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This bucks the trend set in 2011 and 2010, which saw Asian buyers invest almost half of the annual totals (46% in 2011 and 43% in 2010). European corporates seeking a share in emerging markets were less active, investing around a third (36% in 2011 and 38% in 2010) of the annual sums.
Commenting on the findings, Edward Braham, global head of corporate at Freshfields, says, ‘Many cash-rich European corporates are looking to their higher growth market investments to offset the flat European markets. While there’s a temptation to wait and see how the eurozone troubles play out, there are ambitious companies with substantial experience in higher growth markets that are ready to do deals now in order to achieve greater scale and take the initiative.’
Belgium leads the field of buyers targeting the world’s fastest growing markets in 2012, investing $22.1bn. However, Anheuser-Busch InBev’s pending $20bn acquisition of Mexico’s Grupo Modelo - the largest deal seen in these markets over the last five years - accounts for the greatest share of the investment and clearly skews the trend.
Singapore resulted as the second most acquisitive nation in 2012, investing $11.9bn. Cyprus follows with investment levels peaking at $9bn, although two notable deals in the wireless sector contribute to its top-three ranking. 2012 has seen Cypriot investors acquire a $5bn stake in Moscow-based wireless telecommunications provider MegaFon, and a $3.3bn stake in Telekominvest, a St. Petersburg-based provider of mobile communications services.
While UK buyers were the most active last year, with investment totalling $21.9bn, activity has stalled at $2.6bn in 2012. US investors also resulted as less active in the world’s key growth markets, investing $5bn across 168 deals in the first six months of the year compared to $15.8 and 403 deals in 2011.
The Anheuser-Busch InBev-Grupo Modelo deal has cemented Mexico’s position as the top target nation in 2012, with investment peaking at $21.6bn. However, the country has only seen 56 deals in the first half of the year. A flurry of mega-deals involving Russian wireless companies has contributed to its position as the second most attractive target, with 181 deals worth $11.5bn.
China trails closely behind in terms of investment levels at $10.7bn, although it has seen the most deals with 276. Indonesia is emerging as another key target nation, with investment levels growing by a third (34%) in the first half of 2012 compared to the total in 2011.
Edward says, ‘Large European corporates looking to drive growth are now focusing on new countries such as Indonesia and Mexico, not just China, Russia and Brazil. But with the opportunities come challenges. Cultural and corporate differences can be barriers to successful dealmaking and transactions can also fail to deliver the growth intended. Investing in companies in emerging markets can also increase exposure to dangers like bribery and corruption.’
Thanks to Anheuser-Busch InBev’s mega-deal of 2012, the food and beverages sector is attracting the most investment in the world’s key growth markets, driven in part by rapidly declining consumption in their home markets. Investment in the sector totals $23.6bn in the first half of 2012. This is followed by banks at $12.5bn and wireless at $10.4bn. Sectors which have been attractive in previous years, such as metals and mining and oil and gas, have fared less well in 2012, with investment standing at $6.8bn and $1bn respectively.
Edward concludes, ‘There is a stark contrast between the decline in M&A globally and the growth of M&A in higher growth markets. While pursuing a higher growth market strategy clearly makes sense for many companies, it is important to understand the risks of doing business in these markets, and have effective strategies for addressing them.’
* The analysis selected the 15 countries with the highest GDP growth including: Argentina, Brazil, Chile, China, Egypt, India, Indonesia, Malaysia, Mexico, Nigeria, Poland, South Africa, South Korea, Russia and Turkey.
Table 1: M&A deal values and volumes where 15 high growth nations were the target (January 2006 to June 2012)
Value of Transactions ($Mil)
Number of Deals
1st half 2007
2nd half 2007
1st half 2008
2nd half 2008
1st half 2009
2nd half 2009
1st half 2010
2nd half 2010
1st half 2011
2nd half 2011
1st half 2012 (Up to 30 June 2012)
Table 2: M&A deal values and volumes where 15 high growth nations were the target - Acquirer Nation Analysis (to 30 June 2012)
United Arab Emirates
Table 3: M&A deal values and volumes where 15 high growth nations were the target - Acquirer Nation Analysis (to 30 June 2012)
Number of Deals
Table 4: M&A deal values and volumes where 15 high growth nations were the target - Acquirer Continent Analysis (2007 – 2012 by continent)
Table 5: M&A deal values and volumes where 15 high growth nations were the target - Target Sector Analysis (to 30 June 2012)
Target Mid Industry
Food and Beverage
Metals & Mining
Transportation & Infrastructure
Other Real Estate
Source: Thomson Reuters
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