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

9 August 2016 CCTV Interview at Maritime Silk Road Conference

By Li Shouen, CNTV Panview commentator

Three years ago, Chinese President Xi Jinping put forward an initiative to build the Silk Road Economic Belt and 21st Century Maritime Silk Road during his overseas visits in 2013.

The conference on building the 21st Century Maritime Silk Road and Advancing International Industrial Cooperation, held in Sept. 7, in Xiamen, southeast China's Fujian Province.

..... READ MORE

6 July 2016 – AIIB and NDB dominate China’s outbound investment

ASIA / 06-07-16 / BY FINBARR BERMINGHAM

The first lending from the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) dominated China’s outbound investment in the second quarter of 2016.

Data seen by GTR shows that while total outbound investment fell by 49% to US$97.9bn (down from Q1’s all-time record of US$191.6bn), eight loans from the new China-backed development banks made up 44% of the overall volume.

Data produced by merchant banking firm Grison’s Peak suggest that the presence of the NDB and AIIB mark “the first steps in China diversifying away from its policy banks of ‘buy and hold risk; to risk sharing with other countries/partner banks”..... READ MORE

China Outbound Investments Q2 2016 – Vol. 30

Overview 

Q2 Chinese outbound investments USD 97.9 billion, a decrease of 49% from Q1's all time high of USD 191.6 billion. As shown in Table 1, this is also the lowest amount in the past 5 quarters. While the aggregate amount was down, there were volume increases in all 3 components of our research, indicating smaller average deal sizes throughout each component. 

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M&A / Equity Transactions

As noted above, Q2 announced outbound M&A aggregate value was USD 49.4 billion, down 48% from the USD 95.6 billion in Q1, mainly due to the acquisition of Syngenta by ChemChina, which represented 45% of aggregate amounts in Q1. After removing the pro forma effects of the Syngenta transaction Q2 amounts fell by only 4.3%. Volume increased by 11.1%, to 231 transactions, our highest volume total ever. This quarter there were 12 other transactions of at least USD 1 billion, totalling USD 32.4 billion (66% of the total), while the remaining 219 transactions comprised USD 17.0 billion aggregate value.

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China’s ambitions for Asia show through in ‘Silk Road’ lending.

1 April 2016 - FT - James Kynge Read More ........

Chinese Policy Bank Loans

One Belt One Road sends Chinese outbound lending to 7-year high

Global Trade Review - ASIA / 20-01-16 / BY FINBARR BERMINGHAM

onebeltOutbound policy loans from China rocketed up in the final quarter of 2015, as lending along the One Belt One Road route continued to gather pace.

New research from the merchant banking firm Grison’s Peak shows that outbound policy loans, along with outbound M&A and equity investments, reached their highest levels since it started gathering data seven years ago. Read More ........

 

China Outbound Investments Q1 2016 – Vol. 29

Overview 

 Q1 2016 Chinese outbound totalled USD 191.8 billion, an increase of 76% over Q4 2015 and the highest total ever recorded in our 8 years of Chinese outbound research. 

Read more ... download the pdf file below.

M&A / Equity Transactions

As noted above, Q1 announced outbound M&A aggregate value was USD 95.6 billion, up 203.4% from the USD 31.5 billion in Q4 and 253% above the rolling 5-quarter average, mainly due to the acquisition of Syngenta by ChemChina, which represented 45% of aggregate amounts. Volume recorded a slight increase by 6.1%, to 208 transactions, also our highest volume total ever. This quarter there were 13 other transactions of at least USD 1 billion, totalling USD 78.3 billion, while the remaining 194 transactions comprised USD 17.2 billion aggregate value.

Read more ....... download the pdf file below.

China Outbound Investments Q4 2015 – Vol. 28

Overview 

Despite a slowdown in manufacturing, slower GDP growth and a nearly 5% drop in value by the yuan (relative to the IMF's SDR basket), Q4 saw a continuation of trends over the past 5 quarters of increasing transaction volume (230 M&A deals/investments/loans/pledges)totalling aggregate amounts of USD 109 billion. In the 7 year history of our Chinese outbound research, Q4 volumes of outbound M&A, outbound equity investments and outbound policy loans are unsurpassed.

