China Global M&A Push, 2005 ~ Nowadays

[ahojunk]

| Tue Feb 14, 2017 | 6:12pm EST
China Fosun's tourism unit eyes fundraising for overseas M&A: president

FILE PHOTO - Club Med banners blow in the wind beside the swimming pool at the Club Med Punta Cana vacation resort in the Dominican Republic, March 3, 2016. REUTERS/Charles Platiau/File Photo

By Julie Zhu and Elzio Barreto | HONG KONG

China's Fosun is in talks with investors to raise funds for its tourism unit's planned overseas acquisitions, looking to build up the business even as regulators closely scrutinize outbound transactions, the unit's president said.

Fosun Tourism & Culture Group, a key profit growth business for China's largest private conglomerate, is in discussions with domestic and international investors for its first round of capital raising to boost overseas investments ahead of a public listing, said Qian Jiannong.

The unit includes resort operator Club Med, a Chinese joint venture with tour operator Thomas Cook Group (TCG.L) and the ultra-luxury Atlantis Resort Hotel in the southern Chinese seaside city of Sanya.

"We will increase (overseas) investment in the next few years and the area or regions that are most important for us are really not only where Chinese people have an interest in, but also the global regions where the tourism business is attractive," Qian told Reuters in an interview.

"We have been in talks with many companies since 2010. Currently, we are also talking to a few companies, but I can't comment on any potential deals and projects at this stage."

After a record year for outbound mergers and acquisitions by Chinese companies in 2016, Beijing has placed curbs on capital outflows to reduce pressure on the yuan currency, which fell to eight-year lows in December.

That won't present a hurdle to Fosun's growth ambitions, according to Qian.

"Fosun, as a global enterprise, won't be affected by such restrictions because we have enough offshore capital to conduct M&A deals overseas," he said.

"If it's an overseas target, we will definitely use our offshore platform to acquire it. We have units incorporated abroad and at home."

Asked about a timeline for a listing, Qian said none had been set for Fosun Tourism. But Fosun (0656.HK), controlled by billionaire co-founder Guo Guangchang, encourages its different units "to go public at an appropriate time", he said.

Tourism is key to China's shift toward a more consumer-driven economic growth, with companies including Fosun, Dalian Wanda Group Co and HNA Group increasing their bets on the sector. The domestic tourism industry raked in 3.9 trillion yuan ($567.3 billion) in 2016, which Beijing wants to rise to 7 trillion yuan by 2020, official news agency Xinhua has said.

China will account for 14 percent of total global outbound travel by 2020 from 10 percent now, brokerage CLSA has forecast, with the number of Chinese overseas trips rising to 200 million a year at the end of the period from 125 million in 2015.

For Fosun, the tourism unit is part of its "happiness" segment, which saw profits for the six months ended June 2016 soar 76 percent to 365.4 million yuan, surpassing the 25.5 percent increase in the conglomerate's health segment and the 13.7 percent gain in the wealth management segment over the same period.

Only the investment and property development segments, which saw profits double and rise more than 600 percent, respectively, experienced faster growth.

Club Med, which Fosun bought in 2015, plans to open at least 20 new resorts in China over the next few years, Qian said without specifying the timeline for the buildup.

The tourism unit has an inhouse investment team of 26 people scouring the world for leisure tourism targets including hotel brands, travel agencies and theme parks, he said.

"Definitely we still have the investment teams in our new group and they're still searching some new targets to buy and also find some companies that maybe we won't merge with or acquire them, but we can have very good cooperation with them," Qian said.


(Reporting by Julie Zhu and Elzio Barreto; Editing by Muralikumar Anantharaman)

 

[ahojunk]

Geely seeks stake in major Malaysian automaker
2017-02-17 21:46:44 CRIENGLISH.com Web Editor: Shi

The brand marks of Geely and Proton [Photo: Sina.com]​

Geely, the Chinese auto company that acquired world famous Volvo in 2010, is looking to buy over half of Proton, the biggest car producer in Malaysia, according to a Reuters report.

The South China Morning Post adds that Renault and PSA, both based in France, will go up against the Chinese company to clinch the deal.

Geely has declined to comment on reports.

If the deal is confirmed, it will be seen as a major move by the automaker to regain overseas markets after a recent retreat in the international market.

