Cross-border mergers and acquisitions become a new growth driver for investment banks, with Chinese securities firms racing towards international expansion. Who will come out on top in 2026?

China Securities Journal, February 19 (Reporter Lin Jian) — “The wave of cross-border M&A recovery by 2025 is quite strong, as companies have genuine needs to go overseas. Naturally, securities firms’ cross-border businesses have become highly sought after.” Recently, many investment banking professionals from securities firms told China Securities Journal that cross-border M&A has become a new growth engine for securities firms’ investment banking divisions, and currently, those with industry conditions are competing fiercely for this market.

Data shows that by 2025, the total value of cross-border M&A transactions involving mainland China worldwide will reach $32.028 billion, a significant year-on-year increase of 94.8%. The number of transactions is 187, also up compared to the previous year, indicating a clear market recovery trend. Among these, mainland China’s outbound M&A performed notably well, with a total transaction value of $24.4 billion, up about 88% year-over-year, and 272 transactions, up 5%. Conversely, foreign companies’ acquisitions of Chinese firms amounted to $7.4 billion, down 31.5% year-over-year, showing a clear divergence between domestic and foreign M&A activities.

In recent communications with leaders from CITIC Securities, Huatai Securities, Galaxy Securities, China-Deutsche Securities (a subsidiary of Shanxi Securities Investment Banking), and China International Capital Corporation (CICC), the reporter noted that with policy support, the cross-border M&A market still has room for growth. Differentiated competition and capability enhancement have become essential questions for Chinese securities firms. At the same time, issues such as international competition and compliance risks remain persistent pain points.

Chinese Securities Firms’ Regional Choices Are Highly Similar

“This recovery is not a flash in the pan; it is driven by the real needs of companies’ globalization strategies, especially in manufacturing and energy sectors, where the demand to go overseas for markets, resources, and technology is particularly strong,” said a senior executive in cross-border M&A at a leading securities firm. The rebound in the cross-border M&A market has directly opened up broad opportunities for Chinese securities firms’ overseas businesses and has made cross-border M&A a core focus of their international expansion.

Most securities firms agree that they will closely focus on Chinese companies’ outbound needs, providing comprehensive investment banking services such as overseas listing financing, cross-border M&A, and offshore bond issuance to improve the quality and revenue of their overseas operations. In 2025, Chinese securities firms are intensively strengthening their cross-border M&A capabilities. At least 11 listed firms have announced capital increases or the establishment of international subsidiaries, with the overall industry capital increase reaching a recent high. “Institutional expansion is inevitable. If you want to do cross-border business, lacking overseas presence is like talking empty words. You either increase capital or set up subsidiaries—everyone is catching up on this,” said an investment banker.

In terms of regional layout, Chinese securities firms’ choices are highly similar. “Southeast Asia is a must-competition area, Europe offers huge transaction opportunities, and the Middle East and Latin America are also important emerging markets. Plus, Japan, South Korea, Africa, Central Asia—these resource-rich regions—are basically the common strategic directions for the industry,” said several investment banking professionals. Diversified regional deployment has become the norm.

Regarding sector focus, industries such as energy, infrastructure, advanced manufacturing, general manufacturing, energy minerals, healthcare, and consumer sectors are the main areas of cross-border M&A coverage. Strategic emerging sectors like semiconductors, artificial intelligence, new energy, and biomedicine are also widely favored.

There Is No One-Size-Fits-All Template for Cross-Border Business

Faced with significant opportunities in the cross-border M&A market, securities firms are leveraging their resources and advantages to develop differentiated strategies. As one investment banker put it, “There’s no universal template for cross-border business. The key is to thoroughly develop your own strengths.” Each firm has its own characteristics in platform building, regional deployment, industry deepening, and service models, aiming to build core competitiveness.

Galaxy Securities has chosen to build overseas platforms through acquisitions. After acquiring Lian Chang International Securities, it established Galaxy Overseas, extending its international network from Hong Kong to Singapore, Malaysia, Indonesia, and over ten other countries and regions, achieving connectivity between domestic and overseas businesses.

“Our core advantage is the ‘domestic + Hong Kong + Southeast Asia’ collaborative network. Southeast Asia is where Chinese companies’ production capacity advantages meet local markets and resources, and our network can serve as a bridge,” said a Galaxy Overseas investment banker. The firm mainly serves energy, infrastructure, and advanced manufacturing companies. From 2024 to 2025, it assisted Chinese clients in acquiring Indonesian-listed companies BINO and RONY. These flagship projects helped Galaxy establish a foothold in Southeast Asia.

Huatai Securities has built an integrated domestic and international investment banking platform. In a merger and acquisition project involving a large South American state-owned enterprise, the domestic and U.S. teams collaborated to push the project forward. To manage cross-border M&A risks, Huatai Securities also utilizes its group’s financial products, offering foreign exchange hedging and risk management tools for clients.

CITIC Securities, leveraging its early acquisition of Lyon Securities, has established a strong presence in Southeast Asia. “Lyon has been operating in Southeast Asia for over 30 years. The local team’s capabilities are core. They understand local laws, government relations, and cultural customs much better than a team sent from China,” said CITIC Securities. Relying on Lyon’s local investment banking team, the company has obtained licenses across Southeast Asia and built a comprehensive risk control system, becoming a key support for cross-border M&A. Currently, CITIC’s core regional layout covers mainland China, Hong Kong, Singapore, Thailand, and more than ten other countries and regions.

