Private firms to provide momentum for M&A deals in 2015

Private-sector companies based in China are set to drive another strong year of Asian mergers and acquisitions in 2015 after deals hit a record this year, with consumer, retail, financial services and technology seen as the most active sectors for deals.

These companies, including Fosun International Ltd and Haitong Securities Co Ltd, have sealed outbound deals this year, a marked change from past years when State-owned enterprises dominated China's mergers and acquisitions.

Bankers expect that trend to accelerate next year, mirroring private companies' increased role in equity capital markets as China's reforms aim to make the world's second-largest economy more responsive to market forces.

"What we are seeing is (Chinese) companies that haven't been on the radar screen showing interest in specific targets," said John Kim, head of mergers and acquisitions for Asia excluding Japan at Goldman Sachs Group Inc.

Dealmaking in the region, except for Japan, jumped 48 percent this year to a record $802.2 billion, according to preliminary Thomson Reuters data through Friday. Goldman Sachs, Morgan Stanley and Citigroup took the top three positions.

China was the most active market in 2014, accounting for about $353 billion worth of deals, the data showed. Fosun's takeover battle for Club Mediterranee and its latest offer that values the French holiday operator at $1.15 billion give an indication of things to come next year, bankers said.

Rohit Chatterji, head of Asia ex-Japan M&A at JPMorgan Chase & Co, said: "We are now seeing China come of age in terms of the broad-based nature of outbound acquirers.

"In the past, natural resources dominated outbound interest, whereas the distribution has been more balanced this year."

Investment banks are also betting on reforms in China's SOEs and privatizations in Australia to pump up M&A volumes next year.

Private equity firms, both domestic and global, sitting on $130 billion in capital are also seen deploying more cash next year to scoop up targets, bankers said.

Yet another source of deals would be depressed oil and metal prices, which are expected to tempt Asian companies to buy distressed targets, giving M&A and financing opportunities to banks.

"There are a lot of leveraged balance sheets in the (commodities) sector. As well, many companies that have committed to capital expenditures can no longer follow through without equity support. These will present opportunities," Chatterji said.