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China Expands M&A Loan Policy to Support Minority Equity Deals

Published: Aug. 22, 2025 4:05 a.m. GMT+8

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A draft issued by the National Financial Regulatory Administration opens the door for loans supporting “equity participation” acquisition transactions.

China is overhauling its merger and acquisition (M&A) loan framework, allowing banks to finance minority stake deals for the first time in a policy shift aimed at boosting corporate restructuring and investment.

On Wednesday, the National Financial Regulatory Administration released a draft regulation on commercial bank M&A loans, opening the door for loans supporting “equity participation” transactions. These loans will support buyers acquiring stakes of at least 20% in target firms without taking control. If an investor already holds 20% or more, additional loans can be used to boost the stake further, provided each deal adds at least 5%.

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China is revising M&A loan rules, enabling banks to finance minority stake deals of at least 20% for the first time, subject to stricter bank asset thresholds (100 billion yuan for minority-stake loans).
The draft regulation divides loans into control-based (up to 70% financing, 10-year tenor) and equity-participation M&A loans (up to 60% financing, 7-year tenor).
The consultation period extends until September 20, 2025; all domestic banks must comply, with others encouraged to follow.

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Who’s Who

Eastern Airlines Industry Investment Co. Ltd.: Eastern Airlines Industry Investment Co. Ltd. received a 1.95 billion-yuan loan from Agricultural Bank of China's Shanghai branch in 2019. This funding enabled them to acquire a 15% stake in Juneyao Air, a budget airline. This deal was a notable instance of a bank financing a minority stake, even before new regulations for such transactions were formally introduced.

Juneyao Air: Juneyao Air, a budget airline, was involved in a 2019 deal where Eastern Airlines Industry Investment Co. Ltd. acquired a 15% stake using a 1.95 billion-yuan loan from Agricultural Bank of China. This transaction was a case-by-case approval, signaling a crucial step in supporting private companies during financial difficulties.

Agricultural Bank of China: Agricultural Bank of China has been involved in pioneering minority stake M&A financing in China. In 2019, its Shanghai branch issued a significant loan to Eastern Airlines Industry Investment Co. Ltd. to acquire a 15% stake in Juneyao Air. A representative from its investment banking division, Wang Junlin, has advocated for phased rollouts of broader M&A loan reforms.

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What Happened When

2008：: M&A loans were introduced in China, becoming the only credit tool in China's banking system that can directly support equity financing.

2015：: Regulators extended M&A loan maturities from five to seven years and raised the financing cap from 50% to 60%.

2019：: Agricultural Bank of China’s Shanghai branch issued a 1.95 billion-yuan loan to Eastern Airlines Industry Investment Co. Ltd. to buy a 15% stake in Juneyao Air, under special approval.

2020：: Wang Junlin from Agricultural Bank of China's investment banking division wrote that regulators could consider phased rollouts of minority-stake M&A loan policies.

By end of 2024：: The asset thresholds for issuing M&A loans—50 billion yuan for control-based and 100 billion yuan for minority-stake loans—are calculated based on asset size at the end of the previous year.

March 2025：: Regulators trialed looser rules for tech-sector M&A, allowing up to 80% bank financing and 10-year terms.

August 21, 2025：: The National Financial Regulatory Administration released a draft regulation on commercial bank M&A loans, allowing minority-stake deal financing for the first time.

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