Geely's major overseas markets are based in Northern Africa, Middle East and Russia. Due to unstable local conditions, the company has suffered from loses since 2013.

At the same time, analysts from Frost & Sullivan based in the U.S. have estimated that ASEAN countries, including Malaysia, with a population of 623 million in total, will become the sixth largest auto market by 2018.


About Proton

Car produced by Proton [File photo: Xinhua]​

Proton rose to fame worldwide in 1996 after acquiring sports car brand Lotus and had been a leading brand domestically in Malaysia.

But the company started to lose market share in the last ten years, as Japanese brands gained popularity thanks to low prices and smaller car models.

DRB-HICOM, the parent company of Proton, announced last September that they would sell over half of their shares in Proton.

The announcement was aimed at look for a partner to help the auto brand regain domestic market as well as expand in other Southeast Asian countries and eventually the global market.

Further information on the deal will be announced in April by DRB-HICOM.

 

[ahojunk]

State Grid to own 100% of CPFL
2017-02-18 11:32 | China Daily | Editor: Wang Fan

A robot helps check power transmission facilities in Quanjiao county, Anhui province.
(Photo/China Daily)

Move expected to result in more business and higher exposure in South America

The State Grid Corp of China - the world's biggest utility company by revenue - said it will launch a tender offer to buy the remaining shares it does not already own in CPFL Energia SA, the Brazilian power group said in a securities filing.

The State Grid said on Thursday it would pay 25.51 reais ($8.35) per share for the balance in CPFL.

The latest move comes after the Chinese company last month acquired a controlling 54.64 percent stake in CPFL Energia and its subsidiary, CPFL Energias Renovaveis SA, for 17.36 billion reais ($5.68 billion).

According to the filing issued by CPFL, the largest power distributor in Brazil, the State Grid plans to delist CPFL from the New York and Sao Paulo stock exchanges.

Bloomberg Intelligence senior analyst Joseph Jacobelli said with the purchase, the State Grid would enjoy better synergies overall with more business and exposure in Brazil.

The State Grid did not reply to questions about the buyout, but said when taking the controlling stake, the deal would further extend its business to power transmission, distribution, new energy power generation and electricity sales.

It said last month that the acquisition would help it to introduce its new energy power generation technology and management experience in the South American country.

Now running most of the country's electricity distribution network, the State Grid has other projects in Brazil as well.

It earlier landed ultra high-voltage electricity transmission projects in Brazil, planning to build transmission lines from the huge Belo Monte hydroelectric dam in the Amazon area to the populous center-south region.

The first phase of the Belo Monte UHV DC Transmission Project is expected to start commercial operations by February 2018, Li Lequan, deputy director of State Grid International Development Co Ltd, SGCC's subsidiary for global operations, said earlier during a news conference.

Brazil's power sector is undergoing a wave of consolidation as several companies struggle financially amid Brazil's economic recession since middle 2014.

 

[TaiShang]

Chinese group eyes Four Seasons Resort
China Daily | Updated: 2017-02-18

A pianist and an employee are seen at work at luxury hotel Four Seasons George V in Paris. [Photo/Agencies]

A consortium of Hong Kong-based private equity fund Gaw Capital Partners and individuals including Pony Ma, founder of China's Tencent Holdings Ltd, is looking to buy the Four Seasons Resort in Bora Bora, French Polynesia, Basis Point reported on Wednesday.

The consortium is seeking a loan of up to 100 million euros ($105.7 million) to buy the resort from French national Thierry Barbion, Thomson Reuters publication Basis Point reported, citing two sources with direct knowledge of the matter who did not want to be named.

Others in the consortium include Tencent President Martin Lau and Chief Strategy Officer James Mitchell, as well as Brandon Beck, co-founder of Riot Games, a Tencent subsidiary and developer of online game League of Legends, Basis Point said.

Also in the consortium are Neil Shen, founding and managing partner of venture capital firm Sequoia Capital China, and Askar Alshinbayev, managing partner of private equity firm Meridian Capital.

Deutsche Bank is acting as coordinator, mandated lead arranger and facility agent for the loan. Swansea King, a British Virgin Islands-incorporated entity, will act as borrower, Basis Point said.

