China’s outbound investment already hit records the first half of the year, and a few mega-IPOs now in the works in greater China suggest the second half could get even more interesting.
Citic Securities, China’s largest publicly traded brokerage, has grabbed most of the headlines but it’s joined by another brokerage, a dam builder and a heavy machinery maker in its efforts to raise money to fund overseas expansion.
China’s Citic Securities—a financial services group which includes a brokerage, investment bank, and asset management wing— is looking to raise up to $1.94bn in a listing early next month.
Approximately 65 per cent of those proceeds will go to “used to establish or acquire overseas research platform and sale and trading networks,” according to a term sheet for the listing.
Citic has not yet identified its targets, according to the sheet, but the overseas push could include, “establishing international research teams, expanding international sale networks, developing other overseas and cross-border businesses.”
The company is already in the vanguard of Chinese financial institutions looking abroad with a set of European acquisitions in early June. Then, Citic made the first ever investment by a Chinese bank in an international brokerage by putting $374m into Crédit Agricole’s two broking businesses, Cheuvreux and CLSA Asia-Pacific Markets.
中信证券已经成为寻求海外发展的中国金融机构的先锋，今年6月初在欧洲进行了一系列的收购。当时，中信证券投资3.74亿美元收购了法国农业信贷银行(Crédit Agricole)旗下两家证券经纪公司——盛富证券(Cheuvreux)和里昂证券亚太市场(CLSA Asia-Pacific Markets)，这是中国的银行首次投资于一家国际券商。
Haitong Securities, another mainland group, is also planning to raise money to fund overseas expansion.
Chinese outbound investment has risen steadily for the past nine years to hit $68.8bn last year, according to government reports cited by Xinhua, the Chinese news agency. Non-financial Chinese outbound investment, which rose 25.9 per cent in 2010 to $60.2bn, accounted for the bulk of this rise.
Sinohydro Group in Beijing is one such group. China’s biggest dam-builder already has 261 projects underway in a mind-boggling 55 countries and wants to raise $2.7bn in a listing in Shanghai next week. The company is in talks to launch projects or make acquisitions in countries from Costa Rica to Cambodia.
It gets bigger.
Sany Heavy Industries, a construction equipment maker run by China’s richest man is looking to raise up to $3.33bn, Hong Kong’s largest IPO since Glencore’s $10bn dual listing in Hong Kong and London. The lion’s share of that will go towards expanding its manufacturing facilities, but 7.2 per cent has been earmarked for expanding its overseas operations.
中国首富旗下的工程机械制造商三一重工(Sany Heavy Industry)正寻求在香港筹资至多33.3亿美元，这是自嘉能可(Glencore)在香港和伦敦两地上市筹资100亿美元以来香港最大规模的IPO。该公司募资所得大部分将用于扩大生产设施，但7.2%的资金已被指定用于扩大海外业务。
But don’t think that overseas is the only frontier left for China companies to conquer.
Many of China’s second and third-tier cities are bigger than the entire country of Costa Rica (4.6m, just over half the population of Hong Kong). Sun Art, for example, raised $1.1bn earlier this year to fund an expansion of its network of hypermarkets in China’s second-tier cities where competition is less fierce than in Beijing and Shanghai.
So while international deals might grab headlines, untapped demand at home remains an equally potent factor behind China’s corporate growth.