China’s private companies are set to be the key engine to drive another robust year of merger and acquisition (M&A) agreements in the region after a record run of deals last year. The shift in the identity of the buyers from state-owned enterprises (SOEs) to private companies comes after President Xi Jinping vowed to restructure the economy and boost productivity of SOEs, which are busy following the call to introduce more private capital under the “mixed ownership” program. “Slowing economic growth in China is one of the major factors to drive the robust M&A activities as companies can no longer grow their business organically,” said David Brown, Partner at PricewaterhouseCoopers (PwC). Paul Chan, Fund Manager at Invesco, explained that China’s reform of state-owned enterprises will lower the possibility of buying overly priced assets overseas, leading to less demand for mega acquisitions. China’s M&A activities surged 55% year-on-year to a record USD407.2 billion last year, according to PwC. Outbound investments by state enterprises dropped 29% to USD27.9 billion in 2014, while private companies spent 29% more at USD14.7 billion for the same period, the South China Morning Post reports.