Deals
China Is Buying Distressed Private Companies as Markets Sink
- At least 47 private companies plan to sell stakes to the state
- Government is stepping in as entrepreneurs face margin calls
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It’s never been easy to figure out where China’s government ends and the private sector begins, but the dividing line is getting increasingly blurry as the nation’s stock market sinks.
At least 47 non-state companies in China have disclosed plans to sell stakes to government-backed investors in 2018, company filings compiled by Bloomberg show. The pace of such deals accelerated in recent months as the country’s $3.2 trillion equity rout squeezed company founders who pledged their stakes as collateral for loans. Faced with margin calls and cut off from the banking system, some entrepreneurs have had little choice but to accept state money.