Chinese overseas buying increasingly shifts from state to private

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Chinese is exerting their influences this time by slowing at home to buy strategic assets on the cheap... very clever - head and tail they all win...

Growth in Chinese private investment
THE AUSTRALIAN SEPTEMBER 23, 2014 12:00AM

Matt Chambers

Resources Reporter
Melbourne
Miner Col Radley (42) back at work at Northparkes Mine in Parkes, NSW. Radley, along with 340 employees of the Northparkes M...
Rio TInto’s Northparks copper mine in NSW. Source: News Limited
CHINESE private investment in Australian resources is expected to continue growing as private enterprises increasingly link with state-owned enterprises looking for nimble partners, and debt financing becomes easier to get.

Scott Gardiner, managing partner at King & Wood Mallesons, told the International Mining and Resources Conference in Melbourne yesterday that while deals were small in number and size, they were increasing.

“The trend is clearly heading in a positive direction, so I would expect we will see more private transactions in Australia,” Mr Gardiner said

“I also think we will see a greater interaction between the (Chinese) private sector and state-owned enterprises,” he said.

“There is a nimbleness that private investors can bring to Australia that to date the state-owned enterprises haven’t had.”

Illustrating the nimbleness of the private enterprises, he pointed out that all hostile Chinese bids for listed companies here had been made by private companies.

Mr Gardiner said the 2013 deal where private Chinese company Chengdu Tianqi Industry teamed up with China Investment Corp to buy Talison Lithium (owner of the Greenbushes mine in Western Australia) for $646 million was an example of the state-private partnerships that could become more common.

Private Chinese firms have been more aggressive in Australian resources sector in the past couple of years, while state-owned companies that bought up big after the global financial crisis have stepped back as investments such as Citic Pacific’s beleaguered Sino Iron project have struggled.

Private deals, such as China Molybdenyum’s $900m purchase of Rio Tinto’s NorthParkes copper mine in NSW, have not been large, possibly due to recent changes to the approvals process that make it easier for deals of less than $US1 billion to get approval from the National Development and Reform Commission.

Paul Glasson, chairman of Shanghai-based Sartori Investments, said capital options for ­private entities were growing.

“Up until last year it was nearly impossible for a privately-owned enterprise to get debt funding (from an SOE) for an overseas project, but that is changing,” Mr Glasson said.

But it was not all smooth sailing for small firms, a Chinese private equity investor told the conference. Biao Chen, managing partner at Jinjiang Mining Fund, said Chinese banks were much keener to lend to state-owned enterprises because of the security they provided, regardless of the quality of the minerals project being funded.

“The Chinese banking system is not purely market-based, it is probably half market-based,” Mr Chen said.

“Fortunately, the current government realises this problem and is trying to change it.”
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RE: Chinese overseas buying increasingly shifts from state to private - by greengiraffe - 22-09-2014, 11:10 PM

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