M&A market will reach its peak in China during the second half of 2011
2011-08-05 14:38:08
Investment of Chinese manufacturers in Europe will increase and reach a record level in the second half of 2011. The total cost of 5 transactions announced in the first half of 2011, substantially more than 1Bn USD and is expected to increase by the end of the year. These operations will be the largest by volume in the last ten years, beating the record set last year when eight transactions were carried out in Europe.
The study involved 1,000 Chinese companies and the results show that most active investors in China are overseas companies operating in the manufacturing sector (33%), they are a little behind the wholesale and retail trade (17%), agriculture, forestry and fishing industry (17%) and mining (13%).
Over the past ten years, most large-scale operations, which cost more than 1Bn USD, originate from Chinese companies that operate in the manufacturing sector. In 2010, the number of deals in the of production sector, which cost more than 1Bn USD, increased from one (in 2009) to six. One striking example of investment trends in developed markets, which is becoming more common, is the Geely - Chinese automaker which purchased Volvo in 2010.
China will continue investing in different countries, including the European Union and CIS countries. Traditionally, Chinese investors are attracted by the assets with a high level of technical expertise and brand development, enabling them to significantly increase its level of technical skill and gain market share. The acquisition of IBM's PC division by Lenovo is a good example of this approach.
The demands of China for energy and natural resources are well known, and in this respect, they have carried out significant investments in these sectors worldwide. These sectors in Ukraine, Russia and other CIS countries are likely to be attractive to Chinese investment.