Of profits and politics

24 September 2007 By Edward Hadas

More money will be spent this year by companies from poor countries buying richcountry companies than the other way around. That s a massive shift in just a few years. Many of the rising companies are stateowned or politically motivated. Expect adjustment pains.

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According to Dealogic, firms in developing countries have completed acquisitions with a value of $128bn in 2007, compared to $130bn for developed country acquisitions in developing countries. The balance is expected to tip towards developing countries by the end of 2007. In 2000, developing country buyers acquired about $30bn of Western assets, while Western companies acquired $150bn of developing country assets.

Much of the new money from developing countries comes from sovereign wealth funds; those of Kuwait, Saudi Arabia, Dubai, Abu Dhabi and Qatar total $1.5tn. On September 20, Dubai acquired 28% of the London Stock Exchange and Qatar 20%.

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