China DealBook
A Newsletter on Deal Making in China

By: ChinaDesk | May 21, 2017

A Newsletter on Deal Making in China | M&A . Investment Banking .VC . PE . Deals


Deal News

Shanghai Pharma weighs rival bid for Germany's Stada
Shanghai Pharmaceutical Holding Co Ltd said it may bid for Stada Arzneimittel AG - a move that would pit it against buyout firms Bain and Cinven which have made a joint offer of nearly $6 billion for the German generics drugmaker.

The Chinese company said in a filing it had recently discussed the matter with "a couple of financial investors" but added it had not made a concrete offer and there were still many uncertainties. Shanghai Pharma, which has a market value of $9 billion, needs to submit its bid by June 8 if it wants to challenge an existing 66 euro-a-share bid by Bain and Cinven. But any takeover attempt by Shanghai Pharma would need the blessing from Beijing which recently introduced restrictions on outbound foreign investment to try to curb capital outflows.


SF Express, Baidu Waimai Rumored To Be In Deal Talks
Baidu Inc.'s food delivery unit, Baidu Waimai, is rumored to be in deal talks with delivery giant SF Express. According to the rumors, the two companies may jointly establish a new company to operate the food delivery business and significantly expand its reach via SF Express' vast network.


China's CDH to raise up to $743 million from WH Group stake sale: IFR
Chinese private equity investor CDH Investments is selling a 6 percent stake in WH Group Ltd, the world's largest pork supplier, in a deal that will raise up to $743 million, according to a term sheet seen by IFR.


Yum China Revs Up Takeout Business With Acquisition of Sherpa’s (Daojia)
Yum China Holdings Inc., operator of the KFC and Pizza Hut fast food chains in China, said it will buy control of a high-end takeout dining specialist, joining a crowded field of local firms clamoring for a large but fiercely competitive market.


Yum China will receive a controlling stake in, owner of the Sherpa’s takeout delivery service, under a newly signed agreement that is expected to close at the end of this month.


China Railway Opens Door for Alibaba to Join Share-Holding Reform Plan
E-commerce giant Alibaba may get a chance to invest in China Railway Corp., as China’s state-owned rail operator prepares to join an early parade of state-owned enterprises selling stakes to the private sector as part of a national reform program.


AirAsia to launch new Chinese low cost carrier
AirAsia Bhd signed a joint venture agreement with China on Sunday to establish a low cost carrier (LCC), with a base in the east-central city of Zhengzhou.


Jack Ma's Ant Financial Eyes More Deals in Global Expansion
Ant Financial, China’s largest provider of internet financial services, will continue investing in mobile-payment providers around the world to boost offshore revenue and buttress itself from rising competition and tighter regulation at home.


Over the past two years, Ant Financial has unveiled investments in countries including India, Thailand, South Korea and France, and is currently negotiating to acquire MoneyGram International Inc.


Billionaire Li Explores Options for Fixed-Line Business
Billionaire Li Ka-shing is exploring options for his Hong Kong fixed-line phone business including a potential sale, according to people familiar with the matter, following a similar move by local property tycoon Peter Woo.


Holding onto Hutchison Global could prove a drag for Li, as he carves out a future in the more exciting market of mobile phones, or, at the other end of the scale, sure and steady utilities such as Australian power provider Duet Group. Private equity, flush with plenty of ready cash, is the best owner for it. Such firms would find a lot to like in Hutchison Global, including its business-customer focus. There's also the opportunity to get management control, a rare thing in Asia. Plus if the $1 billion price tag is anything to go by, it's selling cheap.


China Automotive Systems receives buyout offer from chairman
China Automotive Systems (CAAS) announces that its board received a proposal letter from Chairman Hanlin Chen to acquire all of the shares of the company he doesn't already own for $5.45 per share. Chen and his affiliates currently beneficially own approximately 56.4% of the outstanding shares.


Wanda Cinema Acquires 1.87% Of Bona Film In Consolidation Push
Wanda Film Holdings, a Chinese movie theater operator controlled by Chinese conglomerate Dalian Wanda Group, has agreed to acquire 1.875% of independent film production and distribution company Bona Film Group Ltd. for RMB300 million (US$43.5 million) as part of a wide-ranging strategic partnership.


