China Investment Research – Chinese outbound investment

a 1763 Chinese reproduction of a 1418 map made from Zheng He's voyages

a 1763 Chinese reproduction of a 1418 map made from Zheng He's voyages

Our firm's China Outbound Investment product was launched in 2008 with a view of providing  (to the extent possible) "primary source reconciled data" related to Chinese outbound investments. We did so after hearing so many corporate and institutional investors question the transparency or sources of such data appearing in numerous public sources.

We monitor all Chinese outbound investments across countries, industries and by type or component of investment. We exclude from our analysis all defense related or security related investments.  We do not make specific recommendations, either by industry or by sector, rather our objective is to provide solid data which can assist our corporate clients and/or institutional investors in identifying macro trends and to track major shifts in Chinese investment patterns.       ..... Read more

China Outbound Investments Q1 2018 – Vol. 37

I. Overview 

Q1 2018 Chinese outbound investments across all 3 components we track totalled $65.1 billion, a decline of 40.8% from Q4 2017 aggregate amounts of $110.4 billion. There were declines across each of the three components of various levels.

In M&A/equity investments of announced transactions, volumes fell from 194 in Q4 2017 to 157 in Q1 2018, a decline of 19.1%. Volumes were reasonably consistent each month, but well below volumes in November and December 2017. Aggregate amounts fell from $46.7 billion to only $25.6 billion, a decline of 44.5%. This marked the lowest level since Q2 2015 and well below the prior 4 quarter averages.

Unlike the previous two quarters of 15 announced transactions over $1 billion, this past quarter saw only 3 such transactions, led by the $9.1 billion investment by Geely into Daimler.

Relative to industries, Consumer led in aggregate amounts with $13+ billion, representing slightly over 50% of Q1 aggregate amounts. In addition to the Geely investment there were a number of both large and mid-sized consumer transactions this quarter across geographies (discussed within this document). Consumer was followed by Financials and Industrials each with just over 10% and Communications with nearly 7%.

Read more on the PDF 


China Outbound Investments Q4 2017 – Vol. 36

 I. Overview 

Q4 2017 Chinese outbound investments, across all 3 components we track, totalled $110.4 billion, up 18.7% from Q3's adjusted total of $93 billion. M&A/equity investment saw $46.7 billion, down 21% from Q3, Government related bank loans were flat at $22.3 billion while G2G agreements increased by 276% to $41.4 billion. 

M&A/equity investments saw a 21% decrease in aggregate value from Q3 to $46.7 billion. However, this still represented the 2nd highest total in the past 4 quarters. Volume built during the quarter from only 45 announced in October to nearly doubling to 83 during December. This continues the trend of increasing – yet focussed –outbound investment trends we commented on as early as March (see Table 1). 

As with Q3, there were 15 transactions/investments over $1 billion. Six of these represented minority equity stakes, including a $3.8 billion investment in Volvo and investments into Ola and Uber. 

Financials, Consumer and Technology segments each represented circa 21% of aggregate amounts. Consumer led in aggregate amounts with $15.5 billion followed by Financials with $11.7 billion. Energy, Technology and Industrials all saw aggregate amounts over $4 billion. 

Relative to geography, Asia led in volume (35%), followed closely by North America (also 35%). There were also 11 transactions involving Australia (although only $1.5 billion aggregate value), 9 with Japan (again only $1.5 billion announced value), 5 into Canada (total of $1.5 billion) and two major ones into Latin America: Brazil agriculture and Chile utilities, each over $1 billion in announced value. 

Government related loans in Q3 remained nearly flat in aggregate commitments relativeto the past two quarters. The largest loan in Q4 was to Ghana, for infrastructure projects, but Russia, Brazil and Turkey also recieved $1+ billion commitments, while Bosnia and Bangladesh recieved commitments in excess of $500 million. Chinese policy banks also stepped up debt restructuring on some existing non-performing loans. 

G2G agreements showed an increase in volume and aggregate amounts despite the senior level demands of the October Party Conference. There were agreements signed with 12 countries, up from 5 in Q3. There were disclosed pledges involving USA, Russia, Vietnam and the UK. In light of all of the previously announced agreements, China inbound deals and the 20+ year nature of any investment into West Virginia, we calculated aggregate amounts of $41.4 billion (only $34.5 related to the USA as opposed to the stated $250 billion announced amounts), up 271% over Q3 amounts. 

