DRAGON INDEX™ hits 2483 points, ODI +18%, FDI +5%

Industries

Dragon Index™ hits 2483 points, ODI +18%, FDI +5%

This A CAPITAL DRAGON INDEX™ analyses the full year 2013,
by purpose, by region, by type of Chinese investor, by type of transaction.
A special focus on Europe, North America, Africa and Private Firms is available.

Download A CAPITAL Dragon Index 2013 FY here

Planets

  • Analysis

1. Chinese ODI Pursues Fast Growth

Chinese Outbound Investments (ODI) grew almost 3 times faster than Chinese GDP (+18%)
• 96 Billion USD invested overseas during 2013 (vs 77 Billion USD in 2012)
• 56.2 Billion USD invested in companies=Mergers & Acquisitions (vs 41.6 Billion)
• M&A grew 35% and represent 59% of all outbound investments (vs 51%)
=> MAJOR ‘GO GLOBAL’ TREND ACCELERATES WITH CHANGING ECONOMIC MODEL

Resources remain main driver and boom (up +49%), down by numbers: more Mega Deals
• Resource investments at 36.6 Billion USD (vs 25 Billion)
• Number of deals dropped by 34% (25 vs 38)
• Resources deals represent 65% of all M&A deals (vs 60%)
• Almost 100% done by SOEs (Private Firms represent less than 0,25% of total)
=> RESOURCES DEALS BOOM THROUGH MEGA DEALS (NEXEN ALONE: 27% OF TOTAL M&A)

SOE* remain driving force (79% of all M&A vs 85%), as well as Takeovers (60% vs 43%)
• SOEs remain dominant also in deal numbers (60% of all deals, vs 58%)
• Minority deals down 5% in value (22 Billion vs 23 Billion) as well as numbers (33 vs 35)
=> NO GAMECHANGER YET (AS SOE/TAKEOVERS REMAIN CHALLENGING)

ODI is quickly closing the gap with FDI with 82% of FDI (vs 74%)
• A CAPITAL forecasts ODI to equal FDI in the next 3 years
• Forecast confirms A CAPITAL estimates made early 2012
=> A CAPITAL CONFIRMS FORECAST OF HALF-A-TRILLION

2. Chinese ODI Changing Patterns

ODI to Europe drops sharply (-48%), North America booms (x3), representing 4x more than Europe
• Europe dropped to 6.5 Billion USD (vs 12.5 Billion), representing 12% of all M&A (vs 30%)
• Investment in all European countries are down except France (stable) and Spain (up)
• 26.1 Billion USD invested in M&A North America (vs 9 Billion) representing 47% of all M&A
• Without Nexen, North America would represent 27% of M&As (and 16% for Europe)
=> EUROPE HAS NOT YET FOUND THE MAGIC FORMULA TO ATTRACT CHINESE ODI

The Rise of Private Investors (+85%), doubling their investments in North America + Europe
• Total deal value up 85% at 11.5 Billion USD (from 6.2 Billion), number down to 35 (from 46)
• North America attracts 64% of all Private deal value, Europe 18%
• Private firms represent 28% of all M&A in North America and 32% in Europe
=> PRIVATE FIRMS GOING FOR BOLDER MOVES AND DEVELOPPED MARKETS

Industry & Services (Non Resources) pick up (+17%)
• 19.4 Billion (vs 16.6 Billion), even between North America (38% of total) and Europe (31%)
• Dropped 36% in Europe to 6 Billion USD (from a record 9.5 Billion USD)
• Asia up 71% with 5.0 Billion USD (from a exceptionally low base of 2.9 Billion)
=> CHINESE INVESTORS INCREASINGLY GOING FOR HIGH ADDED-VALUE FIRMS

Blockbusters set the tone & are larger and larger (Top 5 Deals = 55% of total, vs 35% a year ago)
• CNOOC-Nexen : largest deal since the start of the Dragon Index, alone 26% of total
• 2 major deals = 85% of all North American M&A: CNOOC/Nexen (15 Billion, Canada), Shuanghui/Smithfield (7 Billion, USA)
• Average size of deals increased by 66% at 630 Million USD (vs 378 Million)
=> CHINESE INVESTORS WITH INCREASED FINANCIAL AND TECHNICAL CAPABILITIES