Temasek trims stake in ICBC, says remains confident in Chinese banks
Singapore state investor Temasek Holdings pared its stake in Industrial and Commercial Bank of China to 8.43 percent from 9.12 percent, as part of a rebalancing of its portfolio in China's largest bank.


Norinco, Saudi Aramaco Strike Deal for Major Refinery
Saudi Arabian Oil Co. agreed to build a refinery and petrochemical plant in China, deepening ties between world’s biggest oil seller and its largest importer. Aramco plans to build a massive refinery and chemicals complex with state-owned defense conglomerate China North Industries Group Corp. (Norinco).


China's Shougang among bidders for parking space company Indigo: Les Echos
Chinese conglomerate firm Shougang is among firms that have submitted bids for parking space operator Indigo, French daily Les Echos said on Monday. Shougang made an offer on Friday for France's biggest parking space operator.


Alibaba reveals $6 billion share buyback as misses EPS forecast
Alibaba Group Holding Ltd said on Thursday it would buy back shares worth up to $6 billion over two years, as it beat first quarter revenue forecasts but missed income estimates. The Chinese company, which is targeting news business lines such as cloud computing, big data, entertainment and offline retail as it expands beyond e-commerce, said the share repurchase scheme would replace its existing buyback program.


Sinopec Planning $30 Billion Global Investment Push: Report
China’s oil giant Sinopec Group is planning to invest more than $30 billion to expand in global markets, US-based financial network CNBC reported late Monday, citing Dai Liqi, director of Sinopec’s foreign cooperation office.


China aerospace player launches $22b tech fund
China Aerospace Science & Technology Corporation (CASC) has launched a RMB150 billion ($22 billion) fund with a group of state-owned enterprises (SOEs) to invest in new technologies. The vehicle, known as the State-owned Enterprise National Innovation Fund, has an initial size of RMB113.9 billion.


Russia-China fund to invest $500m this year
The Russia-China Investment Fund, a private equity fund formed by the Russian Direct Investment Fund and China Investment Corp, will invest more than 500 million USD.


Alibaba injects $488 million health food assets into Ali Health
Alibaba Health Information Technology Ltd said on Friday controlling shareholder Alibaba Group Holding Ltd would sell HK$3.8 billion ($488.3 million) worth of health food and nutritional products businesses to the company, further developing it into Alibaba's healthcare flagship platform.


Huazhang Technology will acquire two headbox suppliers in the PRC at consideration of RMB34 million
Huazhang Technology Holding Limited announced that, the Company have entered into an Agreement in relation to the purchase of the Equity Interest of Hangzhou MCN and Hangzhou Haorong, headbox distributors, and the Sunplus Contracts for an initial consideration of RMB34 million.


China's Fosun Pharma launches up to $304 million share offer: IFR
Chinese drugmaker Shanghai Fosun Pharmaceutical launched an up to $304 million share offering in Hong Kong on Tuesday, IFR reported, citing a transaction term sheet.


PE firm WL Ross in talks with China’s Shandong Ruyi to sell OCM India stake
Global distressed assets and special situations investor WL Ross and Co. Llc is in talks with China’s Shandong Ruyi group to sell its entire stake in textile maker OCM India Pvt. Ltd, said two people aware of the discussions.


Bright takes over Fisheries in reform of Shanghai SOEs
The Shanghai municipal government announced a fresh round of reform and restructuring of local State-owned enterprises on Thursday. As part of the reform, Bright Food (Group) Co Ltd will absorb Shanghai Fisheries Group Co Ltd. Shanghai Fisheries will thus become a wholly owned subsidiary of Bright Food. Shanghai Fisheries has more than 30 subsidiaries. Its total assets amount to 5 billion yuan ($725 million) and annual sales revenue comes to about 7 billion yuan.


Chinese insurer PICC Group plans $2 bln Shanghai share offering
PICC Group, parent of the nation's biggest non-life insurer, said it plans to sell shares in mainland China as it seeks fresh funds to expand, in a deal valued at about $2 billion.


Dairy major Feihe plans HK IPO
Infant formula and milk powder producer China Feihe Ltd said it plans to make its initial public offering in Hong Kong.


DT Capital-Backed Tiansheng Pharma Completes IPO With $986M Valuation
Tiansheng Pharmaceutical Group Co., Ltd., a Chinese drug maker backed by local private equity firms DT Capital Partners and Leading Capital, has completed an initial public offering on the Shenzhen Stock Exchange.


