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13 February 2012

Bringing the money to west

LLORENTE & CUENCA and its partner AMO, the leading global network in the fields of strategic consulting and financial communication have drafted the study “Attracting Chinese Investment for the West”, analyzing the means to attract Chinese institutional investors used by large Western companies.

The study analyzes the initiatives and approaches implemented by the departments of Investors’ relations to attract Chinese institutional investors. The sample consists of 71 listed companies (whose capital stock ranges between EUR 1 and 100 billion) across 12 countries (Europe, North America and Latin America). Several Spanish companies of all sectors which are listed on IBEX 35 took part in this survey and answered the questions raised by LLORENTE & CUENCA.

Are brokers an essential tool to attract Chinese institutional investors? What is the appropriate dialogue level for this type of investor? Can Chinese institutional investors be contacted from the countries of origin of the Western corporations? These are some of the questions that the survey has answered.

Among the main conclusions drawn from the study, the following should be highlighted:

Spain is one of the countries with few Chinese institutional investors among its shareholders compared to other European countries such as Germany and France.

– Managers of European companies are more advanced in terms of proactively addressing Chinese institutional investors. In this sense, most of the Spanish, French and Germany companies confirmed having a specific program of Investor Relations in order to attract Chinese institutional investors.

– The survey also shows that Chinese institutional investors are passive as regards exerting their rights as shareholders and conservative in relation to the risks they are willing to assume.

– Professionals from both the UK and the U.S. say that one of the main reasons for not addressing Chinese investors yet is the lack of transparency of their funds, even though most of the respondents (from all countries) do not think that the investment decisions of these funds are based on political reasons.

– This study highlights that the volume of Chinese institutional investors –especially “Qualified Domestic Institutional Investors”, who receive the official authorization of the Government to invest in foreign companies– still represents a minimal figure for most listed Western companies. The few exceptions are the cases when alliances have been made between Chinese funds and Western infrastructure groups.

Juan Rivera, Partner and Managing Director of LLORENTE & CUENCA in Mexico

 

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