Foreign buyers have snapped up large British companies in the first half of this year, driving up sharply the value of mergers, acquisitions and equity capital issuance in the UK.
Overseas investors have bought 16 companies worth more than £1bn in the first six months of the year, compared with eight such takeovers in the same period a year before, according to data from Experian, the information services group.
This interest from outside the country helped to raise the overall value of transactions in the UK 29 per cent to £141bn.
This is in sharp contrast to the global slowdown in dealmaking, which prompted a drop in M&A activity by more than a fifth to $931.4bn, according to Mergermarket. Worldwide the level of activity was muted in particular because of the absence of larger deals.
Wendy Driver, business development manager at Experian, said: “The number of multibillion pound deals … highlights an increased interest in the UK market and reflects the quality of UK businesses.”
Chinese buyers in particular have been snapping up UK companies recently.
In January, China Investment Corporation, the $410bn sovereign wealth fund, struck its first UK acquisition by taking an 8.68 per cent stake in the holding company of Thames Water, the water network that serves London.
The deal was followed by Bright Food’s takeover of Weetabix, the UK cereals maker, in a £1.2bn deal that was the largest overseas transaction by a Chinese company in the food and beverage sector.
However, buyers from the European continent and the US have also been looking for deals in the UK. France’s GDF Suez bought the remainder of energy group International Power for £6.4bn recently, while the US group Walgreens took 45 per cent of high street retailer and pharmaceuticals distributor Alliance Boots for $6.5bn in cash and shares.
While the number of large-scale deals was on the rise in the first half, mid-market transactions of between £10m and £100m were down by about a fifth in volume and value, according to Experian. The value of small deals below £10m fell 12 per cent.
UK M&A bankers say they are optimistic that activity will pick up further, but only if the uncertainty surrounding the eurozone crisis abates.
“We feel reasonably good about how the pipeline looks. What we would need to see is for the Armageddon risk to be taken away and then we could see a big step up in our business,” one senior investment banker said.