SHENZHEN: An increasing number of Chinese companies will seek mergers & acquisitions (M&A) home and abroad to drive up growth momentum, said industrial insiders.

"Even though M&A is still at the beginning stage in China, more Chinese companies are now gaining its know-how and some of them will go for it for business expansion," said Wang Wei, chairman of China Mergers & Acquisition Association.

The non-profit and non-government organization, under All-China Federation of Industry and Commerce (ACFIC), set up an office in Shenzhen recently after Shanghai and its headquarters Beijing. ACFIC aims at boosting the M&A transactions in South China where private equity and venture capital are brisk.

"The establishment of Shenzhen office will further strengthen the exchanges and cooperations between our members, government agencies, financial institutes and our international counterparts. It will also promote the regional industrial adjustment and resource optimization in South China," Wang said.

The office will study foreign capital M&A, and trans-national M&A and small-and medium-sized enterprises M&A, which will prompt the companies to innovate and make full use of the M&A transaction methods as well as other financial tools, he added.

Meanwhile, it will play a significant role in promoting the regulation and maturity of the M&A market in the Pearl River Delta area and accelerating the region's financial innovation.

Xu Anliang, deputy secretary general of Shenzhen Municipal Government, said in the opening ceremony of Shenzhen office that M&A would play an active role in South China.

"Companies' demands are on the rise for restructuring, private equity, financing, IPO, M&A and industrial integration amid fast-growing economy of Hong Kong, Macao and Guangdong province as well as the acceleration of globalization of Chinese companies," Xu said.

The local government has issued a package of incentive policies for the financial industry and to develop the city into a regional financial hub, he added.

According to the latest report by Dealogic, a leading data tracking company, the M&A transactions increased by 4 percent to $387.3 billion in Asian market in the first half of this year mainly driven by Chinese and Indian companies' deals.

(HK Edition 06/30/2008 page1)