Chinese companies are increasingly looking at opportunities in Malaysia, with mergers and acquisitions (M & A) by Chinese private investors to become the main drivers of outward direct investment in China, said HSBC Bank Malaysia Bhd.
Mergers and acquisitions have become the fastest way for Chinese companies to tap foreign markets and move further up the value chain, the bank said.
Depreciation of foreign currencies against the yuan, he said, provided a favorable environment for M & A activities in China.
He added that the increase in disposable income among the 1.4 billion Chinese consumers was also fueling interest in acquisitions in the leisure and consumer goods sectors.
"This has been reflected in the Chinese investment in Malaysia. So far this year, mergers and acquisitions of Chinese in Malaysia have been the most active in history, both in terms of volume and number of large deals.
"Real estate, consumer products and retail were the most active sectors," he said in a statement Thursday.
In the first seven months of this year, the total value of Chinese M & A in Malaysia stood at US $ 830mil (RM3.35bil), nearly four times the figure for all of 2014.
The deals include the purchase signal Southern Crest Development Sdn Bhd, Greenland Holding Group at US $ 658mil (RM2.66bil), the purchase of Pearl Longcheer Holdings Sdn Bhd Discovery Development in US $ 89mil (RM359.7mil) and Parkson Retail purchase YeeHaw Best Practices Group Sdn Bhd on dining and lodging industry.
The bank said several factors were driving the growth of China's outbound direct investment (ODI).
"First, in our opinion, ODI China to keep growing by 20% a year, with China overtaking the US as the world's largest outbound direct investor in the coming years.
"This year, the pace of investment will accelerate, driven by large infrastructure investments in Asia and Europe are expected in the 'One Belt, One Way" initiative, "he said.
He added that Chinese companies were turning to agriculture, manufacturing technologies high-end consumer goods, real estate, services and brands.
Another important trend is that private investors are becoming the main driving force of the ODI.
"The privately owned companies are investing in more industrial sectors such as value-added agro-technology, high quality manufacturing and real estate in most countries and regions.
"They are looking for the intellectual property and brands to deploy in the Chinese market," he said.
Increased Chinese ODI is driven by a strong central government stimulus to national to invest abroad in a bid to boost their international competitiveness companies.
ODI from China grew by 19% year on average between 2009 and 2014.
In comparison, foreign direct investment (FDI) in China grew on average by 5% in annual terms during the same period.
Last year, China's ODI reached US $ 116bil (RM469bil), almost the same as the total foreign direct investment of US $ 120bil (RM485bil).
"As Chinese companies accelerate the pace of overseas expansion, the number of renminbi (yuan) denominated in deals is likely to increase.
"Overall, the overseas investment of Chinese enterprises is supported by the central government and is helping to encourage the participation of China in the world economy.
"This is a new era of global cooperation, and history is a clear win-win," he said.
Individual and corporate investors in China have been buying properties in major cities in Europe, especially in London for a number of years. Following the recent turmoil in the stock market of China, many European markets are welcoming a further influx of Chinese investors.
Prolifically Chinese investors already invest in real estate assets in Europe and worldwide, and recent years have seen China's activity in foreign investment markets are increasing rapidly. In 2009, the total value of property abroad owned by Chinese investors - both private and corporate - stood at $ 600 million according to the best estimates of Knight Frank. Last year, this figure had risen to about US $ 15 billion.
London is a particularly popular market among foreign investors, including Chinese buyers of properties. According to Savills, 70% of real estate in London, which was sold in 2014 went to a foreign buyer, and these transactions were for a total of £ 14.6 billion. Chinese investors make up a significant portion of this, second only to the US in total investments, especially at the high end of the market. Chinese investors put a total of £ 2.2 billion in property in London last year, and accounted for 11% of all transactions worth more than a million pounds. As recently as 2012, the latter figure was only 4%.
Chinese investors are taking an interest in all property types, including commercial, residential and mixed developments, as well as the location assets such as hotels and student accommodation. China's interest in all sectors a trend continues to rise, even without the prospect of an increase in investment driven by internal problems of the stock market of China. A series of recent high-profile and high value deals have been announced. Chinese state-owned developer Greenland Group Holding is investing £ 1.2 billion over two residential development projects in London and, last summer, China Construction Bank paid £ 110 million to acquire property in the heart of the city. While London is a particularly well favored market, the Chinese investment boom is far from being a UK-only phenomenon. Real estate agencies in countries such as Spain and Germany have also reported that investment by individuals and Chinese companies is increasing.
Leaving aside the strong investment growth is now expected, increasing Chinese investment in foreign ownership has been reduced to a series of factors (and it is these same factors are expected to maintain the upward trend beyond any short-term increase coming from recent market activity. China's property market itself is slow moving, leading many investors to seek more easily in property abroad than at home. The economic crisis also played a paper. When he arrived, Chinese investors moved to diversify their portfolios in terms of currency exposure, and this remains one of the main attractions of investing in the UK and Europe. Others have been taken to invest in foreign properties not only as an investment but as a future way to move abroad themselves, driven by health care and air pollution problems in the home.
Two Chinese investors go head to head in a battle to buy Dublin-based aircraft leasing group Avolon in a deal that could be valued at $ 2.5 billion. Bohai Leasing, a unit of aviation and shipping Chinese company HNA, has offered to buy Avolon of $ 31 per share, two weeks after reaching an agreement to take a 20 percent to $ 26.
The offer, announced by Avolon traded on NYSE on Friday, it came after an unsolicited takeover approach $ 30 per share. This is understood to AVIC Capital, a subsidiary of Aviation Industry Corp of China. AVIC made a tentative move to buy Avolon a year ago.
Avolon floated on the Nasdaq last December at $ 20 Avolon said Friday that its board "has not accepted or rejected, whether the offer and continues to carefully evaluate these offers with its financial and legal advisors". It said it had authorized its financial advisers, led by JPMorgan, to continue talks with the two bidders.
Avolon shares rose 15.5 percent to $ 28.73 at the close of trading in New York on Friday. The company did not identify the second suitor and refused to comment beyond a statement it issued.
An agreement on the price of the offer, either represent a good return for investors Avolon. Its main shareholders are private equity groups Cinven, CVC and Oak Hill, who collectively own more than half of its assets. Founder and CEO Dómhnall Slattery holds a 1.36 percent.
Mr. Slattery is a former GPA executive who became head of the finance business aviation RBS after the sale of that business to another bank in the UK. Established Avolon in 2010, one of the fastest growing companies leasing aircraft in the world and part of a group of similar companies based in Dublin led by alumni of GPA, which pioneered the industry in the 1980s of It based at Shannon Airport in the west of Ireland. Avolon has 153 aircraft leased to 56 airlines around the world from its base in Dublin, and has another 107 on order. In a note to clients, Andrew Light, an analyst at Citi, said an acquisition of Avolon to $ 31 per share could re-rate the sector. Avolon said it would assess a price-earnings ratio of 14.2 times estimated 2015 earnings before taxes, compared with an average for the sector of 8.8 times.
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