|Title:||Global cross-border mergers and acquisitions by private equity firms in number of deals and value in dollars for 1996 to 2010, and through May 2011|
|Source:||World Investment Report|
Start of full article - but without data
Cross-border M&As by private equity
firms, 1996-May 2011
(Number of deals and value)
Number of deals Value
Share in Share in total total Year Number (%) $ billion (%)
1996 XXX XX XX XX 1997 XXX XX XX XX 1998 X XXX XX XX XX 1999 X XXX XX XX XX 2000 X XXX XX XX X 2001 X XXX XX XX XX 2002 X XXX XX XX XX 2003 X XXX XX XXX XX 2004 X XXX XX XXX XX 2005 X XXX XX XXX XX 2006 X XXX XX XXX XX 2007 X XXX XX XXX XX 2008 X XXX XX XXX XX 2009 X XXX XX XXX XX 2010 X XXX XX XXX XX 2011 XXX XX XX XX
Source: UNCTAD, cross-border M&A database (www.unctad.
Note: Value is on a gross basis, which is different from other
M&A tables based on a net value. The table includes
M&As by hedge funds. Private equity firms and hedge
funds refer to acquirers as "investors not elsewhere
classified". This classification is based on the Thomson
Finance database on M&As.
Global foreign direct investment (FDI) flows rose moderately to $X.XX trillion in 2010, but were still XX per cent below their pre-crisis average. This is in contrast to global industrial output and trade, which were back to pre-crisis levels. UNCTAD estimates that global FDI will recover to its pre-crisis level in 2011, increasing to $X.X-X.X trillion, approaching its 2007 peak in 2013. This positive scenario holds, barring any unexpected global economic shocks that may arise from a number of risk factors still in play.
For the first time, developing and transition economies together attracted more than half of global FDI flows. Outward FDI from those economies also reached record highs, with most of their investment directed towards other countries in the South. Furthermore, interregional FDI between developing countries and transition economies has been growing rapidly. In contrast, FDI inflows to developed countries continued to decline.
Some of the poorest regions continued to see declines in FDI flows. Flows to Africa, least developed countries, landlocked developing countries and small island developing States all fell, as did flows to South Asia. At the same time, major emerging regions, such as East and South-East Asia and Latin America, experienced strong growth in FDI inflows.
International production is expanding, with foreign sales, employment and assets of transnational corporations (TNCs) all increasing. TNCs' production worldwide generated value added of approximately $XX trillion in 2010--about a quarter of global GDP. Foreign affiliates of TNCs accounted for more than one-tenth of global GDP and one-third of world exports.
State-owned TNCs are an important emerging source of FDI. There are some XXX State-owned TNCs, with X,XXX foreign affiliates across the globe. While they represent less than X per cent of TNCs worldwide, their outward investment accounted for XX per cent of global FDI in 2010. The ownership and governance of State-owned TNCs have raised concerns in some host countries regarding, among others, the level playing field and national security, with regulatory implications for the international expansion of these companies.
A. GLOBAL TRENDS AND PROSPECTS: RECOVERY OVER THE HORIZON
X. Overall trends
As stimulus packages and other public fiscal policies fade, sustained economic recovery becomes more dependent on private investment. At present, transnational corporations (TNCs) have not yet taken up fully their customary lead role as private investors.
Global foreign direct investment (FDI) inflows rose modestly in 2010, following the large declines of 2008 and 2009. At $X.XX trillion in 2010, they were X per cent higher than a year before (figure This moderate growth was mainly the result of higher flows to developing countries, which together with transition economies--for the first time--absorbed more than half of FDI flows.
While world industrial production and trade are back to their pre-crisis levels, FDI flows in 2010 remained some XX per cent below their pre-crisis average, and XX per cent below their 2007 peak (figure I.X).
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The moderate recovery of FDI flows in 2010 revealed an uneven pattern among components and modes of FDI. Cross-border mergers and acquisitions (M&As) rebounded gradually, yet greenfield projects--which still account for the majority of FDI--fell in number and value. Increased profits of foreign affiliates, especially in developing countries, boosted reinvested earnings--one of the three components of FDI flows--while uncertainties surrounding global currency markets and European sovereign debt resulted in negative intra-company loans and lower levels of equity investment--the other two components of FDI flows. While FDI by private equity firms regained momentum, that from sovereign wealth funds (SWFs) fell considerably in 2010.
FDI inward stock rose by X per cent in 2010, reaching $XX trillion, on the back of improved performance of global capital markets, higher profitability, and healthy economic growth in developing countries.
UNCTAD predicts FDI flows will continue their recovery to reach $X.X-X.X trillion, or the pre-crisis level, in 2011. In the first quarter of 2011, FDI inflows rose compared to the same period of 2010, although this level was lower than the last quarter of 2010 (figure I.X). They are expected to rise further to $X.X trillion in 2012 and reach $X.X trillion in 2013, the peak achieved in 2007. The record cash holdings of TNCs, ongoing corporate and industrial restructuring, rising stock market valuations and gradual exits by States from financial and non-financial firms' shareholdings built up as supporting measures during the crisis, are creating new investment opportunities for companies across the globe.
