In recent years, China’s enterprises have been very aggressive in the global mergers and acquisitions (M&A) market, hitting a record high of more than US$100 billion in value last year.
Despite the fall in oil prices and fears of a slowdown in China’s economic growth, the pace of overseas M&A did not lose steam. Within only two months this year, there were 102 cases of China’s enterprises making overseas acquisition agreements, an increase of 40 percent compared to last year’s 72 cases during the same period.
Analysts believe that the tide of moving assets may be a major factor for the accelerated M&A. However, this rapid expansion has been frustrated from time to time, with some companies losing money, while some deals fell through because of intervention by the U.S. national security department.
“Having been in this line for so long, this is the first time that I am seeing so many cases,” said Mr. Chen, director of a Hong Kong-based international investment bank.
Chen’s job was to help mainland China’s state-owned enterprises, as well as some well-known private enterprises, to engage in overseas acquisitions. Due to the recent increased demand of China’s overseas M&A, business has been booming for his company.
Not only did Chen have to make business trips to mainland China and overseas, he had to work overtime during the Chinese New Year period. In contrast to other departments which had to retrench staff, Chen’s department was making plans for expansion.
Chen told Epoch Times that 2013 saw a peak in China’s overseas M&A activities, and after a slight dip in 2014, last year was “another easy victory.”
Chen said there were two factors behind the rise in M&A. The external factor was the decline in international commodity prices, and the internal factor was that enterprises were pushed to move assets abroad.
“After the significant devaluation of the yuan and falling asset prices, enterprises sought after overseas assets through M&A, and transferred funds abroad at the same time,” said Chen.
