More PE funds began to actively participate in cross-border M&A from China. Transactions were not only initiated by listed companies, but by the cooperation between listed companies and PE funds.
In fact, the upsurge of the establishment of M&A funds by listed companies and PE funds had already appeared a few years ago. A large number of listed companies hoped to use the power and funds of PE funds to find good target assets, and observe them after investing for several years. If it is determined that it is indeed a high-quality asset and its performance continues to grow, then the listed company will acquire this asset, and at the same time, the M&A fund will also withdraw from the gains. A win-win situation appears.
It is not a coincidence for their active participants. On the one hand, PE funds have been mainly looking for domestic Pre-IPO company investment opportunities. Over time, these investment opportunities have become increasing difficult. New markets and opportunities are necessary. Active M&A from listed companies provide their opportunities. They cooperate and establish M&A funds together. The listed company provide a part of money, in oder to solve the problem of fund financing. On the other hand, after the investment in M&A funds, the exit channel is determined. PE funds can sell it to the list company. As a result, a large number of M&A funds in the market.
In 2017, a large number of PE funds also saw opportunities and actively participated in overseas mergers and acquisitions. Listed companies directly initiate overseas M&A transactions, often faced with many restrictions. Therefore, cooperation with private equity funds to form a consortium to participate in overseas mergers and acquisitions has multiple advantages.
In 2016, financial investors represented by PE and asset management company funds accounted for more than $38.1 billion in transactions, more than double the 2015 figure. Private equity funds have also played a pivotal role in overseas M&A transactions and have become regular customers in the transaction structure.
(Source: Hurun Report – 2017 Cross-Border M&A Special Report for Chinese Enterprises)