CHINA’S M&A FRENZY BREAKS RECORDS

By Morag MacKinnon, ansarada

We’ve all been hearing it and reading it for some time now, so just what are the latest statistics around Chinese offshore acquisitions? Is the hype warranted?

The world’s second-largest economy has seen the pace of growth slide to the lowest in more than seven years just as Chinese capital is embracing the global economy. They’re setting records and driving M&A activity in all the major markets.

Data just in from Dealogic shows China leading global cross-border M&A acquisitions for the first time on record, jumping to the top spot from sixth a year ago, with Canada and the US taking the next two positions.

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The same Dealogic data shows China outbound M&A deal activity has risen 79% year-on-year to a record 300 deals in 2016, to date. In monetary terms, China outbound M&A has reached almost $110.8 billion so far this year, surpassing the 2015 full-year record of $106.8 billion.

Why the big jump?

There have been 17 deals worth more than $1 billion so far already this year, which in combination total $83.4 billion, up from six $1 billion+ deals worth some $16.7 billion for the same period a year ago. Yes, 17 very big deals. The US is seeing 28% of China outbound M&A with $31.3 billion so far this year, quite the jump from the $3.9 billion for the corresponding period a year ago.

China may indeed be about to make foreign investment for local companies even easier, Reuters reported this week. It’s planning to remove the need for State Council approval for large, sensitive outbound deals and allow more than one Chinese company to bid for the same target, the news agency reported.

Proposed changes to the rules could see Chinese companies seeking to carry out a deal worth $2 billion or more in a country or industry sector deemed sensitive by the state no longer require approval from the State Council, or to provide proof of financing.

Watch the sell-side and investment bankers’ eyes light up on that idea.

At ansarada, we’ve seen the number of Chinese buyers entering our virtual data rooms more than double in the past two years. And if indications from the first quarter of this year are a guide, data extracted this month shows that increment is likely to be exceeded this year.

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