Societe Generale¡¯s Peretie: China Still Needs Resource Deals

Societe Generale¡¯s Michel Peretie is in Asia, meeting with clients in China and South Korea. The chief executive of the French banking giant¡¯s corporate and investment banking franchise joined the company after the sale of Bear Stearns. At Bear, he was chief executive for Europe and Asia. Deal Journal sat down with Peretie to discuss China¡¯s appetite for resource deals and opportunities for Asian clients to tap European capital markets. Here are some of the highlights:

On China¡¯s appetite for natural-resource deals after the collapse of Aluminum Corp. of China¡¯s planned $19.5 billion investment in Anglo-Australian miner Rio Tinto:
¡°They will not fade in their effort to secure as much natural resources as they can. China is going further afield¨Cthere are a lot of state-to-state deals. They have been very active in Africa because it hasn¡¯t been as competitive there as in other markets. But that¡¯s now changing and China will face competition in Africa from other fast-growing countries.¡±

On whether higher prices for oil and other commodities will spark more M&A deals in sector:
¡°If we stay at these levels we will. A lot of deals in the energy segment are based on hitting a break-even point. We¡¯ve been below the break-even point and now we¡¯re returning to levels where more deals make sense¡­.Commodity prices are rising and this strong rise goes beyond what our analysts were predicting because economic growth is not back yet. If they go much higher too fast, we think it will harm the resumption of global growth and that there will be another dip.¡±

On Asian companies raising capital in European markets:
¡°We think many of them will have to shift to the Euro market.¡± Peretie says Asian companies have been very active in U.S. dollar fund-raising, partly driven by the cost of liquidity. The terms of dollar-euro swaps made it more attractive for investors to borrow in dollars, but that gap has narrowed and Peretie expects Asian corporates to look to raise more capital in European markets in the coming months.

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