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Business deals

Chinese cash pushes Southeast Asia's M&A tally to record high

Belt and Road triggers flurry of deals in logistics and transport sectors

  © Reuters

BANGKOK -- Southeast Asia is seeing an unprecedented spate of mergers and acquisitions, and Chinese businesses are responsible for much of the deal-making.

The value of M&A deals in the region hit $89.1 billion last year, according to Mergermarket. That is the highest figure since the London-based research company began tracking the tally in 2001.

The number of deals worth $5 million or more came to 431, up 54% from 2016.

Chinese buyers are eager to snap up Southeast Asian targets, motivated by President Xi Jinping's Belt and Road infrastructure investment plans. Their deals were valued at $33.8 billion, up fourfold from 2016. The amount accounted for almost 60% of takeovers in the region by foreign entities.

Nearly 70% of Chinese investment was targeted at logistics and transportation.

Last July, a consortium of five Chinese companies, including Bank of China's investment unit, won a bid to acquire Singapore-based warehousing company GLP, formerly Global Logistic Properties. The deal, worth 16 billion Singapore dollars ($11.9 billion at the current rate), was one of the largest Chinese acquisitions last year.

In October, Chinese conglomerate HNA Group bought more than 90% of Singaporean logistics operator CWT.

These Chinese buyers want logistics bases in a region where consumers are expected to rapidly shift to online shopping. 

As for deals in the transportation sector, a consortium led by Chinese conglomerate Citic Group agreed in October to acquire a 70% stake in the strategic port of Kyaukpyu, in Myanmar's western state of Rakhine.

China's government aims to stem capital outflows, yet there is no sign the rush of investment in Southeast Asia will abate.

From the Southeast Asian perspective, foreign direct investment is crucial for maintaining economic momentum. And China looks likely to remain a key source of those funds.

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