The size of the five-year senior secured term loan could either be up to 100 million euros or 55 percent of the resort's latest gross development value, whichever is lower, the report added.

Gaw Capital - whose hotel portfolio includes InterContinental in Hong Kong, Hyatt Regency Hotels in Japan's Osaka and Vietnam's Danang - said it was invited to bid on the Bora Bora resort but that it was "too early to comment".

Tencent, Sequoia Capital and Four Seasons were not immediately available for comment when contacted by Reuters.

Reuters in Hong Kong

 

[TaiShang]

CNPC buys stake in UAE oil company
By ZHENG XIN | China Daily | Updated: 2017-02-21

A worker secures a clamp as he guides a gas pipe on a drilling tower during operations at the Boekelermeer gas storage site, operated by Abu Dhabi National Energy Co in Alkmaar, the Netherlands. [Photo / Agencies]

Chinese companies have secured a 12 percent stake in Abu Dhabi National Oil Co's onshore oil concession, hoping to further participate in the development of United Arab Emirates' energy sector.

China National Petroleum Corp signed an agreement with the Abu Dhabi oil company on Sunday for an 8 percent stake, paying 6.5 billion dirhams ($1.77 billion), followed by the Shanghai-based CEFC China Energy Co Ltd, which obtained a 4 percent stake.

CNPC and CEFC are the venture's new Asian partners, joining Japanese and South Korean companies alongside BP Plc and Total SA. BP signed on to the project in December, and Total in January 2015.

The onshore concession is operated by the Abu Dhabi Company for Onshore Petroleum Operations.

Asian companies are newcomers in the region, while European and US counterparts have pumped oil in the Middle East for more than a century.

"If you're Abu Dhabi and looking for demand growth, China is the future and its demand is going to continue to grow," Chris Gunson, a Dubai-based lawyer at Amereller Legal Consultants, was quoted as saying by DealStreetAsia, a Singapore-based news and intelligence platform.

"For the big buyers in Asia, the logical source of that future supply is the Gulf," he said.

CEFC has also made a crude oil supply agreement with ADNOC, providing more than 13.2 million metric tons of high-quality crude annually to the Chinese market.

Ye Jianming, chairman of CEFC, said the deal enables the private company to secure long-term and stable onshore oil rights and interests for the company to engage in the exploration of upstream oil and gas in Abu Dhabi.

"This agreement enhances our ability to integrate ADNOC's onshore oil reserves with our storage facilities in China and Southeast Asia," said Ye.

Zhou Dadi, a senior researcher at the China Energy Research Society, said the deal would help unlock growth opportunities for both sides, helping Abu Dhabi and CEFC to further explore upstream exploration and ensure oil reserves.

He said the deal will help CEFC boost its oil supply capacity while helping China to get more involved in determining the global oil price.

CEFC China is among the 10 largest private companies in China and has a focus on energy and financial services.

Xu He contributed to this story.

***

 

[TaiShang]

HNA buys stake in Deutsche Bank
By ZHU WENQIAN | China Daily | Updated: 2017-02-21

Crew members get off a plane of Hainan Airlines, a subsidiary of HNA Group Co, after landing at Nansha Islands. [Photo provided to China Daily]

Move aims to expand finance business and diversify operation structure

Chinese conglomerate HNA Group is seeking to expand its finance business and further diversify its operation structure after taking a stake in Deutsche Bank, the first Chinese investor to take a major stake in the bank.

Starting from Feb 15, HNA, the parent behind the country's largest private commercial airline, holds 3.04 percent of Deutsche Bank, according to the statement of the German bank.

HNA's stake is worth over 700 million euros ($740 million) at current share prices.

The purchase makes HNA the fourth-largest shareholder in the German lender, after BlackRock, which holds 6.07 percent, and two sovereign wealth funds that are controlled by Qatar, which together hold 6.1 percent.

In January, HNA expanded its global asset management business by acquiring a majority stake in New York-based SkyBridge Capital, an alternative investment firm founded by Donald Trump's adviser Anthony Scaramucci.

Pang Guoteng, an analyst at Morning Whistle Group, a Shanghai-based internet platform that helps Chinese capital conduct cross-border investment and overseas mergers and acquisitions, said the move has further strengthened the finance business of HNA.

A few years ago, the finance business was a short board of the company, when it failed several times to get a banking license.

