China to see surge of M&As led by TMT, biomed, new energy

(ECNS) – China is expected to see a flurry of mergers and acquisitions (M&As) due to new policies that streamline bureaucracy and encourage deals, analysts say.

The China Securities Regulatory Commission (CSRC) issued a draft for new rules last week to cut the red tape for M&As, and to allow the financial market to play a bigger role in the pricing of new shares.

The draft lifts a requirement for a minimum value of shares that must be sold by small-and-medium-sized companies in their M&As. Also, it's no longer mandatory for companies to provide profit predictions, a move aimed to rein in performance manipulation by companies after the deals are done.

An analyst at Southwest Securities said easier M&As will provide an alternative for companies that want to go listed. China still puts curbs on initial public offerings in the mainland market.

Southwest Securities is already seeing a surge of M&As as the approval procedure has been greatly trimmed. For example, the approval time of new shares issued for M&As has been cut to 90 from 115 days, and the approval time for mergers by absorption is shortened from 122 to 60 days.

According to Wind Info, a leading provider of financial data in China, listed companies have inked 2,470 M&A deals worth a total of 1.52 trillion yuan ($245 b), exceeding the yearly total in 2013.

Sun Jinju, an analyst at Guotai Jun'an Securities, predicts the trend to roll on for the rest of 2014.

Analysts say M&As incurred by industrial adjustment will dominate as traditional industries such as energy, mining and real estate are trying to upgrade their production.

Southwest Securities analysts say M&As in new industries and government-supported industries will also reach new heights. The ventures include technology, media, telecommunications (TMT), biomedical and green living, high-end services and new energy.