Private corporations accounted for 70% of Chinese investment in both regions in 2016, rising to $67 billion from $21.4 billion in 2015. This rise in private investment vastly outpaced the increase in state-owned investment, which grew to $27.5 billion, up from $19.4 billion in 2015. The dominance of private sector acquisitions represents the continuation of a recent trend, as well as greater scrutiny of SOEs in the US and Canada.
PRIVATELY-OWNED CHINESE COMPANIES DROVE ACQUISITIONS IN NORTH AMERICA AND EUROPE.
The most active Chinese buyers in 2016 included veteran investors such as HNA Group, Haier, Tencent, Anbang and Wanda, as well as newcomers like Chinese appliance giant Midea, printer cartridge maker Apex Technology and Ctrip, China’s largest online travel company.
State-owned enterprises continued to invest more in Europe, accounting for 24% of total Chinese FDI in the region in 2016, versus 20% of Chinese FDI in North America. This is largely because Europe has more attractive assets in sectors dominated by SOEs in China, such as machinery, automotive, infrastructure and utilities.
The percentage of acquisitions by Chinese financial investors, companies that primarily invest for financial returns such as sovereign funds and private equity firms, dropped in 2016, bucking a growing trend. Since 2013, transactions by Chinese financial investors had grown rapidly, accounting for 53% of total deal value in North America and 27% in Europe in 2015. In 2016, however, these investments accounted for only 29% of total deal values in North America and 26% in Europe, reflecting the impact of the Chinese government’s recent efforts to curb capital outflows of investments of a primarily financial nature.
More than half of acquisitions by Chinese financial investors in 2016 targeted the real estate and hospitality sector. Other big targets included ICT, transport and infrastructure, and entertainment. Although investment by Chinese consortiums and private equity firms has risen in recent years, particularly in the ICT sector, most of the large deals continue to involve individual investors.
fdi-transactions
FDI TRANSACTIONS BY CHINESE PRIVATE INVESTORS IN NORTH AMERICA AND EUROPE
Source: Rhodium Group. Private investors include companies that are at least 80% owned and controlled by non-state-related investors.
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Meanwhile strategic FDI investments by Chinese companies pursuing acquisitions to grow their core business areas more than doubled in both regions, rising to $34.2 billion in North America and $33.3 billion in Europe, up from $14.3 billion and $12.4 billion respectively in 2015.
FINANCIAL INVESTMENTS BY CHINESE INVESTORS IN NORTH AMERICA AND EUROPE
financial-investments
Source: Rhodium Group. Financial investments are investments that are made for the purpose of financial returns, in contrast to strategic investments made in the investor’s primary area of business.
“Chinese companies are growing market share, moving up value chains and investing in knowhow to drive domestic and international demand for their goods and services.” DANIAN ZHANG, Chief representative of Baker McKenzie’s Shanghai office
Appendix A: Transaction Attractiveness Indicator
Appendix B: Country Forecasts
Appendix C: Methodology
M&A Transactions (US$B)
M&A Transactions (# Of Deals)
Domestic IPOs (US$M)
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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
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