- New study from Livingstone shows Chinese acquisitions of UK companies increased by 215% in the period 2014-2016, although they account for only one in 20 international acquisitions in the UK marketplace;
- US investors remain the largest source of international investment in UK businesses, with total inbound acquisitions increasing 5% from 2014 to 2016.
Chinese M&A investment into the UK was accelerated over a two-year period as buyers took advantage of the plunge in Sterling following the Brexit vote, according to a new global M&A report launched today by Livingstone, the international mid-market M&A and Debt Advisory firm.
The report, The Acquirers – A Global Review, includes yearly data from deals conducted between 2014 and 2016, across the UK, USA, Europe, and Asia. The data comprises inbound deals and cross-sector investment across the business services, industrial, media & technology, consumer and pharmaceutical industries.
The fall in the value of sterling in the wake of June’s EU referendum lowered the prices of UK companies, and made them more attractive to international buyers. Inbound M&A surged by nearly 15%, with a significant spike in Q4 2016 jumping from 514 deals to 588.
A large proportion of this rise in investment came from Chinese buyers, with deals up by 215% into the UK. The proportion of inbound acquisitions remains relatively small however as it is coming from a low base – Chinese acquirers still account for only one in 20 international acquisitions in the UK marketplace.
However, buyers from the Americas remained the largest source of international investment in UK businesses, whilst European deals increased by nearly a fifth (18%), from 185 to 208, accounting for more than 35% of all inbound deals recorded.
Driving this growth was the business services sector, which grew at a rate of nearly 40%, reflecting the UK’s strong service-led economy. The UK’s media & technology sector followed closely behind, growing by 25% year-on-year, and accounting for nearly a quarter of all inbound M&A deals, up from 20% in 2015.
Jeremy Furniss, London-based Partner at Livingstone, said:
“While 2016 was a year of significant political change, particularly given the US election result and the Brexit vote, it was a strong year for M&A. The rapid increase in acquisitions by Chinese investors has attracted attention across the world, and is set to continue.
“Our findings highlight that M&A activity into the UK has grown at a record pace as investors from Europe, the Americas and Asia take advantage of the cheaper pound to acquire successful companies in a strong economy.
“The current interest rate environment remains at historically low levels, which in turn creates continued appetite for acquisitions that have the potential to generate solid returns – and we see no reason for this to change in 2017. This landscape, coupled with the UK’s strong tech scene driving innovation and reacting to disruptive technologies, will continue to encourage further foreign interest in UK businesses this year.”
Key findings included;
- Inbound UK M&A accounted for nearly 44% of the total international deal activity;
- There were 756 inbound deals into the UK in total, and of those 275 were from investors in the Americas, 208 were from European investors, 83 were from China and Asia, and 22 were from the Middle East and Africa;
- A fall in Sterling post-Brexit resulted in a 15% surge of M&A deals into the UK from 514 in 2015 to 588 in 2016;
- American buyers remained most active, but European, Asian and Chinese buyers all stepped up their interest in UK assets – Chinese buyers tripled the number of UK acquisitions from 6 in 2014 to 22 in 2016;
- Media & technology emerged as a hot sector for investment, with transactions up 25% year-on-year, from 110 in 2014, to 107 in 2015, and 134 in 2016.