Asia News Update

Japan: Government plans expansion of infrastructure investment in Asia by 30%

Source: The Wall Street Journal, 21 May 2015



Tokyo intends to counter China’s push to spearhead a new regional investment bank with Prime Minister Shinzo Abe’s unveiling of a plan to increase infrastructure financing by 30% in Asia. This will increase financing to around USD 110 billion in the next five years for “high-quality infrastructure investments” in Asia, which includes expanding the Asian Development Bank’s lending capacity and yen loans from the Japanese government. It emphasizes financing projects such as bridge and subway construction that may be expensive but will be environmentally friendly, disaster-proof and durable.

The plan also includes the provision of “risk money” from the Japan Bank for International Cooperation, which means nations can launch infrastructure projects without pledging government guarantee for funds. China plans to launch the Asian Infrastructure Investment Bank, with USD 100 billion in capital, since it says that multilateral organizations, like the IMF and World Bank, are being too dominated by the US and Europe. The US and Japan have stayed away from this new bank due to concerns about its governance and that it may undermine existing international lenders. 57 countries, including Germany and the UK, have expressed their intent to join the AIIB.

Automotive

China: Audi turns to connected cars to keep and attract customers

Source: The Wall Street Journal, 24 May 2015

Audi has unveiled its latest offerings, including its concept car the Audi R8 e-tron, which features autonomous-driving technology. It sees China as a significant market for high-end cars equipped with that kind of technology. On Friday, Audi announced plans to integrate Baidu Inc’s CarLife technology in cars sold in China and develop a high-speed data module with Huawei Technology Co. This is part of its connectivity strategy in China, which will be rolled out “very heavily” this year. Rupert Stadler, chief executive at Audi, says the strategy is a crucial factor in building market share. This is due to the fact that the average age of Audi drivers in China is younger than those in more mature markets.

A survey by McKinsey & Co finds that around 40% of Chinese car buyers are willing to switch car brands if the other offers an important connectivity feature exclusively, which is twice the global average. Chinese customers, which will account for 20-30% of an estimated EUR 180 billion car-connectivity market by the end of the decade, have different expectations for connected cars so foreign solutions may not work in the market. Due to this, competitor luxury brands are also looking to increase market share in China through digital offerings.


India: Renault targets small-car market

Source: Financial Times, 20 May 2015

Renault, the first European vehicle maker to launch a global model in India, wants to gain 5% of India’s potentially large car market over the next three years. It will produce and sell its Kwid hatchback in India in an attempt to produce vehicles suitable for budget-conscious consumers in Asia and Africa. Renault is cutting its reliance on mature markets, such as Europe and Russia, and plans to increase investment in India. The Kwid, which will initially be manufactured in Chennai, was designed and engineered in India.

Renault plans to export this vehicle to “nearby” emerging markets and have it manufactured as part of an expansion in other developing markets such as Brazil in time. Navi Radjou, an expert on low-cost manufacturing and fellow at Cambridge Judge Business School, says, “This launch is significant, not just for the company but for models of truly global design and production… In the next stage of globalisation, more companies will view countries such as India not just as new markets but as bases for developing new products.” Though Renault has had success in India with its Duster sport-utility vehicle, analysts think that the Kwid will struggle against competitors since India’s ultra-competitive small car market will be tough for Renault, which has limited dealerships in the country with no history of selling small vehicles.   


Vietnam: New assembly plant to be opened by PSA, Dongfeng

Source: Automotive News Europe, 21 May 2015 

A new assembly plant in Vietnam will be opened and production has already begun in Malaysia for a joint venture between PSA/Peugeot-Citroen and Dongfeng Motor Group. The venture aims to sell 8,700 vehicles in the ASEAN region this year and wants to increase sales of locally produced and imported vehicles to 70,000 by 2020.

In Malaysia, Dongfeng Peugeot is cooperating with Naza Group to produce compact cars. It plans to begin assembling in Vietnam later this year in partnership with THACO Group.The joint venture agreement had the two firms aim to sell 1.5 million vehicles a year starting in 2020. The agreement also has then considering the setting up of a new company responsible for sales in the Asia-Pacific region, especially in Southeast Asia.

