CHINA’S outbound merger and acquisition deals could rise to US$150 billion this year, smashing last year’s record as abundant liquidity allows firms to upgrade their technology and acquire brands, a top executive at the country’s leading investment bank said.

    Chinese firms have launched US$103 billion worth of overseas merger and acquisition deals so far this year, approaching the annual record of US$106 billion in 2015.

    But this could soar to US$130 billion-US$150 billion for the year with deals like ChemChina’s record US$43 billion purchase of Swiss-based Syngenta still in the works, China International Capital Corporation (CICC) head of merger and acquisition Wang Zilong said.

    “These large-scale deals are capital-driven and taking place during a period of ample liquidity, due to China’s abundant foreign exchange reserves and high new loan growth created by economic stimulus,” he said.

    “The sustainability of the trend would be questionable if liquidity was the only driver.”

    CICC, which is advising ChemChina on the Syngenta deal and is part-owned by KKR & Co. and TPG Capital, is expanding its merger and acquisition business to capitalize on Chinese firms’ pursuit of overseas assets, Wang said.

    Big private and State-owned companies, with interests in lifestyle industry, technology upgrading, infrastructure and health care, were the most active buyers in the market, he added.

    But the pace of China’s outbound merger and acquisition activity could slow in the second half, as the government took measures to control forex outflows to ease the pressure on the yuan.

    “Foreign exchange is an issue during transactions,” Wang said. “Sellers pay attention to the certainty to close a deal. Sometimes the seller won’t select a Chinese bidder despite a higher offer under a competitive bidding process, if uncertainty is too high.”

    CICC was ranked No.2 behind Morgan Stanley in China-involved mergers and acquisitions last year, with an 11 percent market share. This year, CICC is ranked No.1 in China-involved merger and acquisition deals, partly helped by foreign investment banks scaling back their Chinese mainland operations.

    But Wang said the Beijing-based investment bank, which added 10 bankers to its merger and acquisition team last year, still needed to lift its game outside China. (SD-Agencies)