US PE deal value in mainland China up in Q2 2023; transaction volume still down

US private equity and venture capital investments in mainland China were up significantly in the second quarter, reversing a consistent quarterly decline since the first quarter of 2022.

Aggregate deal value was $4.46 billion in the three months to June 30, up more than 100% from $2.21 billion in the same period in 2022, according to S&P Global Market Intelligence data. The number of deals declined to 22 in the second quarter from 52 a year earlier.

Number of deals continue to slide

In the year to June 30, US private equity investments accounted for $4.85 billion, or 14.5% of the $33.36 billion in global private equity deals in mainland China.

However, the number of all private equity transactions has been declining since 2021 and US private equity is on track for the lowest number of deals since at least 2018.

One likely factor for the decline is the Biden administration's plans for an executive order to screen and restrict investments in mainland China related to "sensitive technology," though the specific industries are still under discussion. The plans are expected to include private equity and venture capital investment.

Tech sector remains popular

The technology, media and telecommunications sector dominated M&A transactions and funding rounds with US private equity involvement during the second quarter, accounting for nine transactions worth a total of nearly $2.29 billion.

– Click here to download a spreadsheet with data featured in this story. – Explore more private equity coverage. – Read some of the day's top news and insights from S&P Global Market Intelligence.

Top deals

The top 10 largest US private equity-backed deals in mainland China were valued at $4.45 billion in the second quarter, with most of that value coming from two outsized investments.

In the largest private equity-backed transaction during the period, Bain Capital LP's Bain Capital Investors LLC offered to acquire the remaining 57.83% stake it does not already own in hyperscale datacenter solutions company Chindata Group Holdings Ltd. The take-private transaction was valued at $2.26 billion, according to Market Intelligence data.

The second-biggest deal was a $2 billion funding round for Nanjing Shein E-Commerce Co. Ltd. The round was led by General Atlantic Service Co. LP, along with Sequoia Capital Operations LLC and Mamoura Diversified Global Holding PJSC.