Bocom International Raises HK$1.684 Billion in Hong Kong IPO
Bocom International says it raised HK$1.684 billion ($216.3 million) in its initial public offering in Hong Kong. The company’s final issue price is HK$2.68 per share, close to the lower end of its price range of between HK$2.60 to 3.10.


CDH-backed Zhenghai Bio-tech jumps on Shenzhen debut
Yantai Zhenghai Bio-tech, a Chinese biotechnology company backed by CDH Investments, saw its stock gain 44.03% on its first day of trading following a RMB234 million ($34 million) IPO in Shenzhen. Zhenghai Bio-tech sold 20 million shares at RMB11.72 apiece.


Silk Ventures Spins $500 Million Fund to Aid China-Bound Western Startups
Government-backed financier Silk Ventures has raised a $500 million fund to invest in Western technology startups looking to expand into China. Silk Ventures announced the fund at the Belt and Road Forum, held over the weekend in Beijing, and said the first investment will be in July.


Nokia, Former Alcatel Lucent Combine China Assets
Telecom giant Nokia Corp. said it has formed a new joint venture that will combine its China assets with those of former French-American rival Alcatel Lucent SA, as the pair pool operations in various global markets after their own megamerger.


Alibaba Teams Up With Germany's Bosch To Develop Smart Devices
Alibaba Group Holding Ltd has formed a strategic partnership with German industrial manufacturer Bosch Group GmbH to develop interconnected smart devices, strengthen collaboration in big-data-based digital marketing and omnichannel retailing.


Everbright-IDG Fund Leads New Round In Cross-Border E-Commerce Firm Wish.Com
Everbright-IDG Industrial Fund, an investment vehicle jointly established by China Everbright Ltd and IDG Capital, has led a series F round in, a Silicon Valley-based cross-border e-commerce firm co-founded by a Chinese engineer.


Ping An leads $75m round for YY's gaming subsidiary Huya
China Ping An Insurance has led a $75 million Series A round for Huya, the live game broadcasting subsidiary of Chinese social networking platform YY.


CDB Capital leads $42m round for China fintech firm Wacai
CDB Capital, the fund management arm of China Development Bank, has led a $42 million round for Wacai, a Chinese finance management mobile app developer. China Broadband Capital, New Horizon Capital, Qiming Venture Partners and Ally Bridge Group also participated in the round.


CITIC Capital Leads $17M Round In Energy Saving Firm China Great Wall Environment Improving
CITIC Capital has led a RMB120 million (US$17 million) series B round in China Great Wall Environment Improving Co., Ltd, a energy saving and environmental protection services company, which is part of China Aerospace Science and Technology Corp.


Chinese Real Estate Firm Risesun To Invest $82M In Czech Entertainment Complex
Hebei province-based Risesun Real Estate Development Co. has signed an agreement with the government of the South Moravian region of the Czech Republic to invest RMB568 million (US$82 million) to build a spa and entertainment center in the region.


Ping An Insurance Leads $75M Round In Chinese Live Video Streaming Firm Huya
China Ping An Insurance Overseas (Holdings) Ltd. has led a US$75 million series A round in Huya, a live video streaming platform owned by NASDAQ listed Chinese social networking platform YY Inc.


Hillhouse leads $55m round for China AI developer Yitu
Hillhouse Capital has led a RMB380 million ($55 million) Series C round of funding for Yitu Technology, a Shanghai-based artificial intelligence (AI) technology developer. Existing investors including Yufeng Capital, Sequoia Capital, Banyan Capital, and ZhenFund also took part in the round.


Chengwei Leads $14M Round In Electrical Hardware E-commerce Firm Ruigu
Shanghai-based venture capital firm Chengwei Capital has led a RMB100 million (US$14 million) series B round in Ruigu Shop, an e-commerce platform focused on the Chinese electrical hardware sector. Existing investor Source Code Capital also participated in the round.


Cross-border e-commerce site Wish raises new round
Wish, a San Francisco-based cross-border e-commerce app backed by several Asian investors, has completed a Series F round led by Everbright-IDG Industrial Fund. The size of this round was not disclosed. Other participants include Temasek Holdings, DST Global, Third Point Ventures and Founders Fund.


