ODI accelerates by 14% in 2012 while FDI drops with 4%.

Industries

Dragon Index™ hits record at 2138 points (+14% vs. FDI -4%)

This A CAPITAL Dragon Index™ edition presents its yearly 2012 analysis by region, by type of Chinese investor, by type of transaction, by transaction rationale - and for the first time presents the most active Chinese investors globally.

Download A CAPITAL Dragon Index FY 2012 here

Planets

Analysis

This A CAPITAL Dragon Index™ edition presents its yearly 2012 analysis by region, by type of Chinese investor, by type of transaction, by transaction rationale - and for the first time presents the Top 10 most active Chinese investors globally.

Outbound investments increased 14% in 2012 with 77.22 Billion USD invested compared to 68 Billion in 2011, both green field investments and Mergers and Acquisitions.
M&A activity increased by 26% this year, with 37.8 Billion USD compared to 29.9 Billion USD in 2011, which represents 49% of all outbound investments (compared to 44% in 2011). This comes close to the 2010 peak of 40.8 Billion USD in M&A Deals.

All regions saw an increase of Chinese ODI, except in Asia where Chinese M&A sharply declined by 65% representing 8% of the total : this can be explained by the lack of large deals (largest deal in Asia was 425 million USD, compared to 2.5 Billion USD in 2011).

Chinese investors continue to seize opportunities in Europe at a record pace with 12.6 Billion USD invested in 2012 (a 21% increase) confirming Europe’s lead destination for Chinese ODI (33% of all Chinese M&A globally, more than double than into the US).

Investments into Europe are expected to remain strong as European valuations remain moderate due to low growth perspectives, the absence of regulatory hurdles similar to CFIUS in the US, and the strategic match between sectors of interest for Chinese investors and the European economy, in particular in sectors linked with urbanization.
Investments into the United States grew by 48% with 5.4 Billion USD invested (14% of all M&A), a catch-up after a very quiet election year in 2011
SOEs remain the driving force behind Chinese ODI (with 86% of all M&A in 2012).

In parallel, there is an important strategic shift towards minority investments representing now 58% of all M&A compared to 43% in 2011. This new trend is confirmed by statements of senior Chinese government and business leaders supporting minority investments as a more prudent, accepted and efficient approach toward outbound investments.

Key trends:
• Resources investments: 59% of all deals (versus 51% in 2011 and 61% in 2010), up 42% in value compared to last year.

• Europe confirms its leading position as preferred destination in 2012 with 12.6 Billion invested, up 21% vs. 2011, and representing 33% of all Chinese outbound
investments. Important deals in the UK (Weetabix, Heathrow and Thames Water), Germany (Kion, Putzmeister) and Denmark (Bang & Olufsen).

• Mostly minority deals (58% of total) but less private firms (14% of total). Minority deals are up 62% surpassing takeover deals. SOEs dominate outbound investments with
86% of all M&A deals in value, and 60% in number of deals.

• ODI is closing the gap with FDI with 69% of FDI (vs 59% in 2011 and 65% in 2010). We expect ODI equaling FDI in the next 3 years with additional 800 Billion USD ODI
until 2016, confirming A CAPITAL estimates early 2012.