(Reuters) – Private equity firm KKR & Co Inc said on Thursday it and Alberta Investment Management Corp would jointly buy a 65% stake in TC Energy Corp’s Coastal GasLink Pipeline in Canada.
The pipeline is a key part of the C$40 billion LNG Canada project and will supply natural gas from Dawson Creek in the northeast of British Columbia to the liquefied natural gas facility near Kitimat on the Pacific coast.
After completion, it will have an initial capacity of 2.1 billion cubic feet per day.
The LNG Canada project, being built by Royal Dutch Shell and its partners, is expected to provide some relief to the country’s natural gas producers, which are grappling with lower prices because of record production in the United States.
TC Energy will record an after-tax gain of about C$600 million ($456.24 million) after the deal closes, the company said in a separate statement.
The pipeline company said it would also give a right to buy 10% stake in the pipeline to the “20 First Nations” – groups of indigenous people that live along the length of the proposed pipeline and have already signed agreements for its development.
($1 = 1.3151 Canadian dollars)
(Reporting by Shariq Khan and Arunima Kumar in Bengaluru; Editing by Arun Koyyur and Anil D’Silva)
Editorial: Favorable Tax Rates Offer Significant Advantages For The Investment Eager – Business Examiner
BRITISH COLUMBIA – Tax rates make an incredible difference when it comes to decision time for investors and companies.
U.S. President Joe Biden’s recent push to get Group of Seven countries to agree to implement a minimal global corporate tax rate of at least 15 per cent was shot down in flames, to the surprise of mostly no-one. Can anyone see the world’s most powerful economic nations agreeing to something that could make them competitively deficient to the U.S.? Not in this lifetime.
It was believed that Biden’s request would allow him to raise the U.S. corporate tax rate to 28 per cent, after former President Donald Trump dropped it from 35 to 21 per cent. It probably won’t stop the Democrats from raising the tax bar, but they’ll have to do it all on their own.
Taxes are the bane of business’ existence. Despite politicians cries for having corporations “pay their fair share”, owners and shareholders are acutely aware of how much tax they already pay to various levels of government, payroll deductions and employee benefits. It seems like a never-ending stream, stemmed only by sharp managers, pencil-sharpening accountants and on-the-ball lawyers.
Which, altogether, makes the opportunity for making investments – and profits – in other, less taxed jurisdictions, even more attractive. That’s why multinational corporations seek other landing spots for their corporate head offices.
We need not look elsewhere than our own backyard to witness the benefits of lower-than-usual taxation. Does anyone think that British Columbia’s film industry would exist to any extent without significant tax credits, and an attractive, lower Canadian dollar against their U.S. counterpart? The combination of those two factors have been THE reason that this province is home to a large number of film production companies that call BC “home”.
That works in the U.S. as well. The Longmire series, for example, which the script says is located in Wyoming, was actually filmed in New Mexico, where it’s tax rate was 10 per cent less than the northern state.
Casting one’s eyes to the sporting world, it is becoming painfully evident that a stronger American dollar and nonexistent state taxes are making National Hockey League teams in Nevada, Texas and Florida increasingly attractive destinations for players. Including Canadian born skaters, choosing warmer and friendlier tax climes as great alternatives to much higher tax rates in BC, Ontario and Quebec. Not to mention the ability to enjoy life outside the rink due to less concentrated, and invasively rabid fan bases.
Tax advantages are just that, significant reasons for other cities, regions, provinces, states and countries to attract investment they otherwise wouldn’t get.
Ireland is a great case, as it’s low corporate tax rate was a major reason why corporations decided to set up shop there, the most specific cause of what is called “Ireland’s Economic Miracle”.
It’s why towns like Langford enjoy continual investment, despite recessionary times. Mayor Stew Young announced a significant tax reduction for developers prior to the most recent recession, and Langford was able to sail through rough economic waters with positive growth.
It’s also an opportunity that investment-welcoming First Nations can take advantage of, since their smaller bureaucracies can offer lower start-up costs and streamlined regulations to developers, providing an option to locating in multi-level government layers in other cities and towns.
Taxes aren’t the only reason, but they are major factors in attracting, and repelling investment. Even if politicians are loathe to support corporations, eyeing them with suspicion as they report profits, they are forced to recognize that those businesses create jobs, which means voters.