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M&A / Equity Transactions

As noted above, Q4 announced outbound M&A aggregate value was USD 31.5 billion, down 12.5% from the USD 36.0 billion in Q3 but still 35% above the rolling 5-quarter average. While aggregate value decreased, volume increased by 15.3%, to 196 transactions, our investments highest total ever. This quarter there were 10 transactions of at least USD 1 billion, totalling USD 15.5 billion (versus 8 transactions with an aggregate value of USD 21.6 billion in Q3).

Average deal size (excluding equity investments below USD 10 million with disclosed transaction value) declined from USD 358 million to USD 282 million in this quarter, again clearly middle market focussed.

Read more ....... download the pdf file below.

China Outbound Investments Q3 2015 – Vol. 27

Overview 

Q3 In a quarter dominated by news of volatility in Chinese stock markets and slowing GDP growth, Chinese outbound investment remained strong across all three components we track. While down from Q2 levels, aggregate Q3 outbound investment/pledges totalled USD 124.6 billion.

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M&A / Equity Transactions

 As noted above, Q3 announced outbound M&A aggregate value was USD 36.0 billion, an increase of 77.2% from the USD 20.3 billion in Q2 even though volume was flat (170 transactions in Q3 versus 167 in Q2). There were 8 transactions in excess of USD 1 billion, totalling USD 21.6 billion (versus 5 transactions with an aggregate value of USD 11.5 billion in Q2). Collectively, these 8 deals represented 60% of Q3 aggregate value.

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China Outbound Investments Q2 2015 – Vol. 26

Overview 

Q2 Chinese outbound investments totalled USD 159.2 billion, an increase of 160% over Q1 2015.

In M&A/equity, there was a 65.3% increase in volume (101 in Q1 versus 167 in Q2), but a 27.7% decline in aggregate value to USD 20.3 billion. This resulted in a decline in average transaction size from USD 278 million in Q1 to USD 122 million in Q2. This decline was related to both the rising volume of smaller tech/ecommerce investments in North America and the decline in the number of deals over USD 1 billion this quarter.

Read more ... download the pdf file below.

M&A / Equity Transactions

As noted above, Q2 announced outbound M&A aggregate value was USD 20.3 billion, down 27.7% from the USD 28.1 billion in Q1.While aggregate value decreased, volume increased by 65.3%, to 167 transactions. Part of the reason for the decline in aggregate value relates to the decline in the number of large transactions. This quarter there were only 5 transactions in excess of USD 1 billion and 10 in total over USD 450 million, representing 56.6% of aggregate M&A/Equity aggregate value.

These amounts are down from 8 and 14 deals respectively and 80% of Q1 aggregate value.

Read more ....... download the pdf file below.

China Outbound Investments Q1 2015 – Vol. 25

Overview 

Q1 Chinese outbound investments totalled USD 61.2 billion, an increase of 19.8% over Q4 2014. There was a substantial pick up in M&A in aggregate value (up 45% from Q4) and a 5 quarter high, but a slight decrease in volume (down 11% from Q4). Government Related Loan Agreements, outside of the more comprehensive Government Agreements signed this quarter were USD 5.0 billion, continuing the downward trend over the past few quarters. The aggregate value of Government Agreements rose 8.5% from Q4 2014 to USD 28.1 billion, led by major agreements with Argentina, Kazakhstan and Ecuador.

M&A / Equity Transactions

China outbound M&A / equity aggregate value was USD 28.1 billion, up 45% versus Q4, and up 43% versus the average of the past five quarters. The strong jump in M&A equity aggregate value in Q1 was heavily influenced by large transactions. There were 8 acquisitions of controlling stakes greater that USD 1 billion, including the ChemChina / Pirelli deal, which involved USD 7.7 billion in equity plus the assumption of USD 1.2 billion of long term debt. In addition, there were 5 other M&A transactions greater than USD 450 million in value. There was also a $500 million minority investment in an Indian technology company.

Collectively, these 14 transactions accounted for over 80% of aggregate value during Q1.

Read more ....... download the pdf file below.