Monday 16 September 2019

Chinese firms invest $142m after two major Irish deals

Tariff war: US president Donald Trump and Chinese counterpart Xi Jinping are at odds over trade
Tariff war: US president Donald Trump and Chinese counterpart Xi Jinping are at odds over trade

David Chance

Chinese investment into the State rose in the first half of this year, albeit from a relatively low base, with two large deals going through, according to a new report.

Data from consultancies Baker McKenzie and Rhodium Group put Chinese investment here in the first six months at $142m (€128m), compared with €80m in 2017, out of a total of €9bn across Europe as a whole.

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"Ireland is an attractive destination and there's a range of unique areas that are quite competitive, including financial services, airline leasing, greenfield, and research and development," said Peter Lu, the head of Baker McKenzie's China group in London. "We see Chinese foreign direct investment rise when sizeable deals are completed in these areas," he added.

Last year was mixed for Ireland, however, and it was the deal that got away that would have had the biggest impact.

A proposed €150m deal by Zhongze Group for Goodbody Stockbrokers was pulled after the State's oldest stockbroker said there had been a change in the terms.

The sale was initially tipped to close at the end of 2018, but was subject to regulatory approval by both the Irish Competition and Consumer Protection Commission and by the Central Bank.

The deals by Chinese companies are being made at a time of greater scrutiny by both US and European authorities, and come amid a deepening tariff war between Washington and Beijing that has unsettled financial markets and the global economy.

The report, issued yesterday, said that deals in Europe by Chinese companies had fallen 26pc, and that transactions in Germany and France had been especially weak.

Given the increase in tensions between the US and China, it was perhaps a surprise that deal volumes rose there, although the $3.3bn for North America was a tiny fraction of the $28.4bn in the second half of 2016, the peak period.

Globally, the value of all newly announced mergers and acquisitions by Chinese companies dropped by 60pc in the year to June, to a level of just $20bn.

There has been a huge shift in the make-up of the Chinese companies that are on the hunt for deals, with state-owned entities dropping out of the picture almost entirely.

Irish Independent

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