Chemicals

China: DSM and NHU form JV to produce polyphenylene sulphide plastics compunds

Source: Chemicals Technology, 22 May 2015

The joint venture between Royal DSM and NHU, which is expected to be closed within a few months, will be named DSM NHU Engineering Plastics (Zhejiang) with DSM owning 60% and NHU owning 40%. The JV will produce engineering plastic compounds based on polyphenylene sulphide polymer supplied by NHU from its existing Zhejiang plant to serve the automotive, electrical and electronics and industrial markets. The sales of the JV, including those in China, will be marketed under the Xytron PPS brand. 

Roelof Westerbeek, DSM engineering plastics president, says, “The new joint venture will help DSM deliver on its growth strategy, and will reinforce its high-performance plastics portfolio as a key growth driver." DSM’s position as a preferred solutions provider will be enhanced by the addition of PPS products to its portfolio.


South Korea: Daewoo and Daelim selected by S-Oil to construct USD 4.1 billion refinery

Source: Chemicals Technology, 21 May 2015

The KRW 4.5 trillion refinery will be built in Ulsan, South Korea. Daewoo Engineering & Construction and Daelim Industrial’s scope of work will include construction of a residue upgrading complex and olefin production facilities, which will process bunker C oil and other heavy fuels into gasoline, propylene and various products for S-Oil. To manage the work under the contract, a consortium has been formed with Daelim holding a 55% stake and Daewoo holding a 45% stake.

An investment of KRW 1 trillion will be made by S-Oil to complete design and other preparatory works, while the remaining KRW 3.5 trillion will be used to construct the complex. The project is said to be the largest-of-its-kind construction project in South Korea and will be built on Korea National Oil’s previously-owned crude oil storage site.


Malaysia: Start-up of USD 16 billion RAPID project postponed by Petronas

Source: Chemicals Technology, 19 May 2015

Due to the drop in oil prices over the past year, Petronas will postpone the start-up of its USD 16 billion Refinery and Petrochemical Integrated Development project in Johor, Malaysia. It has also reviewed and re-bid certain engineering, procurement and construction contracts for the project due to the weak oil prices.

The RAPID project will now be commissioned during mid-2019 instead of the originally planned year of 2016, after being delayed once until 2017. Wan Zulkiflee Wan Ariffin, CEO and president of Petronas, says, “We've taken the decision that some of the chains in the petchem will be rephased. Basically, some of the chains, like the phenolic chains, will come later.”

Construction & Property Development

Singapore: Home buyers to have access to private property sales data from 5 June

Source: The Straits Times, 19 May 2015

Starting 5 June, developers will have to submit a range of transaction data every week to the Controller of Housing, according to the Ministry of National Development. The information, which includes sales volumes and transacted prices of individual units and the value of any benefits extended to buyers, such as cash rebates, stamp or legal fee absorption, rental guarantees or furniture vouchers, will be published by the Urban Redevelopment Authority website every week due to reforms aimed at improving market transparency and safeguards that are part of amendments to the Housing Developers (Control and Licensing) Act. The value of benefits offered will be disclosed due to improved standard forms, which will take effect on 20 July.

The Housing Developers (Show Unit) Rules will also be changed on 20 July, with the aim to ensure all show units are accurate depictions of the apartments for sale. Showflats that have been set up and are available for viewing before 20 July will be exempted from the new requirements. But purchasers must be informed of the differences between the show unit and the actual unit as shown in the approved building plan.


Australia: Chinese investment in the country shifts to commercial real estate

Source: Financial Review, 25 May 2015

A KPMG/Sydney University annual study shows that private Chinese money has overtaken state-owned-enterprise investment for the first time. The Chinese investment has shifted to commercial real estate and infrastructure, which shows that Australia is still attractive to Chinese capital despite the end of the iron ore commodities boom. The study shows that Chinese investment had 79%, or USD 7.5 billion, go towards commercial real estate, infrastructure and leisure industry investments.


Reflecting both the increasing role of private business in China, the pressure on SOEs to be more profitable after their offshore investment splurge in recent years, and the greater role of Chinese private investors in commercial property, private investors accounted for 66% of deal value and 51% of deals. Risks for individual Chinese investors is offset by purchasing from large Chinese developers.