Thankfully there are competitive alternatives for corporations to weigh before making decisions about where to invest and build. Even if they choose not to locate in other countries, at least the threat of doing so restrains governments from raising taxes out of sight to keep some of these companies at home.
Grey County innovation hub receives $800K federal investment – CollingwoodToday.ca
Entrepreneurs in Grey County will soon have a new place to prototype their products and experiment with leading-edge technology.
Today, FedDev Ontario announced that it will be investing $845,000 to enhance service offering and business programming at the Sydenham Campus Regional Skills Training, Trades and Innovation Centre in Owen Sound.
“By collaborating with Grey County and its partners, we are supporting important parts of our region’s economy to stay strong, while bringing new innovators into the market and helping them commercialize their ideas,” said Marie-France Lalonde, parliamentary secretary to the Minister of Economic Development and Official Languages.
Lalonde made the announcement Monday morning via Zoom webinar on behalf of Minister Mélanie Joly, Minister of Economic Development and Official Languages.
The funds will be used to support the creation of a maker space and device lab that will include 3D printers and prototyping equipment to support small businesses to develop STEM skills, integrate new technologies, and commercialize products.
The investment will also support two new programming streams: acceleration programming for established companies; and incubation programming for newer businesses, benefiting from access to the maker space.
FedDev’s contribution of $845,000 is part of the overall project cost of $2,664,695 with contributions coming from the private sector and Grey County.
According to Lalonde, the investment will support 75 businesses, produce 10 new products and services, create 50 new jobs and will leverage an additional $1.8 million in private investment for the region.
“Creating fabrication and maker space labs allows the Sydenham campus to offer entrepreneurs a place to prototype and experiment, as well as offer training on leading-edge technology. FedDev Ontario funding is outstanding news and we are delighted the federal government recognizes the importance of rural entrepreneurs in the region,” said Selwyn Hicks, warden of Grey County.
Q2 2021 Chinese Inbound Investment: M&A and Equity Investments – China Briefing
The period April-June 2021 saw an impressive array of investments into China, in a variety of different sectors. Despite political differences, the United States led the way closely followed by Asia and then Europe.
Q2 aggregate amounts were led by real estate, and logistics acquisitions and investments, suggesting that corporate MNC’s are buying into China’s Belt and Road Initiative projects while politicians continue to discredit it. Joint ventures (JV) and minority investments took place in multiple sectors from several Asian countries.
JVs/minority inbound investments were made from several European countries led by German and Scandinavian businesses. The UK saw a handful of small investments/JVs as well as one major exit. A notable next generation investment was made by Germany’s Volocopter, looking to bring flying taxis to China.
The second quarter of 2021 saw China inbound investments/pledges reach US$13.9 billion, down 2.1 percent from US$14.2 billion in Q1 2021, but still well above both Q3 and Q4 2020 levels. These investments were a mixture of controlling inbound acquisitions, minority stakes, JVs, and new plants/operations.
This quarter was led by acquisitions of controlling stakes across financial services, banks, investment banks, securities firms, asset and wealth managers, insurers, real estate, and logistics. We set out this activity by region below.
North America led with US$6.8 billion. Two large acquisitions by Blackstone, one of a Beijing-based commercial developer and one of a leading Chinese data management group, accounted for US$4.3 billion. Canadian-based Brookfield acquired a set of five mainland shopping malls for US$1.4 billion. There was a furry of investments/announcements by leading US financial services groups including JP Morgan – seeking to acquire the remaining 29 percent of its securities joint venture (estimate of US$40-50 million). This follows JPM’s Q1 acquisition of a 10 percent stake in China Merchants Bank, a leader in Chinese wealth management for US$410 million.
Morgan Stanley is interested in acquiring stakes in their Chinese securities and mutual funds JVs (approx. US$150 million)
Goldman Sachs launched its Chinese wealth management JV with ICBC wealth management. Goldman will control 51 percent.
Blackrock announced that it had received its license for a majority owned (50.1 ercent) wealth management JV with CCB and Temasek (Singapore). Blackrock also became the first global asset manager to start a wholly owned onshore mutual funds business.
There were also industrial JVs in lithium batteries, chemicals and gasification, venture capital (VC) and/or private equity (PE) investments into Chinese healthcare, with a focus on biopharma and biotech, into diary and into a newly launched industrial/PE fund for the Chinese beauty market. There were also a few smaller RE acquisitions as well. The quarter ended with Warburg Pincus announcing a JV with China’s Golden Union Group, to acquire under-utilized properties in Shanghai and Beijing and convert them into use, including serviced apartments, creative offices, or mixed-use commercial projects.
