French bank set to help Chinese companies invest overseas

Supporting Chinese companies' overseas mergers and acquisitions in 2009, especially in the energy and natural resources sector, will be the main focus of Societe Generale's corporate and investment banking (SGCIB) division, a France-based financial institutions, said De Doan-Tran, head of SGCIB in the Asia-Pacific region.

Chinese companies have stepped up their international investment as the global economic downturn force cash-strapped companies to offer stakes at bargain prices.

The State-owned metals giant Chinalco signed a $19.5 billion deal with Australia's Rio Tinto on Feb 12 that will eventually double its share of the world's third largest mining company.

On Feb 17 and 18, China National Petroleum signed separate agreements with Russia and Venezuela under which China will provide $25 billion and $4 billion in loans, respectively, in exchange for long-term commitments to supply oil.

China's overseas mergers and acquisitions were worth $52.1 billion in 2008 - a record, according to the research firm Dealogic.

In January and February of this year, Chinese companies invested $16.3 billion abroad, meaning that if the pace holds, the total for 2009 could be nearly double last year's.

The United States had $186.2 billion in overseas acquisitions in 2008 and Japan had $74.3 billion.

The value of merger and acquisition transactions worldwide has dropped 35 percent so far this year, to $384 billion.

Doan-Tran is confident that SGCIB is well equipped to assist its Chinese clients with their energy and natural resources-related acquisitions overseas.

"When it comes to energy and natural resources, SGCIB is a very strong franchise and has a international network," Doan-Tran said.

SGCIB's successful experience in supporting clients with different cultural background and its strength in emerging resource-rich markets such as Latin America give it an advantage, added Doan-Tran.

According to Doan-Tran, SGCIB acted as an arranger and advisor for five clients at a liquefied natural gas (LNG) project in Peru. The Peru LNG project was named Best Energy Deal in Latin America in the LatinFinance 2008 Infrastructure & Energy Awards, Doan-Tran said.

Doan-Tran declined to elaborate on which Chinese clients SGCIB has been working with, but said they are mainly from the energy sector, shipping industry and airline industry.

(China Daily 03/23/2009 page4)