HNA's business now includes aviation, finance, real estate, logistics, hospitality, tourism and ecological technology.

HNA Capital, a financial group under HNA Group, has operations in more than 100 countries, and it deals with businesses include leasing, insurance, internet banking, securities and futures. Its total assets have reached over 340 billion yuan ($49 billion), according to the company.

A spokesperson at HNA said Deutsche Bank is very attractive in terms of investment, and HNA is willing to stay as a long-term shareholder in the bank.

HNA said it could buy further shares in Deutsche Bank, and keeps its stake below 10 percent, Xinhua News Agency reported.

The German lender said it welcomed in principle any investor with a long-term view, Reuters reported.

As the largest commercial bank in Germany, Deutsche Bank has suffered losses for two years in a row, and its share prices have been lukewarm.

German media regarded the deal a good move and said Deutsche Bank has been doing business in Asia for many years, and it's natural for Asian investors to inject capital in the bank.

 

[TaiShang]

Takeover activity set to pick up this year
By CAI XIAO | China Daily | Updated: 2017-02-24

A total of $532 billion was raised in the Chinese private equity and venture capital market from 2006 to 2016, according to a report issued on Thursday by PricewaterhouseCoopers. [Photo/China Daily]

Chinese private equity and venture capital-led merger and acquisition activities will be more active in 2017 after their deal value set a new record in 2016, according to a report issued on Thursday by PricewaterhouseCoopers.

"As the pressure to invest large sums of available funds increases, we expect an increase in M&A activities led by PE/VC," said Amanda Zhang, PwC's North China private equity group leader.

A total of $532 billion was raised in the Chinese private equity and venture capital market from 2006 to 2016, it showed.

The report also said that total China PE/VC-led deal values increased 22.5 percent year-on-year to reach $223 billion in 2016, accounting for 73 percent of global PE/VC deal values last year.

"The strong growth was driven by the participation of 'big asset management' investors who dominated the list of large transactions," said Nelson Lou, PwC Beijing advisory leader.

"Chinese PE/VC funds' overseas M&A activities have taken off rapidly, becoming a force to be reckoned with. Investors pursued overseas assets 'with a China angle', aligning with their growth strategies, while focusing on geographical and currency diversification," said Lou.

In terms of deal volumes, high technology remained the PE funds' most favored sector in 2016. In terms of deal value, PE investment in real estate driven by big asset management and outbound M&A, nearly doubled in 2016.

Driven by a substantial increasing amount of renminbi fundraising, $72.5 billion was raised by China PE and VC in 2016, a 49 percent growth over 2015, while the scale of global PE and VC fundraising fell to $336 billion in 2016 from $347 billion in 2015

"Traditional PE and VC fundraising was dominated by the renminbi for the first time, with a plethora of medium and small renminbi funds raising money for domestic investment and A share-related activities and exits," said Ni Qing, PwC China private equity group funds audit partner.

The report also said the backlog of projects awaiting exits continues to face challenges. Although IPO exits reached a new height with 165 deals, a 38.7 percent increase from last year, M&A exit deals fell unexpectedly to the lowest level in four years.

 

[ahojunk]

China’s outbound investment maintains relatively high growth
By Zhang Huizhong from People's Daily (People's Daily Online) 13:15, February 26, 2017

China reported a non-financial outbound direct investment (ODI) of 53.27 billion RMB ($7.73 billion) in January this year, reaching 983 overseas enterprises in 108 countries and regions, said the latest data released by the Ministry of Commerce (MOC).

Compared with last year, China's total outbound investment, with an optimized structure, maintained a relatively high growth.

Of those investments, Chinese companies have especially invested more in the real economy and emerging industries, and increased the share of manufacturing and information service.

Data showed that in January, the year-on-year growth of ODI in manufacturing industry reached 79.4 percent, and that in information transmission, software and information technology services stood at 33.1 percent.

The MOC added that 37.5 percent of China's total ODI was invested in manufacturing industry while 11.5 percent went to information transmission, software and information technology services, up from 13.4 and 5.6 percent respectively in the same period of last year.

In the given period, Chinese companies inked a considerable amount of big projects, of which 50 contracts have a value of over $50 million. These big deals, with a total value of 9.46 billion dollars, accounted for 79 percent of newly signed agreements by Chinese companies.