China: Property sector suffering from ghost towns

Source: Channel News Asia, 19 May 2015

The number of cities built in China has outstripped the demand, with development projects in Tianjin either stalled or left unoccupied. Though there are no official figures on the number of empty cities in China, experts say the situation is seen nationwide.

Steven McCord, head of research for North China at Jones Lang LeSalle, says, “These cities are building ahead of demand, and sometimes they’re building two to three years ahead of demand, and it takes that long for the occupiers to start following the construction.” The recently launched Tianjin Pilot Free Trade Zone has helped resume work at some construction sites in Tianjin.

Consumer & Retail

Asia: Hottest retail markets now in Tokyo and Singapore

Source: World Property Journal, 19 May 2015

Tokyo is the world’s hottest city for new retailer expansion, attracting 63 new retail brands, according to a new report by CBRE, “How Global is the Business of Retail?”. This is true despite an increase in sales tax of 8% introduced in April 2014 and mixed signals in the economy. Singapore was is second with 58 new retail brands and Taipei was in fourth with 49 new brands. Hong Kong had 45 new entrants, Beijing had 34 and Manila has 24. London has remained the world’s most international shopping destination with 57.9% of international retailers present, followed by Dubai with 55.7% and Shanghai with 53.4%.

Mid-range fashion retailers remained the most active sector globally with a 21% international expansion. Luxury and business retailers expanded 20%, the second most active. Asia Pacific expansion was dominated by Luxury & Business retailers with 24% of the activity, followed by Coffee and Restaurant retailers with 22%. A majority of 79% of retailers from Asia Pacific continuing to target their own region for expansion. 41% of American retailers will focus on the Asia region. Though China is seeing a slowdown in demand, the growth of consumer spending power means it is hard for brands to resist entry. Global retail expansion is being encouraged by the core elements of globalization, technology and demographic change having a dramatic impact on the retail business. Retailers will continue to expand and look for opportunities beyond their home territories as they look to increase market share and brand profile.


China: Alibaba is fostering local brands to fight fakes

Source: Reuters, 24 May 2015

Alibaba Group Holdings Ltd is piloting a scheme to try to curb fakes at the source after being criticized and sued by Gucci. Alibaba is working with 17 shoe manufacturers in Putian, Fujian province, to cultivate home-grown brands online, offer would-be counterfeiters and alternative source of livelihood and revitalize a flagging industry. Critics say the “Made in China” scheme is misguided and that Alibaba should focus on ridding its online marketplace of widespread listings of fakes, but Alibaba say the scheme is a key anti-counterfeit initiative this year.

According to Jeff Zhang, head of Alibaba’s domestic retail marketplace, they have received over 60 requests from other industries for this scheme. Zhang says, “They're all looking for a model that can help them upgrade their local manufacturing.” The scheme aims to give those making and selling goods that infringe on others’ intellectual property rights an attractive alternative.


Asia: Middlemen becoming less essential to some in Internet age


Source: The Wall Street Journal, 21 May 2015

Some companies are relying less on middlemen since working directly with factories allows for improved transparency. This reduced reliance on middlemen follows high-profile tragedies in recent years at factories. Some companies also say that working directly with suppliers permits better relationship-handling and quality control. Li & Fund Ltd is one of these middlemen companies that has had its shares fall 70% from its 2011 peak.

IT has also lost business from important clients including Kate Spade & Co. and Wal-Mart Stores Inc. E-commerce is increasing costs since it results in lots of smaller orders that don’t take advantage of economies of scale. This has caused the global supply-chain landscape to be more complex.

Energy, Resources & Environment

Australia: Inpex, Chevron facing delays as worries increase on LNG start-ups

Source: Financial Review, 25 May 2015

Bottlenecks at a South Korean shipyard that is manufacturing an offshore platform have caused Inpex Corporation to struggle to keep its USD 34 billion Ichthys LNG project in Australia on schedule. The bottlenecks at the South Korean shipyard are due to the “heavy workload”. This problem highlights the risks that remain in the LNG projects in Australia during the next two or three years.


