Deals

Hedge Funds Demand Chinese Buyers Pay More in M&A Deals

Court ruled Shanda Games should pay more to Hong Kong fund
Prudential, T. Rowe Price follow Maso in valuation challenges

Commuters are reflected in a building in the business district of Central in Hong Kong, China, on Tuesday, Oct. 15, 2013. The Government is scheduled to release unemployment figures on Oct. 17.
Photographer: Brent Lewin/Bloomberg

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By Debra Mao

November 21, 2017 at 4:00 PM UTC

Updated on

November 22, 2017 at 2:44 AM UTC

This article is for subscribers only.

For years, Chinese executives pulled off multibillion-dollar buyouts of their public companies with little pushback from investors. Now, they are facing a backlash from hedge funds demanding better payouts.

One pioneer has been Maso Capital, which has disputed the valuations of at least six transactions since 2015 claiming insiders at Chinese firms underpaid when taking them private. In April, the Hong Kong-based hedge fund had its first victory when a Cayman Islands court awarded it 2.35 times the price paid for shares of Shanda Games Ltd. in the developer’s 2015 buyout.