Prospect of saturation of foreign capital in M & A

2022-08-03
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China's machinery industry has been vigorously promoting the development and transformation of the plastic recycling granulator industry in recent years. Introduction: on the 17th, PwC pointed out in its analysis report that there were obvious differences between domestic investors and overseas investors in the activity of mergers and acquisitions in China. With the funds raised from the active capital market being used to integrate highly dispersed industries, usually the restructuring initiated by the government, the number of domestic mergers and acquisitions has increased rapidly

17, PwC pointed out in its analysis report that there are obvious differences between domestic investors and overseas investors in the activity of M & A in China. With the funds raised from the active capital market being used to integrate highly dispersed industries, usually the restructuring initiated by the government, the number of domestic mergers and acquisitions has increased rapidly

on the contrary, for foreign companies and private equity investors, the high share price drives the price earnings ratio and other transaction pricing multiples to rise continuously. At the same time, they also face the regulatory restrictions caused by the market changes in 2006. As a result, trading activities led by foreign companies and private equity funds have not increased significantly in the past 18 months. At the same time, the number of overseas M & A transactions of domestic enterprises is growing steadily, and the industries involved are also expanding

the temptation of "less monks and more porridge" China's FDI (foreign direct investment) has been ranking first among developing countries for many years. In recent years, cross-border mergers and acquisitions have begun to carry out business in the fields of heavy chemical industry, basic materials industry, consumer goods production and service industry. Last year, foreign mergers and acquisitions accounted for only 2% of the actual amount of foreign capital used in the country that year. However, 80% of FDI is realized through foreign mergers and acquisitions

according to the statistics of the Ministry of Commerce, in the first five months of this year, 15072 foreign-invested enterprises were newly established in China, a year-on-year decrease of 3.75%; The amount of foreign capital actually used was US $25.258 billion, a year-on-year increase of 9.87%. It is estimated that the actual amount of foreign capital used in the first half of the year will reach about US $30billion. In the first five months, the top three industries in terms of actual use of foreign capital were manufacturing, real estate, leasing and business services, reaching US $13.461 billion, US $6.035 billion and US $1.344 billion respectively

according to m aAsia, in the first half of this year, the number of publicly announced M & A transactions in China increased by 20% over the same period last year, from 674 to 808 in the same period last year, but most of the increase came from domestic M & A. The transaction amount disclosed in the first half of this year was US $27.6 billion, a slight decrease from US $29.4 billion in the same period last year

"this analysis result is very consistent with what we have seen in more than 600 m & A transactions in China in one year where we used micrometers to select qualified steel balls; (3) the error of indentation measuring devices is too large," said huangyaohe, partner of PWC China corporate finance and M & A, "Due to the effective integration of highly dispersed industries, mergers and acquisitions have been quickly accepted in China, and domestic companies have seized the opportunity with the support of the government. Overseas mergers and acquisitions of Chinese companies are receiving more and more attention, and it is often overlooked that many Chinese companies are also facing many attractive acquisition opportunities in China."

for foreign investors, "at present, the demand for M & A in China is still large and growing. However, since the stock market recovered in April2006, the expectation of valuation has been rising. Therefore, many transactions cannot be agreed due to the difference in valuation between the two sides." However, signs of a turnaround are emerging. Huang Yaohe told, "in the past few weeks, we have found that the seller's willingness to sell has increased. It may be because the market has reached its peak, and the seller hopes to seize this opportunity to trade."

embarrassment in saturation period China's construction machinery industry mainly faces two key points: one is "macro-control" and the other is "M & a". Carlyle investment group of the United States acquired 85% of the shares of XCMG Construction Machinery Co., Ltd., which made the global construction machinery giant caterpillar of the United States fail to acquire XCMG; At the beginning of last year, it was reported in the industry that caterpillar turned to acquire Chinese leading enterprises such as "Xiamen Industrial Group" and "Shantui". This has aroused the concern of domestic scholars and entrepreneurs: "whether China's construction machinery industry chain will break", "what kind of situation China's construction machinery industry, which has developed for more than 50 years, will face", "how enterprises deal with industrial safety and anti-monopoly", etc