CASH Capital Leads New Round In Chinese Big Data Firm Boray Data
Beijing-based CASH Capital (Beijing) Investment Management Co., Ltd., an investment arm of the Chinese Academy of Science Holdings, has led a series B round worth tens of millions of U.S. dollars in Boray Data, a Beijing-based real-time big data solutions provider.


Lightspeed China closes debut renminbi fund at $87m
Lightspeed China Partners has closed its first renminbi-denominated venture fund at RMB600 million ($87 million).


Arbor targets $220m for second VC fund, IFC set to invest
The International Finance Corporation (IFC) is considering an investment of $15 million in Hong Kong-based Arbor Ventures’ second VC fund, which has an initial target of $220 million. The Asia-focused VC firm launched its debut fund in 2014 and raised $125 million, including $10 million from IFC.


CEC Capital Reaches $430M First Closing For Debut Future Industry Fund
Chinese investment banking firm CEC Capital Group has reached a first closing of RMB3 billion (US$430 million) for its maiden future industry fund, which will invest in companies operating in innovative industries in China.


Tencent, Universal Music Announce Strategic Licensing Agreement to Expand China Market
Leading internet company Tencent and global entertainment giant Universal Music said they will form a strategic alliance to boost the Chinese music industry.


Biopharm Giant Boehringer Ingelheim Opens Shanghai Plant
German biopharmaceutical multinational Boehringer Ingelheim announced on Tuesday that it has opened a €70 million (535.7 million yuan) commercial production site in Shanghai. It is the first biopharmaceutical facility established by a multinational manufacturer in China employing cell technology.


GM Backs Up From India, Steers Toward Money-Making China
The road that General Motors Corp. (GM) built in India has proved to be a cul-de-sac, steering the American automaker back toward more profitable markets such as China.


Tencent Music Inks Major Licensing Deal With Universal To Widen Lead In China
Tencent Music Entertainment Group has signed a licensing agreement with Universal Music Group to distribute music from the U.S. company's roster of record labels and recording stars on its Chinese music streaming platforms QQ Music, KuGou and Kuwo.


Dawn of Titans heads to China as Zynga partners with NetEase
Zynga announced it is partnering with Chinese game publisher NetEase to publish Dawn of Titans in China on iOS and Android. The free-to-play mobile game is one of the company’s highest profile titles.


Indonesia, China consortium sign $4.5 billion loan for rail project
A consortium of Indonesian and Chinese companies building Indonesia's first high-speed railway has signed a $4.5 billion loan with China Development Bank, Indonesia's government said on Monday.


CRRC Wins Train Supply Deal in Montreal
Leading Chinese railway equipment maker CRRC Corp. Ltd. has won a contract to supply cars to the Montreal area’s mass transit operator, marking its first deal in Canada and the latest in a recent string of similar contracts in the lucrative North American market.


Singapore Land Gets Record S$1 Billion Bid From Chinese Buyers
Logan Property (Singapore) Co. and Nanshan Group Singapore Co. put in the highest bid in the Stirling Road land auction that closed Thursday, according to a statement from the Urban Redevelopment Authority. The final award of the site will be decided once the bids have been evaluated.


China group beats forecasts with record S$1b bid for GLS site
A large residential plot at Stirling Road launched by the government drew a record price of over S$1 billion in a joint bid from Logan Property Holdings - a newcomer hailing from China's Guangdong province - and Chinese conglomerate Nanshan Group.


Chinese firm signs deal to upgrade Ukraine's Black Sea port
China Harbor Engineering Company (CHEC) signed a deal with the Ukrainian government here on Thursday to upgrade the Black Sea port of Yuzhny in Ukraine's southern Odessa region.


China's COSCO to invest in Kazakhstan border project as part of Silk Road drive
China's COSCO Shipping plans to invest in a special economic zone on Kazakhstan's border with China as it looks to increase investment in countries involved in the new Silk Road, the company's chairman said on Sunday.


Alibaba To Bolster E-Commerce In Pakistan Under Agreement With Trade Bureau
Alibaba Group Holding Ltd. has signed a memorandum of understanding with the Trade Development Authority of Pakistan to foster growth of exports by small and medium sized enterprises in Pakistan through its e-commerce platforms, in another step in Alibaba's international push.


