China clampdown on overseas deals crimps Asia Pacific M&A
HONG KONG: Asia Pacific dealmaking activity slipped in 2017 as outbound transactions nearly halved, led by China as Beijing increased scrutiny of crossborder investments and clamped down on some of its most acquisitive – and indebted – conglomerates.
People are treading carefully amid capital controls. They don’t want to be too flashy. Samson Lo, head of Asia M&A
Chinese overseas mergers and acquisition (M&A) investments slumped by more than a third to US$140 billion this year from a record last year, data from Thomson Reuters showed, and investment bankers expect the dealmaking environment to remain cautious in 2018.
The slowdown in new deals, especially large-sized ones, could pressure Asian revenues of Wall Street banks, who are facing growing competition from Chinese investment banks that are beefing up their M&A businesses.
Chinese companies have faced lengthy approvals for their outbound deals after Beijing tightened capital controls late last year in an effort to stabilise a weakening yuan. Sectors such as real estate, sports and media that previously saw heightened activity were hit particularly hard as investments in them were labelled ‘irrational’.
“People are treading carefully amid capital controls. They don’t want to be too flashy,” said Samson Lo, head of Asia M&A at UBS.
Overall M&A volume in Asia Pacific hit US$1.08 trillion in 2017, down 4.3 per cent from last year, the data showed, as regional activity was propped up by banner transactions such as French property firm Unibail-Rodamco’s US$24 billion purchase this month of Australia’s Westfield Corp. — Reuters