HORIZONS | BDO'S GLOBAL VIEWOF MID-MARKET DEAL ACTIVITY 43
CHINA M&A DEAL-MAKING CONTINUES TO SOAR
China’s mid-market M&A activity remained vibrant with volume and value up both from the previous quarter, largely due to increased deal activity in two key sectors – Financial Services and TMT. NEW POLICIES BOOST CHINA’S CAPITAL MARKETS AND DOMESTIC ENVIRONMENT The Chinese government has launched various policies in Q3 2021 that will enhance the development of China’s capital markets and its domestic investment environment. The key policies are set out below: • New Beijing stock exchange: On 2 September 2021, China announced that a third stock exchange will be set up in Beijing to assist small and medium-sized enterprises (SME) in their fund-raising activities. The new exchange will serve as a major base for facilitating the growth of SMEs with huge growth potential and complement the current Shanghai and Shenzhen exchanges. This will also aim to reduce debt levels and create a more mature capital market structure for SME in China.
• Further development of the Qianhai Plan: On 6 September 2021, China issued a new plan for the opening up of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, which will grow from 15 square kilometers to over 120 square kilometers. The Qianhai Plan has proposed a number of new measures and guidelines in terms of participation in international and cross-border cooperation. This includes the improvement of overseas investment protection mechanisms such as investment insurance and policy guarantees, the construction of a cross-border trade data platform, and the development of bilateral and multilateral cooperation in investment and trade facilitation. The new plan will accelerate the regional economic integration of the Guangdong-Hong Kong-Macao Greater Bay Area and promote further international cooperation in the fields of culture, aviation and convention and exhibition.
BIG PICTURE
• Total mid-market deal volume in the Greater China region grew by 1.5% from 468 deals to 475 deals in Q3 2021 compared to Q3 2020, mainly due to the increase in Financial Services and TMT sector deal volumes. However, deal value dropped by 16.8% from USD 42.8bn in Q3 2020 to USD 35.6bn in Q3 2021 • Compared with the previous quarter, deal value increased by 10.9% from USD 32.1bn in Q2 2021 to USD 35.6bn in Q3 2021. Similarly, deal volume increased by 5.1% from 452 deals in Q2 2021 to 475 deals in Q3 2021 • The proportion of PE buyouts to the total mid-market deal value and volume increased from 16.0% and
8.2% in Q2 2021 to 19.6% and 9.9% in Q3 2021 respectively.
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