Partner Article

Chinese buyers ready to snap up bargains

Chinese companies are seeking to make the most of current market turmoil, with almost two thirds planning to buy over the next two years, according to a survey conducted by Deloitte.

Of the companies surveyed at events held in London last week for Chinese executives, the majority have not completed acquisitions before. Despite this, a total of 62% intend to look at acquisition opportunities. Europe is the preferred region for investment, with the UK a favourite for purchases.

Paul Kaiser, associate partner and head of Corporate Finance at Deloitte in Newcastle said: “It’s clear that Chinese buyers are likely to be keen acquirers of UK businesses over the coming years. When we asked clients what the drivers behind their interests are, the desire to acquire brands and technology ranked highly, alongside the obvious benefits of growing turnover through geographical expansion. Whilst many other buyers have lost their taste for deal making, the Chinese remain hungry.

“Chinese companies are increasingly keen to buy and will brave the capital markets to fund acquisitions. Almost 60% of the businesses we surveyed intend to issue equity to fund purchases, whilst only one third intend to rely solely on existing reserves. Given the depreciation of sterling and low equity values, we expect a significant increase in Chinese backed deals in the coming months.

“Appetite is clearly high for UK acquisitions, but buyers still have a number of concerns - understanding the legal and tax frameworks in the destination country are at the top of the list. Our view is that with proper advice, these issues can be overcome and good deals can be struck.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .