Chinese overseas M&A hits 5-year high despite regulatory barriers

{"text":[[{"start":12.25,"text":"Chinese companies acquired overseas counterparts at the fastest rate in five years in the first quarter, braving an increasingly complex regulatory environment to target foreign resources, consumer and manufacturing sectors."}],[{"start":26.15,"text":"The increase in Chinese mergers and acquisitions abroad comes as Beijing becomes more hawkish on inbound deals in the domestic high-tech sector. The government last month retrospectively banned the acquisition of Chinese AI app Manus by Meta, the US owner of Facebook."}],[{"start":43.45,"text":"Chinese offshore M&A transactions totalled $9.6bn in the first three months of this year, rising for the fifth consecutive quarter, according to new data from the Rhodium Group, a US research company."}],[{"start":57.2,"text":"“These deals are happening selectively and it’s important to look at the underlying types of business and whether there are potential foreign investment sensitivities,” said Colin Banfield, head of Asia-Pacific M&A at Citi. "}],[{"start":71.95,"text":"“If you’re going into south-east Asian/Asean markets there are fewer issues from a jurisdictional foreign investment perspective . . . but if you’re [going] in[to] the US or Europe, it’s much more selective,” Banfield said."}],[{"start":84.5,"text":"China’s overseas transactions are still far below their peak 10 years ago, when Chinese regulators cracked down on deals over concerns that companies, particularly state-owned enterprises, were splurging on non-core assets. "}],[{"start":97.45,"text":"In 2016, there were 773 deals worth more than $200bn, according to data from Dealogic, as Chinese companies targeted the UK, Europe and the US. "}],[{"start":109.65,"text":"In recent years, Chinese companies have begun looking again for overseas acquisitions, particularly in south-east Asia and Africa, to secure resources and diversify supply chains. "}],[{"start":null,"text":"

"}],[{"start":121.45,"text":"The figures on China’s rising overseas M&A come ahead of a meeting in Beijing next week between President Xi Jinping and US President Donald Trump that is expected to touch on Chinese investment in America."}],[{"start":134.7,"text":"China’s overseas direct investment “is proving unstoppable, as firms look abroad to channel a record trade surplus amid persistent domestic demand weakness”, said HSBC economists led by Ines Lam in a report. "}],[{"start":147.7,"text":"Setting up production overseas also “helps China counter rising trade barriers”, they wrote."}],[{"start":154.1,"text":"The largest transaction in the first quarter was Zijin’s $4bn acquisition of Canadian mining group Allied Gold Corp, which holds gold assets in Mali, Ivory Coast and Ethiopia, Rhodium said."}],[{"start":166.75,"text":"“In metals and mining, there’s some deals and some activity which is ongoing right now, and that’s going to be into Indonesia, markets like that. It’s into the LatAm markets, it’s into Africa,” said Banfield."}],[{"start":177.7,"text":"In the consumer sector, China’s Anta Sports announced in January the purchase of a 29 per cent stake in German sportswear maker Puma for $1.8bn."}],[{"start":188.1,"text":"Centurium Capital Management, the controlling shareholder of Chinese coffee chain Luckin Coffee, is acquiring US brand Blue Bottle Coffee from Nestlé for around $400mn."}],[{"start":200.15,"text":"In manufacturing, Picea Robotics completed its acquisition of American vacuum robot maker iRobot for $352mn, the report said."}],[{"start":210.70000000000002,"text":"But the study also found growing evidence of regulatory resistance to Chinese acquisitions, with the UK government rejecting JAC Capital’s appeal against a government order to divest its 80 per cent stake in chip manufacturer FTDI. "}],[{"start":225.60000000000002,"text":"In Belgium, the military intelligence service is investigating Chinese group GDAT’s acquisition of helicopter maker NHV via Ireland-based GD Helicopter Finance. "}],[{"start":237.20000000000002,"text":"This mirrors rising Chinese caution about overseas capital capturing its tech champions. Last month, Beijing told Meta to unwind its $2bn acquisition of Manus — a company that was founded in China but relocated to Singapore last year."}],[{"start":253.8,"text":"Additional reporting by Owen Walker in Singapore"}],[{"start":264.15,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778229319_3971.mp3"}