Europe holds enduring appeal for Asia-Pacific dealmakers

APAC investors continue to seek out high-growth assets across the continent despite a global slowdown in M&A activity

High inflation, geopolitical uncertainty and an uncertain macroeconomic outlook precipitated a slowdown of M&A activity across the globe in 2023 as investors adapted to the “new normal.” Asia-Pacific dealmaking targeting Europe followed this downward trend.

A total of 414 inbound APAC-Europe deals worth US$36.1 billion changed hands in 2023—a 10.8 percent decrease in volume and a 25.8 percent drop in aggregate value terms compared to the prior year. The latter decline was due to fewer deals targeting Western European assets, from US$47.7 billion of transactions in 2022 to US$33.5 billion last year.

Over the same period, however, the aggregate value of APAC-led deals targeting assets in Central and Eastern Europe rose, albeit from less than US$1 billion in 2022 to a still-modest US$2.64 billion last year.

Despite the dip in headline value totals, APAC buyers continue to seek out assets on the continent in order to acquire technology expertise and expand into new markets. Q2 of 2023 was an especially dynamic period, with 127 deals featuring APAC bidders targeting European assets announced—the highest single-quarter volume since Q4 of 2020, when 136 deals were announced.

The largest deal of the year was in Germany’s sought-after industrials sector, with Singapore’s sovereign wealth fund GIC purchasing a minority stake in gas specialist Messer. Through the deal, worth €2 billion and valuing the company at more than €12 billion, Messer CEO Bernd Eulitz said he wants the company to become the “number-one challenger” to big players in the global industrial gases sector.

GIC was involved in another top-ten APAC-Europe transaction last year, specifically a deal in Southern Europe’s tourism sector. Announced at the end of October, the sovereign fund acquired a 35 percent stake in Barcelona-headquartered Hotel Investment Partners (HIP)—which operates resort hotels in Spain, Portugal, Italy and Greece—from Blackstone for an estimated €1.4 billion, according to Mergermarket. The equity raise enabled HIP to focus on expanding its business even as elevated interest rates caused borrowing costs to soar.

Japanese dealmakers lead the pack

M&A remains an important tool for Japanese firms looking to expand their global presence. Faced with the challenges of a shrinking domestic market and an aging population, businesses in the country are under pressure to diversify overseas. Japanese dealmakers are also in a fortunate position as they face less competition from Chinese buyers, with evolving protectionist policies currently giving the latter less influence in Western M&A markets.

As a result, Japanese dealmakers were the most active APAC bidders in Europe in 2023, with a total of 135 deals worth US$10.8 billion announced, far ahead of second-place Australia, which undertook 66 transactions worth US$6.5 billion. Excluding intra-regional dealmaking, Japanese bidders were outperformed in inbound European M&A only by buyers from the US.

Japan’s biggest Europe deal of 2023 was the €1.55 billion acquisition by JERA, the country’s largest power company, of Belgian offshore wind platform Parkwind, which has stakes in four wind farms off the Belgian coast, as well as other projects in Germany and Ireland. The tie-up underscores JERA’s ambitions to expand its offshore wind business globally and to offset its carbon emissions, as it currently accounts for a third of Japan’s power generation and around one tenth of the country’s carbon emissions.

Europe’s fast-growing gaming sector is another hotly targeted area. In April 2023, Japanese gaming conglomerate Sega Sammy made a US$776 million takeover offer for Finnish games developer Rovio, which most notably created the Angry Birds franchise. The deal reflects Sega Sammy’s motivation to expand its influence in the mobile gaming sector, which it predicts will represent more than half the overall gaming market by 2026.

China takes a back seat 

Three months later, Tencent, China’s most valuable company by market capitalization, made a bid for another valuable European gaming asset. The company, which had seen its sales squeezed following a slowdown in domestic gaming revenue, moved to acquire Polish game developer Techland for an estimated €1.3 billion in July.

European deals led by Chinese bidders were otherwise few and far between in 2023. Besides the Tencent-Techland deal, only one other top-ten APAC-Europe deal featured a bidder from mainland China: the exclusive license agreement struck between Chinese biopharma group Hansoh and UK pharma giant GSK to develop a cancer-fighting drug. The deal is worth up to US$1.7 billion, depending on what milestones are reached.

Overall, Chinese bidders appear to have shied away from deals in sensitive sectors such as defense and semiconductors following a regulatory clampdown from the EU. As a result, Chinese bidders were involved in just 56 deals worth US$3.7 billion targeting Western European firms over the course of 2023—a decade low in both volume and value terms.

UK attracts lion’s share of deals

The UK was the most targeted region by APAC dealmakers in 2023, both in terms of volume and value. Despite the global downturn in M&A, the 127 deals announced matched recent years’ performance, though the aggregate value of those deals fell from US$18.7 billion in 2022 to US$13.8 billion in 2023—a 26.4 percent decline.

Data center assets are becoming a hot commodity for APAC dealmakers, as illustrated by Australian pension fund AustralianSuper’s minority investment in UK-based Vantage Data – one of the largest data centers in Europe.

The deal, valued at €1.5 billion, highlights the growing value of Europe’s data center assets, with the rise of artificial intelligence and cloud computing generating intense demand for supporting infrastructure. With revenue in Europe’s data center market predicted to reach US$85.2 billion in 2024, according to Statista, international interest for the region’s high-quality assets is set to ramp up further.

Australian dealmakers have been consistently active in UK M&A in the past decade, committing just over US$3.5 billion across 32 deals in 2023—the highest level of such activity seen since the global financial crisis.

Another significant deal involving an Australian bidder was UK energy supplier Octopus Energy’s US$800 million fundraise, announced in December. Investors included Origin Energy, one of Australia’s leading energy companies. Octopus, now the second-largest household energy supplier in the UK, will use the funds to build out its green energy capabilities globally.


With its relatively stable legal and regulatory framework, the European market holds enduring appeal for APAC investors, although market headwinds still pose a challenge.

M&A financing remains expensive and will continue to slow cross-border dealmaking, while a difficult fundraising environment and ongoing geopolitical uncertainty also create hurdles.

However, for many investors, the international appeal of fast-growing European businesses will override such doubts or barriers. These assets will continue to attract attention from APAC bidders with the necessary funds at hand. Specific sectors to watch include renewables, data centers, AI and electric vehicles, which look set to power cross-border M&A activity into Europe throughout 2024.

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