Natural resources remains the main industry target for Chinese investors overseas, with 14 such deals announced since January, and a quick glance through the list of shortlisted deals and winning deals at the 2010 China Law & Practice Awards emphasizes this fact.

For example, CIC made a sizable investment in Russian oil group Nobel Oil Group while CNOOC did the same in BG Group's Queensland Curtis Gladstone LNG project in Australia. Both deals were finalists in the Energy & Natural Resources category but were ultimately edged out by ICBC's loan facility (to be repaid from oil sale proceeds) to the Republic of Angola.

Meanwhile, the in-house legal team at China Petroleum & Chemical Corporation or Sinopec (winner of Chinese Company In-House Team of the Year) worked on the acquisition of Toronto and LSE-listed Addax Petroleum by Sinopec subsidiary SIPC. However, it was pipped to M&A Deal of the Year this year by an all-cash acquisition made by state-owned chemicals group Sinochem of UK-based Emerald, a FTSE-250 oil and gas explorer and producer in South America and the Middle East.

The expected appreciation of the renminbi and the continued support of the PRC Government are just two factors fuelling the continued surge in outbound investments. But the return to form of previously impotent investors around the world is perhaps the most significant contributory factor.

China's capital markets finally awoke from their 10-month induced coma in late 2009, and a series of significant offerings has since helped restore investor confidence.

“The markets have been excellent over the last 12 months because we have seen a strong flow of business across all the products we cover, including equity, high yield and investment grade debt, M&A and private equity,” said Bill Barron, partner at Davis Polk & Wardwell (winner of International Capital Markets Team of the Year). “And based on our current pipeline, the strong deal flow is likely to continue.”

In the US alone, there have been 16 IPOs by China-based companies raising an aggregate of over US$1.1 billion so far in 2010. PRC companies across a wide range of sectors – from retail to financial services to natural resources and energy – are continuing to access overseas markets, with many proposed listings having a Rule 144A placement tranche. This comes at a time when China's own IPO market has been lukewarm due, in part, to challenging regulatory circumstances. And yet, the prognosis for the country's capital markets is bright.

In addition to IPOs, law firms report a strong pipeline of debt and equity-linked securities transactions, such as investment grade and high yield debt and convertible/ exchangeable bond issues. And the development of China's onshore and offshore RMB bond markets has taken great strides forward this past year – with CDB closing the inaugural RMB retail bond issue in Hong Kong, and IFC one of the first two foreign issuers of RMB-denominated bonds in the Chinese domestic market. Shenzhen has even launched its long-anticipated junior board.

The editorial team at CLP would like to congratulate all of the winners and finalists of the 2010 China Law & Practice Awards, and we look forward to following your achievements over the next 12 months.

Deals of the Year

Mergers & Acquisitions

WINNER

Sinochem – Emerald Energy

Sinochem's recommended City Code governed all-cash acquisition of UK-based Emerald, a FTSE-250 oil and gas explorer and producer in South America and the Middle East, was effected by way of a scheme of arrangement under Isle of Man law. The deal was Sinochem's first takeover of a publicly quoted company and the first City Code governed offer by a Chinese SOE for an LSE main market listed company. Many of the provisions of the City Code were completely alien not only to Sinochem but to the Chinese state regulatory authorities. Counsel had to carefully balance the requisite Chinese state regulatory approvals with the requirements of the City Code. Additional complexity came with the bespoke arrangements for Emerald's convertible bonds as well as the Isle of Man scheme.

Private Equity

WINNER

Carlyle – Natural Beauty

One of the high profile deal failures of early 2009 was CVC's attempt to privatise Natural Beauty Bio-Technology. When Carlyle set its sights on the company later in the year, it was keen to learn from CVC's mistakes. CVC tried to take Natural Beauty private through a scheme of arrangement, which requires shareholder approval. The deal was voted down by minority shareholders. Carlyle instead elected to conduct a general offer after its BidCo acquired 65.53% of the target having done a deal in advance with the controlling shareholder. As a result, minority shareholders could not vote down the deal. This US$102 million deal was the private equity house's first public-to-private transaction in Hong Kong.

Restructuring

WINNER

FerroChina