China - M&A Lending
China recently made changes to its government policies, encouraging Chinese companies to expand abroad. Domestic banks are adapting to the policy changes by prioritizing M&A lending. As a result, companies are able to easily obtain loans for acquisitions. For example, China CITIC Bank International made a US$12.7 billion loan in June allowing China National Chemical Corp. to purchase Syngenta AG. Many similar deals have recently been completed thanks to readily available financing.
Previously, only top tier Chinese banks would engage in cross-border M&A; however, second tier banks are now aggressively lending. As banks work hard to increase deal volume, Chinese banks are expected to improve their ranking for financing M&A transactions. Bank of China is currently ranked 20th in global M&A lending. In order to facilitate M&A transactions, Chinese banks are starting to establish overseas branches which will make the M&A process more convenient for its clients. These banks are more capable than ever to move quickly in cross boarder deals and Chinese companies that are backed by state lenders have been extremely active in closing cross boarder deals.
While policy changes have made a positive impact, they are not the only factor driving Chinese cross-border M&A. Investment opportunities in China are becoming harder to find. The country’s economic expansion is slowing and domestic companies are looking abroad to diversify and meet growth objectives. Large companies in particular have found limited opportunities for acquisitions within China. Additionally, by making foreign acquisitions, companies have been able to expand trade and move into new markets. Most companies in the market for acquisitions are searching for well-known brands and advanced technology.
Versailles Group is a 30-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures. Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million. Versailles Group has closed transactions in all economic environments, literally around the world.
Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.
More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.
For additional information, please contact
Founder and President
+617-449-3325
September 2, 2016
