Chinese liberalisation a boon to foreigners
OVERSEAS acquisitions by Chinese buyers are cooling after two record years as Beijing reins in capital outflows, but deals into China are on the rise and new rules will make it easier for foreign buyers to tap China’s giant consumer potential.
Inbound merger and acquisition (M&A) deals have already reached $7.1 billion (R92.39bn) so far in 2017, almost double the amount in the same period last year and are well on track to beat the 2016 total of $46bn, while outbound deals tumbled more than 40 percent to $8.4bn, data showed.
Outpacing
Deals in retail and consumer staples accounted for nearly half those early transactions, far outpacing real estate and financial deals, which usually dominate inbound M&A.
Belgian investment firm Verlinvest is ahead of the trend. It set up a $300 million venture last year with Chinese state-owned conglomerate China Resources and has already deployed more than half the funds.
Verlinvest, which manages funds for the founding families of Anheuser-Busch InBev, is investing in minority and majority stakes in leading western brands so it can push them through China Resources’ distribution channels in China, said Nicholas Cator, who is responsible for the Asia business.
“We’re going to be focusing on those high-growth sectors that are based on consumer trends, like health-related food and beverage products, health care, education, cinema or entertainment, or anything linked to a kind of cultural production and content,” he said.
Plans to expand
Verlinvest’s joint venture in December bought an undisclosed stake in Oatly, a Swedish maker of dairy-free products, and plans to expand it into China.
The leadership in Beijing has long been trying to rebalance the economy away from infrastructure, heavy industry and export-led growth and towards domestic consumption, so in theory such investment should be welcome, but in practice foreign capital has fallen foul of barriers to entry.
That appears to be changing. China in October expanded to the entire country a new liberalisation programme. – Reuters