SOEs drive China's overseas investments

According to A Capital, a private equity firm focused on cross-border transactions involving Chinese companies, Chinese outbound direct investment (ODI) will increase by $800 billion by 2016. The projection is based on the Dragon Index, a tool launched by A Capital to monitor the growth rate of Chinese ODI stock relative to GDP. The index tracks Chinese ODI aggregated by investment and investor type, geographical region, and reason for investment.

China's total overseas investments in the first quarter increased 118% from a year earlier. SOEs accounted for 98% of all deal value in the first quarter, while resources and energy deals accounted for 92% of the total.

Private firms represented 42% of the deals but only 2% of the value in Q1 2012, as it was "more difficulties for private firms to seize large opportunities in an environment characterized by both volatility and strong competition for good assets," the private equity firm mentioned in its report.

In May, A Capital launched a small fund to help domestic companies make investments in Europe in partnership with Belgian Federal Holding Company and China Investment Corporation (CIC) . The China-Belgium Mirror Fund will take minority stakes alongside Chinese firms in mid-sized European companies with strong potential in China. It is the first mirror fund that China has set up in the eurozone.

Last year, the private equity firm announced a renminbi-denominated fund, launched in conjunction with the Beijing Municipal Bureau of Financial Work. The vehicle, which has a target of RMB3 billion ($476 million), will focus on outbound deals.

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• Topics
• Greater China
• Outbound investment
• A Capital Asia