China’s outbound M&A deals – the pink elephant?

18 Mar

Since mid-2014, the number of Chinese outbound investments has allegedly surpassed that of inbound investments by foreign companies. The total for 2014 is around $130B worth of transactions. Government officials, industry experts, consultants and M&A advisors are talking of a new wave of investments, but do we really see the deals coming through? There is some hesitation in the market, so I took a closer look at some of the actual deals that were announced over last three months. Below you will find which countries and sectors Chinese companies have invested in so far in 2015 (and last bit of Dec 2014).

Table: Key Deals Mid-Dec 2014 to Mid-Mar 2015

Key Deals

 

There were less than 20 significant announcements made in the last three months. Comparing it with inbound investments, we see roughly a similar number of transactions. The two countries with the highest number of target investments from Chinese companies are the US and Germany. However, Switzerland and Korea account for the largest transactions (over $1B each). Industry-wise, insurance and industrials top the charts.

Comparing this deal flow of $5-6B with the annual total of around $130B, it looks like as if the first 2-3 months of this year are a bit soft. Among the acquirers, we see some familiar faces. Wanda and Anbang, together with Fosun are contenders with a solid track record in overseas investments.

The fall of the EURO, might lead to more deals in the coming months as the currency effect practically offers a discount for the Chinese buyers. I assume medium sized companies in Germany will be a main target. We are preparing a list of potential targets for Germany’s “Hidden Champions”, all world-market leaders in their respective niche.

An interesting year 2015 awaits us!

Please feel free to share your views with me in the comment section.

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