Chinese banks rise in M&A advisory rankings

China International Capital Corporation holds top spot for deals in Asia Pacific

PUBLISHED : Tuesday, 04 October, 2016, 10:08pm
UPDATED : Tuesday, 04 October, 2016, 10:55pm

Chinese banks are playing a greater role in funding the international aspirations of mainland companies than in the past, new data shows.

When it comes to deals in Asia Pacific (excluding Japan), China International Capital Corporation (CICC) topped the advisory league table for deals by value for the first nine months of the year, beating Goldman Sachs, according to Mergermarket data released on Tuesday. CICC advised on a total of 35 deals with a combined value of US$1.26 billion.

In all there were six Chinese institutions in the top 20 list of those involved in M&As ranked by deal value. No Chinese firm made it into the top 20 for the first three quarters of 2015.

The other five in the top 20 were Citic Securities, China Citic Bank, CCB International, Huatai United Securities and China Securities.

“Chinese banks rising in league tables doesn’t come as a surprise to me,” said Emma de Ronde, a partner at Norton Rose Fulbright in Hong Kong. “A lot of what is driving M&As in the region is Chinese outbound work, and Chinese banks have been quite aggressive in acquiring this. Also, in many cases they have closer links with Chinese corporates than other international banks.”

In the first nine months of the year, there were 201 deals involving Chinese companies worth a total of US$141.2 billion, accounting for a record 84.7 per cent of Asia’s outbound deal value and 46.3 per cent of the deal count, according to Mergermarket data.

The value was boosted by a number of very large and high profile deals, most recently China National Chemical’s (ChemChina) US$43 billion acquisition of Swiss agribusiness giant Syngenta. China Citic Bank, which advised on the deal, was ranked ninth in the list of advisors by deal value in the region, despite only being involved in two deals so far this year.

Chinese dealmakers spent the majority of their investment in Europe (112 deals) and the US (60 deals), primarily targeting the industrial, chemical and technology sectors.

“Generally speaking Chinese companies invest in Europe for the purpose of acquiring technology or market share,” said Paul Irwin Crookes, lecturer in Chinese international relations at the University of Oxford.

A number of major US headquartered investment banks saw falls in the values of deals in which they were involved in Asia Pacific (ex Japan) in the first three quarters compared to the same period in 2015, with Goldman Sachs, Morgan Stanley and Citi all seeing double digit percentage declines, according to the data.

“The number of deals coming into the region has slowed, which has affected the international banks, and Chinese banks have improved their capabilities, while competing strongly on price,” said de Ronde.

Nonetheless, Chinese banks remain of comparatively little significance in the global league tables. CICC was the only Chinese institution to make Mergermarket’s global top 20 list of advisors ranked by deal value. Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch occupied the top three slots.