M&A thrives as BRIC economies spend in the UK

Kasmira Jefford
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EMERGING MARKET countries ramped up their spend on mergers and acquisitions in the UK by 60 per cent last year despite global investments falling to a three-year low.

Research by law firm Freshfields Bruckhaus Deringer found that the world’s fastest growing markets cut their spend on overseas M&A by six per cent to $90.8bn (£60.4bn) in 2012.

Deal volumes also fell by 17 per cent from 1,069 to 889 last year.

However, emerging market buyers upped their M&A spend in Britain to $8.6bn from $5.3bn, despite deal volumes falling to 50 from 54 in 2011.

“The UK has proven an attractive target in what was a subdued year for mergers and acquisitions globally,” Piers Prichard Jones, corporate partner at Freshfields, said.

“The quality of UK assets and brands, combined with favourable valuations preceding the recent rally in equity markets and a less protectionist regime than some other jurisdictions, have lured investors from emerging markets,” he added.

The US was the top destination for emerging market buyers, racking up $17.5bn worth of deals, compared with $4.9bn in 2011. China ranked second ($9.6bn) followed by the UK.

China was also the most acquisitive nation, accounting for more than a third of total emerging market overseas spend. China’s overall investments, however, shrank slightly to $32.5bn from $37.2bn.

Oil and gas continued to attract the most inbound investment reflecting the trend in 2011 and 2010. Emerging market companies poured $18.9bn into the sector last year over 63 deals. But this was a fifth lower than the amount invested in 2011 and almost half (46 per cent) that of 2010.

The insurance sector was the biggest riser, attracting six deals totalling $9.5bn. This was 2951 per cent higher than the combined value of deals in the previous five years.