As a joint venture securities firm, China-Deutsche Securities has chosen to cooperate deeply with its shareholder, Deutsche Bank. “We don’t build our own overseas platform; Deutsche Bank’s global network is our advantage. Combining that with our domestic A-share capabilities, the domestic and international resources complement each other—that’s our differentiation,” said China-Deutsche Securities. The firm’s core focus is on Europe and countries along the Belt and Road Initiative, with a focus on technology upgrades, industry supply chains, infrastructure, and trade. Notable projects include a $450 million overseas acquisition advisory for Sanxun Electronics, which serves as a flagship case.

CICC, with 30 years of cross-border M&A experience, continues to strengthen its presence in Europe, Southeast Asia, and South America, completing several landmark deals. “High-tech companies are our key clients. These companies face significant geopolitical risks when going abroad, so we tailor solutions to minimize risks and help realize their strategic goals,” said CICC’s investment banking division. Their project experience in high-end manufacturing, mineral resources, and consumer sectors has fostered deep industry understanding.

Multiple Challenges and Pain Points Remain

Despite rapid growth in cross-border M&A by Chinese securities firms, they still face multiple challenges and pain points in their internationalization process. As one investment banker noted, “Doing cross-border M&A now is a complex task—brand, compliance, capabilities, talent—every step requires caution.” International competition, compliance risks, and capability gaps are prominent issues that restrict industry development.

Intense international competition is the foremost challenge. “Foreign firms have been doing cross-border M&A globally for many years, with strong brands and experience that clients recognize. We want to grab a share of the cake, but building our brand takes time,” said several bankers. Chinese firms generally lack strong brand recognition overseas. Huatai and China-Deutsche Securities both emphasized that overseas brand promotion and awareness are urgent issues. Currently, the best approach is to build reputation through project execution—delivering solid results, gaining client trust, and spreading positive word-of-mouth.

Compliance risks are increasing industry-wide. “Regulatory rules vary greatly across countries—capital market regulation, information disclosure, FDI review—each has its own standards, and they change with international circumstances. A slight oversight can lead to violations,” said a compliance officer at a securities firm. Some markets also have restrictions on foreign ownership or explicit/implicit barriers to FDI, further complicating compliance.

More critically, Chinese securities firms must coordinate approvals from multiple domestic authorities such as the National Development and Reform Commission, Ministry of Commerce, and State Administration of Foreign Exchange. “Both domestic and overseas compliance must be managed simultaneously. You have to stay alert at all times. Compliance is the bottom line of cross-border business—nothing can be relaxed,” said an industry insider.

Limited ability to handle complex transactions is another obvious weakness. “Very large cross-border M&A and cross-border equity swaps are complex. Foreign firms have many years of experience; we need to accumulate more through projects and learn,” said an investment banker. Additionally, cross-border M&A faces regional business rules, cultural differences, and increasingly complex geopolitical environments, resulting in low project conversion rates. “Especially for high-tech foreign acquisitions, geopolitical pressure and foreign government approval risks are high. Sometimes, after months of effort, approvals fail, and the deal falls through,” they added.

Talent issues also constrain industry growth. “Cross-border business requires versatile talent familiar with both domestic and international markets—understanding approval processes, rules, and cultures. Such talent is scarce,” said a banker. The challenge is compounded by work visa restrictions and personnel rotation issues, which hinder talent mobility and capability sharing—an issue all firms are struggling with.

Demand Continues to Grow, Industry Will Become More Rational

The implementation of the “Six Measures for Mergers and Acquisitions” and local cross-border M&A support policies injects institutional vitality into the market. The national level continues to optimize approval, foreign exchange, and financing support, while local governments leverage regional advantages to develop specialized service systems, reducing cross-border M&A costs for enterprises.

“Policies have made things much easier—faster approvals, smoother foreign exchange, lower costs and difficulties for companies doing cross-border M&A. This is very beneficial for the entire market,” said several investment bankers. Most securities firms are optimistic about the development prospects of the cross-border M&A market over the next 1-3 years.

All agree that Chinese companies still have strong outbound needs, and the overall cross-border M&A market is expected to continue growing. However, the investment logic is changing. “In the past, some companies went abroad blindly chasing scale. Now, they focus more on actual value—whether they can strengthen supply chains, acquire core technologies, or open up overseas markets. The shift from ‘scale-driven’ to ‘value-driven’ is inevitable,” said CICC. Future market development will be more rational, professional, and diversified.

From industry and regional perspectives, manufacturing outbound will face significant opportunities. “Europe needs localized deployment, Southeast Asia is a key area for capacity transfer, and there are many acquisition opportunities in the tech industries of Japan and South Korea. These three are core sectors for manufacturing going abroad,” said Huatai Securities. The demand for resource-based M&A in mining and non-ferrous metals is concentrated in resource-rich regions like Central Asia, Africa, and South America. The outbound consumer industry shows dual characteristics: acquiring high-end brands in Europe and North America, and proactively deploying in emerging markets like Southeast Asia. Regionally, Southeast Asia and Europe will remain key destinations, with resource M&A gradually expanding in Africa and Latin America. North America still offers opportunities in non-sensitive sectors.

Transaction models will become more flexible. “Traditional control acquisitions are no longer the only option. Joint ventures, greenfield projects, and other new models will become more common. Asset-light models like technology licensing and localized production will also be more favored,” said China-Deutsche Securities. The role of cross-border M&A funds will further highlight, and companies’ awareness of geopolitical, post-merger integration, and other risks will significantly increase.