|
 While low fees have helped Chinese banks to win market share from
U.S. and European counterparts in stock offerings and loans, they
figure nowhere among the 10 biggest M&A advisers by value of deals,
Thomson Reuters data up to the end of November showed.
China's biggest investment bank, CITIC Securities <600030.SS>,
ranked 11th, advising on $68.7 billion worth of deals. The number of
Chinese banks among the top 20 M&A advisers in the region fell to
seven from eight and their market share slumped to 13.8 percent from
33.7 percent last year.
The Chinese banks' struggles to emerge as leading advisers on big
ticket acquisitions have curtailed their fee income growth at a time
when the lending business is under pressure due to a slowing
domestic economy.
"When Chinese companies go global, they will tend to call on banks
and advisers who have global reach so there's still a strong role
for the international banks and advisers," said Aga Guzewska-Radzka,
consultant at Accenture Strategy in Hong Kong.
A push by Chinese state-owned enterprises and private companies to
buy assets abroad and the massive restructuring of the region's
biggest conglomerates are driving the deal-making boom. The trend is
expected to continue, bankers say.
Top deals in 2015 include the $33.7 billion combination of assets of
China's three main telecom operators as well as the $15.4 billion
purchase of British mobile phone company O2 by Li Ka-shing's
Hutchison Whampoa. (See graphic for snapshot of Asia-Pacific deals).
Chinese firms tend to advise on domestic deals, where they have
relationships on both sides of transactions, but that's less likely
in cross-border acquisitions. They also have fared better than
international rivals in financing M&A deals, where they have won
business with cheaper funding because of their sizeable balance
sheets, but that's not the case for merger advice.
"They can't compete on fees there," said the head of M&A at a global
investment bank who couldn't be named discussing the industry.
Semiconductor, Internet and telecoms transactions have accounted for
about a quarter of M&A deal value this year, a sector so far
dominated by global firms such as Goldman Sachs and Morgan Stanley.
[to top of second column] |
FIGHTING BACK
In order to win more cross-border deals, Chinese banks are adopting
several tactics. CITIC Securities, for instance, appointed Italian
banker Federico Bazzoni, formerly at Bear Stearns, to originate
deals in Europe, Middle East and Africa.
Haitong Securities, China's second-largest brokerage, completed in
October the purchase of the investment banking arm of Portugal's
Novo Banco to use it as a platform for global expansion.
Some Chinese securities firms are also teaming up with European law
firms to help source potential acquisition targets for mainland
suitors, according to a source with direct knowledge of the tie-ups
who was not authorized to discuss them publicly.
Despite the jump in deal activity to a record $1.1 trillion,
estimated fees fell 1.8 percent to $3.7 billion according to Thomson
Reuters/Freeman Consulting Co, reflecting an increase in less
lucrative corporate restructurings. Activity in Asia still accounted
for just 21 percent of global value, compared with nearly 50 percent
for deals in the Americas region.
"Where the biggest fees are going to be made are in the complex,
cross-border deals where banks that understand the situation across
different jurisdictions and geographies are needed," said John Kim,
head of M&A for Asia ex-Japan at Goldman Sachs.
(Reporting by Elzio Barreto; Additional reporting by Lawrence White;
Editing by Muralikumar Anantharaman)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
