Private equity buyout value in the region reached $122.7 billion in 2017, an almost 40 percent increase by value compared to the previous year, boosted by mega deals in China and Japan. The number of deals also increased, from 393 in 2016 to 445 in 2017, according to data from Mergermarket.
China continues to lead the region in terms of deal count and value, recording 131 buyouts valued at $49.8 billion in 2017. Examples of private equity-backed mega deals include PAG’s $2.7 billion take-private of Hong Kong-listed industrial gas company Yingde Gases and CDH Investments and Hillhouse Capital’s take-private of retailer Belle in a deal valuing the company at $6.8 billion.
There was, however, a 54.1 percent drop in China’s outbound M&A value in 2017 from the previous year, as Chinese authorities continued to regulate the amount of capital invested in offshore markets. While numbers appear to show Chinese buyers are slowing down overseas deals, the sentiment on spending outside its border remains strong, Amy Wu, a senior research analyst noted in the report.
Meanwhile in Japan, private equity continued to gain interest, driven by an increased focus on corporate governance, family succession issues and a higher valuation environment. Total buyouts in 2017 reached $16.1 billion, the highest deal value on record since 2001 and a 2.1x increase compared to 2016’s deal value of $7.7 billion, according to the report. The reported attributed the increase in value to several big-ticket transactions, including Bain Capital-led consortium’s $10.6 billion acquisition of Toshiba Memory. In fact, Japan’s three largest buyouts in 2017 made up approximately 80 percent of the overall private equity buyout value for the year.