Chinese buyers are looking to snap up a bargain in the Australian iron ore market, with embattled juniors reportedly the target of a growing investment trend.
Minter Ellison WA managing partner Adam Handley reportedly told the AFR this week that Chinese bidders were circling a number of iron ore juniors, looking to take advantage of the historic decline in the commodity price in the last 12 months.
“It is a trend,” Handley was quoted as saying, “we have seen emerge over the last two or three months and I think it’s gathering some pace.”
Handley reported that Minter Ellison has seen an increased level of interest in its services from such potential buyers.
“Certainly, we are fielding an increased level of inquiry or interest in a number of mid-tier players.
“I think there is an opportunistic element to the current activity we are seeing with prices so low and companies which have taken a significant hit to their market caps.”
Handley believes Chinese bidders are becoming more sophisticated, with a better knowledge of Australian bidding and takeover processes and regulations.
“In the last couple of months we have seen an increasing level of appetite and understanding on how takeovers might be done on a hostile basis rather than on a friendly basis,” Handley was quoted as saying.
“This is a shift. If you look at the track record of China undertaking takeovers in Australia there have only been a couple that were truly hostile but I think that appetite is changing and China is becoming more comfortable with our capital market system.”
Most recently Chinese bidders were rumoured to be looking to set up a deal to buy a stake in Australian miner Fortescue Metals Group.
But the latest comments from Handley would suggest Chinese bidders could be in the running for a variety of other iron ore businesses, including juniors that at this time can’t sustain their business.