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China's European Acquisitions Multiply

By NexChange
Capital Markets

Chinese buyers tripled their acquisitions of companies in both the UK and Germany between 2014 and last year, according to new data.

As a result, Asian investors accounted for 14% of inbound merger and acquisition (M&A) activity in both countries in 2016, said Livingstone Partners, an M&A and debt advisory firm.

However, fears about ceding control of key industries to Chinese entities has caused some regulators to seek to impede deals.

“The immense increase of Chinese inbound M&A activity recently raised concerns on transactions involving German tech companies – and the Aixtron transaction was called off as a consequence,” said Christian Grandin, of Livingstone Partners’ Dusseldorf office. US regulators blocked a bid by Fujian Grand Chip Investment Fund to acquire Aixtron, a German chipmaking company, because of security concerns.

“Nevertheless, the deal activity between China and Europe will remain strong and grow further,” he added.

Chinese regulators have also shown they are worried about the amount of Chinese capital going overseas.

David Ryland of law firm Paul Hastings said some Chinese investors have required additional permissions beyond exchange control approval, “because of an increased sensitivity in China relating to the impact on the stability of the Chinese currency of significant exported capital, and the prices/multiples […] at which these businesses are being sold”.

©2017 funds global asia

This article was originally published in Funds Global Asia.

Photo: sung ming whang

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