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Capital Markets

Big-game hunting for China’s POEs

State-owned companies have, until now, set the tone in China. But as economic growth slows and state-driven capital market activity founders, banks are hunting for business from China’s privately owned, ambitious enterprises.

Sitting in a small third-floor room in a modern Beijing office block, a 43-year-old Hong Kong-based managing director at a large US investment bank is indulging in idle chit-chat with two colleagues she has been stuck with for the past six hours. Her Blackberry and phone have been taken away and she is not being given much by way of refreshment. She’s bored, hasn’t checked in with the office, is increasingly uneasy, and doesn’t know how much longer she is going to be here.

This is no rogue trader waiting for questioning in prison. She’s simply on a roadshow trying to win a mandate from a large state-owned Chinese company. And her tale is far from unique.

Frustrated bankers from across Asia have, time and again, been asked to jump through myriad hoops to show their commitment to the cause when a large state-owned Chinese companyis deciding on banks to use on a particular deal. It is not uncommon for investment bank chief executives to endure similar conditions if the deal is deemed big and important enough.

As a senior investment banker bluntly puts it: "The fact is, it can be very labour- and time-intensive trying to do business with SOEs.