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Andy Rice of The Jordan Company describes their deal activity in China, and what factors are impacting the development of other areas in Asia. In this SourceMedia video sponsored by CT Corporation, you’ll see why the Asian market is soon to be booming.
Are you still active in China?
We’re actually slowing down a lot in China. We’ve actually done 35 deals in China, acquisitions and joint ventures, and most are add-ons to our US portfolio. What we found is valuations are very, very high. We’ll look at eight to nine times EBITA [earnings before interest, taxes, and amortization] and competitors are bidding 12 to 14 times EBITA or higher. There is still not much debt financing in China, and the economy is starting to slow down a little bit. We’re just not as comfortable as we were investing in China.
Are you interested in other areas of Asia?
We’re looking a lot at Southeast Asia. The ASEAN Agreement just kicked in at the beginning of this year, and that’s going to create a common market of the Southeast Asia countries similar to the EC. For instance, 90% of all tariffs between those countries just kicked in on January 1, which was a huge event and this is going to lead to infrastructure development.
There are 625 million people in Southeast Asia, and 65% of those people are under 35, so the demographics are very positive compared to China, which is slowing. As more and more Fortune 500 companies invest in Southeast Asia to be part of that growing region, small, midsized, middle market companies will follow them to be part of that market as well.
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