Domestic and overseas investors have been feasting on a flood of sour loans being churned out by China’s economic slowdown, mostly by buying shares in big state-run firms that try to recover money from those bad assets. In the latest wrinkle of that story, 8 major institutional buyers have spent a hefty $2.4 billion to purchase 21 percent of China Huarong Asset Management, one of the leading bad asset managers.
But bad asset management isn’t always such an easy game to play, as another group of China-backed investors is learning after their ill-advised purchase 2 years ago of insolvent Swedish car maker Saab. That group, called National Electric Vehicle Sweden AB (NEV) has declared bankruptcy, signaling an end may finally be near for the Swedish car maker that probably should have died several years ago. Read Full Post…
A couple of major overseas moves are in the headlines today, spotlighting the fact that Chinese firms are becoming increasingly adept at relatively simple resource deals, even as they still lack sophistication to do M&A in other, more complex sectors. In the former category, oil major PetroChina (HKEx: 857; Shanghai: 601857; NYSE: PTR) has reached a deal to co-develop a $3 billion oil pipeline in Canada with a local partner, in the largest project of its kind by a Chinese firm to date. In the latter, a white-knight rescue bid by a relatively obscure Chinese firm for bankrupt plane maker Hawker Beechcraft has collapsed, leaving the US company no choice but to work out a reorganization plan with its creditors.
I’ll wrap up this week with a couple of items from the car world, one of which has Japan’s Nissan (Tokyo: 7201) adding fuel to China’s looming auto glut while the other has yet another Chinese buyer helping forestall the long and tortured death of Sweden’s bankrupt Saab. My personal favorite among these 2 stories is Saab, as it’s quite a colorful saga; but Nissan is clearly the bigger of the items, so I’ll start with a look at the news that the Japanese automaker is planning to build a $785 million new plant in the northeastern port city of Dalian. (
China’s domestic car makers are continuing their drive to develop their own brands in their search for bigger profits outside their foreign joint ventures, with Dongfeng Motor (HKEx: 489) the latest to join that march as it prepares to revive its mothballed namesake brand. But success for these new initiatives is far from guaranteed, and Dongfeng and the many other Chinese automakers to announce similar own-brand plans in recent months certainly aren’t preparing to abandon their lucrative foreign joint ventures anytime soon. Dongfeng itself recently launched another new brand, called Venucia, with longtime Japanese partner Nissan (Tokyo: 7201) (
Three recent global M&A deals by Chinese firms outside the resource sector are highlighting the country’s potential as a major new player for such deals, but also its unreliability, as only 2 of the 3 deals ultimately collapsed. This ratio of 2 failed deals for every successful one could well indicate what we will see from China over the next 2-3 years, as many deals collapse for a wide number of reasons, from lack of financing to disapproval by Beijing, or even changes of heart by fickle acquirers. In the most high-profile of the 3 recent deals, a months-long effort by 2 obscure firms to buy a controlling stake in Saab has finally collapsed, with the dying Swedish automaker officially filing for bankruptcy. (
The never-ending saga of a plan by 2 obscure Chinese firms to rescue dying Swedish automaker Saab has taken an interesting twist, with foreign media reporting that one of the Chinese partners has dropped out of the rescue group and been replaced by banking heavyweight Bank of China (HKEx: 3988; Shanghai: 601988). Under the original plan that stood little or no chance of success (
