Mergers & Acquisitions
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Mergers & Acquisitions

JIC Huawen sets up 2 billion yuan fund to invest in China’s soft power

PUBLISHED : Sunday, 30 July, 2017, 3:42pm
UPDATED : Sunday, 30 July, 2017, 10:53pm

China Jianyin Investment (JIC), the equity investment group spun out from the country’s second-most valuable bank, has set up a 2 billion yuan (US$297 million) unit to seed funds in businesses related to the export of Chinese cultural heritage and the projection of Chinese “soft power.”

JIC Huawen Investment will use its paid-up capital and seek other funding sources to finance its global mergers and acquisitions in the technology, media and telecommunications sectors, said the unit’s chief executive Cao Qun.

“By capitalising on the power of capital, we hope to carve out a new niche via constant mergers, acquisitions and asset restructurings,” Cao told the South China Morning Post. “We aim to increase our influence in certain segments.”

Chinese investors return to global deals market in second quarter

JIC Huawen is the latest among Chinese companies on the lookout for global acquisitions, as they return to the deal table after six months of regulatory scrutiny that ground many overseas asset purchases to a halt. Chinese investors were the second most-acquisitive group in the second quarter, with 94 deals valued at US$35.9 billion, according to Baker McKenzie’s Cross-Border M&A Index.

Several of China’s asset buyers had been actively acquiring businesses and assets abroad related to culture, leisure and the arts, in a projection of Chinese “soft power.” Guo Guangchang’s Fosun Group owns the Club Med chain of hotels and resorts, as well as Canada’s Cirque du Soleil, while magnate Wang Jianlin’s Wanda Group owns Hollywood studio Legendary Pictures as well as the world’s largest cinema chain.

Does China’s buying spree of Hollywood studios project soft power? Not so easy

Jianyin was spun out of China Construction Bank in 2004. Its portfolio of equity investments include insurance, pharmaceuticals, leasing and even snack foods. in 2015, The Carlyle Group invested US$115 million for 18.5 per cent of JIC Leasing.

Investment funds should discern new trends of global technology development and seek out high-growth firms to support the TMT sectors’ go-global strategy, hence increase China’s “soft power” worldwide, Cao said.

“Establishment of a highly efficient investment mechanism is necessarily needed,” he said. “Priority should be given to strong enforcement so that the strategic plans can eventually be implemented.”

JIC Huawen’s investments already include Zhejiang Huace Film & TV, listed on Shenzhen’s ChiNext board for startups, and whose production include The Assassin starring Shu Qi, and Tiny Times. It’s also an investor in mgtv.com, a video streaming platform.

China Media Capital (CMC), the country’s most influential media and entertainment investor, is the single largest shareholder in Hong Kong’s Television Broadcasters (TVB) through its investment in Young Lion Holdings, which owns a 26 per cent stake.

Tan Yunming, a professor at the Central University of Finance & Economics, said that China, already a net global investor with outbound funds exceeding the size of inbound capital, would shell out more funds on cross-border investments involving TMT sectors in the coming years.

China’s outbound investments in TMT businesses last year hit US$32.5 billion, more than fourfold the amount of US$7.6 billion in 2015, according to JIC’s report on China’s media investment.

“We feel it is our responsibility to promoting Chinese culture to the world,” said Cao. “It is a heavy task for us, but we are going all out for it.”

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