Asia Pacific M&A market expected to stay active

 BEIJING, Apr. 8(Xinhua) -- Data recently released by Intralinks Deal Flow Predictor showed that the number of M&A transactions in the Asia Pacific region in the first half of this year is expected to grow 14 percent year on year.

M&A transactions are most active in sectors such as power and energy, industry and materials, and in regions including China, India and South Korea, the data showed.

The total value of overseas M&A by enterprises in the Chinese mainland and Hong Kong last year stood the second highest ever through dropping by 137 billion U.S. dollars due to the intensification of the supervision over Chinese enterprises' overseas investment by the Chinese government since last year.

As going global remains a national strategy of China, Chinese enterprises will have strong momentum for overseas acquisition, said Raghu Narain, head of the investment banking division for Asia Pacific at Natixis. Natixis is subordinate to Groupe BPCE, a banking group with the second largest total assets in France.

This March, the Chinese consortium of Fosun International and Sanyuan completed the acquisition of French food and beverage producer, St-Huber. Natixis was the exclusive strategic financial advisor in the cross-border acquisition. Last year, Natixis arranged a bridge loan of 12.7 billion U.S. dollars for China National Chemical Corporation and assisted it receiving a syndicated loan in dollars to acquire Syngenta successfully.

To Peter Batey, Chairman of Vermilion, compared to the previous model of overseas M&A by a single Chinese enterprise, more and more acquisitions will be conducted by Chinese consortium comprising state-owned enterprises, private enterprises and some financial investors.

These different participants can bring different experiences and resources to M&A transactions to reduce transaction risk, and this is a healthy trend, said Peter.

Traditional private equity financing and venture capital fund financing have been active in the M&A market in recent years, and these financial investors were involved in 238 overseas M&A transactions last year with a total amount of 34.1 billion U.S. dollars. Open data show that 551 funds have been involved in financial or strategic investment in the past three years, including 442 overseas funds, 96 Chinese private funds and 12 government-controlled funds.

These investors usually have sufficient dollar funds. They hope to seek some M&A opportunities with “Chinese concept”, like bringing some consumption brands to China, thus Chinese buyers are more aggressive in offer, said David Brown, transaction services leader for PwC China and Hong Kong.

Under the Belt and Road Initiative, Chinese enterprises have conducted frequent M&A in Belt and Road countries and regions. According to statistics released by Mergermarket, enterprises in the Chinese mainland and Hong Kong completed 99 M&A transactions in Belt and Road countries and regions last year, with a total amount of 47.4 billion U.S. dollars, up 84.3 percent from the total transaction amount of 25.7 billion U.S. dollars registered in 2016.

China will continue to push forward the Belt and Road Initiative in the coming decades, which means that there will still be huge M&A opportunities for infrastructure, natural resources and industry in Belt and Road countries and regions, said Alain Gallois, CEO of corporate & investment banking for Natixis Asia Pacific.

Take Latin America for example, according to a report recently released by Baker McKenzie, Chinese investors completed 40 M&A transactions in Latin America from 2012 to 2017, with a total value of 28.6 billion U.S. dollars. Constantly digitalization development and the changes of Latin America's demographic structure have led to the changes of investment direction. Future M&A transactions in Latin America are expected to cover energy and infrastructural construction, and switch to consumer goods, technologies, financial services and medical care.

(Edited by Yang Qi, kateqiyang@sina.com; source: 21st Century Business Herald)