Big Deals (November 12)

Bank of China wheeling and dealing, energy and power sector amps up, M&A action, more.

By Marine Cole

Bank of China was busy making deals this week.

It issued an $8.98 billion follow-on equity offering, bolstering secondary activity in China to $46.5 billion. This is up 118 percent from the same period last year and the highest level since the same period in 2007, which saw total proceeds of $56.8 billion, according to data provided by Thomson Reuters.

This latest offering from Bank of China is the largest secondary offering on record for China, just passing the previous record set by PetroChina in October 2007, with total proceeds of $8.93 billion.

By number of issues, this year has been the most active year on record for China. So far this year, there have been 171 offerings, 37 percent higher than the previous annual record set in 2009 with 125 offerings. Offerings from Chinese issuers currently account for 12 percent of the total global proceeds from secondary offerings this year.

The Wall Street Journal also reported this week that Bank of China is also busy in the real estate world, lending $800 million to US real estate investment trust (REIT) Brookfield Office Properties to refinance a Manhattan office building on Park Avenue. This is “the latest sign that well-capitalized Chinese investors are helping fuel the commercial real-estate recovery in US cities,” the Journal wrote.

Chinese institutions have been more aggressive than other foreign lenders. Chinese banks had $1.8 billion in commercial real-estate loans outstanding in US branches in the second quarter, according to data firm Foresight Analytics, more than double the level a year before.

In mergers and acquisitions, energy and power companies are keeping busy. Including this week’s $4.7 billion acquisition of Atlas Energy by Chevron Corp., energy and power M&As have reached $418.2 billion for the year, up 50 percent from the same time last year and 19 percent higher than full-year activity in 2009, according to Reuters.

The energy and power sector currently ranks as the top industry for worldwide merger and acquisition activity, representing 21 percent of the global total. The US is the top nation for energy and power M&As, accounting for 51 percent of global activity with 632 total deals so far this year and total value of $212 billion.

This year-to-date figure is the second highest annual total for energy and power M&A deals in the US just behind the full year 1998, which saw 797 deals worth $252.8 billion.

Goldman Sachs, which was an advisor to Chevron, currently ranks as the top global advisor for global energy and power M&As with an advisory role on 52 deals valued at $119.8 billion so far this year.

Meanwhile, despite the recent $3.4 billion announced acquisition of UK-based high speed railway infrastructure firm HS1 by a consortium of Canadian investors, M&A activity in the UK still remains behind 2009 levels, down 7 percent from the same time last year. By industry, financial services companies have seen the largest year-over-year decline, down 61 percent from last year.

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