Mainland hot zone for M&A deals
Interest in Chinese companies sparks busiest first half ever, with transactions up 58.3pc
Mainland mergers and acquisitions surged in the first half of this year, marking the busiest start on record as investors and bankers lined up to strike deals in the world's fastest-growing major economy.
A booming stock market and increasing demand for stakes in mainland firms have made it one of the most exciting arenas for investment banking in Asia.
The mainland is also a hot zone for share sales, coming second only to the United States in global equity issuance in the first half of this year.
M&A deals climbed 58.3 per cent to US$39.1 billion, slightly higher than in the second half of last year, according to Thomson Financial.
This is the busiest start to a year on record but still well behind the semi-annual historical high of US$44.7 billion in deals in the last part of 2000.
'As long as interest rates remain low, especially in Japan, liquidity will remain high, and the M&A merry-go-round will continue,' said Violet Chung, a senior portfolio manager at Pacific Capital Management.
Some of the top deals this year have been the Rowsley purchase of solar energy company Perfect Field Investment, the mainland government's US$3 billion investment in Blackstone Group and Dongfang Electrical Machine's US$2.8 billion bid for Dongfang Boiler.
'Companies are still doing restructuring, including buying assets from their parent firms, so the deals will likely go on,' said Marco Mak, the head of research at Taifook Securities.
The technology sector was a favourite hunting ground for foreign investors, while mainland companies preferred to buy foreign businesses in the financial sector.
Asian M&As reached US$160 billion in the first half, a 34.1 per cent gain from the US$119 billion in the same period last year.
UBS topped the Asian M&A rankings, with Goldman Sachs coming in second.
Thomson Financial's preliminary data for the first half of the year showed Asian equity underwriting gains led the global market, with volumes rising 31.7 per cent compared with 17.4 per cent growth in the US and Europe's 28.8 per cent.
UBS also was the top equity underwriter, followed by Goldman.
The mainland market was the hottest of all, with record new issuance of US$33.8 billion, an increase of 64.89 per cent over last year. Hong Kong companies raised US$8.7 billion.
Domestic initial public offerings hit US$15.2 billion, closing on the full-year total of US$21.6 billion last year. Ping An Insurance (Group)'s US$5 billion share sale in February was the largest A-share deal of the year so far.
China Citic Bank Corp's US$5.9 billion dual listing in Hong Kong and Shanghai was the world's second-largest initial public offering so far this year.
That made the mainland the world's second most-active initial public offering issuer with a 15.2 per cent share of the global market, next to the US with US$18 billion and a 16.2 per cent market share.
It is already a record year for the number of mainland firms going public on US exchanges, with 10 companies raising US$2.2 billion on the New York Stock Exchange and Nasdaq Stock Market, more than double last year's full-year total.
Asian debt issuance in US dollars, euros and yen hit US$30.2 billion, up 53 per cent from last year. Domestic currency issuance rose a lesser 38.7 per cent to US$53.7 billion, with deal size growing significantly.
