The Rise of Middle Market M&A: Q3 2024 Update

After a weak start to the year, the third quarter of 2024 confirms that the post-COVID rebound remains strong. Chinese investors continue to focus on the automotive, energy, and minerals sectors. Europe and Asia were top destinations, with middle market M&A transactions gaining momentum.

Investment momentum

Chinese outbound investment momentum remains solid. In the third quarter of 2024, we recorded 108 major outbound foreign direct investment (OFDI) transactions by Chinese companies, with a total estimated value of $20.67 billion. This marks a 23% decrease in investment value compared to the second quarter of 2024 but remains around the quarterly average for 2023 and 2024.

Greenfield projects have lost some momentum compared to the previous quarter, with $15.52 billion in new investments, representing a 34% decrease from Q2 2024. New projects were generally less capital intensive, with only one transaction breaking the multibillion-dollar mark—a $3 billion oil refinery project in Liberia built by Sumec. There were four $1 billion transactions, including BYD’s electric vehicle manufacturing plant in Turkey.

Newly announced mergers and acquisitions (M&A) jumped to more than $5.15 billion, a 52% increase from last quarter. The main growth drivers are middle-market M&A transactions valued between $100 million and $1 billion, such as China Merchant Capital’s acquisition of a 40% stake in HKT Limited’s Regional Link Telecom Services ($870 million), Dongfang Hengxin Asset’s acquisition of Samsung SDI’s battery polarizing film business in South Korea ($834 million), and Global New Material’s acquisition of Merck’s pigments business in Germany ($720 million). Over the past five quarters, the number of middle-market acquisitions has increased by 45% compared to the preceding five quarters, with 52 transactions recorded.