China's Russian energy and commodity "acquisition spree" set to continue
According to the global banking head at VTB Capital, a Moscow-based investment bank, China’s “buying spree” in Russia is set to continue.
As relations become closer between the two countries, the “acquisition spree” by Chinese businesses for energy and commodities in Russia will increase over the next few years.
Alex Metherell, Co-Head of Global Banking at VTB which is backed by the Russian state, told the South China Morning Post that a rebound in prices from industry cycle lows has een beneficial in this regard.
Metherell stated “We have definitely seen increased cross-border investments by Chinese firms in Russia in the past 18 to 24 months…. Strategic asset owners in Russia, Eastern Europe and Central Asia are increasingly coming to China, too, as their first port of call before going elsewhere in search of potential long-term strategic investors.”
China is a huge consumer and importer of many of the goods which Russia remains the top producer of in the world, including oil, natural gas, nickel gold, diamonds, platinum and palladium.
The largest sectors for acquisitions include oil and gas, which are mainly acquired by state-owned forms from China. This follows sanctions imported on Russia by the West in 2014 due to its annexation of the Crimea, forcing Russia to look to Asia for investment.
So far this year, a total of $9.1bn has been invested in major stake purchases by Chinese corporates in Russia, according to Dealogic.
Metherell also told the South China Morning Post: “I expect next year to be exciting for announcement s- a product of increasing dialogue in the past two years.”