Chinese M&A is booming. New figures from EY reveal that in the first half of 2015 there were 1,393 deals involving companies from mainland China, with a combined worth of US$247.6bn – an 88% year-on-year increase in value. The figure includes inbound activities worth US$25 billion, a 211% rise compared to the same period last year.
Mainland M&A activity by value now dwarfs that of all other Asia Pacific markets – the second and third placed countries in the EY report, Japan and Australia, could only muster US$79.4bn and US$54.1bn respectively.
So why then do investment banking headhunters in China and Hong Kong tell us that in 2015 bulge bracket banks have not been aggressively hiring more M&A bankers? For starters, Chinese companies are more averse to paying for acquisitions advice than those in Western markets, and when they do pay they are increasingly turning to domestic firms. Chinese banks and brokerages earned $2.7bn in investment banking fees in the first six months of this year, or about 75% of the market, up from 65% in the first half of 2014, according research firm Freeman & Co, reported in Bloomberg yesterday.
Moreover, as we’ve been reporting over the past few months, many of the most alluring mainland M&A jobs are now in the corporate sector as expansionist Chinese companies look to save money and bring advisory work in-house. Just last week, for example, Winston Cheng, head of Asia technology, media and telecommunications at Bank of America Merrill Lynch, left the US bank to join China’s LeTV Holdings as head of corporate finance and development.
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