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.

China Bike Sharing Update

June 10th, 2017 Posted by China Business Development, Mobile Marketing No Comment yet

China’s entrepreneurs show their creativity and acumen with the evolution of Ofo and Mobike bike sharing business models. Key takeaways:

  • Ofo is booking 20 million bike rides per day.
  • As a result, the Ofo app is generating 100-200 million views per day.
  • Combined with user data such as time of day and time of day, it’s now a platform for highly targeted advertising.
  • For a typical mobile app, the cost of acquiring a user via mobile media buy is 15 yuan (US$2.21). Because the branded bicycles serve as a customer acquisition tool, Mobike’s customer acquisition cost is around 10 yuan ($1.47).
  • This is possible because Chinese cities do not regulate sidewalks. As a result, Ofo and Mobike have placed millions of bicycles on the streets of Beijing, Shanghai, and Shenzhen.

Read The Information 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.

Chinese Bike Share Startups in North America

March 26th, 2017 Posted by China Business Development No Comment yet

Can Chinese innovators crack the unprofitable bike share market in North America? Chinese unicorns Ofo Inc and Beijing Mobike Technology Co both have over a million bicycles in their fleets and plan to introduce their  “dockless” solution to select cities in the United States.

Read the WSJ article here.

Billionaire Duan Yongping Takes On Apple and Wins in China

March 21st, 2017 Posted by China Business Development No Comment yet

Duan Yongping founded Vivo and Oppo, two mobile phone startups that shipped 147m handsets in 2016 compared to Apple’s 45m units in China. Referring to Apple, Duan commented, “They’re maybe too stubborn sometimes. They made a lot of great things, like their operating system, but we surpass them in other areas.”

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.

Hot Pre-IPO Adtech Startups

May 28th, 2016 Posted by Digital Marketing, Mobile Marketing, Social Marketing No Comment yet

Analyst at Business Insider compiles a list of 37 hottest pre-IPO adtech startups. Eye-popping public valuations in China will ensure that one or more of the below will be acquired by China-listed entities.

Taykey

Sharethrough

Accordant Media

Kargo

Innovid

Pubmatic

Beeswax

Social Bakers

xAd

LiveIntent

Captify

Drawbridge

Turn

Kenshoo

Sprinklr

RadiumOne

Data Xu

Sourcepoint

PageFair

WideOrbit

Applift

AddRoll

InMobi

Centro

Teads

Integral Ad Science

Quantcast

IronSource

Outbrain

Taboola

Videology

MediaOcean

Moat

Trade Desk

OpenX

Media Math

Appnexus

Read the Business Insider article here.