China’s M&A deals to rise from decade-low as DeepSeek, AI spur interest, experts say

Mergers and acquisitions (M&A) in China’s capital market are projected to rebound this year from a 10-year low as the sudden rise of start-up DeepSeek propels more deals in the technology sector, bankers and analysts said.

PwC said M&A could grow at a double-digit pace, while French investment bank Natixis said a 10 to 15 per cent increase would be a safe bet. The catalysts could come from demand for overseas investments by Chinese companies, exits by private equity funds and restructuring involving Chinese state-owned enterprises, they added.

“DeepSeek has made a big impact not only in the technology area but also in the equity market, as it is changing the momentum in China,” said Miranda Zhao, head of M&A in Asia-Pacific at Natixis Corporate and Investment Bank. The first couple of months of 2025 have been one of the busiest for the bank, she added.

M&A transaction value fell 16 per cent last year to US$277 billion, the lowest since 2014, PwC said in a report. Only 39 transactions exceeded US$1 billion, the fewest in nearly a decade, it added.

An ongoing reform of state-owned enterprises could result in large-scale transactions in 2025, said Sam Sze, PwC China South advisory leader. There was also a bigger appetite for regional M&As, especially in Southeast Asia, he noted, particularly in sectors like technology, energy and power.