China’s outbound M&A hit by exchange controls

Author: Brian Yap | Published: 23 Nov 2016

The regulatory challenges faced by PRC buyers of overseas assets have long been blamed for the failure of Chinese-led transactions. But strict domestic regulations may be a big part of the problem.

By September this year Chinese companies had carried out a total of 521 outbound transactions with a combined value of $67.4 billion, up from $54.4 billion in 2015, according to the latest figures released by China’s Ministry of Commerce (Mofcom).

But lawyers in China point out that the tightened control of capital outflow at home has increasingly led foreign sellers to question the ability of PRC buyers of overseas assets to settle a transaction abroad.

"The PRC regulatory regime continues to create deal uncertainty for PRC buyers of foreign assets," said a lawyer at an international law firm who specialises in China outbound deals.

Chinese investors spent a total of RMB 882.8 billion ($134.2 billion) for...