Chinese M&A market expected to stay strong

Mergers and acquisitions involving Chinese companies are at an all-time high, and the outlook remains bright, according to a managing director at the Carlyle Group.

"For China, I see full-spectrum integration in the global capital markets generally, but certainly within the private equity world," James Attwood, managing director and head of Global Telecommunications and Media at the Carlyle Group, said during a panel discussion at the New York Athletic Club on Tuesday.

A total of $103.5 billion in deals involving Chinese companies have been made so far this year, up 21 percent from last year ($85.3 billion), according to Dealogic, an investment research firm.

Among the more notable deals involving Chinese companies were Lenovo Group Ltd's $2.9 billion purchase of the Motorola Mobility smartphone unit from Google Inc, and Lenovo's $2.1 billion purchase of IBM's low-end server unit. Both deals were finalized in October.

"There's been an emergence of local Chinese funds and investors in recent years, which is not at all surprising,” said Attwood. He said his firm's level of interactions in China “has increased dramatically".

Attwood spoke during the 2014 M&A Advisor Symposium in a discussion titled The Year M&A Returned: Global Business in a New Era.

Global M&A transactions have surpassed $3 trillion this year, the highest total since 2007, according to Dealogic. Overall M&A activity has increased 32 percent year-over-year.

The United States has seen nearly $1.5 trillion in M&A deals this year, data from Dealogic showed.

Matthew Bishop, an editor with The Economist, said he is heartened by the moves that Chinese President Xi Jinping has made to "consolidate his control" in the world's second-largest economy.

"After a bit of difficulty, China is starting to find its feet and momentum again," Bishop said in a keynote speech at the conference.

"China is looking to build corporate empires," he said. "So the demand from China for Western assets is going to be very strong, and China will become a bigger player in every equity market in the world."

However, Steven Klinsky, founder and CEO of New Mountain Capital LLC, a New York private equity firm, said he is not as positive on China's economic outlook.

"My sense is the economy is not all that robust," Klinsky said. "Japan just announced they're back in recession; Europe could be facing recession again; and China is slowing, so it actually feels reasonably fragile."

"I don't feel like it's a 'super-bullish' time, so the US may be the best house in a bad neighborhood," he said.

The International Monetary Fund's October 2014 World Economic Outlook report estimates that Chinese economic growth will slow to 7.4 percent in the fourth quarter and 7.1 percent in 2015, as it "makes the transition to a more sustainable path".

"Of course we want robust economic growth around the world, and China's role is increasingly participatory in all aspects," Attwood said. "I look at it through two lenses: you need the deep industry knowledge to make purchases, but in the end it's all about operations."

jackfreifelder@chinadailyusa.com