Chinese companies surpass US as largest buyer of cross-boarder M&As

With the rapid growth of cross-border mergers and acquisitions, Chinese companies and funds are making a deep impact on the global industrial structure, bankers, academics and investment experts said at a forum on M&A in Beijing on Friday.

During the first three quarters of 2016, the volume of China's cross-border M&As totaled $173.9 billion, an increase of 68 percent from the previous year. For the first time, China overtook the United States as the largest buyer of cross-border M&As worldwide, according to the US-based financial data provider Dealogic.

"The ongoing supply-side reform has provided important policy guidance for economic transition and industrial restructuring in China. Given the above situation, traditional sectors have obvious demands for industrial mergers, integration and upgrading. Emerging industries are also in demand for large-scale integration. All these factors will become a core driver for the sound development of the M&A market," said Hong Qi, chairman of China Minsheng Banking Corp Ltd.

The bank initiated the founding of China Mergers & Acquisitions Alliance aiming to provide comprehensive services to satisfy Chinese companies' M&A demands. Since its establishment in August 2013, the alliance has attracted 33 members including banks, brokerages, law firms and accounting firms that are active in the M&A market. Benefiting from the multifunctional alliance, China Minsheng Bank can provide services ranging from consulting, syndicated loans to buyout funds that offer companies diversified financing solutions.

Nowadays, the globalization of Chinese companies has become an inevitable trend, said Huo Jianguo, vice-chairman of the China Society for World Trade Organization Studies.

The Belt and Road Initiative, a developmental strategy promoting connectivity and cooperation among more than 60 countries and regions, will continue to attract a large volume of overseas investments in the development of infrastructure, industrial parks, as well as economic and technical cooperation zones.

"Apart from the majority of Chinese companies that are seeking technologies, market or talent through cross-border mergers and acquisitions, some are making short-term opportunistic investments that may bring greater risks... Those companies should build the right investment philosophy and abandon short-term behaviors," Huo said.