Mergers and acquisitions (M&A) in China’s capital market are projected to rebound this year from a 10-year low as the sudden rise of start-up DeepSeek propels more deals in the technology sector, bankers and analysts said.
PwC said M&A could grow at a double-digit pace, while French investment bank Natixis said a 10 to 15 per cent increase would be a safe bet. The catalysts could come from demand for overseas investments by Chinese companies, exits by private equity funds and restructuring involving Chinese state-owned enterprises, they added.
“DeepSeek has made a big impact not only in the technology area but also in the equity market, as it is changing the momentum in China,” said Miranda Zhao, head of M&A in Asia-Pacific at Natixis Corporate and Investment Bank. The first couple of months of 2025 have been one of the busiest for the bank, she added.
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In recent months, Beijing has pushed the nation’s protracted brokerage industry to merge or consolidate their businesses, leading to several large-sized mergers. Some state-controlled carmakers have also looked to combine amid competition in the local market and tariff threats overseas.
M&A transaction value fell 16 per cent last year to US$277 billion, the lowest since 2014, PwC said in a report. Only 39 transactions exceeded US$1 billion, the fewest in nearly a decade, it added.
An ongoing reform of state-owned enterprises could result in large-scale transactions in 2025, said Sam Sze, PwC China South advisory leader. There was also a bigger appetite for regional M&As, especially in Southeast Asia, he noted, particularly in sectors like technology, energy and power.
Despite a drop in value, M&A transactions had been growing steadily over the past two years, PwC said. There were 10,654 deals last year, a 24 per cent increase from 2023, fuelled by the activity of venture capital funds, it added.
“High technology and industrial M&A transactions accounted for 39 per cent and 21 per cent of the transaction volumes respectively, indicating a large number of small-scale deals in the market, such as early-stage financing in the artificial intelligence sector,” the report showed.
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