Chinese investment in North America jumps in 2013 – study
Chinese outbound direct investment (ODI) reached $73 billion during the first three quarters of 2013, with the amount of capital deployed in North America rising nearly three-fold on a year-on-year basis, according to A Capital, a private equity firm focused on cross-border transactions involving Chinese companies. It expects ODI to match foreign direct investment (FDI) within three years.
The nine-month ODI figure represents a 20% increase on the same period in 2012. M&A - investment in companies as opposed - came to $41.6 billion and continues to account for the majority of activity, suggesting the influence of government policies encouraging cross-border transactions is being brought to bear.
Capital entering North America reached $24.7 billion, compared to $8.6 billion in the first nine months of 2012, although two transactions accounted for 90% of the total: China National Offshore Oil Corp's $15.1 billion purchase of Canada-based oil and gas company Nexen and the $7.1 billion acquisition of Smithfield Foods by private equity-backed Shuanghui International.
Average deal size jumped 50% year-on-year to $603 million while the top five deals had a 72% of overall transaction volume compared to 22% in 2012.
While Nexen ensured resources investments outperformed the previous year in dollar terms, the number of deals dropped by 45% to 15. There was a sharp increase in industry and services - non-resources - transactions, which jumped 46% to $17.9 billion. Shuanghui was a factor here, but not the only one: industry and services investments within Asia nearly doubled to $4.5 billion.
State-owned enterprises (SOEs) continue to drive ODI, accounting for 75% of deal value and 60% of deal volume, but there has been a noticeable pickup in private investor activity in Europe and North America. Private enterprises committed $10.4 billion in the regions during the first three quarters of 2013, up 86% year-on-year.
The numbers were released alongside the latest installment of A Capital's Dragon Index, which monitors the growth of Chinese ODI. It measures the growth rate of Chinese ODI stock relative to GDP and tracks Chinese ODI aggregated by investment and investor type, geographical region, and reason for investment.
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