The “Belt and Road” initiative was a strong boost to cooperation between Chinese and foreign firms. Since the plan was proposed by Chinese President Xi Jinping in 2013, it has been supported by over 100 countries and international organizations, with more than 40 of them having signed cooperation agreements with China.

Despite anemic growth of global market demand, China's combined imports and exports with countries along the route topped 6.3 trillion yuan (about $914.2 billion) in 2016, up 0.6 percent from 2015, then China’s Commerce Minister Gao Hucheng said at a press conference held on 21st February.

Contracts with total valued of $126 billion were signed by countries along the Belt and Road in 2016, up 36 percent from the previous year, Gao added.

China maintained robust investment relations with countries along the route this January. During the period, outbound non-financial investment to countries involved in the initiative accounted for 10.6 percent of the total ODI in the month, up 2.1 percent from that in 2016.

Chinese businesses helped build 56 economic and trade cooperation zones in about 20 countries along the Belt and Road with a combined investment surpassing $18.5 billion, generating nearly $1.1 billion in tax revenue and about 180,000 jobs in those countries, Gao said.

Gao continued that the Belt and Road forum for international cooperation scheduled to be held in Beijing in May will be the first high-level international forum on the “Belt and Road” initiative.

Observers believed the “Belt and Road” initiative has served as an important platform and a carrier for China to participate in global economic governance, and it nurtures a broader prospect for industrial cooperation in the future.

 

[Shotgunner51]

HNA takes stake in Deutsche Bank
2017-02-20 09:15Global Times Editor: Li Yan ECNS App Download

China's HNA Group has taken a stake of just over 3 percent in Deutsche Bank, and it said on Friday that it could buy further shares in the German lender.

"We have the fullest confidence in Deutsche Bank's management and will keep a close watch on its future steps and lend support as a shareholder where appropriate," a spokesman for HNA said.

The aviation and shipping company intends to keep its holding below 10 percent, he said.

HNA's stake of 3.04 percent, worth about 750 million euros ($796 million) at current share prices, makes it the bank's biggest shareholder after Qatar, which has close to 10 percent of the stock via two sovereign wealth funds, and BlackRock, which owns 6.1 percent.

Deutsche Bank said it welcomes in principle any long-term investor.

 

[TaiShang]

CC Land to buy London's 'Cheesegrater'
China Daily, March 2, 2017

Chinese firm CC Land confirmed it is in talks to buy the tallest building in City of London for 1.02 billion pounds ($1.26 billion), in the largest Chinese investment in the United Kingdom's real estate market if the deal is completed successfully, after a report in the Daily Telegraph.

Hong-Kong listed CC Land is controlled by Chinese property magnate Cheung Chung-kiu, one of the largest players in the real estate market in Chongqing. The tower the company seeks to buy is 122 Leadenhall Street, widely known as the "Cheesegrater" for its shape.

CC Land is seeking to buy out both British Land and Canada's Oxford Properties, joint venture partners in the 225-meter-high building, according to the report.

British Land, which owns 50 percent of the Cheesegrater said it and Oxford Properties, which owns the other 50 percent, were in advanced discussions regarding the possible sale of their interests in the Leadenhall Building.

"It is not certain that these discussions will lead to a sale of the building," according to British Land.

CC Land said in an announcement on Wednesday that the board of the company noted that there has been media coverage in relation to a potential acquisition of the Leadenhall Building, and "the board would like to inform the market that the company is in advanced discussions with respect to the potential acquisition of the Leadenhall Building and the company will make a further announcement if and as appropriate".

No formal agreement has yet been entered into with respect to the potential acquisition, so the potential acquisition may or may not materialize, the announcement said.

In January, CC Land acquired One Kingdom Street in Paddington for 292 million pounds.

Analysts said that Chinese investors have been actively spending on properties in London since the beginning of the year, which reflects their intention to diversify their asset portfolio globally, particularly when prices in the UK market are at a level they find adequate.

According to research by Savills, a London-based real estate services provider, Chinese investors spent 805 million pounds on property in London's West End in January.

