Gear­ing up

Chi­nese in­ter­net com­pany to build elec­tric car plant

China Daily (USA) - - FRONT PAGE -

Chi­nese banks are in­creas­ing their clout in fi­nanc­ing in­ter­na­tional merg­ers and ac­qui­si­tions. The na­tion’s len­ders were man­dated lead ar­rangers on $19.9 bil­lion of global syn­di­cated loans for M&A this year, rais­ing their share of that mar­ket to 4.4 per­cent from 0.9 per­cent in 2015, data com­piled by Bloomberg showed.

While Bank of China Ltd led, se­cond-tier len­ders have in­creas­ingly joined the fray. China CITIC Bank In­ter­na­tional Ltd helped helm a $12.7 bil­lion loan in June back­ing China Na­tional Chem­i­cal Corp’s pur­chase of Syn­genta AG. China Mer­chants Bank Co led a $3 bil­lion loan in July for the pri­va­ti­za­tion of for­merly New York-listed Qi­hoo 360 Tech­nol­ogy Co, Bloomberg data showed.

With in­vest­ment op­por­tu­ni­ties sparse amid the coun­try’s weak­est eco­nomic ex­pan­sion in a quar­ter cen­tury, Chi­nese banks are fo­cus­ing more on cross-bor­der lend­ing.

“Be­fore it was only top-tier banks ac­tive in un­der­writ­ing out­bound M&A fi­nanc­ing deals, but now the se­cond-tier len­ders are also com­pet­ing for the business,” said Jack Chan, a fi­nan­cial ser­vices man­ag­ing part­ner at global au­dit­ing firm EY.

“It has ev­ery­thing to do with the re­cent gov­ern­ment poli­cies en­cour­ag­ing the na­tion’s firms to go abroad,” Chan said.

Big Chi­nese com­pa­nies face few op­por­tu­ni­ties for do­mes­tic in­vest­ment at the mo­ment, spurring de­mand for over­seas M&As, ac­cord­ing to Wei Hou, an an­a­lyst at Sanford C. Bern­stein in Hong Kong. Fi­nanc­ing such deals over­seas of­fers smaller Chi­nese banks an op­por­tu­nity to grow, Wei said.

“Se­cond-tier-Chi­nese banks want to build up their in­vest­ment bank­ing arms,” said Jimmy Le­ung, China fi­nan­cial ser­vices leader at Price­wa­ter­house­Coop­ers LLP in Shang­hai

4.4 per­cent Chi­nese banks’ share of the M&A mar­ket this year

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