Digital China Buyout Cleared

Government approval of the takeover of a digital IT company  has signalled that national attitudes regarding buyouts might be shifting in China.

"At the end of last year, the Chinese government made several changes that were highly beneficial to management buyouts of Chinese companies," said David Eich, a lawyer with Kirkland & Ellis.

"One of them is a policy decision - state-owned enterprises are encouraged to 'equitise' their management, so that their interests are aligned with shareholders. Another is that the limit on foreign exchange held by individuals has more than doubled - making it easier for management to access cross-border investment. It is common for a subsidiary in a large corporate structure to feel like an orphan. If it can go independent, it might have more resources to grow," said Mr. Eich.

This article appeared in its entirety in the November 1, 2007 edition of South China Morning Post.