Wood Mackenzie predicts delays at Ichthys, Chevron’s Wheatstone LNG project and a slower than expected ramp-up of the Gorgon project. This would cause a 11 million tonnes reduction in Australia’s 2015-2019 LNG output than it had forecast six months ago. Wood Mackenzie expects the Ichthys project and Wheatstone Petroleum project to startup in mid-2017. It expects the Gorgon project to start up its LNG trains in 9 month gaps instead of the 6 months estimated by Chevron, which means full capacity will not be reached until late 2018.

Japan: Major cities not waiting for Tokyo policy on energy mix with ambitious goal for renewables

Source: The Japan Times, 24 May 2015

The Japanese government is expected to announce a national long-term energy plan for 2030 by the end of the month that will includes a “best energy mix” scenario. The Ministry of Economy, Trade and Industry forecast that by 2030, nuclear power would remain the cheapest source available, but the cost of renewables will also drop, just not as low as nuclear. METI wants Japan’s energy mix in 2030 to consist of 7% LNG, 26% coal, 3% oil, 22-24% renewable energy and 20-22% nuclear energy. The major sources in renewable energy are expected to be 8.8-9.1% hydro, 7% solar, 3.7-4.6% biomass, 1.7% wind and 1-1.1% geothermal.

Renewables now account for more than 12% of Japan’s electricity and mayors see small and midsize solar facilities and biomass facility to be key sources of renewable energy by 2030. Cities are setting their own local energy policy, all with different targets and policies for the future, with most based on logical assumptions about future advancements in both renewable energy generation technology and the development of more energy-efficient houses, cars and electronic goods. Due to this, these local energy policies are more ambitious than those being pursued by the central government as a national goal.


Indonesia: Mitsui eyes coal gasification projects to expand its investments

Source: Jakarta Post, 18 May 2015

Mitsui Indonesia’s plan to increase investment has not time frame or investment value released. Mitsui want to increase the value of coal so it can go beyond an energy source and be supplied as raw materials for the domestic fertilizer industry. Mitsui is conducting a joint study on coal gasification in Kalimantan and Sumatra with Pupuk Indonesia Holding Company to support the government’s plan for food sufficiency.

Japan’s Ministry of Economy, Trade and Industry is cooperating with Indonesia’s government to develop a coal gasification project, involving Pupuk Kujang and IHI Corporation. Mitsui has shown an interest in coal liquefaction in ethanol. These two projects would be a solution for Indonesia’s attempt to achieve self-sufficiency in both food and energy.

Financial Services

Singapore: Manulife will list US office assets in Singapore

Source: The Australian, 25 May 2015

Manulife Financial Corp will list up to USD 450 million of US office properties on the Singapore stock exchange. The IPO is planned for Q3/2015 and will be structured as a real estate investment trust. This could be among a handful of US assets taken public in Asia if successful. LMA International NV was the last US company listed in Singapore in March 2005. The Manulife IPO would target Asian investors looking for stable cashflows and higher-yielding assets amid low yields on offer in the bond market.

Singapore has a large investor base and is Asia’s top destination for REIT listings. The IPO is part of Manulife’s strategy to build its brand in Asia. If successful, it could mark a revival of the Singapore IPO market, which has been weak this year due to greater interest from investors in soaring stocks in Hong Kong and China.


Indonesia: Court weighs legal challenge to banking regulator OJK

Source: Bloomberg, 25 May 2015

The constitutional court of Indonesia is finalizing a review of a legal challenge to the role of the country’s financial regulator, OJK, which was created to improve supervision following the banking collapses during the 1997-1998 Asian financial crisis. The court is assessing an appeal against eight articles of the law in a challenge to the authority, definition and fees of the new regulator.

The plaintiffs bringing the case are looking to either dismiss the OJK, which returns banking supervision to Bank Indonesia, or for the OJK’s fees to be paid to the state budget. Syamsudin Slawat Pesilette, the case’s legal advisor, says, “The OJK doesn’t follow the state framework as it took authority which was under other institutions and later on it will become an empire, an independent institution, which then will be difficult for the state to control.” OJK is likely to keep supervising non-banking institutions if banking supervision is moved back to the central bank.