lijingwen, academician of the Chinese Academy of engineering, believes that foreign capital M & A can make the domestic technology level develop by leaps and bounds and shorten the domestic learning technology cost; And improve industrial safety; Promote large groups to move towards diversification, core and internationalization. Caoyushu, deputy director of the Western Development Office of the State Council, also said that industry mergers and acquisitions should not be raised to the level of industrial security, but should be regarded as an economic behavior

however, at the 28th meeting of the Standing Committee of the Tenth National People's Congress, the draft anti-monopoly law was reviewed again. New provisions have been added to the second review of the draft, requiring that, in addition to the market antitrust review, foreign mergers and acquisitions of domestic enterprises should also be subject to national security review in accordance with relevant provisions

according to Xinhua news agency, before 2004, foreign investment in China in the form of mergers and acquisitions accounted for only 5% of direct investment. In 2004, this proportion rose rapidly to 11% and in 2005, it was close to 20%. In fact, some transnational corporations and foreign investment funds have actively implemented mergers and acquisitions of key enterprises in some industries in China

people from the Ministry of Commerce pointed out that foreign M & A has brought new opportunities for China to undertake international industrial transfer and innovate the way of utilizing foreign capital. People in the machinery industry believe that many machinery enterprises are in a semi saturated state and are facing a downward trend; Some investors who later entered the machinery industry have no sense of prospect at all, and are only concerned with immediate interests. Moreover, for a long time, the utilization of foreign capital in China has been mainly concentrated in the manufacturing sector, accounting for about 60% ~ 70% of the total utilization of foreign capital. Multinational companies have begun to enter China's large-scale manufacturing industry on a large scale. Nine of the world's top 10 construction machinery companies have fully entered China, and the focus of M & A is directly on the backbone enterprises and leading enterprises in China's construction machinery industry, electrical appliance industry and other fields

before the saturation period of the machinery industry comes, the wave of mergers and acquisitions in the industry will be difficult to calm down. Due to the large-scale and leapfrog development in China in recent years, the traditional machinery industry has ushered in an unprecedented brightness. Whether the growing machinery enterprises can seize this opportunity has become a crucial issue. However, mechanical products, as consumables, have limited market share; The direct entry of transnational corporations; The re differentiation of the domestic machinery industry pattern and so on, all these factors urge the machinery enterprises to rapidly expand their territory before the saturation period. The resulting antitrust issue is just a gap for Chinese enterprises to compete for rapid growth and redraw their sphere of influence

"antitrust" PK influx of foreign capital

"in the context of globalization, the free flow of capital is an inevitable trend. We can neither regard it as a monster nor a savior." Xiangwenbo said so. The United States once implemented a strict management system for foreign mergers and acquisitions, which did not affect it to become the largest foreign capital importer. At present, China's reform and opening up has entered the core level, and the tentacles of foreign mergers and acquisitions have gradually penetrated into the key industries and leading enterprises of state-owned enterprises

experts believe that it is only the first step to add national security review to foreign mergers and acquisitions in the tolerance zone of direct marking deviation in the anti-monopoly law, which is used to mark the tolerance of plastic parts. In order to truly realize the effective management of foreign capital, we should further improve laws and regulations, establish institutions and improve mechanisms, so that the management of foreign capital M & A can be governed by laws. Secondly, there should be an authoritative management organization. In addition, a strict hearing system should also be established for the merger and acquisition of domestic enterprises by foreign capital

PwC pointed out that foreign private equity investors are looking for larger scale transactions. In the first half of this year, there were 10 transactions worth more than US $100million (only one transaction in the first half of 2006), but they still face the regulatory restrictions on buyout transactions

"many private equity investors are rethinking how to view China's opportunities," said Zhaoliang, PwC's China corporate financing and M & a director. "They are willing to take a more flexible approach in China, become minority shareholders, and make pre IPO investments. Buyout transactions are not common, and it is expected that this situation will continue for some time."

PwC predicts that in the second half of this year, in order to establish larger national companies to enhance their domestic and overseas competitiveness, domestic M & A activities will continue to heat up. Driven by more large state-owned enterprises, overseas investment will also gradually increase. However, they also believe that the growth of foreign M & A activities may be relatively slow; Unless the market's valuation expectations decline

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