Legend Holdings' buyout unravels new model of China-EU co-op

After 10 months' supervision proceedings, Legend Holdings finally got the green light to the buyout deal of the Banque Internationale à Luxembourg (BIL) from the financial regulators of EU, Luxembourg and China. The founder of the Legend Holdings and the iconic IT giant Lenovo, Liu Chuanzhi sees this transaction as another milestone breakthrough, after Lenovo‘s famous acquisition in 2004.

However, this deal means more than adding a new member to the balance sheet of Legend Holdings, it also signals a shift of the Chinese companys' overseas investment paradigm, from gathering resources to enabling foreign businesses. This for sure indicated a new phase and new possibilities between China-EU cooperation.

A new deal by Legend Holdings

In the latest Legend Holdings' filing in Hong Kong, the acquisition, after approval, account for Precision Capital's 89.936% stake in Banque Internationale à Luxembourg (BIL) for 1.53 billion euros, while the Grand Duchy of Luxembourg will keep its 9.993% ownership of BIL.

Liu Chuanzhi reiterated to the press that the deal is "a long-term strategic investment for Legend Holdings”. Legend Holdings is committed to providing the financial and operational support to maintain and grow the BIL brand domestically and internationally to achieve sustainable growth.

Upon the deal, Legend Holdings will retain the current governance and management of the bank, with Luc Frieden as BIL Chairman, Hugues Delcourt as CEO, and it will invest in BIL's people, support employment and provide international career opportunities.

"An important milestone"?in EU-China co-op

"The fact that the European regulator approve this transaction, also shows that Chinese investments in Europe are welcome”, Luc Frieden, Chairman of BIL, addressed the significance of the deal in Beijing, "and I think that is an important milestone for relations between Europe and China."

Most people couldn't figure out what happened in the following 10 months when Legend Holdings initially released the acquisition in Sep 2017, with the transaction pending regulatory body's final approval. Unfortunately, in the past ten months, the global economy and trade have suffered drastic turbulence, sometimes flip-flop trade policies, trade barriers, even annoying tariff spats.

However, European countries are expressing their willingness to enhance co-op and ties with China, with German Chancellor Angela Merkel having visited China 11 times, a number more than that of her visit to the US. What's more, French President Emmanuel Macron, British Prime Minister Theresa May, Dutch Prime Minister Mark Rutte and Austrian President Alexander Van der Bellen visited China in past months, not only for enhancing political trust, but also for a more robust business cooperation with China in all aspects.

Therefore, Legend Holdings' acquisition of BIL is a miniature of China-EU co-op.

Although it's widely believed that the regulation of Chinese companies' overseas investments is tightening, the accomplishment of Legend Holdings' BIL case still shows, to some extent, the support of Legend Holdings' attempt from the Chinese financial regulatory body, as well as signaling China's impulse to ameliorate its's overseas investment structure and influence.

Win-Win deal of Chinese investments

Chinese companies are changing the investment paradigm from absorbing resources and offering markets, to a more balanced philosophy—Chinese companies also providing and contributing to the overseas markets, especially to the backdrop of China's domestic supply-side reform and the Belt and Road initiatives. That shift is absolutely aimed at an all-win situation. Legend Holdings' acquisition of BIL is a prototype and example of the all-win scenario.

To be specific, BIL is an ideal asset for investor——BIL, with over 100 years' operation in Europe, keeps steady growth, renowned branding and unique understanding of its' clients all over the continent. "What's more, the transaction could bring Legend Holdings a new pillar asset in the financial services sectors, with BIL's total assets of approximately 23.8 billion euros, and that would enhance the overall value and financial stability for Legend Holdings."said LI Peng, senior vice president of Legend Holdings.

LI also addressed the geographical importance of BIL as a gateway for foreign companies to get entrance into EU markets.

As of the other side of the multi-win coin, investment and management experiences, as well as Legend Holdings' repository of invested projects on Fintech, Artificial Intelligence, and big data are the very elements that BIL sees as critical and potential cross-over fields.

What's more, the reputation and VC/PE projects and enterprise libraries of Legend Holdings accumulated in the past three decades could also be a treasure for BIL to achieve more cross-over growth.

Unlike the acquisitions of hotels and other real estate assets by Chinese companies years ago, analysts on China describe the status quo as an upgraded China-EU cooperation, featuring a more collaborative, cooperative and mutually-beneficial model.

Undoubtedly, it's the right time to discuss the future cooperation pattern between China and European countries, when the global enterprises need more than Chinese market, but also the innovation, unique insights and accurate understanding of the business model of China.