Robust emerging markets M&A deals surge
March 15, 2010

Emerging economies such as China and India, having broken free of the recession are increasingly investing in developed countries with  a long-term economic track record. A KPMG report on emerging to developed market deals shows a substantial rise in FDI flow from emerging to developed markets in the last year.

The number of Emerging-to-Developed deals registered in the second half of 2009 stood at 102, representing a strong bounce back from the 78 recorded in the first half of 2009. By contrast, the number of Developed-to-Emerging deals fell to 216; making it four consecutive six month periods during which that figure has fallen, reported KPMG.

The net result of this is that Emerging to Developed market deals now represent 47 percent of the Developed to Emerging market totals – the closest the two sets of numbers have ever been since the survey began. It also means that Developed to Emerging market deal activity has now more than halved from its high point of 463 deals in the latter half of 2007, KPMG continued.

A hunger for natural resources and growth pushed China to invest substantially in its top three markets – Australia, Canada and the US during 2009. While deal sizes are confidential and not released, China invested in 18 deals in Australia, eight deals in neighboring Hong Kong and six deals with the US. During the same time frame, Hong Kong and the US invested in 29 deals in the mainland and Japan invested in 14 deals with Chinese companies.

While China’s overseas investments continue to remain small in comparison to FDI entering the country, Hong Kong remains the mainland’s highest deal hub, followed by Australia and the US.  Over the past few years, the US has maintained its position as the premiere developed economy with the most deals in the mainland, followed by Hong Kong and the UK

India’s top three investment destinations during 2009 were the UK, USA and Australia. India concluded five deals in the UK, ten in the US and three in Australia, while during the same time, France invested in seven deals in India, the Netherlands in eight deals and the US 32 deals in India.

Over the past few years, the US remains India’s dominant deal destination followed by the UK and Germany. Similarly while comparing the number of deals into India over the past few years, the US and UK remain prominent players followed by Germany and Canada.

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