched 37 marking an increase of 117.6% against 17 in 2006.
Figure 1: Distribution of Cross-border Transactions by Quarter (US$M)
(Please Click the Link at the bottom of the release)
Figure 2: Industrial Distribution of Cross-border M&As (by Target) (US$M)
(Please Click the Link at the bottom of the release)
The Traditional sector remained a leader with 57 deals garnering US$11.77B. The Services and Broad IT sectors stood second with US$5.99B and US$873.00M (closed). The bio/healthcare sector disclosed a relatively low value.
The Mineral and Manufacturing sub-sectors stood out in Chinese M&A market. Notably, domestic financial enterprises represented by ICBC conducted a series of M&A deals. The overseas capitals prefer to acquire Chinese enterprises distributed in real estate, chemicals, pharmaceuticals, retail, iron & steel, and finance sub-sectors.
Energy and TMT Had More M&As with More Value Garnered
In 2007, the energy sector recorded 25 deals -- 108.0% year-on-year increase. These 25 deals secured US$5.29B -- increasing by 54.3% year-on-year. Several acquisitions transacted between two large-size domestic energy enterprises contributed to this.
The TMT sector remains most active with closure of 73 deals and disclosure of US$2.57B -- 17.8% year-on-year growth. The Internet and media had VC/PE- related M&As, each garnering US$100.00M.
Table 1: Industrial Distribution of M&As (by Target)
(Please Click the Link at the bottom of the release)
Figure 3: Industrial Distribution of M&As (by target)
(Please Click the Link at the bottom of the release)
VC/PE-related M&As Slightly Dropped Year-on-year; More M&As Participated in Software and Internet Sectors
Within the scope of Zero2IPO research, there were 30 VC/PE-related M&As that closed during 2007 -- 18.9% year-on-year decrease. Of these, 19 closed in Broad IT with US$445.44M disclosed accounting for 66.2% of the total. Four Services VC/PE-related M&A deals achieved US$195.8M. In contrast, the transaction value in Bio/healthcare, Traditional and Other Hi-tech was smaller.
Figure 4: Industrial Distribution of VC/PE-related M&As (by target; US$M)
(Please Click the Link at the bottom of the release)
The global M&A value far exceeded that of last year in spite of the impact from secondary debt crisis. With the lowering interest rate adopted by western countries to inject capital liquidity into the global capital market, the global M&A market will shirk off side effects of the secondary debt crisis.
The new economies will play an important role in the global M&A market. Large M&As will be more frequently transacted with the participation of PE funds and sovereign wealth funds. In this context, the internationally qualified M&A resources will be acquired competitively.
Sources predict that huge capital will be poured into Chinese M&A market owing to the US and western countries shirking off the side effects of the secondary debt crisis, the capital liquidity restoration, and the rebound of US dollars. The overseas capital-launched M&As will create a new high in 2008.
As for the Chinese M&A market, China's GDP will keep up 10.0% growth in 2008 despite slow growth trends caused by the macro-control. The further appreciation of RMB enables more Chinese enterprises to work with overseas partners -- especially those in Mineral Resources and Manufacturing sub- sectors.
The industrial restructuring among Chinese enterprises plays an important role in Chinese M&A market. The impact of the Anti-Trust Law will be exposed to regulate domestic M&A market in the future. This proves that the Chinese M&A market will be more dynamic during 2008.
Note: The research scope of Zero2IPO Research Center covers:
a. At least one party involved in the deal is a Mainland-based company.
Here ''party'' refers to either a target company or an acquirer.
b. Deals where acquirers take 20% and above of the target companies'
stake.
c. The research scope of Zero2IPO Research Center covers:
(1) M&A activities in TMT, bio/healthcare and energy sectors,
(2) Cross-border M&A transactions
(3) VC/PE-related M&A transactions
An equity transaction is included into our M&A research scope if it is between two enterprises and both of them are non-financial investors, with at least one party invested by at least a VC/PE. For the transactions between two parties with at least one party is VC/PE are categorized into VC/PE research field.
For more information please click:
http://www.zero2ipo.com.hk/china_this_week/detail.asp?id=5751
About Zero2IPO Group
Founded in 1999, Zero2IPO is a leading integrated service provider in the China venture capital and private equity industry. Over the past seven years, Zero2IPO has become an unbeatable dealflow and networking source in China.
Zero2IPO's mission is to be the preferred service provider to businesses in the venture capital and private equity industry by offering an unparalleled knowledge and expertise to our clients and partners. To ensure this, Zero2IPO provides a broad and deep array of services enabling entrepreneurs and investors to reach the next level of success.
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Financial Information Services: Financial Information Services (FIS) releases annual, quarterly, and customized research reports covering China venture capital, private equity, M&A, and IPOs. Also known as the Zero2IPO Research Center, FIS is viewed as the most trustworthy information source in the industry. FIS reports are used by investors, LPs, investment banks, auditing firms, law firms and entrepreneurs worldwide. Each year, FIS publishes the China venture capital ranking results which are widely accepted and quoted among these professionals.
Media & Network Services: Media & Network Services (MNS) strives to provide a networking platform for entrepreneurs and investors. Since 2001, MNS has organized more than twenty China Venture Capital & Private Equity Forums and over sixty Z-club activities. Each year, over 5000 participants attend these conferences and club events held in Beijing, Shanghai, Tokyo, London, and Silicon Valley. Together, the China Venture Capital & Private Equity Forums and Z-Club events constitute the largest networking platform for investors and entrepreneurs in China.
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Zero2IPO Group is headquartered in Beijing with offices in Shanghai, Hong Kong, and Silicon Valley.
About Zero2IPO Research Center
Founded in November 2001, Zero2IPO Research Center provides the cream of business research reports and custom researches for professionals in the Greater China Region. Our research ranges from Venture Capital, Private Equity, IPO, M&A to TMT industries. Zero2IPO Research Center stands tall as the most prestigious research institute in Chinese VC and PE spheres.
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