European dealmakers who sell companies and real estate to Chinese investors are increasingly asking them to pay deposits upfront, after China clamped down on capital outflows, according to bankers and lawyers.
Wary that Chinese buyers will have to pull out of a deal because they can’t send funds overseas, European sellers are asking for non-refundable deposits, often around 10 per cent, before the deal can go forward, industry insiders say.
Such deposits are common in the US, where the federal government’s Committee on Foreign Investment reviews acquisitions by foreign entities for their national security implications, leading to more deals falling through. Increasingly, European sellers are following suit.
China’s government began restricting foreign deals late last year, culminating in rules in August of this year to curb “irrational” investment overseas. It wanted to keep outflows of funds from destabilising its currency.
Since then, overseas dealmaking has waned. Acquisitions of European companies by buyers from Hong Kong and China has fallen nearly 40 per cent so far this year, according to Thomson Reuters data. The decline has been even greater in the US, though, so…
Original article found on Times Of Malta