China’s One Belt One Road (OBOR) offers substantial opportunities to connect Asia
by Kathy Liu, MD, Head of One Belt One Road, CLSA
President Xi Jinping’s One Belt One Road (OBOR) initiative aims to increase trade flows between China and the world with a coordinated infrastructure spending programme spanning 65 countries. To date, China has established 56 economic cooperation zones (ECZs) with more than 20 nations and 10 newly signed free trade agreements, with more in the pipeline. Economic data indicates that intra-Asia trade volume is a key growth driver. China’s Overseas Direct Investment (ODI) in the form of cross-border M&A, joint ventures and green field investments jumped to US$170bn in 2016, up 89% from US$90bn in 2013. China’s ODI exceeded foreign direct investment (US$126bn) in 2016 and should continue to outpace it.
For the past 20 years, CITIC CLSA’s corporate finance and capital markets business has been involved in over 850 capital market transactions, assisting our corporate clients in fund raising. Under the OBOR banner, CITIC CLSA has completed capital raises and advisory work for corporates and sovereigns in India, Sri Lanka, Vietnam, Malaysia, Indonesia, Thailand, Philippines, Singapore and Australia, in addition to those based in HK/China.
With China’s outbound expansion still at the midway point of its upcycle in terms of solidifying relationships with OBOR peers, we see many opportunities, especially for construction and equipment companies, to benefit from bilateral agreements through infrastructure collaboration. Increasingly, we find Chinese buyers focusing on specific assets and businesses that have real strategic value, especially where a brand, technology or product capability can be taken back to China and used to drive stronger growth or improve competitive positioning.
CITIC CLSA’s corporate finance and capital team is uniquely positioned to provide both cross-border advisory services and international capital raising for our OBOR clients. CITIC CLSA has established strong relationships with leading conglomerates, investors, regulatory bodies and other financial institutions in many OBOR countries including Singapore, Malaysia, Philippines, Indonesia, Thailand, India and Sri Lanka.
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We are focused on long term value creation.
Our priority is to ensure sustainable and long term value creation for our clients. For more than two decades we have advised companies, governments, insurers and investors seeking access to capital markets, restructuring and pursuing strategic investment opportunities. We have worked on numerous, significant capital raising and M&A deals across Asia, helping companies to reach their strategic goals.
Unparalleled access to China.
With significant presence and local connections in China, our parent company CITIC Securities provides local background, innate knowledge of China’s regulatory framework and comprehensive understanding of developments within all major industries across the country.
As the international arm of CITIC Securities’ global investment banking business, CLSA Securities leverages the breadth and deep relationships of 1,000+ bankers at China’s largest investment bank and is the ideal partner for Chinese companies aspiring to invest overseas, as well as foreign companies seeking Chinese capital for growth and expansion.
China, being one of the fastest-growing markets globally, continues to develop its domestic market, upgrade infrastructure and revive transcontinental trading routes via its Belt and Road initiative. CLSA Securities is best placed to capture the mass of capital inflows and outflows from China.
CLSA is a market leader in equity and debt capital markets and has completed a number of significant ECM, DCM, equity-linked securities and M&A deals across the region:
Equity Capital Markets
TMT Xiaomi (Hong Kong, 2018): US$5.4 billion IPO for the first new economy company to list in Hong Kong following the introduction of HKEx’s new listing rules and the first HK-listed company to adopt a WVR (Weighted Voting Right) structure. CLSA acted as Joint Sponsor, Joint Global Coordinator and Joint Bookrunner.
REAL ESTATE Midea Real Estate (Hong Kong, 2018): The most anticipated Hong Kong IPO (US$390 million) among China property developers in 2018. CLSA acted as Joint Sponsor, Joint Global Coordinator and Joint Bookrunner.
HEALTHCARE Hua Medicine (Hong Kong, 2018): Hong Kong’s third biotech IPO (US$110 million) following the introduction of new listing rules for this diabetes treatment company. CLSA acted as Joint Sponsor, Joint Global Coordinator and Joint Bookrunner.
FINANCIAL INSTITUTIONS HDFC Asset Management Company Limited (India, 2018): the largest IPO (US$410 million) in 2018 in the asset management industry in India. CLSA acted as Joint Global Coordinator and Book Running Lead Manager.
Debt capital markets
ENERGY AC Energy (Singapore/Philippines, 2018): 5-year US$225 million bond maiden US$ green bond issuance for Ayala Corporation’s energy vehicle. CLSA acted as Arranger and Dealer for the establishment of a MTN (Medium Term Note) programme and as Joint Bookrunner and Joint Lead Manager for the US$ green bond issuance.
REAL ESTATE Guangzhou R&F Properties (Hong Kong, 2018): US$600 million senior bond with a coupon of 7% for a leading PRC property developer. CLSA acted as a Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager.
FINANCIAL INSTITUTIONS YES Bank (India, 2018): 5-year US$600 million bond offering for YES Bank’s debut US$ issuance, the largest debut international bond issuance by an Indian bank. CLSA acted as Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager.
TMT Lenovo (Hong Kong, 2018): Landmark US$675 million convertible bond priced at coupon rate of 3.375% and a conversion premium of 40%; Lenovo’s first convertible bond issuance and the largest ever convertible bond issuance by a Hong Kong listed technology company. CLSA acted as joint global coordinator and joint bookrunner.
HEALTHCARE Alvotech (Europe, 2018): US$200 million pre-IPO convertible bond issuance for the pan-European biopharmaceutical company. CLSA acted as sole placement agent.
INDUSTRIALS China Shipbuilding Industry Corporation (Hong Kong, 2018): US$1 billion exchangeable bond into shares of Postal Savings Bank of China for this SOE and one of China’s largest shipbuilding groups. CLSA acted as joint global coordinator and joint bookrunner in this transaction that represents CLSA’s debut JGC role in the Asian equity-linked securities market.
REAL ESTATE Property Exchange Australia (PEXA) (Australia, 2018): A$1.6 billion (US$1.2 billion) sale of a majority shareholding to a consortium comprised of Link Group, Commonwealth Bank of Australia and Morgan Stanley Infrastructure. CLSA acted as sole sell-side financial adviser to PEXA.
FINANCIAL INSTITUTIONS Shenzhen Stock Exchange and Shanghai Stock Exchange’s US$119 million acquisition of a 25% stake in Dhaka Stock Exchange (Bangladesh, 2018): an exemplar of cross-border collaboration undertaken as part of China’s Belt and Road initiative, and the build-up of the Bangladesh-China-India-Myanmar Economic Corridor. CLSA acted as the sole buy-side financial adviser.
ENERGY Tianqi Lithium Corp (Australia/China/Chile/Canada, 2018): acquisition of a 23.8% stake in Chilean lithium miner SQM from Canadian fertilizer giant Nutrien, for US$4.1 billion. CLSA acted as Financial Adviser to Tianqi.