Despite a 42% decrease in the total amount of Chinese overseas mergers and acquisitions (M&A) compared to the same period last year, there has been an explosive growth in overseas M&A related to the "Belt and Road Initiative."
Reuters data reveals that as of this Monday, Chinese companies' M&A activity in the 68 countries along the "Belt and Road" route has reached $33 billion, surpassing the total investment of $31 billion for the entire previous year.
As a national-level strategic initiative for China, President Xi Jinping pledged $124 billion in investment for the "Belt and Road" plan during the summit meeting in May.
In June, Chinese regulators tightened control over overseas investments by restricting expansion efforts abroad for major corporations like HNA, Wanda, and Fosun Group. In 2016, Chinese overseas investment reached $220 billion, some of which was used for acquisitions in real estate, the entertainment industry, and football clubs, all of which are now subject to regulatory restrictions.
However, these regulatory constraints do not apply to projects deemed as part of the national-level strategic "Belt and Road Initiative." By early August, there were 109 M&A projects in the countries along the "Belt and Road" route this year, compared to 175 for the entire previous year and 135 in the year before that. The data suggests that overseas M&A activity related to the "Belt and Road" initiative continues to expand.
Overseas M&A deals associated with the "Belt and Road" initiative are more likely to receive regulatory approvals. A senior investment consultant in the Chinese overseas M&A sector stated, "Whether your M&A deal is related to the Belt and Road Initiative is something that regulators consider before approving it. It's better to think about it early on."
Hilary Lau of law firm Herbert Smith Freehills commented that the "Belt and Road Initiative" is China's long-term national strategy. In M&A projects taking place in countries along the initiative, energy and infrastructure projects are favored by regulators.
"Recently, there has been frequent Chinese M&A activity in countries like Indonesia, Malaysia, and Myanmar. Sri Lanka, India, and Bangladesh are also active because they are corridors connecting the East and the West."
One notable M&A deal in the "Belt and Road" sector this year involved a consortium of Chinese investors, including Vanke, China Investment Corporation, Hopu Investment Management, and Hillhouse Capital Group, which acquired Global Logistics Properties, a global logistics facilities provider, for $11.6 billion. Other significant M&A deals include China National Petroleum Corporation's acquisition of an 8% stake in Abu Dhabi Onshore Oil Company for $1.8 billion and HNA Group's purchase of Singapore logistics company CWT for $1 billion.
In August, China's State Administration of Foreign Exchange encouraged domestic companies to participate in "Belt and Road" projects. Additionally, HNA, which has faced obstacles in overseas investments, recently stated that it would prioritize investing funds in "Belt and Road" projects in the future.
Source: Wall Street CN
Original Article Link (in Chinese): http://t.cn/RChrpad
