US private equity and venture capital investments in mainland China tumbled 40.9% to $869.5 million in the third quarter from $1.47 billion in the same period in 2022.
The number of deals announced in the third quarter declined to 31 from 64 a year earlier, according to S&P Global Market Intelligence data.
On a quarter-over-quarter basis, the transaction value for US private equity-backed deals plunged from $6.32 billion in the second quarter. However, the number of deals went up from 22 transactions tallied in the previous quarter.
Year to date, deal value totaled $7.59 billion, up 12.8% from $6.73 billion in the first three quarters of 2022. However, the number of transactions slid to 82, from 179 a year earlier.
Investors have concerns about deploying capital in mainland China in part because of "weakened economic growth," said Henry Lam, associate vice president for research insights at Preqin. China's economy is struggling with stagnating growth and deflation.
Technology restrictions also play a role in assessing China investment risk. In August, the US government, citing national security reasons, announced restrictions on exports of "sensitive technologies" to China as well as a ban on private equity and venture capital investments in some Chinese technology companies.
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Tech sector gets chunk of investments
The technology, media and telecommunications sector remained popular in the third quarter, accounting for $666.7 million in total investments.
The technology, media and telecommunications sector logged 11 announced deals during the quarter, including three in the electronic equipment and instrument subsector and two in the semiconductor segment.
Top deals
Two transactions involving Walden International topped the list of the largest US private equity-backed deals in mainland China in the third quarter.
In July, the San Francisco-based venture capital firm participated in the series C funding round for solar and photovoltaic modules company Chint Solar (Zhejiang) Co. Ltd. and the series C round for photovoltaic cell component manufacturer Zhengtai Xinneng Technology Co. Ltd. Each company secured $280.3 million.
