This interview will appear in the 1Q Y2014 (April 2014) issue of the Sovereign Wealth Quarterly.
This is a deep dive with Charlie Welsh, Co-Founder of Mergermarket
1. As co-founder of the Mergermarket Group, what is one lesson that should be learned about the current M&A environment in Asia?
In recent years China’s foreign investment strategy has been largely focused on gaining control of strategic raw materials that the country needs, such as energy, metals and food, this trend has become dominant. Chinese companies are now increasingly looking to move up the production value curve and be less dependent on commoditized, labor-intensive manufacturing processes. In many cases the only way to do so is to attain access to production technologies and expertise that are possessed by companies based in more advanced economies. While this can sometimes be attained by licensing the technology or forming a partnership with a technology transfer arrangement, Chinese companies are looking to formal joint ventures and, increasingly, to the acquisition of western companies that can help them develop such technological expertise.
2. During a news conference on March 6, 2014 at the National People’s Congress, China Finance Minster Lou Jiwei commented that, “Whether GDP growth is to the left or to the right of 7.5 percent, that is not very important. What is important is job creation.” Do you have any thoughts on this?
China views economic growth less from a statistically or financially-defined perspective, but more in terms of its ability to preserve social stability. The country has emerged from a very poor, undeveloped country to the world’s leading industrial production base in just 35 years. During this time vast numbers of its predominantly rural-based population have been migrating to the countries many cities where they have experienced increased standards of living, higher levels of education and greater personal freedoms. However the freedoms have been carefully limited and the country remains controlled by one central political organization. It could be argued that this political control has been accepted because the system has focused on ensuring the provision of jobs for the country’s vast population.
China has been attempting to form bilateral currency swap agreements with some trading partners in order to avoid having to rely on the dollar or other reserve currencies.
3. How will China respond to a major GDP contraction?[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
Private equity firm BC Partners hired Goldman Sachs Group Inc. and JPMorgan Chase & Co. to advise on the sales of Acuris. Acuris is a collection of financial news and data sites, which includes Mergermarket, Dealreporter, and Debtwire. In 2017, BC Partners sold around a 30% stake in GIC Private Limited.
Before the rebranding to Acuris, Mergermarket was part of The Financial Times Group until 2013 when it was sold off to BC Partners.
Aflac Inc. is an American insurance company founded in 1955. The company is the biggest provider of supplemental insurance in the United States. Aflac also has major operations in Japan.
In December 2018, Japan Post Holdings (JPHLF) signaled it was spending US$ 2.64 billion for a 7-8 % stake in Aflac. The goal is that, in four years time, Aflac will become an affiliate of Japan Post. Japan Post hopes to accomplish this by becoming the largest voting shareholder of the company. The world’s 13th largest company, with 400,000 employees, Japan Post needs to expand to chase further growth, mainly because Japan Post expects the postal business to decline. Diversification is seen as the optimal route to long term stability for the holding company. Japan’s economy is worrying. Japan’s aging population means that many insurance companies are facing a shrinking customer base, Japan Post settled on a plan to expand overseas.
[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
The Russian Direct Investment Fund (RDIF) and the Development Agency of Serbia, also known as Razvojna agencija Srbije, reached an agreement to work together to identify attractive investment projects to strengthen bilateral economic ties and increase investment flows between Russia and Serbia. Russian capital and businesses are keen on investing in Serbia.
In addition, the two countries signed an agreement to cooperate on civil nuclear energy, according to state-owned Russian reactor builder Rosatom (Rosatom State Nuclear Energy Corporation). Rosatom continues to expand it business of nuclear cooperation deals in a wide number of countries.
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