 

[TaiShang]

HNA buys key stake in German airport
By Zhu Wenqian | China Daily | Updated: 2017-03-03

A Ryanair aircraft parks on the tarmac of Frankfurt Hahn airport 100 kilometers (60 miles) west of Frankfurt, Germany, June 6, 2016. [Photo/Agencies]

Move is latest in series of acquisitions by group to step up global expansion

Chinese conglomerate HNA Group has acquired a majority 82.5 percent stake in Hahn airport in western Germany, its owner, the state government of Rheinland-Pfalz, said in a statement on Wednesday.

This is the first acquisition of an overseas airport by HNA, the parent of China's biggest private commercial airline.

It is also the latest in a succession of acquisitions mounted by the company of various international assets, in order to step up its global expansion.

The statement did not disclose the financial details of the deal for Hahn, a former military base now mainly used by budget carrier Ryanair.

A source familiar with the matter said the purchase price was around 15 million euros ($16 million), Reuters reported.

Hahn airport, located 120 kilometers from Frankfurt, is the second-biggest airport in the city and it has been losing money in recent years. In 2015, it lost around $17 million.

The state government said in the statement that it had decided to greenlight the sale of the state's 82.5 percent stake in the airport and it would now move forward on signing the contract.

The remaining stake in the airport is owned by the neighboring state of Hesse.

"It's hard to understand and comment on the plan and intentions behind HNA's acquisition of a foreign airport," said Zou Jianjun, a professor of the department of economic management at the Civil Aviation Management Institute of China.

He said that unlike airlines, there was generally little short term potential to turn a loss-making airport into profits and there were very few Chinese airlines acquiring overseas airports.

Differing from Frankfurt airport, Hahn has a license to operate 24 hours a day, which is an attractive feature for cargo flights. The freight volumes of Hahn airport make it the fifth busiest in Germany.

HNA had made a bid for the acquisition－together with several other bidders such as local German group ADC－and appears to have won out due to its rich overseas investment experience.

Last year, it was reported that Shanghai Yiqian Trading Co was in the frame to buy the airport for $10 million, but the deal was blocked by the local German government.

HNA's international business now spans aviation, finance, real estate, logistics, hospitality, tourism and ecological technology.

 

[TaiShang]

China 'glass king' to continue US expansion

Wednesday, March 1, 2017

China's largest auto glass manufacturer, Fuyao Glass, will press ahead with investments worth about $1 billion in the United States this year despite criticism at home amid growing China-US tensions, the company's chairman said. The company also expects to invest a further $130 million in Germany and Russia this year. Fuyao chairman, billionaire Cao Dewang, whose company is already the biggest investor in Ohio, told Reuters he planned to create about 4,500 jobs by setting-up plants in Ohio, Illinois and Michigan this year. The move has sparked outrage on Chinese social media, with netizens urging the government to stop Cao from "running away" at a time when US regulators are stepping up scrutiny of Chinese buyers and new US President Donald Trump has strongly criticized Chinese trade practices.

 

[Shotgunner51]

Chinese Companies Set Sights on Oil Assets
By Karl Wilson in Sydney | China Daily Europe | Updated: 2017-03-03 07:57

Fossil fuels may be out of fashion, but sales of foreign-owned resources across Asia are expected to attract a broad mix of bidders. Some of Asia's biggest foreign-owned oil and gas assets, worth more than $40 billion, are to be sold this year, with potential bidders expected to include Chinese energy companies and sovereign funds.

Assets to be sold include US-based Chevron's $1 billion (0.94 billion euros; 0.81 billion) joint ownership stake with China's state-owned CNOOC in an offshore oil field.

One of the world's biggest oil and gas companies, Chevron plans to sell about $10 billion worth of assets, including natural-gas assets in Thailand, by the end of the year.

A worker checks one of CNOOC's deep-water drilling platforms in the South China Sea.
China's top offshore oil and gas producer said it is scouting for potential acquisition opportunities among
Chevron's $1 billion in assets that were put up for sale recently. Xinhua​

CNOOC, China's top offshore oil and gas producer, has said it is scouting for potential acquisition opportunities, although a climate of low oil prices is making it difficult to agree on price.

This comes at a time when many countries in Asia are adding renewable resources, such as wind and solar, to their energy mix. While renewables are gaining traction, oil and coal-fired power stations will be around for some time.

