Chinese deal making in Europe surges ahead of European deal making in China
21 January 2015
Chinese investors are doing a far higher value and volume of M&A deals in Europe than European investors in China, according to Deloitte, the business advisory firm. In 2014 Chinese companies and financial investors announced 79 deals in Europe, compared to 54 European deals in China.
In terms of value, in 2014 the average disclosed deal size for Chinese investors in Europe was £249 million (versus £116 million for European investors in China). At the top end the difference is even more pronounced, with the five largest deals done by Chinese investors in Europe having total value of £6.6 billion, whereas the five largest deals done by European investors in China had total value of only £1.4 billion.
Graham Matthews, lead China M&A partner for Deloitte, commented: “In the space of a few years the tectonic plates between Europe and China have shifted, with Chinese deal activity surging in 2014. 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.
“The shift in the balance has profound consequences for deal makers. Any seller of assets in Europe should be actively thinking about how to attract and include Chinese buyers in their sales processes.”
Germany was the most popular destination for Chinese companies by volume with 16 deals (mainly in industrial and automotive businesses), the UK coming second with 12 (mainly in consumer businesses) and Italy also proving attractive for both its industrial and consumer opportunities.
Chinese companies are still looking to Europe for technology to make them more competitive, with 31 of the 79 deals being in the industrial and automotive industries. There were 13 deals in consumer businesses, seven in hospitality and six in energy (mainly renewables).
Graham Matthews added: “We are seeing many more repeat buyers and re-invigorated state-owned enterprises undertaking many of the larger deals. However, private enterprises are doing the majority (45 of the 79 deals) by volume in Europe.
“Chinese private equity (PE) is also becoming prominent in outbound deals to Europe, completing nine investments in 2014, and already finding larger deals than any foreign PE fund has ever found in China. 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. As China’s capital markets open up in 2015 with a predicted wave of IPOs, and the Eurozone economy remaining challenged, cross-border M&A flows are predicted to remain increasingly in favour of China.”
Notes to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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