US and UK lead the way in $1.4 trillion acquisitions in the world’s fastest growing markets

Between 2000 and 2011, global investors, led by the US and the UK, (who committed $213bn across 4,481 deals and $142bn across 1,631 deals respectively) have poured more than $1.38 trillion (across more than 27,000 acquisitions) into the world’s 15 highest growth markets*, in what has been a race to secure a share of the phenomenal growth gains enjoyed by emerging economies.

Despite emerging markets M&A still being largely dominated by western acquirers, there is a growing trend of investment from emerging markets into the 15 high growth economies, with the likes of China and Brazil featuring among the world’s top 10 emerging market investors, according to an analysis by international law firm Freshfields Bruckhaus Deringer. (see table 1)

Out of all the investments into the world’s 15 highest growth economies since 2000 the US and the UK alone accounted for over 25% (US – 15.3% and UK – 10%) more than all of the acquisitions combined of the 15 markets investing between themselves (23.9% of all investments).

Commenting on the findings, Edward Braham, global head of corporate at Freshfields said: ‘The growth in emerging markets M&A since 2000 has been phenomenal. At first it was all about western companies trying to secure a toehold in foreign high growth economies, but we are now seeing significant investments by emerging market companies into other emerging markets, as well as substantial outbound investment into western economies.’

Most targeted high growth markets:

As well as being the leading emerging market investors in other high growth markets, China and Brazil also attracted the greatest share (over 25%) of all global investments in the 15. However, the most acquisitive emerging economies in high growth markets were not always the biggest targets of M&A activity, and vice versa. Turkey was particularly noticeable for being a relatively big target for M&A activity (attracting $83bn of M&A investments) whilst investing relatively little ($9bn) in other high growth markets. (see table 2)

Cultural and historical links seemed to still play an important role in influencing investment decisions. For example, the top four targets for Spanish M&A activity were all Latin American. Similarly, the UK’s Commonwealth connections still seems to hold sway, with its top two targets being former colonies (India and South Africa). The UAE is notable for investing almost exclusively in countries that are majority Islamic.

Geographical proximity also played a role. Asian companies in particular were far more likely to engage in M&A activity in high growth markets on their own continent rather than elsewhere, with Singapore and Hong Kong conducting over 80% of their high growth market M&A activity in Asia.

Looking at M&A data since 2000, and therefore over a longer 12-year period, rather than year on year as is typically the case, really exemplifies the marked M&A dominance of the likes of the US and the UK in terms of capturing prized assets in emerging markets. However, change is afoot. Particularly in the second half of the 2000s countries like China and Brazil have started to become much more aggressive in the pursuit of growth opportunities, with their share of emerging market M&A rising markedly.

‘Looking ahead, the expectation is for emerging markets M&A to play an even greater role in global M&A activity’, Edward Braham said. ‘The situation varies by market, but the combination of higher growth prospects, under-consolidated markets and a number of substantial companies that are open to M&A, provides a strong impetus for deals’.

ENDS

Notes for editors

Table 1: Top 20 countries investing in the 15 high growth markets (by value of transactions)

Acquirer nation Value of transactions ($Mil) Number of deals

United States
213,152.41
4,481
United Kingdom 142,190.86
1,631
Spain 95,244.30
571
France 80,508.20
931
Hong Kong 79,858.84
2,357
China 67,522.56
1,345
Brazil 61,407.66
735
Japan 56,171.90
945
Netherlands 53,438.46
692
Singapore 42,171.01
1,603
Russian Fed 38,254.25
682
Germany 35,412.38
880
India 32,738.98
733
Canada 25,905.96
1,449
Malaysia 19,750.40
630
Italy 18,794.50
282
Poland 18,619.57
364
Switzerland 17,788.88
343
Chile 17,610.32
220
South Korea 17,555.77
420
Industry total 1,386,029.81
27,366

Table 2: Top 15 high growth countries investing among themselves (by value of transactions):

Acquirer Nation Value of Transaction ($Mil) Number of Deals
China 67,522.56
1,345
Brazil 61,407.66
735
Russian Fed 38,254.25
682
India 32,738.98
733
Malaysia 19,750.40
630
Poland 18,619.57
364
Chile 17,610.32
220
South Korea 17,555.77
420
Mexico 16,440.94
225
Argentina 12,710.72
244
South Africa 10,772.19
286
Turkey 9,122.27
107
Indonesia 5,597.16
266
Egypt 2,611.30
46
Nigeria 591.60
14
Industry Total 331,305.69
6,317

* 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.

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