By Quentin Webb and Daisy Ku
CAMBRIDGE, England, Oct 16 (Reuters) - Financiers and executives are betting on a recovery in cross-border dealmaking, powered in large part by China, as the financial crisis recedes and the global balance of economic power shifts eastward.
Cross-border mergers and acquisitions (M&A), which at the best of times can fall foul of politics, especially where sensitive industries or rising powers such as China are involved, suffered disproportionately during the financial crisis.
But at a Cambridge University conference on the subject on Friday, the 100-plus delegates, including bank chiefs, top Wall Street lawyers, and chief executives, showed it was back on the agenda for many.
Jiang Jiangqing, chairman of Chinese bank ICBC <0349.HK>, the world's biggest bank by market value, told the conference: "Mergers and acquisitions are the most discussed topic among Chinese entrepreneurs and company heads."
But, speaking through an interpreter, he said mergers could be a "battlefield rather than a rosy garden".
"We are newcomers to the international M&A markets, so we want to be very prudent," he said.
Goldman Sachs Co-Chief Executive Richard Gnodde said: "As the centre of economic activity shifts east, I think major corporates in Europe and the U.S. are going to be forced into M&A of significant scale to drive ongoing growth."
Gnodde said this upswing in activity would bring a range of deal structures, including more deals in stages that perhaps start with a joint venture, rather than simple takeovers.
"Whenever you get into a cross-border situation, creativity is paramount, and you have to adapt to structure around local cultures and local financing markets," Gnodde told the conference.
CLOUT
Worldwide announced M&A in the year to Oct. 8 fell 38 percent to $1.508 trillion, according to Thomson Reuters data, while cross-border deals fell more than half to $454.2 billion, and foreign buys of U.S. companies plunged 83 percent.
As China grows in economic stature, it is ploughing some of the hundreds of billions of dollars it has earned from exports back into overseas acquisitions, to secure resources or technology or simply a good return on investment.
In the auto industry, for example, China is keen to access foreign know-how. And in Africa, Chinese state-backed oil companies and miners have spent billions securing natural resources and building Beijing's political clout. [ID:nLT571260]
In contrast, attempted deals in some developed markets, such as Australia and the United States, including a failed attempt to buy Unocal, have provoked huge controversy.
"When I talk to my clients about investing into the U.S., most would say no," based on China's tough previous experiences, said Frank Xu, managing director of Chinese investment bank China International Capital Corp (CICC).
Xu said deals such as long-term offtake agreements or technology transfers could be more attractive to Chinese acquirers than straightforward acquisitions.