IT WAS not so long ago that Chinese companies – state-owned and private – had a reputation for snapping up all sorts of international assets, from airports to football clubs, as they rapidly expanded overseas.

The craving for foreign trophies was so strong that dealmakers in Europe and the US would sometimes use mystery Chinese bidders as wild cards to make the sale process more competitive – and potentially lift the price of an asset. That trend has gone into reverse, with cash-strapped companies such as Fosun International and HNA Group, as well as the likes of tech titan Alibaba Group Holding, ditching expansionism and selling off assets instead.

“Some Chinese conglomerates are now accelerating their asset disposals because some are faced with liquidity issues,” said Samson Lo, Hong Kong-based head of Asia-Pacific mergers and acquisitions at UBS Group. “Those groups are under increasing pressure to raise cash and repay debt.”

After already offloading billions of US dollars in assets, Fosun has revived a plan to sell Hong Kong-based Peak Reinsurance, Bloomberg News in reported February, and it’s considering selling its minority stake in Belgium’s largest insurer, Ageas, having already sold a chunk of Banco Comercial Portugues. Fosun is also weighing options for French luxury resort chain Club Med.

Another is Dalian Wanda Group, which is considering selling a stake in mall operator Zhuhai Wanda Commercial Management Group to Abu Dhabi Investment Authority, Bloomberg reported last month. billionaire Wang Jianlin relinquished control of Zhuhai Wanda in December as part of a landmark agreement to avoid repaying pre-initial public offering investors.

Reining in

Having once encouraged Chinese companies to spread overseas, the central government in Beijing rowed back and started more closely scrutinising the debt-fuelled expansion of some conglomerates and the risks tied to them.

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The pressure to speed up disposals is particularly acute in those firms that have lost access to offshore funding markets and have US dollar needs, according to Pri De Silva, a Bloomberg Intelligence senior credit analyst in Hong Kong.

Bohai Leasing, a Shenzhen-listed arm of failed conglomerate HNA, is considering selling container-leasing business Seaco in a deal that could value the business at more than US$5 billion including debt, Bloomberg has reported.

Bohai needs to raise US$2 billion to refinance a bond in September, De Silva said. “Their willingness to reportedly monetise an unencumbered asset in Seaco speaks volumes,” he said.

A sale would mark a major step for HNA as it unwinds a global deal spree that saw it snap up stakes in companies from Deutsche Bank to Hilton Worldwide Holdings The government of China’s Hainan province seized control of HNA in 2020 after it piled up one of the country’s biggest corporate leverage loads, and the company has been streamlining its portfolio since then.

“International and good quality assets are easier to offload as there is a healthy level of interest from global buyers,” UBS’s Lo said. “The real problem is finding buyers for the local assets as many bidders, both private equity funds and strategics, are still evaluating their investments in China.”

Big tech too

Even China’s tech champions such as Alibaba are revamping portfolios and refocusing on core businesses. The e-commerce giant has been exploring options for a wide range of assets from video entertainment to its InTime department store chain, Bloomberg has reported. It hasn’t been plain sailing – the company scuppered a spinoff of its US$11 billion cloud division, and it hasn’t made significant progress in a planned listing of Cainiao logistics.

Advisers have kept busy throughout the ebb and flow by trying to orchestrate deals. More action is likely to come as Chinese companies accelerate efforts to shore up their balance sheets or boost growth.

“We’ve seen an uptick in M&A activity in the last few months, and companies are getting ready for more,” said Richard Griffiths, head of Asia M&A at BNP Paribas, based in Hong Kong. “China is back, mostly looking to sell some of the assets overseas, but also exploring some strategic acquisitions.” BLOOMBERG