The increasing participation of Chinese private equity and other financial investors in outbound mergers and acquisitions into the U.K. has significantly and quickly improved in the recent years.
An event organized by DealGlobe, a digital mergers and acquisitions platform whose headquarters are in London, discussed trends at the 2nd China-Britain Investment and Partnership Forum on June 19, Friday, in London.
An increasing number of key Chinese acquisitions are now being done with the help of special financial companies that venture as joint investors or initiators of deals in capital and private equity funds.
This is mainly due to the fact that private equity and other financial investors are often more knowledgeable of the local markets, giving them more access to vital information and networks, thus gaining more chances of sealing deals.
A perfect example would show that a 3.75-percent stake from Ashton Martin in 2012 was taken by private equity firm, China Equity Fund, which joined forces with other co-investors who played a hand by using its knowledge to help the brand expand further into the Chinese consumer market.
The Chinese market is becoming more forward in materializing both local and international consumption and technology needs, according to John Liu, who is both a partner and managing director at China Equity Fund. He also believes that significant benefits are to be gained by international firms who choose to expand into the Chinese market.
Western firms feel more confident if they have a Chinese financial investor in on the project, Liu said. There will be more room for growth and improvement once provided with the right products and technology.
"In the process of helping Western firms grow in China, we can help them develop and manage their brand image, manage their risks and costs in China, which will effectively create more potential for them to generate profits in the future," Liu said.
A subsidiary in the U.K., processed by China Equity Fund, is also in the works so new opportunities may rise locally and so the domestic market may understand and properly tackle challengers in a more effective and timely manner.
Another equity firm, China Minsheng Investment Capital, headed by Terry Liu, believes it is lucrative to hold a wide range of portfolio that showcases overseas assets. He also, as a financial investor, stated that it is imperative that spot industries be given the proper ground to reach their maximum potential in order to take lead positions in said investments.
Terry Liu said that he is presently on his second visit to the U.K., where he has already found more potential prospects. He is hopeful that China Minsheng Investment Capital will be equipped with more strategic cooperation to materialize these opportunities.