To the ruler, the people are heaven; to the people, food is. So goes a Chinese proverb. The appetite of China’s companies for cross-border deals contrasts with a regulatory reluctance to approve them. That partly explains why the volume of regional mergers and acquisitions by Asian companies, outside Japan, fell more than half last year, according to Mergermarket data.
Despite companies’ desire to spend outside mainland China, restrictions on risky deals have had a significant effect. US regulators have also become more wary of intellectual property and consumer data issues. Global cross-border merger volumes declined 1.3 per cent compared to the previous year, to $1.32tn.
True, overall Asian M&A was buoyed by a number of large deals, such as the $24.7bn acquisition of Australian property group Westfield’s US and UK assets by France’s Unibail-Rodamco. That deal made the property sector top in M&A volumes in the region. Property markets in Asia, especially Hong Kong, remain robust. Residential prices there are forecast to rise as much as a fifth next year, say consultants JLL.
The real winner of the last year was private equity. Deal volumes across Asia, including Japan, rose 45 per cent to $144bn. A big contributor there was the $15.9bn buyout of Global Logistic Properties by Hopu Investment Management and Vanke.
去年真正的赢家是私人股本。包括日本在内的亚洲地区的私人股本并购交易额增长了45%，达到1440亿美元。其中一大交易是厚朴基金(Hopu Investment Management)和万科(Vanke)斥资159亿新加坡元收购了普洛斯(Global Logistic Properties)。
Three statistics may raise concerns. In Japan, the value of companies acquired by foreign firms was higher than domestic acquisitions for only the second time ever. Last year’s average deal value of $353m, too, exceeds that of any year but one. The same holds for the number of technology deals. For all three of those metrics the previous high water mark was 2001, the twilight of the technology bubble.
A hint of indigestion to come? Maybe, but the banquet could still go on for a while. Acquisitions better aligned with Beijing’s priorities will get a better reception, likewise less politically sensitive targets. Meanwhile, economic recovery in Europe, tax cuts in the US and cheap debt everywhere suggest global M&A should top $3tn again in 2018.