Myanmar: More strengthening of local financial institutions required

Source: The Nation, 25 May 2015

According to Bernd Kuzmits, regional director of Germany’s Division for Technical Cooperation Instruments at Federal Ministry for Economic Cooperation and Development, says that Myanmar must strengthen financial institutions due to the limited lending to small and medium-sized enterprises and lower number of bank accounts held by citizens. This means that the majority of people have no significant role in the financial sector, making it very weak. The German Agency for International Cooperation has selected three banks, SMIDB, Kanbawza and Yoma Bank, to train so they can come up with tailor-made financial services to SMEs. They were chosen since they met banking management standards.

Kuzmits says, “As a first step, we are providing financial assistance for SMEs through the three local banks. As second step, necessary assistance is being provided for the upgrade of the associations which offer banking courses, like Yangon Institute of Economics and Myanmar Banks Association. As a third step, efforts are being made to exercise international fiscal standards. Finally, we will help support the emergence of better laws and procedures for the fiscal sector. Germany is cooperating with the Banks and Monetary Development Committee to implement this.” The project is set to run until the end of 2016 and will boost SME development. Despite SME’s accounting for more than 90% of the country’s business, lack of access to funding has resulted in weakness in expanding their operations.

Logistics & Transportation

Malaysia: 11MP ensures growth for aviation and logistics industries

Source: New Straits Times, 21 May 2015

According to Seri Liow Tiong Lai, the Malaysian Transport minister, the 11th Malaysia Plan will ensure further growth in the transportation and aviation industries. It will have a particular emphasis on strengthening the aviation industry. Liow wants Malaysia to enter the world’s top 10 most competitive logistics industries by the end of 11MP in 2020. Liow says, “The 11MP is a comprehensive plan that takes care of all communities and places emphasis on productivity and competitiveness.”

South Korea: Mikpo New Port seeks terminal operator

Source: IHS Jane’s, 22 May 2015

Mikpo New Port, which will open a new car carrier terminal in June, is looking to choose a terminal operator through a competitive bidding process. The operator that is chosen will sign a 5-year contract, which will be worth approximately KRW 427 million of annual rent. In a pre-bid meeting on 13 May, local major logistics companies such as CJ Korea Express, Daehan Logistics, Dongbu Logistics, Sebang and Sun Kwang took part.

Philippines: Davao port PPP gains interest from Europe

Source: Business World Online, 22 May 2015

The auction for the PHL 18.99 billion Davao Sasa Port Modernization Project under the public-private partnership program has received interest from two European companies, France’s Bollore S.A. and Spain’s Obrascon Huarte Lain, S.A. According to Rene K. Limcaoco, Undersecretary at the Department of Transportation and Communications, five firms have bought bid documents for the project. Besides those two European companies, San Miguel Holdings Corp., Davao International Container Terminals, Inc. and Singapore’s Portek International Pte. Ltd are prospective bidders for the seaport project. The winning bidder will operate and maintain the port, under a build-operate-transfer scheme, for 30 years.

The Sasa project involves modernizing existing infrastructure and the construction of a new apron, container yards, linear quay, warehouses and expansion of its backup area and installation of ship-to-shore cranes and rubber-tired gantry. This project is the first involving a seaport under the government’s PPP program. It has been criticized by local government and Davao’s business community for being priced beyond local developers’ capacity.

Manufacturing & Industrial

China: Gauge of manufacturing remains sluggish on economic slowdown

Source: Bloomberg, 21 May 2015

Government efforts to cushion a slowdown in China have had a tepid response, as seen in the gauge of Chinese manufacturing remaining sluggish. The preliminary PMI from HSBC and Markit was at 49.1 for May, thus missing the median estimate of 49.3 in a Bloomberg survey. The Chinese government has added fiscal loosening to monetary easing and relaxed financing rules for local government in efforts to prevent a hard landing. Despite credit supply being sufficient, the demand has remained weak with manufacturing output falling to a 13-month low and employment remaining in the contraction zone.

