Chinese investment into Ireland reached $2.9bn in 2016
HNA Group purchase of Avolon propelled Ireland up rankings for FDI from China
Neria Wang from China at the launch of the Dublin Chinese New Year Festival: Ireland was the fifth-largest market in Europe for Chinese investment in 2016. Photograph: Cyril Byrne
This made us the fifth-largest market in Europe for Chinese investment last year and the sixth-biggest when North America is included.
The big rise in investment was largely down to the HNA Group’s purchase of Irish aircraft leasing company Avolon, for $2.5 billion. The deal, which closed in early 2016, saw Avolon become part of HNA’s extensive interests in the aviation sector, spanning stakes in 20 airlines and nine airports in China.
Avolon has since gone on to announce the $10 billion purchase of the leasing business of CIT Group.
Ireland’s energy sector also received a boost, with a $400 million investment from China General Nuclear Power’s European energy arm, into 14 Irish wind farms owned by Gaelectric.
Other sectors in Ireland to receive Chinese investment in 2016 were: IT at $121 million; financial and business services at $26 million; electronics at $10 million; entertainment at $5 million, and; industrial machinery and equipment at $3 million.
Tim Gee, a mergers and acquisitions partner with Baker McKenzie, said the surge in investment from China into Ireland was indicative of a trend throughout Europe, as Chinese investors look to the transport, energy, ICT and industrial machinery and equipment sectors. “We expect 2017 to be another strong year globally, as previously announced deals reach financial close, and protectionist rhetoric in some major markets could further boost the attractiveness of Ireland as an investment destination,” he said.
The Government and IDA Ireland have actively courted foreign investment from China in recent years with the establishment of a direct air route between the counties believed to be under negotiation.
State-owned Dublin Airport Authority and Hainan Airlines, which is part of the HNA Group, are understood to be in talks about a possible service between Dublin Airport and Beijing.
Chinese direct investment into the advanced economies of North America and Europe more than doubled in 2016 to a new record of $94.2 billion. Deal making rose by 130 per cent from the previous benchmark of $40 billion, set in 2015. Acquisitions drove activity, accounting for 97 per cent of FDI value.
In Europe, Chinese investors focused on Germany and Britain, which between them saw 46 per cent of all investment in Europe. Germany saw inbound deals from China rise nearly tenfold to $12.1billion last year. Britain attracted $9 billion of investment, a year-on-year increase of 130 per cent.
The British total was driven by deals announced prior to the EU referendum closing in the second half of the year, with Baker McKenzie saying it was too early to judge the impact of Brexit.
Finland and Switzerland were also major recipients of Chinese FDI in 2016, attracting $7.6 billion and $4.8 billion respectively.
Meanwhile, Italy, Portugal and France saw investment drop by 85 per cent, 50 per cent and 40 per cent respectively in 2016, as Chinese investors focused on integrating large acquisitions they made in those countries in the previous year.