Data from financial markets platform Dealogic show that from January to February this year, Chinese oil and gas companies were involved in $6.98 billion worth of mergers and acquisitions.

BP, Chevron, Royal Dutch Shell and other oil and gas majors have been slowly divesting tail-end assets within the region in recent years, but that trickle looks set to gain momentum as larger assets are to be put up for sale in 2017.

Chevron and Shell hold the largest portfolio of legacy assets in the region - that is, old assets that have lost value - and in the latter half of last year signaled their intentions to sell assets in Myanmar, Bangladesh, Thailand, New Zealand and Malaysia, among others.

In January, Shell said it would sell its stake in Thailand's Bongkot gas field to Kuwait Foreign Petroleum Exploration Company for $900 million.

The move is the latest stage of the Anglo-Dutch company's push to reduce debt. The transaction will include Shell's 22.2 percent equity stake in the Bongkot field and adjoining acreage off the coast of Thailand, Shell said in a statement.

"This transaction shows the clear momentum behind Shell's global, value-driven $30 billion divestment program," the company said.​

International resources consultancy Wood Mackenzie expects 2017 to bring a different mix of buyers to the fore than has been seen in recent years.

According to Prasanth Kakaraparthi, senior upstream research analyst at the consultancy, between 2010 and 2016, national oil companies were the main buyers in the Asia-Pacific, acquiring over 2 million barrels of oil equivalent of commercial reserves.

"This year we expect to see more buying activity from local independents and private equity-backed players," he says.​

​

"Domestic utilities and refiners, Japanese players and Middle Eastern NOCs looking for growth opportunities are also possible acquirers."​

He says Asia-Pacific capital expenditure is expected to fall again in 2017 to $64 billion, with capital budgets some 40 percent lower than in 2015.

This is due in part to fewer projects with final investment decisions in 2016. Only two projects, Ca Rong Do (Red Emperor) in Vietnam and the Western Surat Gas Project in Australia, are expected to take this step in 2017.

Lackluster participation in recent licensing rounds, and reduced budgets, point to a bleak year for exploration in the Asia-Pacific.

"We expect around 50 wells to be drilled this year - a 70 percent drop from 2014 levels," Wood Mackenzie said in a report.​

Myanmar, which holds some of the last remaining frontier acreage in an otherwise mature region, accounts for the bulk of frontier exploration drilling and will be the biggest bright spot in Asia Pacific this year.

"We expect several wildcat wells to be drilled, as several blocks from the hugely successful 2013 bid round are matured through the exploration process," the report said.

"We also expect to see several companies farm down interest in exploration acreage where commitment wells are due, to reduce risk and manage budgets."​

Kakaraparthi says there are three reasons why he expects the big players to sell this year.

"Many of the assets they hold in Southeast Asia are now mature, meaning they are likely to incur high (capital expenditure) going forward for little additional value," he says.

"Abandonment liability is also a big issue for older assets, which is another incentive to divest these from a portfolio.

"Typically at this stage, we would expect to see assets change hands from the majors/international oil company (IOC) type operators, to late-life players, smaller independents who still find these assets valuable, and potentially domestic players and local NOCs."​

He says the second reason is two years of low oil prices, in 2015 and 2016.

"This has given a further incentive for the majors to kick-start divestment programs in order to bolster cash flow and sharpen the tail end of their portfolios.

"Many of these deals were already in progress during 2016 and we expect them to come to fruition this year.

"And finally, with limited exploration upside, increasing uncertainty around license extensions and domestic NOCs taking a more aggressive stance, the region has much less appeal than it did a couple of decades ago."​

Kakaraparthi says several IOCs were seen retreating back to North America even before the oil price began to tumble.

He expects this trend to continue, explaining that the overall investment climate for the majors is challenging, in Southeast Asia in particular. License expirations looming on many large assets over the next decade serve as a disincentive to spend and an incentive to sell.

As for the buyers, he says: "We expect to see a mixed bag, ranging from NOCs, domestic independents, refiners and utility players to private equity-backed independents.

"From a Chinese perspective, there are mature assets operated offshore from China by international players that could be in the frame for sale.

"As buyers, we see the Chinese NOCs as increasingly focused on ongoing domestic energy reforms and the impact it has on their overall business."​

Tim Woodall, managing director of specialist oil and gas corporate advisory firm Miro Advisors, says the Wood Mackenzie expectations match what he is seeing in the market.

