Baird: State rule changes fuel foreign PE interest

"Government rule changes have fueled foreign private equity interest in China," said the report. "Domestic private equity firms are increasingly pursuing outbound M&A, often partnering with Chinese strategic buyers."

The report also added that both inbound and outbound deals are likely to show double-digit growth this year. Deals over $1 billion and those valued between $100 million and $499 million are the fastest growing transactions types in the market.

Based on shifts in the flow of capital across the globe, Baird expects China M&A to remain robust. "China's M&A metrics continued to outpace global trends in 2011," the report said. "Moderate global economic growth, as is projected in 2012, would help China's economy avoid a hard landing, which would benefit its M&A market."

Aside from the fact that the Chinese government has eased restrictions on inbound acquisitions of companies, the need for financial sponsors in China and the increasing strength of Chinese companies looking to expand overseas are also strong drivers of the country's M&A activity.

Outbound M&A registered a 23.8% surge in 2011 and is likely to keep growing as Chinese companies attain access to brands, technology and overseas markets. Aggregate deal value was up 29%, at $42 billion in 2011, and volume was up 32%, at 332 transactions.

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• Topics
• Greater China
• Outbound investment
• China