However, the volatility of the business environment, particularly in developed countries, means that TNCs have remained relatively cautious regarding their investment plans. In addition, risk factors such as unpredictability of global economic governance, a possible widespread sovereign debt crisis and fiscal and financial sector imbalances in some developed countries, rising inflation and apparent signs of overheating in major emerging market economies, among others, might derail FDI recovery.
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a. Current trends
Global FDI inflows in 2010 reached an estimated $X,XXX billion (figure--a small increase from 2009's level of $X,XXX billion. However, there was an uneven pattern between regions and also between subregions. FDI inflows to developed countries and transition economies contracted further in 2010. In contrast, those to developing economies recovered strongly, and together with transition economies--for the first time--surpassed the XX per cent mark of global FDI flows (figure I.X). FDI flows to developing economies rose by XX per cent (to $XXX billion) in 2010, thanks to their relatively fast economic recovery, the strength of domestic demand, and burgeoning South-South flows. The value of cross-border M&As into developing economies doubled due to attractive valuations of company assets, strong earnings growth and robust economic fundamentals (such as market growth).
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As more international production moves to developing and transition economies, TNCs are increasingly investing in those countries to maintain cost-effectiveness and to remain competitive in the global production networks. This is now mirrored by a shift in international consumption, in the wake of which market-seeking FDI is also gaining ground.
This changing pattern of FDI inflows is confirmed also in the global ranking of the largest FDI recipients: in 2010, half of the top XX host economies were from developing and transition economies, compared to seven in 2009 (figure I.X). In addition, three developing economies ranked among the five largest FDI recipients in the world. While the United States and China maintained their top position, some European countries moved down in the ranking. Indonesia entered the top XX for the first time.
The shift towards developing and transition economies in total FDI inflows was also reflected in a change in the ranking of host countries by UNCTAD's Inward FDI Performance Index, which measures the amount of FDI that countries receive relative to the size of their economy (GDP). The index for developed countries as a group is below unity (the point where the country's share in global FDI flows and the country's share in global GDP are equal), and their ranking has fallen in the after-crisis period compared to the pre-crisis period of 2005-2007. In contrast, developing countries increased their performance index in the period 2005-2010, and they all have indices above unity (figure I.X).
The rise of FDI to developing countries hides significant regional differences. Some of the poorest regions continued to see declines in FDI flows. In addition to least developed countries (LDCs), landlocked developing countries (LLDCs) and small island developing States (SIDS) (chapter II), flows to Africa continued to fall, as did those to South Asia. In contrast, major emerging regions, such as East and South-East Asia and Latin America experienced strong growth in FDI inflows (figure I.X).
FDI flows to South, East and South-East Asia picked up markedly, outperforming other developing regions. Inflows to the region rose by about XX per cent in 2010, reaching $XXX billion, rising especially in South-East Asia and East Asia. Similarly, strong economic growth, spurred by robust domestic and external demand, good macroeconomic fundamentals and higher commodity prices, drove FDI flows to Latin America and the Caribbean to $XXX billion. Cross-border M&As in the region rose to $XX billion in 2010, after negative values in 2009. Nearly all the big recipient countries saw inward flows increase, with Brazil the largest destination.
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In contrast, inflows to Africa, which peaked in 2008 driven by the resource boom, continued the downward trend which started in 2009. Inflows to South Africa declined to little more than a quarter of those for 2009. North Africa saw its FDI flows fall slightly (by X per cent) in 2010; the uprisings which broke out in early 2011 impeded FDI flows in the first quarter of 2011 (see box II.X).
FDI flows to West Asia, at $XX billion decreased, despite the steady economic recovery registered by the economies of the region. Sizeable increases in government spending by oil-rich countries helped bolster their economies, but business conditions in the private sector remained fragile in certain countries.
The transition economies of South-East Europe and the Commonwealth of Independent States (CIS) registered a marginal decrease in FDI inflows in 2010, of roughly X per cent, to $XX billion, having fallen by XX per cent in 2009. FDI flows to South-East Europe continued to decline sharply due to sluggish investment from EU countries--traditionally the dominant source of FDI in the subregion. The CIS economies saw their flows increase by less than X per cent despite stronger commodity prices, a faster economic recovery and improving stock markets.
FDI inflows to developed countries contracted moderately in 2010, falling by less than X per cent to $XXX billion. Europe stood out as the subregion where flows fell most sharply, reflecting uncertainties about the worsening sovereign debt crisis. However, while Italy and the United Kingdom suffered, FDI in some of the region's other major economies fell only slightly (e.g. France) or increased (e.g. Germany). Declining FDI flows were also registered in Japan, where there were a number of large divestments. In contrast, FDI flows to the United States surged by almost XX per cent largely thanks to a significant recovery in the reinvested earnings of foreign affiliates. However, FDI flows were still at about XX per of their peak level of 2008.
At $X,XXX billion, global FDI outflows in 2010, while increasing over the previous year, are still some XX per cent below the pre crisis average, and XX per cent below the 2007 peak (see box I.X for differences between FDI inflows and outflows). As in the case of inflows, there was an uneven pattern among regions. FDI flows from developing and transition economies picked up strongly, reflecting the strength of their economies, the dynamism of their TNCs and their growing aspiration to compete in new markets. The downward trend in FDI from developed countries reversed, with an XX per cent increase over 2009. However, it remained at half the level of its 2007 peak.