A record US$99 billion worth of mergers and acquisitions deals was sealed in China in 2006, the rating agency said. China growing M&A market boosted the value of transactions in Asia Pacific, excluding Japan, to a record high of US$385.4 billion, a 50 percent jump over the previous year.
Most of the mergers and acquisitions deals in China in the past year targeted banks, metals, oil and gas, medical and technology companies. Deals among China companies contributed to more than half of the transactions last year.
Foreign funds flooded into China mergers and acquisitions market last year as the government opened more sectors to overseas investments. Even in the banking sector, where overseas players can only hold a minority stake, several acquisitions were often heard last year. Overseas investors can hold a combined 25 percent in a domestic lender while a single investor can only own 20 percent.
For instance, Banco Bilbao Vizcaya Argentaria SA, the second biggest financial group in Spain, agreed to pay 501 million euros (US$650 million) for a five percent stake in China City Bank.
"Foreign investors are likely to be drawn to a wide range of sectors in 2007, such as in the retail, service, and consumer goods markets, where competition is intense," said the report. "Some of these sectors are viewed as less strategic to China and are therefore less protected, with foreign investors able to buy a large or controlling shareholding."
For this year, foreign companies seeking mergers and acquisitions deals in China will look at key factors including the government's push for ailing state owned firms to go into the private sector, the potential lucrative returns in a fast rising market and low cost manufacturing opportunities, the report said.
This article was researched and produced by Posicionarte for China Trading Company , 2007
Author Bio:
Eric Castro Mattas, is chief editor of Posicionarte researching and producing articles for China Trading Company. If you need products from China please visit www.chinatrading-company.com