Private equity executives expressed concerned about the health of China’s economy, citing the slowdown and growing debt as major factors affecting deal flow in the coming 12-18 months.
Whilst 40 percent of general partners named the U.S.-China trade war as the biggest determinant of deal flow, subsequent responses indicated a skewed concern about its impact on the second-largest economy.
25 and 20 percent of respondents underlined China’s economy and its debt, which exceeded $40 trillion and 300 percent of GDP this year, according to the Institute of International Finance, according to the «Global Private Equity Outlook 2020», co-published by law firm Dechert and financial data provider Mergermarket.
Trade War Beneficiaries
Deal activity in Asia Pacific slowed in the first nine months of 2019 with just 320 deals worth $62.7 billion compared to $131 billion in 2018. The report noted that Chinese activity is expected to remain subdued at least until an accord has been reached with the U.S.
Meanwhile, neighboring Asian countries have been beneficiaries of the fall out, most notably Vietnam, Thailand and the Philippines.
The survey interviewed 100 senior-leveled private equity executives with $500 million or more in assets under management as of the second quarter of 2019. 20 percent of the respondents were based in the Asia Pacific region.