"The timing appears right for increased merger and acquisition activity in 2017, whether it be a continuation of companies deleveraging by asset divestments, or companies like Shell, BG, Repsol and Talisman tidying up their Asia portfolios post-merger, or some IOCs looking for growth in their 2017-18 time frame via M&A," Woodall says.​

Last year, the French utility Engie was reported to be seeking buyers for its oil and gas assets in Malaysia and Indonesia.

Engie, which joins a number of European utilities in selling oil and gas exploration and production assets after a sharp drop in energy prices, is looking to raise up to $500 million from the sale, Reuters said, citing banking sources.

The first bidding round for the assets is scheduled to be completed in mid-June. The package consists of five assets, including a 33.3 percent working interest in the Muara Bakau offshore gas and very light oil project in Indonesia operated by Italy's Eni.

In Malaysia, Engie is selling 20 percent stakes in two exploration blocks, according to documents seen by Reuters.

Potential buyers include Asian oil firms such as Indonesia's Pertamina, Malaysia's Petronas, Thailand's PTT Exploration and Production, and Japan's Inpex and Mitsui, as well as companies backed by private equity funds, the sources said.

Deal-making in the oil and gas sector has slowed significantly since the sharp fall in oil prices nearly two years ago, while the number of assets on the market has climbed as companies seek to raise cash.

karlwilson@chinadailyapac.com
http://europe.chinadaily.com.cn/epaper/2017-03/03/content_28417165.htm

 

[TaiShang]

China to lead foreign investment in Peru's mining sector
Xinhua, March 3, 2017

Photo taken on Jan. 29, 2016 shows the mine site of the company Shougang Hierro Peru, in the district of Marcona, province of Nazca, Ica, Peru. [File photo / Xinhua]

China, Canada and the U.S. will account for 53 percent of investments in the Peruvian mining sector in the next few years, according to the new guide for mining investments published Wednesday.

The guide, which was produced by Peru's Ministry of Energy and Mines (MEM) and Ernst & Young, showed that China will be the leading foreign investor in 2017-2018, with its companies planning to spend 10.189 billion U.S. dollars, or 21.6 percent of the total.

Canada will come in second place with 8.755 billion U.S. dollars, or 18.6 percent, and the U.S. in third with 6.55 billions, or 12.8 percent.

Chinese investments include the expansion of the Marcona iron mine in the southern region of Ica at a cost of 1.5 billion U.S. dollars, which is to be completed by December 2019. This will increase the mine's production to 3.5 million metric tons.

Jinzhao Mining is planning to invest 1.5 billion U.S. dollars at Pampa de Pongo mine, to complete an environmental impact assessment and begin production by 2021.

 

[Shotgunner51]

China to lead foreign investment in Peru's mining sector
Xinhua, March 3, 2017

Photo taken on Jan. 29, 2016 shows the mine site of the company Shougang Hierro Peru, in the district of Marcona, province of Nazca, Ica, Peru. [File photo / Xinhua]

China, Canada and the U.S. will account for 53 percent of investments in the Peruvian mining sector in the next few years, according to the new guide for mining investments published Wednesday.

The guide, which was produced by Peru's Ministry of Energy and Mines (MEM) and Ernst & Young, showed that China will be the leading foreign investor in 2017-2018, with its companies planning to spend 10.189 billion U.S. dollars, or 21.6 percent of the total.

Canada will come in second place with 8.755 billion U.S. dollars, or 18.6 percent, and the U.S. in third with 6.55 billions, or 12.8 percent.

Chinese investments include the expansion of the Marcona iron mine in the southern region of Ica at a cost of 1.5 billion U.S. dollars, which is to be completed by December 2019. This will increase the mine's production to 3.5 million metric tons.

Jinzhao Mining is planning to invest 1.5 billion U.S. dollars at Pampa de Pongo mine, to complete an environmental impact assessment and begin production by 2021.

Good news, resources is always my most favorable sector in global M&A, be it energy or mines. Chile and Peru are both rich in metals and close partners of China, they should be included in RCEP to further promote trade/investment.
http://thebricspost.com/chile-peru-to-join-china-led-trade-partnership/