M&A: Larger CNY outflows – Nomura

According to our Dealogic database, CNY M&A outflows picked up in September and Nomura’s 6m net pending flow measure is at -$55bn, from -$46bn in August, though still smaller than the -$107bn in July 2016, points out the research team at Nomura.

Key Quotes

“The decline in August followed the $8bn acquisition of a 14.16% stake in Rosneft Oil Co OAO by Shanghai Energy Fund Investment Co Ltd, which was recorded as an $8bn CHF inflow with Glencore PLC selling its stake (turning net pending CHF flows positive). Elsewhere, China Merchants Port Holdings Co Ltd PLC has agreed to acquire a 90% stake in TCP Participacoes SA (90%), which is recorded as a $0.9bn USD inflow in our database. The CNY M&A pipeline remains the most negative.”

“For the US, 6m net pending M&A flows did not substantially shift in September despite fairly active cross border M&A activity. There was a $5.3bn outflow from Hellman & Friedman LLC, a private equity firm, leading to the acquisition of shares in Danish Nets A/S. There were also a number of smaller US outflows into Israel, Japan and Malaysia. Offsetting these US outflows, CRH plc, the listed UK-based diversified building materials group which has agreed to acquire US-based Ash Grove Cement Co for $3.5bn (recorded as an Irish outflow in our database). UK-based Unilever PLC has also acquired Carver Korea Ltd from Goldman Sachs Capital Partners for $2.7bn. Our UK 6m net pending flows remains positive at $22.3bn, though slightly lower in September than in August.”

“Elsewhere, there were large inflows into Australia in two large deals. The first was a $5bn cash inflow from ATP (a Danish insurance company), which acquired a 27.7% stake in Copenhagen Airports A/S from Macquarie. Hong Kong AIA Group Ltd also the announced acquisition of CBA’s life insurance business in Australia and life and health insurance businesses in New Zealand for $3bn.”

“The improvement in Canada’s M&A pipeline came from an announcement in March that Cenevus Energy Inc and Canadian Natural Resources Ltd fell out of our 6m window.”

“In summary, USD has currently the largest pending inflows expected from M&A activity, followed by GBP, BRL, AUD, EUR and CHF. Meanwhile, CNY has the largest net outflows (though far from levels in July 2016), followed by JPY, CAD, and MXN.”