Chinese Outbound Investment: KWM's predictions of key sectors

As part of our Chinese Outbound Investment publication, we make a number of predictions on the future of China's offshore investment. Aside from further deregulation which will substantially increase the ease of doing business, we predict the following trends.
Market and Deal Trends
China will become the world’s biggest cross-border investor in the next five years
Further deregulation and simplification of the existing regime will facilitate increasing cross-border investments
Hungry for quality assets, Chinese bidders will:
• continue to compete among themselves and grow more competitive overall
• grow less averse to going hostile
• become more involved in public deals
• become more comfortable with taking minority shareholding positions in foreign listed companies
There will be more partnerships with local players (especially in sensitive sectors), and with experienced partners like PE, SWFs and pension funds
Vendors’ obsession with clean exits will result in more Warranty & Indemnity policies accepted by Chinese buyers
Deals requiring CFIUS clearing will see more reverse break fee requirements
Conversely, with Chinese regulatory requirements becoming more relaxed, failure to obtain NDRC approval may no longer trigger a reverse break fee12
HK and PRC listed companies will lobby their exchanges for board freedom to approve large acquisitions without shareholder approval, especially as SOE reform removes large majority shareholders which made shareholder approval a formality.
Energy & Resources
Taking advantage of low equity prices, Chinese SOEs and POEs will continue to make significant acquisitions in the mining sector
Particular jurisdictions of interest will include lower risk countries such as Australia and Canada, and key African and Latin American destinations, including South Africa, Mozambique and Brazil
In oil & gas, the next 12 months is likely to see consolidation of existing assets, rather than significant acquisitions
Renewables will continue to be a focus, with wind farms in particular likely to remain in high demand
Food and Agriculture
Investment in food and agribusiness will continue to steadily grow
Smaller companies with natural, healthy and providence based brands and products will be of increased interest
China’s e-commerce providers will increase investments in supply chain providers and logistics to facilitate ecommerce trade to China in food
There will be winners and losers with investments in international infant formula providers focussing on China as regulatory changes develop.
Real Estate
Manhattan will continue to outpace London as the preferred destination for Chinese buyers
China REITs will attract non-PRC investors
At least one major Chinese real estate company will become insolvent next year
Jin Jiang will become the third largest hotel operator in the world.
China's 13th Five Year Plan
The Plan will see that:
Health will become the most hotly contested sector in the next 3 years
The services sector, including hospitality, leisure (not just hotels) and education will remain very active
Quality assets and know-how in high-tech, high-end manufacturing and environmental protection will be in high demand.
Infrastructure
Outbound M&A by SOEs in transport will continue to rise initially, but may plateau due to integration delays and domestic restructuring
Capital will shift to outbound investment linked to development projects with a broader policy benefit
AIIB will become a major funder of infrastructure projects in the Asian region in the next decade
20% of all China outbound loans will be provided for infrastructure projects
SOEs and state-owned banks will lead the way on infrastructure investment, with the private sector providing products and services along the way
Offtake/tolling contracts for major infrastructure projects will start to be priced in RMB, reflecting the currency of both users and financing
State-owned developers and contractors will rival the major Japanese and European house in Asian development work.
Media, Technology and Entertainment
Focus on sports media (football and broadcasting rights) to intensify
The so called “consumer tech bubble” is, in our opinion, only just starting to inflate – offering massive opportunities
Chinese video games and film industries will outstrip the US within 5 years
A number of UK and EU fashion retailers will be “measured up” by Chinese investors.