- In 2021, Chinese firms purchased or acquired a stake in nine companies in Switzerland
- The value of these transactions was USD 96 million, a fourfold increase over the previous year
- In Europe, the number of Chinese company acquisitions rose from 132 to 155 – and the value of transactions increased eightfold
Following a sharp drop in Chinese acquisitions of companies in 2020 as a result of the pandemic, the number of transactions increased again in 2021, from 132 to 155. The transaction volume rose as well, with the value of investments in and acquisitions of companies increasing more than eightfold, from USD 1.5 billion to USD 12.4 billion.
In 2021, Chinese firms purchased or acquired a stake in nine companies in Switzerland. This is one transaction more than the previous year. There was a sharp increase in investment volume: The value of companies acquired and investments in companies in Switzerland reached USD 96 million in 2021. This is a sharp rise compared with the USD 7 million posted the year before.
Four of the companies in Switzerland with Chinese parent companies have purchased other companies outside of Switzerland or have taken a stake in these companies.
These are the results of the annual study by audit and advisory company EY, which analyzed the investments by Chinese companies in Switzerland and Europe.
Michael Messerli, Head of Strategy & Transactions at EY in Switzerland says: “The hurdles to foreign investments that have now arisen, especially in certain critical sectors, and increasing competition from highly capitalized financial investors have had a dampening effect.” Purchase prices on the M&A market that have climbed sharply of late have consequences for investors from China, too, according to Messerli: “In some cases, prospective Chinese investors are no longer interested in participating. In particular, exchange-listed Chinese companies fear that their own share prices will come under pressure as a result of expensive acquisitions.”
Healthcare sector in demand – interest in industrial companies is waning
As was the case in previous years, most of the deals in 2021 involved traditional industrial companies – 30 of the 155 transactions in Europe were in the industry sector. However, the number of such deals is falling. There were 36 transactions involving industrial companies in 2020.
The number of acquisitions and investments in the area of healthcare rose, from 16 to 26 transactions. “Especially in Switzerland, the healthcare sector – pharmaceutical, biotech and medtech – is increasingly becoming one of the most important target sectors for Chinese companies because there is substantial need to catch up in this area in China, particularly in research and development,” says Hubert Stadler, Head of the China Desk at EY in Switzerland.
The focus of Chinese investors here is mainly on the healthcare sector: Three of nine transactions in 2021 were in this sector, followed by two transactions in consumer products and services.
There were 27 transactions involving high tech/software companies across Europe last year (previous year: 20). “We are seeing increased interest in game developers and software programmers, for example. Particularly the most active Chinese investor in the past year, Tencent, has been heavily involved in this segment,” notes Michael Messerli.
UK replaces Germany as the top target in Europe – Switzerland is in sixth place
The UK posted the largest number of transactions last year. With 36 acquisitions and investments, the UK is just ahead of Germany (35 transactions) and well ahead of the third-place Netherlands (13). Switzerland comes in 6th in these rankings (9 transactions). The top rankings were reversed the previous year: With 28 transactions, in 2020 Germany was ahead of the UK, which had 21 deals. “To the extent that interest by Chinese investors is moving away from traditional industrial companies toward technology, software and media companies, making the UK a more important target market,” says Messerli.
Europe’s largest investment last year was the sale of the Philips household appliances division to Hillhouse Capital, which is based in Hong Kong, for USD 4.4 billion.
The second largest transaction was the acquisition of UK developer studio Sumo Digital by Tencent for USD 1.1 billion, followed by the acquisition of Danish refrigerated container manufacturer Maersk Container Industry by China International Marine Containers, also for USD 1.1 billion.
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