Chao Offers Analysis and Guidance on Recent Developments in Chinese Outbound and Onshore TransactionsMay 03, 2011
Julie Fei Sonja Steptoe
O’Melveny & Myers LLP O’Melveny & Myers LLP
213.440.7792 (cell) 323.578.1586 (cell)
O’Melveny & Myers LLP
BEIJING, CHINA -- MAY 3, 2011 -- Howard Chao, Chair of the Asia Practice Group at O'Melveny & Myers LLP, is available for interviews to explain important recent developments in the Chinese financial markets and provide guidance about how these changes affect onshore and outbound transactions involving Chinese entities. The analysis is collected in two articles, written by Chao and other members of the Asia practice, that are attracting attention from leading international investors, financial institutions, corporations, and parties to mergers and acquisitions. Executive Summaries of both articles are linked below.
As outlined in this executive summary, the white paper, “Onshore Financial Investing in China,” discusses the important trend of many financial transactions that have moved from offshore to onshore in China, and what opportunities and challenges that presents to the international investment community. The paper, which is only available in English, also presents new research showing that the number of initial public offerings fueled by domestic Chinese private equity and venture capital investors is much larger than previously reported or estimated. The authors, Chao and fellow partners Walker Wallace and Yi Zhang, analyze the many reasons for Chinese companies' growing preference for domestic investors over investors, and the other advantages that onshore investors enjoy. They also discuss the implications of these trends and offer guidance to international investors for successfully navigating the new landscape.
“The domestic private equity industry and related exit transactions have matured much faster than anyone anticipated,” says Chao. “But there continues to be an important role for international capital in China. The challenge will be how to migrate the new and always changing competitive and regulatory landscape.”
The second article, “Obtaining Funding and Approval for Chinese Outbound Investments,” co-authored by Chao and O’Melveny associate Ruchun Ji, was published in the March 2011 issue of International Financial Law Review and explores the impact of updated regulations on: bank financings for Chinese acquisitions; conversions of RMB into foreign currency for offshore investment; contractual enforceability against Chinese buyers; acquisitions by offshore holding companies and by Chinese companies with existing offshore subsidiaries; and partnerships with private equity funds. The authors also provide guidance on new strategies, opportunities, and risks in the burgeoning Chinese outbound investment arena in the piece, which is only available in English. Chao says China's restrictive regulatory environment means that the funding and execution of outbound investment transactions involving Chinese entities will not occur in the usual free market way. “The parties to those transactions should not assume that they will progress smoothly and without regulation by the Chinese government,” he says.
Chao has long been recognized as a leading authority on the Chinese financial markets and serves as a trusted advisor to those seeking successful investment strategies for cross border transactions involving Chinese entities. As well, Zero2IPO has named the Asia Practice Group as Private Equity Market Lead Legal Advisor for four of the past five years and the VC/PE Foreign Fund Raising Legal Advisor of the Year 2010. Chambers Asia recognized O’Melveny’s excellence in China by naming the Firm as a finalist for the 2011 practice awards, which will be announced in April 2011. And the readers of Private Equity International and PEI Asia named O'Melveny as the top fund formation practice in Asia.
Please contact Sonja Steptoe, Julie Fei, or Chris Schob at the email addresses or phone numbers listed above for more information and to arrange an interview with Chao.
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About O’Melveny & Myers LLP’s Asia Practice
O'Melveny & Myers LLP began its practice in Asia nearly 25 years ago, and over this time we have become one of the most respected and full-service legal service providers in the region. The Firm maintains large offices in the most important political and commercial centers of Beijing, Shanghai, Hong Kong, Singapore, and Tokyo. Most of our lawyers are native to the region, understand the local law and business practices, speak the local languages, and, most importantly, function as an integrated team that taps the Firm’s vast resources in Asia and globally, delivering value and expediency to its clients. The China practice is widely and frequently recognized as one of the strongest on the market. The Japan practice has been recommended by The Legal 500 and Chambers Global for corporate, mergers and acquisitions, and dispute resolution work. Our newest office in Singapore, opened in 2008, has grown rapidly and is a hub for corporate, finance, and private equity work for the entire South and Southeast Asia region. For more information, please visit www.omm.com.