Chinese companies' M&A expected to thrive in Europe

Outbound mergers and acquisitions by Chinese companies in Europe will continue to grow by double-digit rates in the next two years, driven by the low-cost funding in the euro and the urge for structural change in the slowing economy, industry experts said on Wednesday.

M&A activities of Chinese companies in the consumer branding, high-end manufacturing, infrastructure, power and utilities and healthcare sectors will lead the trend, said David Wu, head of corporate finance for China at ING Group, a Dutch multinational banking and financial services corporation.

Wu said the launch of the Beijing-led Asian Infrastructure Investment Bank will play an important role in facilitating future M&A deals by Chinese companies.

Countries and regions covered by the "Belt and Road Initiative", a national strategy to revive the ancient land-based and maritime Silk Roads, are likely to attract more infrastructure investment from China, he said.

Chinese companies made 23 M&A deals worth $12.3 billion in Europe in the first quarter. The value of the deals increased by 59.7 percent from the same period last year, according to a report by ING Group.

State-owned chemical giant China National Chemical Corp's $8.1 billion acquisition of Italian tire maker Pirelli is the largest deal by a Chinese company in Europe in the first quarter.

In terms of deal volume, the top three destination countries in Europe for Chinese investors were the United Kingdom, Switzerland and Germany.

China's interest in the natural resources sector will likely decline while activities in new areas such as entertainment, environmental protection and retail will increase, Wu said.

Meanwhile, private companies and private equity investment funds will become active buyers in the outbound deals, which were dominated by State-owned enterprises, he added.