In the news: PE and VC may get single regulator, plus $7.1 billion pork deal and cross-strait trade service agreement
May 31, 2013 | BY
clpstaff &clp articles &The CSRC may become the only regulator for PE and VC investments, a move that will standardise the sector. Shuanghui has agreed to buy US pork processing outfit Smithfield for $7.1 billion and the PRC and Taiwan concluded talks over a trade service agreement
CSRC to regulate PE and VC
China Daily cited the Securities Times announcing that Premier Li Keqiang's State Commission Office for Public Reform is considering delegating the China Securities and Regulatory Commission as the exclusive regulator for the private equity (PE) and venture capital (VC) industry.
The CSRC and the National Development and Reform Commission (NDRC) regulate both industries at present. The NDRC is the country's top economic planning agency and has controlled these markets in the past. The move can be seen as a major effort to standardise this sector.
Market participants will welcome the change, as it allows for a single regulator. This is something professionals have been wanting, especially as it will increase certainty when making long-term investments. The NDRC has also regulated the PE and VC market for years, causing a back log in initial public offerings, the main exit route for PE investors.
Shuanghui buys US meat processor for $7 billion
Shanghui, China's largest publically-traded meat processing enterprise, has agreed to acquire Smithfield Foods, its US pork counterpart for $7.1 billion, creating one of the world's largest pork production, processing and packaged meat companies.
The deal is financed through a combination of cash from Shuanghui, rollover of existing debt from Smithfield and debt financing from Morgan Stanley and a syndicate of banks. Paul Hastings and Troutman Sanders advised Shuanghui, Simpson Thacher & Bartlett and McGuireWoods advised Smithfield, with Skadden, Arps, Slate, Meagher & Flom representing Barclays.
This is probably the largest outbound deal in the food and beverage sector since Bright Food's acquisition of Weetabix. The transaction will be closely scrutinised because of a series of recent food safety scandals, but the government has showed commitment to tackling food safety issues with the establishment of a food safety regulator in March.
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PRC and Taiwan end talks over service trade agreement
The mainland and Taiwan ended talks at the beginning of the week on a service trade agreement. The agreement reconfirms both sides' commitment to implementing the Economic Cooperation Framework Agreement (ECFA). The agreement will be submitted before being endorsed and signed by both parties later this year.
These kinds of agreements are common and there have been some regulatory changes over cross-straits investment recently (allowing Taiwan businesspeople domiciled outside of Taiwan to enjoy the same benefits as direct Taiwan investors). The fact still remains that the PRC is welcome and open to Taiwan investment, but reciprocal policy does not exist in this arena as mainland investments are heavily regulated and closely scrutinised. Will Taiwan start to open up more to mainland investment?
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