LONDON (The Deal) -- The West may be cautious about foreign investment, but China is still putting its money into cross-border deals and the private sector is gradually increasing its share of an overseas direct investment scene once dominated by state-owned enterprises.
Those are the findings of the latest survey of Chinese overseas direct investment from Beijing- and Brussels-based private equity firm A Capital, which co-invests with Chinese companies in European businesses looking to accelerate their growth in China and other emerging markets.
A Capital's latest Dragon Index, a quarterly indicator of the globalization of the Chinese economy, rose to 2,483 for the first nine months of 2013, up from 2,348 in December 2012 - and from a base of 1,000 in December 2001. The indicator attempts to track all outbound Chinese investments that are either worth more than $5 million or, where it involves M&A transactions specifically, entails more than a 10% stake in a target company.
On this definition, M&A deals accounted for $46 billion, or 57% of all Chinese outbound investment in the first nine months of the year. The total value was up from $34.3 billion in the same period last year.
The biggest deals by far, which somewhat distort the picture both in terms of geographical distribution of Chinese investment and in comparison with the same period the previous year, were China National Offshore Oil Corp.'s $14.5 billion acquisition of Canadian energy producer Nexen Inc. and Shuanghui International Holdings Ltd.'s $7.1 billion acquisition of Smithfield Foods Inc. Shuanghui's private sector status showed that it is not only China's state-owned enterprises that have the cash and the boldness of vision to strike big deals overseas.