A new report in the Financial Times has highlighted the extraordinary ‘sea change’ in Chinese investment since the world’s financial crisis. Portugal accounts for just 1.3% of the EU economy, explains the report, yet it has seen more Chinese investment in recent years than any other member state except the UK, Germany and France. The dossier stressed “takeovers tend to make a start not a finish” and itemised the largest investments this far, which have “seized opportunities arising from the privatisation of utilities and transport infrastructure”.
“China Three Gorges paid €2.7 billion for 21% of Energias de Portugal (EDP) and State Grid Corporation of China spent €1.4 billion on 25% of Redes Energéticas Nacionais (REN). Both buyers are state enterprises, but last year private conglomerate Fosun International bought 80% of state-controlled Caixa Seguros Saúde, Portugal’s largest insurance group, for €1 billion — and then used it to buy the hospital business Espírito Santo Saúde for €460.5 million.
“Elsewhere, Huawei invested €10 million in a technology centre and Beijing Enterprises Water Group bought Veolia Água.
“While little capital went into greenfield projects, takeovers tend to mark a start, not a finish. “The important thing in a country in crisis is to shift capital from weak hands — of owners with solvency and debt problems — into stronger hands with the capacity to invest and open up markets,” says José Brandão de Brito, chief economist at Portuguese bank Millennium BCP.
“The Chinese are in a very good position to do this.”
“As part of its 2011 deal, Three Gorges pledged €2 billion to EDP-led renewables ventures. Last June, they unveiled their latest, Hydroglobal, targeting South America and Africa. State Grid created similar ventures with REN in Angola and Mozambique (and in 2013 helped it secure a €1 billion finance line from China’s Development Bank). Fidelidade continued its drive into Africa, setting up in Mozambique.”