In a bid to increase growth, policy makers are considering relaxing rules for bond sales and banks have been instructed to keep funding projects that were approved before year-end 2014 even if repayments cannot be paid. According to chief China economist at Nomura Holdings Inc in Hong Kong, Zhao Yang, “The loosening fiscal policy will lead to rapid growth of infrastructure building and thus partially offset the slowdown in property investment and other investment, improving short-term growth momentum.” Policy makers are focusing on reversing the economic downturn despite their desire to accelerate China’s structural reforms.


South Korea/India: Ties enhanced in infrastructure and manufacturing

Source: The Korea Herald, 19 May 2015

South Korea and India have vowed to enhance economic ties with the ability to create win-win partnerships in infrastructure, information and communication technology, cultural contents, software, energy and manufacturing. During a meeting between the leaders of the two countries, Indian Prime Minister Narendra Modi expressed his intent to transform India into an investment destination. He wants South Korean businesses to invest more in India since it is seeking to transform itself into a global manufacturing hub by 2022.

Japan: Manufacturing activity rebounds in May to a three-month high

Source: Business Insider, 20 May 2015

The preliminary JMMA-Markit PMI gauge for activity across Japanes factories increased in May to a three-month high of 50.9, an increase from the 49.9 seen in April. New export orders and employment growth increased at a faster pace than previously reported with output and new orders also increasing. In the March quarter, the Japanese economy expanded at a 2.4% annualized rate. Employment rose at the quickest rate since December 2014 and purchasing activity increased for the third time this year.

Pharmaceuticals & Healthcare

Asia: Valeant CEO expects large increase in Asia revenue by 2020

Source: Reuters, 19 May 215

Michael Pearson, Chief Executive at Valeant, says that exposure to Asia’s growing middle class could lead to quintupling of sales in that market to around USD 5 billion by 2020. He says that Asia has the “best growth prospects of any region in the world and it’s led by China.” He says that Asia is expected to generate USD 1 billion in sales this year and all of its units will grow 10% as well. Valeant has acquired many companies, but Pearson declined to discuss future acquisition targets.

Australia: Strides Arcolab to purchase generic drugs business from Aspen Pharmacare

Source: The Economic Times, 21 May 2015

The purchase of Aspen Pharmacare Holding’s generic drugs business in Australia, along with some branded drugs, by Strides Arcolab will be for a purchase price of around AUD 380 million. The deal will be financed through internal accruals and debt and is expected to be closed by the end of Q2/2015. The acquired company will operate under the Arrow Pharmaceuticals brand and will sell both non-prescription and prescription products.

Malaysia: KPJ Healthcare looks to increase health tourism revenue to MYS 90 million

Source: The Star Online, 25 May 2015

This increase is compared to the MYS 78 million of revenue from health tourism in 2014. To reach this goal, KPJ Healthcare will continue to bring in new technology and innovation while expanding its services. KPJ Healthcare will also continue engaging foreign agents in several key markets overseas to help patients select a KPJ hospital that best meets their treatment requirements.

The medical tourism industry in Malaysia had its growth rate of income exceed the 10th Malaysia Plan target by 10% every year. For the 11th Malaysia Plan, the income is forecast to grow 15% annually. The increasing number of medical travelers has been attributed to joint efforts between the Malaysian government and private hospitals and agencies to make the Healthcare National Key Economic Area an essential part of the Economic Transformation Programme.

Private Equity

China: Foreign hedge funds have mixed success in the market

Source: Financial Times, 24 May 2015

The six hedge funds that were granted access to China two years ago have had mixed success, with only four of the six included in the qualified domestic limited partner programme successfully raising assets from Chinese investors. Winton and Oak Tree have been the least successful, with several consultants claiming their reluctance to make a large financial commitment to the Chinese market is the cause of their lack of success. Though some find this surprising due to the effort made to secure the QDLP license, others see it as understandable due to the substantial difficulties in gaining traction with investors under the QDLP scheme. The four funds that were more successful, Citadel, Man Group, Och-Ziff and Canyon Capital, had to gamble on the fact that their significant expenses of building a sales and distribution team in China would pay off, despite the fact that a limit of USD 50 million was placed on how much they could raise.

