China’s PE, VC fundraising jumps to all- time high

Bucking global trend, domestic firms raise 49% more money in 2016

China swam against the global trend by seeing a rising amount of funds raised by private equity ( PE) and venture capital ( VC) in the country, according a report published by PwC on Thursday.

Experts told the Global Times on Thursday that this trend won’t be affected by the government’s opposition to speculative investment.

According to the PwC report, PE and VC in China raised an all- time high of $ 72.51 billion in 2016, up 49 percent year- on- year. Around the globe, PE and VC fundraising fell to $ 336 billion in 2016 from $ 347 billion in the previous year.

Frank Shan, an assurance partner at PwC China, said at PwC’s press conference on Thursday that in the midst of China’s industrial upgrading, many new industries have emerged, giving rise to more active investment.

He also noted that for the first time PE and VC fundraising was dominated by the yuan, as a result of the government’s tighter manage- ment on foreign currencies.

Yuan- denominated funds were valued at $ 54.89 billion in 2016, up 177 percent from the previous year.

The PwC data also showed that in 2016, PE merger and acquisition ( M& A) deals increased 66 percent to $ 222.9 billion, while VC deals are also about six times more active in the Chinese market than they were about five years ago.

According to the PwC, one of the factors behind the increase in Chinese PE and VC deals is their activeness in the overseas markets.

In 2016, 195 overseas M& A deals were backed by mainland financial investors, up from 95 in the previous year.

The Chinese government has warned against reckless M& As that aim for a quick buck.

An official from the China Insurance Regulatory Commission, for example, said during a press conference on Wednesday that “financial predators” should not use insurance to engage in investments like speculative M& As.

“The government wants M& As to be rational instead of speculative. I would say that direction of management is positive and will benefit the M& A market on the whole,” Li Junwei, transaction services partner of PwC China, told the Global Times on Thursday.

Shan also told the Global Times that the government’s short- term management would not cause too much fluctuation in the M& A market.

PwC forecast that PE and VC M& A activities will continue to increase in 2017.