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China's open borders, stimulus efforts could revive deal, advisers say

By Scott Murdoch, Yantoultra Ngui and Roxanne Liu

SYDNEY/SINGAPORE (Reuters) – China reopening borders and renewed focus on boosting sluggish economy sours deal outlook In the light of day, bankers are starting to take an interest in mergers, acquisitions and financing in the world’s second-largest economy.

Prospects for a deal recovery have been undermined by the COVID-18 pandemic as Chinese policymakers try to restore confidence and growth in the private sector The impact of the epidemic and a sweeping regulatory crackdown.

While consumer, retail and travel-related companies are expected to bounce back after a nearly three-year lockdown, sectors linked to strengthening China’s economic outlook will be central to deals this year, advisers said.

“We’re seeing strategic industries, core industrial technologies, automation, semiconductor-related becoming the focus of outbound activity,” said Mark Webster, partner and Singapore head of BDA Partners, an Asia-focused firm. Investment Banking Advisor.

“Healthcare opportunities are proving to be of interest both at home and abroad, including in Southeast Asia,” he added. “Geographically, Indonesia in particular has attracted a lot of attention.”

Australia has also emerged on China’s radar, hoping that diplomatic relations between the two countries will ease. In such a deal, a joint venture between Tianqi Lithium and IGO is bidding for lithium miner Essential Metals.

Outbound M&A involving Chinese firms halved last year to lowest point since , Refinitiv data showed to a nine-year low.

Capital market deals by Chinese companies fell 24% over the same period, according to Refinitiv data. The downturn has sapped fees earned by Wall Street banks over the past few months and forced some of them to cut jobs, mostly related to the China deal.

“We’ve received more requests,” said Li He, a capital markets partner at the law firm Davis Polk, who traveled to Beijing to meet clients the day after China’s borders reopened on Jan. 8.

“It’s not just because of travel, people think reopening is good for the economy, capital markets and deal execution,” he said.

In the past 18 For several months, due to proposed rule changes and the tech industry struggling with a slew of new regulations, the past 19 Overseas Chinese IPOs have come to a grinding halt for several months.

Travel from Hong Kong to mainland China has been severely restricted for about three years until borders reopen – a pair of advisers It is a huge change for them, who visit ips to China on a weekly basis is already common.

According to Bagrin Angelov, the opening of the borders may It will lead to an increase in transactions involving private equity funds in the later period of , the head of China’s cross-border mergers and acquisitions of China Investment Bank CICC. , lower than 57 a year ago ).$8 billion, according to Pitchbook data.

“Six months or a year before a deal, private equity firms have begun meeting with potential buyers in an attempt to Generating interest and trying to understand who might be interested,” said Beijing-based Angelov.

“For them, certainty is very important, and they really need to meet buyers early on,” he continued “Because of the opening up, we expect an increase in overseas deals selling private equity to Chinese buyers. ”

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