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China Outbound Investments Q3 2017 – Vol. 35

Le Royaume-Uni, porte-avions des investissements chinois en Europe

Chinese purchases of overseas ports top $20bn in past year

China is ramping up acquisitions of overseas ports as it expands its reach as a maritime power, doubling its investments in port projects over the past year to $20bn and pushing ahead with plans to open new shipping routes through the Arctic circle. Read More .....

China Outbound Investments Q2 2017 – Vol. 34


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China Outbound Investments Q1 2017 – Vol. 33

 I. Overview 

Q1 2017 Chinese outbound investments totalled USD 109 billion, a decrease of 44% from Q4 2016. Moreover, $70 billion of this total represent pledges (as opposed to actual) to Saudi Arabia and Australia, leaving only $39 billion actually leaving China. Such numbers are entirely consistent with the capital controls instituted by the Chinese Government in Q4. 

Aggregate amounts declines across all 3 components: G2G, from $114.7 million in Q4 to $70 in Q1, M&A, from $57.0 million in Q4 to $36.0 billion and Government Related Loan Agreements, which fell from $24.7 billion in Q4 to only $3.1 billion in Q1.
Read More.....

 M&A Transactions / Equity Investments 

Q1 announced outbound M&A aggregate value was USD 36.0 billion, down 37% from the USD 57.0 billion in Q4. This quarter there were 10 other transactions of at least USD 1 billion, totalling USD 15.6 billion (43% of aggregate value), while the remaining 203 transactions comprised USD 20.5 billion.
Read More.....


4 April 2017 – China outbound M&A picks up in March after subdued months

Rising M&A activity in March boosts outlook for easing of China’s capital curbs

 by: James Kynge


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30 March 2017 – Goldman, Lazard China Dealmakers Decamp for Upstart Funds

Top Goldman, BofA, Lazard bankers leave as advisory fees drop

by Cathy Chan and Jonathan Browning

Veteran China dealmakers at Wall Street banks and Western buyout firms are heading for the exits, in search of the more lucrative deals and higher remuneration offered by smaller funds.

Three senior merger advisory bankers from Goldman Sachs Group Inc., Bank of America Corp. and Lazard Ltd. have resigned within the past month for senior roles at fledgling investment funds, according to people familiar with their departures, who asked not to be identified discussing private information. Carlyle Group LP Managing Director Alex Ying left the firm in January after two decades to set up Rivendell Partners, which focuses on mid-sized buyouts in Greater China and Vietnam, other people said. Read More ......

The fDi Podcast: China restrictions on overseas investment already biting

Beijing reinstated limits on overseas investment in a push to limit the flow of hot money out of the country. ICBC's Helena Huang and Grisons Peak's Henry Tillman discuss with fDi deputy editor Jacopo Dettoni how these restrictions have already limited the activity of Chinese investors in Europe and the US, and add uncertainties over the final outcome of ongoing and future deals. Watch the Podcast


An Analysis of Short-Term Performance of UK Cross-Border Mergers and Acquisitions by Chinese Listed Companies


Using a unique and proprietary database of Chinese cross-border mergers and acquisitions into the UK from 2012 to early 2016, this paper investigates the short-term performance of UK cross-border mergers and acquisitions acquired by Chinese publicly-listed companies. Using event study analysis with four different time-period windows, the results show that Chinese acquirers have earned significantly positive abnormal returns on the first day following the announcement date of M&A deals, however, these positive returns faded away over time. In addition, we conduct the event analysis by sector subsamples. The findings suggest that Chinese acquirers in Real Estate and other business sector deals have gained positive abnormal returns, while those in the Financial sector had negative abnormal returns. Regarding the factors that drive stock performance, the paper takes five of the most related deal characteristics into consideration both in univariate analysis and regression analysis. The results indicate that target form (public/private) and absolute transaction size are the most influential factors on the short-term performance of these Chinese acquiring firms: acquirers engaged in deals where the target firms are UK private and small/medium-sized earn statistically significant higher abnormal returns than those UK public and large-sized targets.

Belt & Road Initiative: Implications for UK-China Business

screen-shot-2016-10-14-at-08-57-32Download the powerpoint presentation