JPMorgan Chase Breaks Industry Rule in Chinalco Deal

JP Morgan Cazenove, a Britain-based joint venture of JP Morgan Chase, reportedly is to act as a broker for Rio Tinto, which is now in an acquisition deal with Aluminum Corporation of China (CHINALCO).
Reports said that CHINALCO is to raise its stake in Rio Tinto and establish iron ore, copper and aluminum joint ventures with the latter at a total cost of USD 19.5 billion. JP Morgan Chase is to act as a financial consultant for CHINALCO.

This would break the industry rule, as an investment bank usually could only advise for one side of an acquisition deal. Peers of JP Morgan Chase could not understand the move by JP Morgan Chase and some believe that the transaction could become uncertain if JP Morgan Chase fails to adjust the present role of JP Morgan Cazenove, even though the latter has helped Rio Tinto successfully conduct mergers and anti-mergers for many times in the past.

JP Morgan Chase is thought to only seek for commercial profits but break the industry rule. Actually, the US investment bank had benefited much from the M&A market in China's Mainland ever since 2003.

Over the past year, the value of global M&A plunged 36% but that soared 36% in China to hit USD 167 billion. China in 2008 accounted for 6.9% share in the world's M&A market, an increase of 100% over 2007.

Last year, JP Morgan Chase also acted as the financial consultant for Sinosteel Corporation, the second biggest iron ore trader in China's Mainland. In addition, the US investment bank advised for China Oilfield Services Limited (601808.SH) in buying Awilco Offshore ASA (AWO) and advised for China Unicom to buy China Netcom.

Other big as well as relatively smaller international investment banks are also eyeing the M&A market of China. UBS, which takes a leading position in Brazil, Australia and Europe, acted as the financial consultant for China Minmetals Corporation in the deal of its acquisition of OZ Minerals at a price of USD 1.7 billion or AUD 2.6 billion on February 16, 2009.

Besides, such players as Deutsche Bank Group and Macquarie Bank are also busy discovering M&A businesses in China's Mainland, according to a top executive of a European investment bank.

Copyright and Exemption Declaration :¢ÙAll articles, pictures and videos that are marked with "China Aluminum Network" on this website are copyright and belong to China Aluminium Network (www.alu.com.cn). When transshipment, any media, website or individual must list the source from "China Aluminium Network (www.alu.com.cn)". We seek legal actions against anyone that disobey this. ¢ÚArticles that marked as copy from others are for transferring more information to readers, do not represent or endorse their opinions or accuracy and reliability. When other media, website or individuals copy from our website, must keep the source. Anyone that changes the articles' sources will hold the responsibilities for copyright and law problems. We also seek legal actions against anyone that disobey this. ¢ÛIf any articles copied by our website concern the copyright and other problems, please contact us within one week.