Research On Overseas M&A Risk Management Of Chinese Power Grid Enterprises

In recent years, Chinese power grid enterprises’ activities are remarkable in global energy power mergers and acquisitions (M&A) market, especially State Grid Corporation of China (SGCC). With its advantages in capital, transmission technology and management experience, SGCC is vigorously implementing the strategy of internationalization, expanding overseas markets, realizing leap-forward development, which makes it become a strong and competitive player in global M&A market of transmission and distribution grid. A nation’s grid, widely accepted as the nation’s strategic assets, are attached great importance and highly protected by governments. At the same time, the current economic growth in the world maintains slow, so for safety, financial investors in the international capital market turn to chase the steady electricity regulatory capital investment, which makes the overseas investment of Chinese power grid enterprises face fierce competition. Therefore, "going global" of Chinese power grid enterprises are facing more and more complex risks in political, economic, regulatory, legal, natural environment and other aspects. In the overseas M&A investment of power grid assets, the research on various risks must be strengthened and feasible risk management measures must be formulated to ensure the steady and sustainable development of overseas investment.This paper is mainly divided into five parts:Firstly, the relevant monographs and articles are collected. Secondly, according to the connotation of enterprise overseas M&A and the source of the risks. Thirdly, the present situation and the basic process of overseas investment M&A of Chinese power grid enterprises are expounded in the paper. The risks in each milestone and the special industrial risks are also analyzed in this part. Then, by deep analysis of typical transnational M&A cases and risk management measures in different countries and different fields, experience and lessons are summarized in the process of overseas M&A of Chinese power grid enterprises. Finally, in allusion to the special industrial and milestone risks in Chinese power grid enterprises’ overseas M&A investments, the paper proposes a risk management strategy system.In this paper, in view of the current situation of overseas M&A of Chinese power grid enterprises, the characteristics of overseas investment M&A are analyzed systematically, the main difficulties and risks encountered in the process of overseas M&A are summarized, a specific and operational risk management strategy system of overseas M&A of Chinese power grid enterprises is put forward, including the decision-making risk management strategy, the milestone risk management strategy, exchange rate risk management strategy, operational risk management, internal and external resource management and etc. These can provide better experience for reference for Chinese power grid enterprises "going global".