China Has Become the Global Second Largest Entity to Invest Overseas
With a total of $220B invested overseas in 2016, China has become the second largest entity in the world in terms of foreign investment. This came from 100% CAGA growth in the immediate three years prior to 2016. Since late 2016, the Chinese government issued new regulations and guidelines on Chinese overseas investment. Directionally, there are mainly two principles that have the most impact. First, foreign investment in certain sectors such as real estate, sports and entertainment, etc. are discouraged or prohibited. Secondly, foreign investments from strategic investors that are making investments with clear strategic rationale in their main business sectors are still encouraged. In 2017, Chinese outbound M&A activity has become more rational, and foreign investment excluding the prohibited sectors are kept at a similar level as seen in 2016.
Chinese Investors Have Special Characters
Chinese investors are a new force in global M&A and investment market and possess obvious characters with pros and cons in general:
1. Strong motivation both in short and long term
2. Synergy potentials with target company, especially in Chinese market
3. Friendly investors that mainly relying on the local management team to keep running the target company with an incentive plan in place
1. Overall inexperienced in M&A transactions; need professional help and hand-holding
2. Slower decision making process, especially for some state-owned enterprise
3. Potentially slower government approval if the fund is in China
Arbor Lake Capital Is Your Go-To Source to Access Chinese Investors and Market
As one of the most experienced cross-border M&A team in China, we understand the challenge in cross-cultural transactions, and are inspired and highly motivated to find solutions to close any gap to bring a deal together. Our partners are the first generation of M&A professionals in China, while all of our investment banking team members are bilingual / bicultural professionals. Our professionalism and years of M&A experience set the base for our strong execution capability.
As a boutique investment bank, entrepreneurship is our gene. All of our projects will be led by our partners at project execution level, and any projects we are engaged in will be our highest priority with no compromise on the quality of our work.
Both of our Chinese and international team are one team working as one profit center. There are no internal conflicts of interest or communication barriers.