In 2016, Chinese direct investment nearly tripled in North America and doubled in Europe, reaching a combined value of $94.2 billion in both regions, up 130% from $41 billion in 2015. Before 2008, both regions received less than $1 billion in Chinese investment per year. Although the total number of completed deals in both regions remained consistent with previous years at 330 transactions (155 in North America and 175 in Europe), the average deal value more than doubled to $290 million, up from $120 million in 2015, as Chinese investors pursued more medium and large-sized deals.
Chinese outbound investment hit another record high in 2016, rising to $200 billion globally. Nearly half of this investment targeted assets in North America and Europe, a reflection of China’s shift from commodity to technology and services sector acquisitions as it transitions to a middle-income economy.
“Well over half of all Chinese direct investment into North America and Europe since 2000 has taken place in the last three years, marking the continued influence of globalization and the rapid development of China’s economy.” MICHAEL DE FRANCO, Chair of Baker McKenzie’s Global M&A Practice
Privately-owned Chinese companies led the investment trend, outpacing state-owned enterprises to close deals accounting for 70% of total deal value in 2016. This signals the continued rise of corporate China in the global economy as the government pursues a new growth model that incentivizes Chinese companies to acquire advanced technology, consumer brands and safe haven assets. Chinese FDI would have been even higher in 2016 if not for a record number of canceled transactions. In 2016, Chinese investors canceled or withdrew 30 deals (10 in the US and 20 in Europe) worth an unprecedented $74 billion. Some of this increase can be attributed to a much higher number of attempted transactions since mid-2015. However, Chinese investors also faced greater challenges with China’s recent measures to slow capital outflows and closer screening of inbound deals in the US and Europe. This report provides an update of our 2016 study comparing Chinese FDI patterns in North America and Europe. We review Chinese investment trends in both regions over the last year, providing insight on deal values and volumes, target industries and geographies, investor type and canceled transactions. We also present an outlook for Chinese investment in 2017.
INTRODUCTION
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Chinese direct investment in North America and Europe more than doubled
North America took the lead as the top target market by deal value
Chinese investors target different assets in North America and Europe
Privately-owned Chinese companies drove acquisitions
Chinese investors continue to target assets in key jurisdictions in both regions
The number of canceled and withdrawn transactions rose
Appendix A: Transaction Attractiveness Indicator
Appendix B: Country Forecasts
Appendix C: Methodology
M&A Transactions (US$B)
M&A Transactions (# Of Deals)
Domestic IPOs (US$M)
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