Hungry Chinese investors line up floundering British targets

Linda J. Dodson

Deal advisors have received a number of inquiries out of China about investment opportunities, particularly in the manufacturing, automotive, technology and natural resources sectors.

Hogan Lovells partner Liang Xu says some investors are actively targeting the European teams of US companies struggling to keep their overseas operations afloat. Meanwhile, a number of deals are being re-marketed to Chinese clients for a fraction of the original price, he adds.

Despite the appetite for deals, Xu says Chinese suitors face an increasingly hostile environment abroad as governments shore up their defences against the threat of hostile bids. “The biggest challenge is the rise in foreign investment control in host countries,” he says.

Britain, for example, is bringing forward legislation to significantly widen the government’s ability to screen transactions. The framework, known as the National Security and Investment Bill, is expected to see as many as 200 sensitive deals reviewed each year.

With just 11 deals formally reviewed by the Government on national security grounds since the current framework was adopted in 2002, the changes represent a major shift in policy.

“The concern I have, which I think is broadly shared in government, is that there are real issues with the openness of the UK economy in areas of sensitive technology,” says Tom Tugendhat, conservative MP and chairman of the Foreign Affairs Select Committee. “This is something that the Government is urgently trying to address.”

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