Latin Finance - November/December 2010 - 12

latam-china

China Links Proliferate
by Natalie Feary

Cultural barriers remain, but the China-LatAm relationship is starting to blossom. Both sides hope to convert dialogue into more frequent large transactions.
atAm-China ties are strengthening by the day, with the biggest acquisition on record by a Chinese ﬁrm in LatAm taking place in October. A visit to the region by China’s president, plans by LatAm’s biggest miner to list in Hong Kong and tough negotiating by the region’s asset sellers illustrate the growing complexity of the alliance. The actual ﬂow of money is still relatively minor. Reports of multibillion dollar oil supply deals being signed with Venezuela, Brazil and Ecuador lack convincing detail and market participants on both sides say that much of it is just talk. But positive momentum is building. “We see Latin America as a very important market for asset allocation,” says He Ludwig, head of public markets investment department at China Investment Corporation (CIC), the sovereign wealth fund with around $300 billion in assets under management (AUM). The debate is swiftly moving from initial expectations that China would seek to replicate its experience in Africa by purchasing cheap commodities from ideological fellow travelers. LatAm owners are demanding higher prices, and Chinese investors are also interested in portfolio investment. Meanwhile, Chinese direct buyers appear less focused on majority control. “Many Chinese ﬁrms are starting to look

L

at the Korean and Japanese investment models,” says Erik Bethel, managing partner of SinoLatin Capital, a ﬁnancial advisory and private equity ﬁrm specializing in investments between LatAm and China. “Rather than take a majority equity position, they take smaller stakes, which shows a real interest in developing good, long-term o take agreements.”

Brazil Drives Hard Bargain

While language and culture may stand in the way, trade ﬂow is rising. Increased LatAm government support, more free trade agreements (FTAs) and physical presence within each other’s region are some of the moves suggested in order to strengthen China-LatAm ties. A surge in M&A highlights the change in China-LatAm ﬂow, albeit from a low base. At the start of October, China Petroleum and Chemical Corporation (Sinopec) acquired a 40% stake in Repsol Brazil for $7.1 billion, making it the biggest acquisition by a Chinese ﬁrm in LatAm on record, according to Dealogic. The deal demonstrates the beneﬁts of doing a strategic deal with China, as opposed to just extracting cash via an IPO, says the buyer’s advisor. Access to Sinopec’s technical and crude marketing expertise, as well as ties to an exploration major, were major beneﬁts

12 LATINFINANCE

November/December 2010

Latin Finance - November/December 2010

Table of Contents for the Digital Edition of Latin Finance - November/December 2010

Latin Finance - November/December 2010
Contents
Latam-China Flows
Boutique Investment Banking
Infrastructure Investment
Banks of the Year 2010
Sustainable Banking
Central America
Mezzanine Financing
Petrobras Equity Jumbo
Xstrata Interview
Latin Finance - November/December 2010 - Latin Finance - November/December 2010
Latin Finance - November/December 2010 - Cover2
Latin Finance - November/December 2010 - Contents
Latin Finance - November/December 2010 - 2
Latin Finance - November/December 2010 - 3
Latin Finance - November/December 2010 - 4
Latin Finance - November/December 2010 - 5
Latin Finance - November/December 2010 - 6
Latin Finance - November/December 2010 - 7
Latin Finance - November/December 2010 - 8
Latin Finance - November/December 2010 - 9
Latin Finance - November/December 2010 - 10
Latin Finance - November/December 2010 - 11
Latin Finance - November/December 2010 - Latam-China Flows
Latin Finance - November/December 2010 - 13
Latin Finance - November/December 2010 - 14
Latin Finance - November/December 2010 - 15
Latin Finance - November/December 2010 - 16
Latin Finance - November/December 2010 - 17
Latin Finance - November/December 2010 - Boutique Investment Banking
Latin Finance - November/December 2010 - 19
Latin Finance - November/December 2010 - 20
Latin Finance - November/December 2010 - 21
Latin Finance - November/December 2010 - 22
Latin Finance - November/December 2010 - 23
Latin Finance - November/December 2010 - 24
Latin Finance - November/December 2010 - 25
Latin Finance - November/December 2010 - Infrastructure Investment
Latin Finance - November/December 2010 - 27
Latin Finance - November/December 2010 - 28
Latin Finance - November/December 2010 - 29
Latin Finance - November/December 2010 - 30
Latin Finance - November/December 2010 - 31
Latin Finance - November/December 2010 - 32
Latin Finance - November/December 2010 - 33
Latin Finance - November/December 2010 - 34
Latin Finance - November/December 2010 - 35
Latin Finance - November/December 2010 - Banks of the Year 2010
Latin Finance - November/December 2010 - 37
Latin Finance - November/December 2010 - 38
Latin Finance - November/December 2010 - 39
Latin Finance - November/December 2010 - 40
Latin Finance - November/December 2010 - 41
Latin Finance - November/December 2010 - 42
Latin Finance - November/December 2010 - 43
Latin Finance - November/December 2010 - 44
Latin Finance - November/December 2010 - 45
Latin Finance - November/December 2010 - 46
Latin Finance - November/December 2010 - 47
Latin Finance - November/December 2010 - 48
Latin Finance - November/December 2010 - 49
Latin Finance - November/December 2010 - 50
Latin Finance - November/December 2010 - 51
Latin Finance - November/December 2010 - 52
Latin Finance - November/December 2010 - 53
Latin Finance - November/December 2010 - 54
Latin Finance - November/December 2010 - 55
Latin Finance - November/December 2010 - 56
Latin Finance - November/December 2010 - 57
Latin Finance - November/December 2010 - 58
Latin Finance - November/December 2010 - 59
Latin Finance - November/December 2010 - 60
Latin Finance - November/December 2010 - 61
Latin Finance - November/December 2010 - 62
Latin Finance - November/December 2010 - 63
Latin Finance - November/December 2010 - 64
Latin Finance - November/December 2010 - 65
Latin Finance - November/December 2010 - 66
Latin Finance - November/December 2010 - 67
Latin Finance - November/December 2010 - Sustainable Banking
Latin Finance - November/December 2010 - 69
Latin Finance - November/December 2010 - Central America
Latin Finance - November/December 2010 - 71
Latin Finance - November/December 2010 - 72
Latin Finance - November/December 2010 - 73
Latin Finance - November/December 2010 - 74
Latin Finance - November/December 2010 - 75
Latin Finance - November/December 2010 - 76
Latin Finance - November/December 2010 - 77
Latin Finance - November/December 2010 - 78
Latin Finance - November/December 2010 - Mezzanine Financing
Latin Finance - November/December 2010 - 80
Latin Finance - November/December 2010 - 81
Latin Finance - November/December 2010 - Petrobras Equity Jumbo
Latin Finance - November/December 2010 - 83
Latin Finance - November/December 2010 - 84
Latin Finance - November/December 2010 - 85
Latin Finance - November/December 2010 - Xstrata Interview
Latin Finance - November/December 2010 - 87
Latin Finance - November/December 2010 - 88
Latin Finance - November/December 2010 - Cover3
Latin Finance - November/December 2010 - Cover4
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