China’s IPO Backlog to Spur M&A


May 8, 2013

There are more than 7,500 PE-backed companies in China, according to Finance Asia, many of which may now seek trade or M&A sales as a way to exit rather than try to list in China, Hong Kong and New York.


The IPO flow reached a peak of around 350 transactions, but PE equity funds invested at triple that rate. As a result, there are now more than 7,500 unexited private equity deals in China.


Your DealMarket editor notes that Asia Pacific represents only 16.7% of global IPOs compared to 51.5% in the US, according to Renaissance Capital. IPOs may start again, but it will never be like it was say insiders. Foreign acquirers are likely to step in to acquire some of the ventures.


Leverage will likely be involved. Some of those deals may involve trade sales to other PE funds, as a number of funds have recently raised capital to deploy in Asia and are well placed to take advantage of the opportunity, despite the challenges. (Image Source: Renaissance Capital, Greenwich, CT )

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