China’s IPO drought spurring interest in M&A

China’s huge backlog of initial public offerings is creating an exit crisis for maturing private equity funds and an opportunity for international investors interested in buying something other than a bit of a state-owned enterprise.

For China’s entrepreneurs, the dream of earning a rich valuation through an IPO is over, but the result could be a healthy increase in acquisitions as owners slowly come round to reality that selling to a foreign buyer is probably the best way of cashing out.

There is no shortage of candidates, thanks to the unsustainable euphoria at the height of China’s IPO boom. The number of firms listing in China, Hong...