China third-largest M&A player in Africa
July 15, 2013 Category Mergers & Acquisitions, Weekly
China has become the world’s third-largest country doing mergers and acquisitions in Africa, favoring the oil and gas sector, according to a report by international law firm Freshfields Bruckhaus Deringer. The country made 49 M&A deals totaling USD20.8 billion in Africa since 2003, following the United Kingdom with USD30.5 billion and France with USD30.47 billion. The value of African inward investment has tripled in the last 10 years reaching more than USD182 billion, up 214% in 2012 compared with 2003. “Africa’s rapid pace of growth makes it an obvious investment partner for China in many jurisdictions,” said Rob Ashworth, Freshfields Asia’s Managing Director. Chinese dealmakers favor the natural resources sector with USD8.1 billion invested in oil and gas across three deals and USD6.7 billion invested across 19 deals in metals and mining over the last 10 years, and their preference for these sectors will likely continue, said the report. Globally, there were 1,190 M&A deals totaling USD87.6 billion done in Africa over the same period. South Africa, Nigeria and Uganda became attractive destinations for Chinese investors with 23 deals totaling USD16.4 billion, said the report. One of the largest deals was the China-Africa Development Fund’s acquisition of a stake in Misr Refrigeration and Air Conditioning Manufacturing Co, a Cairo-based manufacturer of refrigerators and air conditioning systems, from the Barakat Group, for USD5.6 billion in 2010. As of this year, over 2,000 Chinese companies have invested in Africa. Apart from the traditional big SOEs – such as PetroChina Co and Aluminum Corp of China – that are significant investors in the energy and mining sectors, private Chinese companies have in recent years become a key driving force, the China Daily reports.
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