China has traditionally not had a hedge fund market, so the funds were a hard sell for domestic Chinese investors. Kenny Lam, a partner of the China tax management group in Shanghai at PwC, says that the marketing efforts “are not very cost effective” since it involved either hiring Chinese banks to promote their products or sending a Hong Kong-based marketing team to the mainland. Interest in foreign hedge funds has also become less appealing due to the launch of the Qualified Domestic Investment Enterprise scheme in February, which allows mainland asset managers that are registered in Shenzhen to invest in overseas instruments. The eight domestic managers are able to raise up to USD 1 billion altogether from mainland investors. In March five additional managers were approved under the QDLP scheme, with talk of a change in policy to allow the 11 managers to raise up to USD 5 billion between all of them.


Hong Kong: Baring Private Equity Asia to purchase majority stake in Vistra Group

Source: Reuters, 22 May 2015

IK Investment Partners, Vistra Group’s majority shareholder, will divest its entire stake to Baring Private Equity Asia though no financial terms of the transaction have been disclosed. After the completion of the transaction, Vistra Group’s management team will continue to have a significant shareholding. The financial advisors for Vistra Group were JP Morgan, Morgan Stanley and Lazard. Goldman Sachs and Credit Suisse advised IK Investment Partners and Linklaters advised Baring Private Equity Asia in the transaction.

India: Private equity majors vying for USD 500 million stake in L&T Finance


Source: The Economic Times, 19 May 2015

The USD 500 million minority stake in L&T Finance will be likely struck at a 10-15% premium to L&T Finance’s current market price if the deal occurs. L&T is likely to restrict management rights that private equity investors normally seek, though the deal will give the investor a large block of shares and board representation.

Bain and Baring have been the most aggressive in showing interest, though Carlyle Group and Advent have also shown interest. If the deal goes through, the funds will be used for business expansion plans. It is still unclear if L&T will choose one large investor or two. The deal could also fall apart since the deal making is still not definitive.



Technology, Media & Telecommunications

China: Development of high-speed broadband to accelerate to increase speed and reduce prices

Source: Reuters, 13 May 2015

According to China’s State Council, telecom firms should move to reduce prices and increase urban broadband speeds by around 40%. This investment could benefit home-grown players such as Huawei Technologies and ZTE Corp. as well as global network equipment makers such as Ericsson and Nokia Oyj’s Alcatel-Lucent.

Officials had previously earmarked RMB 2 trillion to improve China’s broadband infrastructure by 2020, but no actual number has been released for the required investment. The expansion of a pilot scheme for broadband services this year is part of China’s attempts to open up the telecoms market and encourage increased competition.


Thailand: Samsung Electronics will halt TV production in Q1

Source: Reuters, 20 May 2015

Samsung Electronics will halt TV production in Thailand in order to streamline its global manufacturing footprint in Q1. The company has made efforts to increase output across segments including smartphones and displays in Vietnam recently, and had previously announced a USD 560 million investment to construct a consumer appliances complex in Vietnam.

Samsung Electronics did not disclose if the TV production that is being halted in Thailand will be moved to Vietnam. LG Electronics, who ranks second in the global TV market and comes behind Samsung Electronics, plans to move TV production from Thailand to Vietnam due to lower labor costs and the fact that China-based suppliers are closer in Vietnam.


Taiwan: Application for merger between Asia-Pacific Telecom and Ambit confirmed by NCC

Source: Taipei Times, 21 May 2015

The National Communications Commission will consider both companies as the applicant when reviewing the qualifications of bidders for a frequency spectrum auction this year. There is concern about the merger between Asia-Pacific Telecom and Ambit over possible collusion in the auction if they are represented as two separate bidders. The NCC has two months to complete the review of the merger based on the Administrative Procedure Act, though it may spend more time reviewing the case if it deems such a moves necessary.

Other service providers have urged the NCC not to allow APT or Ambit participate in the auction for the frequency band between 2.5-2.6 GHz after discovering that APT was using Taiwan Mobile’s core network through a roaming partnership instead of building its own infrastructure. However, NCC has found that APT was not the only service provider to have been sharing a core network with other carriers.