Cross-border M&A becomes a new growth driver for investment banks: Chinese securities firms race towards international expansion. Who will win by 2026?

The recovery momentum of cross-border mergers and acquisitions in 2025 is strong, as companies have genuine needs to go global. Securities firms’ cross-border businesses have naturally become highly sought after. Recently, many investment banking professionals from securities firms told Cailian Press that cross-border M&A has become a new growth driver for securities firms’ investment banking divisions, and currently, those with industry conditions are competing fiercely for this market.

Data shows that in 2025, the total value of cross-border M&A transactions involving mainland China reached $32.028 billion, a significant year-over-year increase of 94.8%. The number of transactions was 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, an increase of about 88%, and 272 deals, up 5%. Conversely, foreign companies’ acquisitions of Chinese firms amounted to $7.4 billion, down 31.5%, showing a clear divergence between domestic and foreign M&A activities.

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

Chinese Securities Firms’ Regional Choices Are Highly Convergent

“This recovery is not a flash in the pan but driven by the real demand of companies’ globalization strategies, especially in manufacturing, energy, and other industries where the need 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 made cross-border M&A a core element of their international expansion.

Most securities firms agree that they will closely focus on Chinese companies’ outbound needs, providing a comprehensive suite of 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 announced capital increases or the establishment of international subsidiaries, with the overall industry capital increase reaching a recent high. “Expansion is inevitable. If you want to do cross-border business, lacking overseas presence is like building castles in the air. Either increase capital or set up subsidiaries—everyone is catching up on this,” said an investment banker.

Regarding regional layout, Chinese securities firms’ choices are highly similar. “Southeast Asia is a must-competition area, Europe offers huge transaction opportunities, and emerging markets like the Middle East and Latin America cannot be ignored. Plus, resource-rich regions like Japan, South Korea, Africa, and Central Asia are also part of the industry’s common strategic layout,” said several investment banking professionals. Diversified regional deployment has become the norm.

In terms of industry focus, sectors such as energy, infrastructure, advanced manufacturing, manufacturing, energy minerals, healthcare, and consumer goods are the key areas for securities firms’ cross-border M&A. 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 huge 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 leverage your own strengths.” Each firm has its own characteristics in platform building, regional deployment, industry deepening, and service models, forming their 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 interconnected domestic and overseas operations.

“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 line. 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 other tools to hedge client risks.

CITIC Securities relies on its early acquisition of Lyon Securities to maintain a foothold 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, culture, and customs much better than a team sent from China,” said CITIC Securities. Relying on Lyon’s local investment banking team, the company has obtained full licensing in Southeast Asia and built a comprehensive risk control system, becoming a key support for cross-border M&A. Currently, CITIC’s core deployment regions include mainland China, Hong Kong, Singapore, Thailand, and more than ten other countries and regions.

As a joint venture securities firm, China-Germany 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. Combined with our domestic A-share capabilities, the resource complementarity between domestic and international markets is our differentiator,” said China-Germany Securities. The firm’s core focus is on Europe and the ‘Belt and Road’ countries, with a focus on technology upgrades, industry supply chains, infrastructure, and trade. Its landmark project includes a $450 million overseas acquisition advisory for HEYU Electronics.

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 cases. “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. Its experience in high-end manufacturing, mineral resources, and large 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 the internationalization process. As one investment banker summarized, “Doing cross-border M&A now is a complex task—brand, compliance, capabilities, talent—every step requires caution.” Issues such as international competition, compliance risks, and capability gaps are prominent and restrict industry development.

International competition is a primary challenge. “Foreign firms have been doing cross-border M&A globally for many years, with strong brands and experience, and high client recognition. We want to grab a share of the cake, but building our brand takes time,” said several bankers. Many Chinese securities firms admit that their overseas brand recognition is generally insufficient. Huatai, China-Germany, and others have emphasized that brand promotion and awareness in overseas markets are urgent issues. Currently, the main approach is to build reputation through project execution. “Real projects speak louder than words. If clients are satisfied, they will recommend us—this is the most practical way,” said one.

Compliance risks are also increasing. “Regulatory rules vary greatly across countries—market regulation, disclosure, FDI review—all have their own rules, and they change with international circumstances. A small oversight can lead to violations,” said a compliance officer. Some markets also have restrictions on foreign ownership and explicit or 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. We need to stay alert at all times. Compliance is the bottom line of cross-border business—nothing can be relaxed,” emphasized a compliance professional.

Limited ability to handle complex transactions is another obvious weakness. “Very large cross-border M&As and cross-border equity swaps are complex. Foreign firms have many years of experience; we need to accumulate gradually, doing more projects and learning,” 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 still fail, and it all comes to nothing,” 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 more practical problem is that personnel rotation and exchange are hindered by work visa restrictions, making talent mobility difficult. This hampers capability sharing and is a headache for many firms.

Demand Continues to Grow, Industry Will Become More Rational

The implementation of the “Six Guidelines for M&A” 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 companies.

“Policies have provided many conveniences—faster approvals, smoother foreign exchange processes—reducing costs and difficulties for companies doing cross-border M&A. This is very beneficial for the entire market,” said several investment bankers. Most agree that the cross-border M&A market will likely grow steadily over the next 1-3 years.

All securities firms believe 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 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 destination for capacity transfer, and Japan and South Korea’s tech industries offer many acquisition opportunities. These three are core sectors for manufacturing going abroad,” said Huatai Securities. The demand for resource-rich regions like Central Asia, Africa, and South America in the minerals and metals sectors is also increasing. The outbound trend in consumer industries shows dual features: acquiring high-end brands in Europe and the U.S., and proactively deploying in emerging markets like Southeast Asia. Regionally, Southeast Asia and Europe remain key destinations, while resource-based M&A in Africa and Latin America is gradually increasing. North America still offers cooperation 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-Germany Securities. The role of cross-border M&A funds will further highlight, and companies’ awareness of risks related to geopolitical issues and post-merger integration will significantly improve.