China’s European Ties Heat Up in Cannes
It used to be the glamour and the chance to cultivate relationships with Hollywood that drew Chinese film executives to Cannes. But more than ever before, execs from China are arriving in the South of France ready to do business with Europe. Sino-European co-productions are increasing.


Cannes: HBO, China Movie Channel to Co-Produce More Martial Arts Films
The deal marks HBO's second co-production pact for the massive Chinese TV sector, which counts some 1.2 billion viewers. HBO Asia is again partnering with China Movie Channel to co-develop and produce a pair of Chinese-language martial arts movies for television.



Jack Ma dethrones Wanda's Wang to take richest crown
Jack Ma, chairman of China's e-commerce leader Alibaba Group, has surpassed Wang Jianlin, chairman of Dalian Wanda Group, to become the richest mainland Chinese, according to Forbes magazine. As of Friday, Ma's fortune was worth $30.9 billion, compared with $30.7 billion for Wang. Ma Huateng, chairman of Tencent, took the third spot with $29.7 billion, according to the magazine.


Three Wharton Dealmakers Bet Their Future on Chinese Trucking
In 2001, three Chinese men named Richard enrolled in the University of Pennsylvania’s Wharton School before heading to high-flying careers as bankers and dealmakers. Their company Truck Alliance Inc., known as Huochebang or truck gang in Chinese, is trying to bring the smartphone age to a trillion-dollar industry that carries 80 percent of the country’s cargo, yet has haulers standing empty almost half the time. Founded little more than three years ago, the company has joined the billion-dollar valuation club and raised $270 million.


Cash-Strapped LeEco Poised to Roll Out Mass Layoffs: Report
Chinese tech giant LeEco is set to roll out massive layoffs, including a 70% cut in its sports branches, as it continues to struggle with financial problems, the China Business Journal reported.


Why Did a Chinese Peroxide Company Pay $1 Billion for a Talking Cat?
Inside the strange courtship between industrial behemoths and Western video game studios. It’s hard to see the synergies between a maker of chemical solvents and a digital cat perched over a toilet. And curiously, the buyer, which had recently been renamed Zhejiang Jinke Entertainment Culture Co., had revenue of only $133 million in 2016, according to Bloomberg data pulled from regulatory filings, and its gross profit was $55 million. Jinke won’t say where the money to buy Outfit7 came from.


Nation's GAC Motor starts recruiting in the United States
China's GAC Motor is putting out the "Help Wanted" sign for engineers, marketing and management talent in the United States, and analysts in the auto industry say it may be a prelude to the company's entry into the US auto market.


Cooley's Lee Says 'WeChat' Is the Next Big Thing
Cooley's Lee Says 'WeChat' Is the Next Big Thing


Didi Chuxing Granted Operating License in Beijing
China’s largest car-hailing company Didi Chuxing said on Thursday that it had secured an operating license from the Beijing government. The Beijing authorities also issued a license to another major player, Shenzhou Zhuanche.


Meituan-Dianping Says Reaches Break-Even, Daily Orders Top 18 Million With 240 Million Active Users
Group buying and take-out dining giant Meituan-Dianping said it is operating on a break-even basis, as it shot down rumors that it was having trouble raising cash. The company said it currently has more than $3 billion in cash, and that it hasn’t launched a new fund-raising round.


China AI Firm Mobvoi To Use Google Personal Assistant It Its Products
Chinese artificial intelligence firm Mobvoi, backed by Google and Volkswagen Group China, has been named as Google Assistant's official partner and will use Google Assistant in its smart hardware products targeting overseas consumers.


CDIB hires senior team from SMC Capital
Three of the senior management team at SMC Capital China - a GP launched by Hong Kong-based Simon Murray & Company (SMC) - have left to join CDIB Capital, the PE arm of Taiwan’s China Development Financial.


Short-Sellers Are Fleeing This Chinese Water-Treatment Company
Once popular with short sellers, China’s biggest water-treatment company is basking in a clean-up of its own, with bearish investors fleeing in droves. It’s a reminder of the power that Chinese government moves can have in determining winners and losers in the equity market.


Tencent’s China Reading takes first foray overseas with multi-language website
The online literature arm of Tencent Holdings has launched a multi-language site aimed at making Chinese web novels a global cultural phenomenon the way Hollywood does with its films.


