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Alternative Market Briefing

US private equity firms cool on China

Thursday, September 01, 2022

Bailey McCann, Opalesque New York:

US private equity and venture capital firms are making fewer investments in mainland China amid concerns about the country's macroeconomic picture, according to a new research note from S&P Global.

S&P Global Market Intelligence data shows a downward trend in M&A and new funding rounds in mainland China involving U.S. private equity companies, with second-quarter deal values dropping 78.5% year over year.

Aggregate deal value through the beginning of August was just $5.75 billion, a significant drop from $33.64 billion for all of 2021.

Investors say that the macro picture for China has changed significantly and note that tightening fiscal conditions in the country have made things difficult for companies that are still dealing with the fallout from the covid-19 pandemic. Private equity investors are also growing concerned about deteriorating exit conditions for companies where they have already made investments.

Despite these headwinds, there are some deals getting done. S&P Global Market Intelligence reports that through August 9 there had been 58 transactions amounting to approximately $2.78 billion in deal value in the technology sector. There are also some indications that Chinese regulators may be softening their stance on allowing more deal activity in key business sectors like tech. For example, regulators have given Ant Group tentative support for reviving its IPO. However, it's unclear if these moves wi......................

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