By Zhang Ran (China Daily)
Updated: 2007-11-19 07:27

The chairman believes the M&A market itself is encouraging enough as the market size for overseas investment is "exciting".

Houlihan Lokey was involved in a number of M&A deals for Chinese companies investing overseas in 2007, including acting as financial advisor to NASDAQ-listed Harbin Electric in its purchase of Harbin Taifu Electric.

The investment bank also assisted a Chinese wire producer to acquire a leading US wire maker to become a dominant global player in the industry.

The time Houlihan Lokey arrived in China looks propitious. Large enterprises, motivated by a global development strategy and backed by plentiful funds raised through the booming capital markets, see outbound investment an inevitable choice.

Recent deals include that by Industrial and Commercial Bank of China, which said in October it will spend $5.46 billion to take a 20 percent stake in Standard Bank Group Ltd, Africa's largest bank. China Minsheng Banking Corp has announced that it may buy a stake in UCBH Holdings Inc, the biggest bank serving the Chinese community in the United States.

Zukin's sees industrials, environmental technology and consumer businesses as the three most promising sectors for outbound investment.

One thing Chinese companies need to pay attention to in outbound investments is that the M&A processes in the US and Europe move quickly. It generally takes six to nine months from initiating to closing a deal, Zukin says.

"Chinese companies are learning fast and they are shortening the approval process," the chairman says.

He notes that Chinese companies also need to be careful that they are not overpaying for companies.

"Companies in China grow very fast and their valuations on the stock market are high. But Chinese companies should not use the Chinese valuation matrix on a foreign company," he warns. "That could be a big risk."

   1 2   

   1 2