2011 to be record year for Chinese overseas acquisitions: PwC

Outbound merger and acquisition activity by China buyers has reached a new record for the six month period from January to June 2011, with a 14 per cent increase compared to the same period last year, indicating that despite market volatility and a global economic outlook that is far from certain, China remains hungry for M&A deals abroad across a wide range of industries.

According to PwC, there were 107 outbound transactions in the first half of the year, and if this strong level of activity carries through for the remainder of the year, 2011 will be a record year for Chinese M&A activity abroad.

Although there were fewer larger overseas deals, with only three deals exceeding $1 billion in the first half of 2011 compared to 12 in FY2010, there is strong interest in a wide array of industries including machinery and equipment manufacturers, and in consumer related companies.

In fact, M&A in the industrial and consumer segments nearly doubled in the first half of 2011 compared to the same period in 2010. PwC Greater China Private Equity Group Leader David Brown said as production of China goods continued to move up the value chain and the country transitioned to a consumer-led economy, it was no surprise that buyers from China were keen to acquire more industrial know-how, technology and brands.

''China is hungrier than ever for good deals abroad,'' Brown said. ''Although there were fewer larger-sized transactions in the first half of 2011, we expect a number of big deals to be announced in the second half of the year. China is in the driver's seat of global M&A, and there is no sign that interest in outbound M&A is waning.''

While the reach is global, there is a noticeable increase in Europe as an investment target, with 30 announced transactions in the first half of 2011, which exceeded the total into Europe for all of 2010. The target sectors in Europe have been industrials and consumer related sectors besides the always popular resources sector.