There is more talk now about Chinese businesses selling assets overseas, rather than buying them. Conglomerates, notably Anbang and HNA, are being pushed by regulators and creditors to unwind holdings, attracting interest from hedge funds and private equity firms on both sides of the Pacific.
Assets talked about by analysts as potentially being up for sale range from Ingram Micro, a California-based distributor of IT parts for which HNA paid $6bn 18 months ago, to luxury hotels in the US and stakes in various European financial institutions. Last year, Chinese acquisitions overseas fell 30 per cent compared with the previous year. Yichen Zhang, head of private equity fund Citic Capital, believes that the figure could drop further this year.
Yet it would be a mistake to believe that the mega-purchases of the recent past will completely reverse. But the buyers will change. In the past, the companies that most often paid eye-watering prices for offshore transactions often did so without the backing of Beijing. Going forward, the flow of money leaving China to acquire international assets is likely to happen only with the explicit support of Beijing. It is clear that the current regime regards private enterprise with distrust, which means that it will be entities linked to the state sector that will make up the next wave of Chinese outbound mergers and acquisitions.