Mobile Payments Charge Up McDonald’s, Starbucks in China
Global dining giants Starbucks and McDonald’s say they now get a third or more of their China business from mobile payments, reflecting the nation’s growing global leadership in the high-tech electronic transaction space.


Canadian Women's Hockey League could be expanding to China
The Canadian Women's Hockey League appears to be expanding east. The Far East, that is. Indications are China will ice a team in the CWHL for the upcoming 2017-18 season.



Other Updates


China says to import $2 trillion in products from Belt & Road countries over five years
China will import $2 trillion worth of products from countries participating in its Belt and Road initiative over the next five years, Commerce Minister Zhong Shan said at a summit on the program.


Chinese banks to lend 380 billion yuan to support Belt and Road cooperation
Chinese President Xi Jinping on Sunday said Chinese banks will lend 380 billion yuan ($55.09 billion) to support Belt and Road cooperation, and China will also inject 100 billion yuan into a Silk Road Fund.


India and Russia tipped to be the big winners from China’s massive ‘Belt and Road' investment
Less-developed countries along the new Silk Road stand be among the big winners of investment as China revives ancient land and maritime trade routes, according to estimates by a top bank.


China Eyes U.S. Energy After Inking $20 Billion in Deals
China is setting it sights on U.S. energy as a growing reliance on imports forces it to look beyond traditional suppliers, according to the head of the country’s biggest oil and gas company. China National Petroleum Corp. will import more crude oil and natural gas from the U.S.


U.S. Firms Want In on China’s Global ‘One Belt, One Road’ Spending
As China plans to build a raft of roads, rail lines, ports and airports across Asia, Africa and Europe, skeptics say Chinese companies will be the only real winners from the ambitious initiative. General Electric disagrees.


China April factory output, investment growth miss forecasts
China's factory output and fixed asset investment growth cooled more than expected in April, adding to signs that momentum in the world's second-biggest economy is slowing from a strong start in the first quarter. Factory output rose 6.


China-Led Asian Infrastructure Investment Bank Adds Seven New Member Countries
The Asian Infrastructure Investment Bank (AIIB), a multilateral development bank led by China with an aim to support the building of infrastructure in the Asia Pacific region, has approved seven new member countries to join the bank, bringing the bank’s total membership to 77.


China's central bank sets up fintech committee
China's central bank has set up a fintech committee to study the impact of fintech on monetary policy, financial market, financial stability, payment and clearing. The People's Bank of China (PBOC) made the announcement on its website on Monday.


Chinese, Western Banks’ Battle for Dominance Reaches Bond Market
China’s banks are pressing hard on Wall Street firms in one of the banking world’s hottest markets: helping Chinese companies sell bonds overseas.


Speculative Ventures Threaten China’s Financial System, Tsinghua Report Says
Chinese joint-stock commercial lenders’ aggressive expansion in off-balance-sheet activities is creating a serious risk to the financial system that requires regulatory attention, a new report by the Tsinghua University National Institute of Financial Research says.


China’s Central Bank Injects 10 Billion Through Reverse Repo
The People’s Bank of China, central bank, will auction 110 billion yuan of 7-day reverse repurchase (reverse repo) agreements, 30 billion yuan of 14-day reverse repos in the open market today.


A $60 Billion E-Commerce Loophole in China May Be Narrowing
Health supplements must undergo a registration and approval process in China that would cost the Wisconsin-based company about $100,000 per product, said James Konkle, director of international operations. With 37 products earmarked for the Chinese market, Nature’s Way would have paid $3.


CSRC vows tough action on violators
China's top securities regulator on Friday vowed stricter regulations of the country's securities firms and funds, warning that repetitive rule violations and illegal practices will lead to business suspensions and license revocations.


China releases rules for due diligence on non-resident financial accounts
Chinese authorities Friday publicized detailed rules for financial institutions to conduct due diligence procedures on non-resident accounts in an effort to counter cross-border tax evasion.


Chinese private equity rides innovation wave
Private equity (PE) investment in China picked up momentum in tandem with the ongoing economic restructuring, in which emerging sectors provide better investment returns and have become new pillars of the world's second-largest economy.


Negotiating China M&A Deals: Watching a Bit of the Sausage Get Made
The below is an email from one of our China corporate transactional lawyers to a client in the midst of dealing with a Chinese company interested in buying our client.