Terence Kawaja, the CEO of investment bank LUMA Partners, which
advises on ad tech deals, explained to Business Insider, “Due to the
discrepancy in valuations — Chinese markets value revenue and profits at
much higher multiples — these Chinese buyers are arbitraging the
difference. They buy US assets and then trade up much higher in the
domestic market.”
So, for example, if a Chinese company buys an ad tech company at 15x
net income, then incorporates it into their business, which is valued at
80x net income, that’s an easy way to create value on paper.
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The $14 billion Chinese internet display advertising market is dominated by three players: Baidu, Alibaba, and Tencent.
http://www.businessinsider.com.au/medianet-acquisition-chinese-ad-tech-arbitrage-play-2016-8
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