China Is Struggling to Offload Foreign Acquisitions, From Yachts to Pizza
(Bloomberg) — China Inc. is struggling to offload overseas businesses and the accompanying debt in an increasingly volatile market.
In just a few weeks, companies from yacht makers to luxury clothing and pizza outlets — acquired by Chinese firms in recent years — have either scrapped planned IPOs or sought alternatives to reduce their debt piles.
Ferretti SpA, the Italian superyacht-maker controlled by China’s SHIG-Weichai Group, shelved its planned Milan listing last week, citing weak market conditions. Shandong Ruyi Technology Group Co. Ltd., which spent over $4 billion on purchases including U.K. trench-coat maker Aquascutum, introduced a local state-owned firm as its second-largest shareholder amid rising pressure to repay debt.
Chinese firms started selling off assets two years ago when the government tightened curbs on capital outflows and stepped up scrutiny on foreign acquisitions. Geopolitical factors from the U.S.-China trade war to Brexit and protests in Hong Kong and Chile are hurting sentiment in dealmaking on uncertain outlook.
“It’s a big process of adjustment,” Mark Webster, a managing director at investment banking adviser BDA Partners in Shanghai, said in a phone interview. “Some Chinese companies made overseas acquisitions at the top of the cycle and ended up overpaying for assets that did not make a lot of strategic sense. They are now finding it challenging to offload those businesses at fair values.”
Beyond luxury, sectors less sensitive to economic cycles are also having issues. PizzaExpress Ltd. hired a financial adviser to prepare for debt talks with its creditors, people familiar with the matter said earlier this month. The iconic U.K. casual dining chain has been struggling with its domestic market at a time when it’s expanding in China after its acquisition by Chinese private equity firm Hony Capital in 2014.
The volume of Chinese outbound deals was at $59 billion so far this year, a 13% drop from a year earlier, according to data compiled by Bloomberg. It’s a far cry from the peak of such M&A activities in 2016, when China National Chemical Corp. agreed to buy Swiss agrochemical maker Syngenta AG for $43 billion.
China’s HNA Group Co. Ltd., once among the most aggressive in foreign acquisitions, found itself stymied in an attempt to sell out of plane lessor Avolon Holdings Ltd. for a valuation of about $8.5 billion.
“Bigger financial and regulatory hurdles and the global geopolitical instability make it even harder to get deals done now,” Webster said.
Contact editor Yang Ge (email@example.com)
Sep 25 06:34 PM
Sep 25 05:21 PM
Sep 25 04:57 PM
Sep 25 04:50 PM
Sep 25 04:49 PM
Sep 25 01:26 PM
Sep 24 05:25 PM
Sep 24 05:02 PM
Sep 24 04:50 PM
Sep 24 04:42 PM
Sep 24 04:35 PM
Sep 24 04:28 PM
Sep 24 01:00 PM
Sep 23 06:43 PM
Sep 23 06:37 PM
- 1Cover Story: China Moves to Alter Medical Coverage of 300 Million
- 2China Adds Three Areas to Its Ever-Expanding List of Free-Trade Zones
- 3In Depth: China Plays Kingmaker in Nvidia’s $40 Billion Bid for Arm
- 4In Depth: Will Huawei Become China’s Tesla Challenger?
- 5HSBC Stock Pummelled by Financial Crimes Report, China ‘Unreliable Entity’ List
- 1Power To The People: Pintec Serves A Booming Consumer Class
- 2Largest hotel group in Europe accepts UnionPay
- 3UnionPay mobile QuickPass debuts in Hong Kong
- 4UnionPay International launches premium catering privilege U Dining Collection
- 5UnionPay International’s U Plan has covered over 1600 stores overseas