China M&A 2022 mid-year review and outlook

August 2022

China M&A deals held up well in the first half of 2022, with 6,173 transactions. However, their value fell to US$236.7bn – a half-year low last seen in 2014. There were 22 “mega-deals” (> US$1bn) in this period – less than half the number in the previous six months – according to PwC’s M&A 2022 Mid-year Review and Outlook.

While overall deal volumes were robust, the number of PE deals fell by almost a quarter. However, the value of PE deals reached US$118.5bn – representing more than half of total deal value for the third consecutive half year.

Domestic M&A transactions declined in the first half of the year, and there is little prospect of a significant rebound in the short term. However, investor sentiment is still strong and activity in certain segments remains high. If some adverse factors – such as Covid, weak stock markets and regulatory and geopolitical concerns – can start to ease, investor confidence will gradually recover.

Domestic strategic M&A remained active in the first half of 2022, with more than 2,400 deals. However, their overall value fell to less than US$ 100bn. Smaller deals are still being fuelled by key domestic drivers, such as industrial upgrade, and by high-tech sectors, which appear to have been less affected by the various uncertainties in play. The few mega-deals have been concentrated in the SOE sector, such as SOE-driven industrial upgrade, re-capitalisation or integration between large SOE groups.