HONG KONG (Reuters) - The financial services arm of state-owned China Everbright Group plans to allocate $1.5 billion of its 2017 spending to the purchase of a fund manager, private bank or insurer overseas to help it raise cash more easily and extend its presence abroad.
Chen Shuang, chief executive of Hong Kong-based China Everbright Limited (CEL) (0165.HK), said in an interview on Friday that the company was planning to “significantly” increase overseas deals, including in the financial sector.
Chinese companies have come under pressure from Beijing to rein in overseas purchases, as the government tries to stem speculation, slow capital flight and shore up the yuan.
“It’s not an easy job (for Chinese firms) to raise capital in U.S. dollars and invest in overseas markets,” Chen said.
“We certainly need to make such strategic acquisitions to help our fundraising and extend our footprint overseas.”
Chen said the firm, which raised $6 billion last year, was actively scouring America, Europe and Hong Kong for possible financial targets. He declined to elaborate.
After deals including the tie-up between UK fund managers Standard Life SL.L and Aberdeen Asset Management ADN.L earlier this year, more acquisitions are expected among asset managers and the broader financial sector in 2017.
Chen said Beijing’s capital restrictions would not prove a hurdle for the company, which manages a total of 36 funds in both yuan and U.S. dollars - but the constraints would contain corporate China’s broader ambitions overseas.
“The Chinese regulatory changes have already caused some difficulties for Chinese companies going global. It’s an irresistible trend - Chinese firms and individuals going abroad to diversify their asset allocations,” he said.
In 2014 and 2016, CEL launched two dollar funds worth a combined $460 million - its first moves to tap overseas markets and buy international know-how to upgrade China’s domestic industry.
Last summer, it teamed up with venture capital firm IDG Capital Partners to set up a $3 billion fund, China’s largest buyout fund at the time.
Chen said CEL was looking to raise another $1.4 billion to help fund the overseas push, including $600 million to be raised by its Overseas Infrastructure Fund within the year, which in 2016 acquired Albania’s Tirana International airport for an undisclosed sum.
Already invested in tech and finance, CEL, through the infrastructure fund, will further invest in infrastructure-related projects in Hong Kong and regions covered by China’s ambitious “One Belt, One Road” initiative.
CEL has been among China’s financial players that have pushed into leasing: it is the biggest stakeholder in China Aircraft Leasing Group Holdings(CALC) (1848.HK).
Chen said CALC, which leases mostly to Chinese airlines, would increase the number of its planes from 85 currently to 120 this year and 200 by 2020.
Reporting by Julie Zhu; Editing by Clara Ferreira Marques