Asia Q2 announced deals with disclosed values totaling US$6.1 billion.
Not surprisingly, Hong Kong and Singapore ranked #1 and #2, respectively, by country.
The largest Asian inbound investment was AIA’s acquisition of a 24.99 percent equity stake in China Post Life for US$1.8 billion. Hong Kong also saw a US$500+ million acquisition of a Chinese shopping mall by a REIT and an inbound mainland Chinese hospital acquisition. Singapore saw three real estate/REIT transactions, one of which represented the successful IPO of GLP’s logistics REIT (a landmark China REIT transaction), the launch of DBS’ majority-controlled mainland securities JV, and a private placement by GIC into a leading tech platform.
This quarter also saw inbound JVs/partnerships involving many other Asian countries; Japan (Daiwa securities JV and an EV batteries JV), Korea (biopharma VC investment led by Mirae and a JV in lithium-ion battery recycling), Mongolia (metallurgical coal JV), Thailand (hospitality/hotels entry), and Australia, a US$1.4 billion lithium strategic partnership.
MENA China (Guangzhou) and Israel launched a second Sino-Israel biotech Fund, managed by prominent Israeli professionals, and is to be focused on Israeli and EU biotech companies in phase II/III clinical trials.
Europe (excluding the UK) saw numerous JVs/investments into China, however, very few of these disclosed any value. The aggregate disclosed values for FDI into China amounted to US$750 million.
Germany invested in two China JVs, focused on electric batteries as well as one on fuel cells – all involving leading brands from both countries. There was a JV launched to focus on monorail components, another to bring German flying taxis (Volocopter) into China and one to fund a Series C of a Chinese drone maker. Perhaps the most pressing Q2 German/China JV was the one between Fosun Pharma and BioNTech, which is designed to produce up to 1 billion of additional vaccine doses per year to mainland China, which needs this additional domestic vaccine capacity. (BioNTech also announced that it would be launching new regional vaccine production facility in Singapore).
BASF’s new engineering plastics compounding plant at the BASF Zhanjiang Verbund site (US$10 billion) is also on track with the first production plant to come commence operations at the site in 2022. German inbound VC investment volume was much lower in Q2 versus Q1 as Bertelsmann (BAI) – which made 5 VC investments in Q1, made none in Q2.
BASF and Bosch VC funds saw much lower VC investment activity in Q2.
France saw Sanofi launch a new global research institute in China (its fourth such global institute), Air France/KLM acquired an additional US$200 million to increase its stake in China Eastern (still below 10 percent) and TOTAL released updated data on its solar panel JV (TEESS) with Envision, which appears to be making strides into the Chinese commercial and industrial user segment.
Other European countries
Norway saw two JVs, one to develop offshore wind in the Yellow Sea and one with UAC, a supplier of fiberglass pressure vessels, to build a large-scale production facility in China.
Finland – Finnair announced a new JV with Shanghai’s Juneyao Air to expand air services between Finland and China.
Switzerland – Clariant opened its new production facility for light stabilizers.
Italy – Daerg Chimica, a specialist in car washing business operating in 45 countries, announced the launch of its Chinese business.
Netherlands – LyondellBasell announced that Jiangsu Fenghai will use its Spheripol 400 kilotons per annum (KTA) and Hostalen ACP300 KTA Hostalen technology for its new facility to be built in Lianyungang.
UK – (amounts with disclosed values of estimated US$250 million) – saw the acquisition of a majority (73 percent) stake in a small Chinese industrial company, acquisition of a 10 percent stake in a regional Chinese freight organization, a JV involving China Everbright Fund providing growth capital for IP Group’s China based portfolio companies, a chemical manufacturing JV, a JV in life sciences/AI, a small petrochemicals JV (via Shell), and a data focused JV involving Unilever, Alibaba’s Brand DataBank, and Fudan University.
A sizeable infant formula business exit was made by Reckitt Benckiser, a leading UK consumer health group.
Included in this analysis are transactions and/or investments which have both been signed and announced. Omitted from this analysis are transactions involving publicly traded debt or equities.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at email@example.com.
Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. We also have partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh.
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