China outbound investments heavy on resources: Study
08 Jun 2012
A study of China's outbound investment of $21.4 billion in the first three months of 2012 reveals that resources deals dominated with assets in South America the most sought after, mostly by state-backed buyers.
State-controlled Sinopec, China's second-largest oil-and-gas producer, concluded a $4.8-bn deal for 30 per cent stake in Petrogal Brazil, which also marked the quarter's single biggest deal. The deal further underlined an emerging trend of China purchasing minority stakes.
Private equity fund, A Capital, which specialises in Chinese outbound investments and compiles a quarterly index tracing Chinese outbound direct investments (ODI ) said in a statement,
"Minority deals represent a clear majority (78 percent) of total deal value.''
"Going for a minority stake is increasingly recognised as a way to tap into high-quality assets that would otherwise not be for sale or out of reach for Chinese investors," the statement said.
That approach has been favoured since 2009 following Australia outlining its position on foreign investment in big firms, pointing to the types of deals which would and would not succeed in the wake of a series of failed Chinese attempts for resource assets.
