Mergers and acquisitions in China will remain subdued for the rest of the year after the value of deals more than halved in the first six months, PricewaterhouseCoopers LLP (PwC) said.
Companies announced 1,427 deals valued at US$45.8 billion in the first half, compared with 1,812 transactions worth US$101.3 billion a year earlier, PwC said.
“Confidence is seeping back into the domestic economy, but investment by foreign buyout firms or other financial investors is unlikely to reach 2008 levels until 2011,” Benjamin Ye (葉常青), a Shanghai-based partner at PwC’s Transaction Services division, told reporters in the city yesterday.
China’s GDP expanded 7.9 percent in the second quarter as the nation became the first major economy to rebound from the global recession, helping drive consolidation in industries such as steel, cement and financial services.
Ping An Insurance (Group) Co (中國平安), China’s second-biggest insurer, on June 12 agreed to pay US$3.2 billion to boost its stake in Shenzhen Development Bank Co (深圳發展銀行) to almost 30 percent from 4.68 percent, making it the biggest transaction on China this year.
Meanwhile, China’s planned small-company stock exchange received 108 applications for initial public offerings (IPO) on its first day of accepting proposals as its launch nears, a state news agency said yesterday.
The Growth Enterprise Board planned for the southern financial center of Shenzhen is meant to nurture smaller, innovative companies. The government has not said when trading will start, but analysts expect the first IPO in October or November.
The board began taking applications on Sunday, the Xinhua news agency said. It said regulators would need three months to review each application.
Authorities have promised for several years to create an exchange to help smaller and private companies that struggle to raise money in a system where state-owned banks lend mostly to big state-owned companies.
The launch comes at a time when Chinese markets are recovering from a sharp decline last year. The benchmark index has risen 80 percent this year amid government stimulus spending to counter the global downturn.