After a record-breaking first quarter of 2016 for Chinese outbound mergers and acquisitions focused on the US and Europe, more mainland-based companies are poised to follow Alibaba in targeting assets in the fast-growing region closer to home.
The Chinese ecommerce and internet group last week agreed to take a $1bn controlling stake in Singapore-based online shopping start-up Lazada, marking Alibaba’s biggest cross-border deal.
According to a survey by law firm Herbert Smith Freehills, acquisitive Chinese corporations are poised to follow Alibaba’s lead and have marked the region as a focus for investment.
Some 47 per cent of large Chinese corporations surveyed identified their top destination for investment over the next three years as Southeast Asia, followed by 17 per cent homing in on Latin America.
Only 8 per cent of respondents said the US was a future top destination for investment.
Malaysia was flagged as the principal destination for Chinese deals, particularly its energy sector, followed by Singapore and Indonesia.
“It does represent quite a shift from what we have seen in the past,” said the firm’s Singapore-based M&A partner Nicola Yeomans, noting the recent flurry of China deals into the US. “It’s a matter of wanting to consolidate in their backyard?.?.?.?And now [Chinese companies] have the resources to do that.”
Globally, Southeast Asia was a top target for investment with 60 per cent of corporations marking the region as a first choice, according to the Herbert Smith Freehills report, which surveyed 700 senior executives from global companies with more than $1bn in annual revenues.
As growth in many emerging markets slows, several of Southeast Asia’s economies are expected to remain strong. Indonesia and the Philippines were among just a few emerging economies expected to deliver strong growth in 2016, according to Nomura.
China became the driving force for M&A in Asia-Pacific last year. Companies from the mainland struck about $50bn in regional deals in 2015, more than doubling the figure from the year before and comprising 40 per cent of the regional total, according to Dealogic.
The value of outbound Chinese deals hit $101bn in the first quarter of the year, nearly eclipsing the previous annual record of $109bn recorded over the whole of 2015. Chinese buyouts have focused on developed markets such as the US and Europe in sectors such as materials, technology and hospitality.
Deals in the quarter included the biggest Chinese takeover of a foreign company, when ChemChina, the sprawling chemicals group, agreed a $43.8bn all-cash deal to buy Swiss agribusiness Syngenta.
Southeast Asia, particularly Malaysia, has already seen a windfall in Chinese investment over the past year.
In the biggest Chinese buyout in that region last year, China General Nuclear Power Corp, or CGN, in November agreed to pay $2.3bn in cash for the energy business of troubled state fund 1Malaysia Development.
Official Chinese state media reported this week that CGN planned to set up its regional headquarters in Malaysia as a springboard into Southeast Asia.
史密夫斐尔律师事务所(Herbert Smith Freehills)的一项调查显示，收购意识较强的中国企业正准备效仿阿里巴巴，把东南亚地区列为投资焦点。