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. The 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 their clients. These banks are more capable than ever to move quickly in cross-border deals, and Chinese companies that are backed by state lenders have been extremely active in closing cross-border 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.
Founded in 1987, Versailles Group is a boutique 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 in the middle and lower-middle market. 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.
