Posts in Capital Markets

China M&A: Rational Deals Only

August 18th, 2017 Posted by Capital Markets, China Business Development, M&A No Comment yet

China’s State Council issued a statement today formalizing new rules around outbound investment. The statement criticized “irrational” overseas investments in certain sectors. Recent media headlines have focused on the increased regulatory scrutiny placed on China’s most aggressive dealmakers at  HNA Group, Dalian Wanda Group, Fosun International, and Anbang Insurance for their real estate and entertainment acquisitions.

The statement clarified three types of investment:

  • Encouraged: Investments that further Belt and Road framework, enhance China’s technical standards, research and development, oil and mining exploration, agriculture and fishing.
  • Restricted: Property, hotels, film, entertainment, sports, obsolete equipment, investments that contravene environmental standards.
  • Banned: Military, gambling, sex industries, and “investments contrary to national security.”

Conclusion: If you are selling a casino with related services, don’t expect PRC bidders.

Read the Bloomberg article here.

Tencent Takes $1.8B Tesla Stake

March 29th, 2017 Posted by Capital Markets, China Business Development No Comment yet

Chinese Internet giant Tencent disclosed that it has taken a 5% passive stake in Tesla. Best known for its WeChat mobile app and investments in mobile games, Tecent’s stock purchase comes as a surprise. Will our friends in Beijing and Shanghai be able to order a custom configured Model S via WeChat in the near future?

Read the Reuters article here.

Ballard Power Systems and China: Better Late than Never

March 27th, 2017 Posted by Capital Markets, China Business Development No Comment yet

Rapid market adoption of non-polluting hydrogen powered buses in China is giving fuel cell supplier Ballard Power Systems a boost to its stock price. BLD is up 63% over the past 12 months, with 40% of sales coming from China. Ballard’s biggest shareholder is Zhongshan Broad-Ocean Motor Co., and the partnership is expected to drive costs down and accelerate deployment.

Read the Bloomberg article here.

JD Capital $200m Fund for Overseas M&A

March 16th, 2017 Posted by Capital Markets, China Business Development, M&A No Comment yet

China’s JD Capital intends to raise at least US$200m to acquire North American companies to merge with its portfolio companies in China. With 28b RMB in assets under management, JD Capital is known for investing in hundreds of companies in traditional industries like manufacturing chemicals, and industrials and taking them public on the new ChiNext and NEEQ exchanges.

Read the Information article here.

 

 

How Chinese Companies Finance Overseas M&A

March 5th, 2017 Posted by Capital Markets, China Business Development, M&A No Comment yet

Wall Street Journal reporter Anjani Trevedi takes a closer look at how China’s HNA Group, a recent buyer of stakes in Hilton Worldwide Holdings, Skybridge Capital, and a host of other assets, has used credit-enhanced debt offerings to deploy capital overseas. In a typical transaction, a Chinese bank will provide standby letters of credit to back loans issued by Chinese buyers. The credit line, which is in turn backed by RMB cash deposits in China, is then used as collateral by the buyer to borrow USD offshore.

Read the WSJ article here.

Tencent Buys Supercell for Expansion and Synergies

June 21st, 2016 Posted by Capital Markets, China Business Development, M&A No Comment yet

Tencent’s biggest M&A deal ever sees it acquiring Finland’s Supercell for $8.6 billion. Shenzhen-based Tencent gains access to the lucrative mobile game franchise “Clash of Clans” which it can monetize via its 762 million WeChat messaging platform users. With the majority of its $15 billion in revenue derived from China, Tencent becomes the world’s #1 game publisher by revenue.

Read the Wall Street Journal article here.

Chinese Capital, Canadian Real Estate

May 21st, 2016 Posted by Capital Markets, China Business Development, M&A No Comment yet

InnVest Real Estate Investment Trust, one of Canada’s largest hotel owners, has been acquired by Bluesky Hotels & Resorts Inc.  Bluesky has been described as “a privately held real estate investor incorporated in Canada and backed by Hong Kong capital.” Bloomberg speculates that the buyers have links to China’s Anbang Insurance Group Co.  To paraphrase an old China hand, “Fish grow fat in muddy waters.”

Read the Bloomberg article here.

Chinese Tech One Percenters

February 23rd, 2016 Posted by Capital Markets, China Business Development, M&A No Comment yet

Ignore the headlines about China’s economic slowdown and stock market gyrations. In the innovation economy, Chinese entrepreneurs can go from zero to billionaire in six years. This new class of high network individuals are sophisticated, Western-education, and open to investing in opportunities outside of China to diversify their portfolios.

Read the Bloomberg article here.

Opera Catches $1.2B Bid from Chinese Syndicate

February 11th, 2016 Posted by Capital Markets, China Business Development, Digital Marketing, E-Commerce, M&A, Mobile Marketing No Comment yet

Norway-based Opera Software ASA, a software maker best known for their mobile browser, agreed to be acquired by a consortium of Chinese tech companies. 75% of Opera’s sales in Q4 consisted of mobile advertising third-party publishers. The all-cash offer is backed by:

  • Internet security provider Qihoo 360 Technology Co., which announced in 2015 its intention to delist from NYSE in a buyout led by its chairman
  • Chinese game maker Beijing Kunlun Tech Co.
  • Golden Brick Capital Management Ltd.
  • Yonglian Investment Co.

Read the New York Times article here.

Winter Descends on Chinese Startups

January 25th, 2016 Posted by Capital Markets, China Business Development No Comment yet

Ignore the headlines, focus on the data. Despite record-breaking valuations. venture capitalists in China started pushing back on sky-high valuations in Q4.

Read the Bloomberg article here.