Mergers & Acquisitions

Explosion of cross-border M&As in China compels Merrill Corp to set up regional data centre in Hong Kong

China’s outbound acquisition activity draws digital due diligence company to Hong Kong

PUBLISHED : Monday, 07 March, 2016, 9:23pm
UPDATED : Tuesday, 08 March, 2016, 1:04pm

The rising tide of international mergers and acquisitions by mainland Chinese companies has led Merrill Corp, one of the world’s largest providers of virtual data room services, to establish its Asia-Pacific data centre in Hong Kong.

Virtual data rooms are secure online repositories of information used by businesses for the due diligence process related to mergers and acquisitions, initial public offerings, regulatory compliance and other fundraising exercises.

Nancy Yu, the managing director for Merrill in Asia-Pacific, said the launch of its new data centre in Hong Kong would provide improved performance, in terms of online access time and speed, for its virtual data room service across the region.

“The phenomenal increase in cross-border mergers and acquisitions activity by mainland Chinese companies made it important for us to locate our DataSite facility in Hong Kong,” Yu said. “We used to host data in the United States.”

Privately-held Merrill, which is based in Minnesota, estimated that it has conducted more than 35,000 virtual data room projects worldwide since it started offering the service in 2003.

Before this service became widely available from different providers, Yu said mergers and acquisitions transactions typically had representatives of potential buyers physically inspect for days all the relevant data of the seller.

She said virtual data room services is already widely used in North America and Europe.

Competition among providers has apparently started to pick up pace in Asia, thanks to a growing appetite for acquisitions by companies based in the world’s second-biggest economy.

Other prominent providers competing against Merrill in Asia included New York-listed IntraLinks and the Australian firm Ansarada.

Companies in mainland China spent a record US$61 billion in global outbound mergers and acquisitions last year, targeting major assets in the technology, entertainment, financial services and property sectors.

That total was around 16 per cent higher than in 2014, when global cross-border deals by Chinese companies reached US$53 billion, according to a report published in January by research firm Rhodium Group.

“Our data centre is the first step of many more investments we’re planning in the Asia-Pacific,” Yu said. She added that the company was closely looking at the potential of setting up local hosting facilities in mainland China.

Yu pointed out that Merrill is also the leading provider in Hong Kong of financial printing services for IPOs, debt financing and other deals, with a 30 per cent market share.