China outbound investment deals from Hong Kong rise 66.6 per cent
The 66.6 per cent rise highlights the city's importance as a hub for overseas investments
In a sign of Hong Kong's importance as a hub for mainland investments overseas, outbound deals from Hong Kong soared 66.6 per cent to US$21.48 billon in the first three quarters of this year, according to Mergermarket, an international mergers and acquisitions news provider.
In contrast, outbound deals from the mainland dipped 1.9 per cent to US$45.06 billion during the same period.
"Some mainland-based companies use their Hong Kong-registered offshore companies to make overseas acquisitions, such as Shuanghui and Alibaba," said Samuel Wang, the China head of Mergermarket.
The total value of outbound deals from the mainland and Hong Kong rose 13.2 per cent to US$66.54 billion in the three quarters, Mergermarket said.
Overseas energy and mining assets, consumer brands and industrial technology continued to be attractive for Chinese players, Wang said. "We see this as a good opportunity for [Chinese] companies to make overseas deals since the global economic revival still face challenges."
The central government will boost its financial backing for investments in overseas geological exploration projects in the next few years, government sources and industry executives have told Mergermarket.
Within the mainland and Hong Kong as well as mainland investments overseas, deals in energy, mining and utilities jumped 97.6 per cent to US$9.7 billion in the first three quarters, while deals in the consumer sector soared 617.3 per cent to US$20.4 billion, according to Mergermarket.
Foreign acquisitions within the mainland and Hong Kong totalled US$5.4 billion in the third quarter, double the second quarter, it said.
"We see an uptick in M&A in China in the upcoming quarter, especially for inbound deals since domestic [initial public offerings] have been suspended since October last year," Wang said. "We have seen an extensive backlog of companies, and private equity investors are looking to other alternatives to exit."
The rise in M&A within China was partly driven by the central government issuing guidelines to encourage consolidation in nine industries including carmaking, iron and steel, cement and shipbuilding, he said.