Asia’s growing importance in European M&A

John Bakie
10 November 2010

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The sale process surrounding 3i portfolio company Hyva would not only be a major exit for the investor, but demonstrates the increasingly global nature of M&A. The proposed €600m sale has received interest from not only European private equity houses, but a major trade buyer in China. John Bakie investigates

With Dutch hydraulic cylinder manufacturer Hyva set to make a 12x return for 3i, it's no surprise the story has grabbed headlines. However, one of its suitors has attracted the most attention, because it is based in China.

Chongqing Machinery & Electric Company, a state-owned industrial firm, is reportedly in talks with 3i to acquire the group. While it is far from the only company interested in acquiring Hyva, it demonstrates that Chinese companies now have the financial clout to acquire substantial assets in Europe.

The move coincides with a visit from UK Prime Minister David Cameron, who earlier this week attempted to drum up trade between Britain and China. Clearly Western politicians are aware of how important many Asian Pacific countries have become to global trade. However, China is no longer simply a key trading partner, but is increasingly becoming a significant business power.

The acquisition of Hyva demonstrates that Chinese companies are keen to acquire businesses in Europe to expand their capabilities and build a presence in new markets, particularly in the heavy industries. China is today the number two manufacturer in the world, and is expected to overtake the US as early as 2011.