Chinese investors have displayed a strong appetite for European M&A deals

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Chinese investors turn to Europe for M&A deals

European merger and acquisition deals remain popular among Chinese investors, Deloitte research shows.

Wednesday 21 January 2015

The number of merger and acquisition (M&A) deals involving Chinese investors in Europe far outweighs the amount of European activity which is taking place in the East Asian country, according to Deloitte research.

Data from the business advisory firm shows that a total of 79 M&A deals in Europe involved Chinese investors and companies last year.

Meanwhile, only 54 deals in China involved European investors.

Large disparities emerge

Typically, European deals involving Chinese investors were valued at £249 million.

Again, this was larger than the typical figure, of £116 million, which applied to European firms conducting business in China.

Deloitte said the difference was even wider when it came to the very largest M&A deals.

It said the combined value of the five biggest agreements involving Chinese firms across the European continent hit £6.6 billion in 2014.

The top five deals involving European firms in the East Asian country amounted to just £1.4 billion.

Attracting Chinese investors

In light of these trends, Graham Matthews, lead China M&A partner for Deloitte, said those selling assets in Europe may want to think about ways in which they can appeal to Chinese investors.

He said: “No European company or private equity fund has ever done a deal larger than £1 billion in China, but last year alone there were five Chinese acquisitions in Europe of around this size.”

Germany leads the way

In terms of the total number of deals taking place, Germany, the UK and Italy were the three busiest M&A destinations for Chinese investors in Europe last year.

Deloitte said a total of 12 deals took place in the UK, with 16 occurring in Germany.

When it came to specific sectors, the industrial and automotive industries attracted the largest number of deals, at 31.

A further 13 related to the consumer sector, while seven had links with the hospitality industry.

The rise of PE funds

Mr Matthews said private enterprises were involved in 45 of the European deals last year.

But he added that state-owned enterprises and repeat buyers are also having a growing influence.

The expert concluded that attention additionally needs to be paid to Chinese private equity (PE) funds.

He said: “Not only are Chinese PE funds becoming active buyers of European businesses, but non-Chinese financial sponsors are also co-investing with Chinese companies and financial investors to do deals in Europe.”

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Copyright Press Association 2015

“No European company or private equity fund has ever done a deal larger than £1 billion in China, but last year alone there were five Chinese acquisitions in Europe of around this size.”

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