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North American FDI Trends C2ER | St. Louis, MO | June 5, 2019 David East Director, Product Strategy
North American FDI TrendsC2ER | St. Louis, MO | June 5, 2019
David East
Director, Product Strategy
Contents
• About Bureau van Dijk
• Introduction – Trade Wars and Brexit
• North American trends
• Venture capital
• Using FDI data
• Summary
About Bureau van Dijk
A global presence
We capture a wide variety of information
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bespoke
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Output
Catalyst CustomData
The resource for entity data
Note: Figures are rounded
Introduction
Trade Wars and Brexit2
The current investment climate
• Investor confidence remains fragile despite an increase in Greenfield investment
• A number of factors are still creating uncertainty:
• Trade wars – who are the biggest potential losers?
• Geo-political risks
• Tax policy changes
• Slowdown in Chinese growth
• Brexit
• Protectionism & Nationalism
• Cybersecurity
• Terrorism
Trade wars – FDI implications
• Trade uncertainty is causing companies to review their global footprint, a combined effect of:
• US-China trade conflict
• Ongoing renegotiation of NAFTA (now USMCA)
• Brexit, BUT…
• New trade agreements between EU, Mexico, Canada and Japan
• Opportunity for MNCs to review their global supply chains
• Some companies are being forced to relocate production now
• Companies with products already directly impacted by tariffs and with falling profits as a result i.e. Cisco
• Determining which industries is difficult, but those companies which depend on imports that have risen in price because of tariffs will be impacted
Trade wars – FDI implications
• Despite the uncertainty, some trends are taking shape already
• Companies are looking for alternatives to manufacturing in China
• US companies will invest less in China and vice-versa
• FDI will continue to fall as companies put investment decision on hold
• Uncertainty is leading to companies postponing investments
Brexit – FDI implications
• The future still uncertain – with Theresa May resigning, is a “hard” Brexit back on the cards?
• Brexit is not the only challenge facing the UK economy – demographic shifts, tech developments, trust in business has fallen and is influencing policy
• There’s a need for multi-stakeholder collaboration to formulate new Industrial policy with business contributing positively
• Businesses are still adjusting – relocating jobs – especially those servicing the European market
• European financial hubs (i.e. Frankfurt, Paris, Amsterdam) are having some success (but this is still a small %)
• Manufacturing (investment lowest in 15 years) and Services in particular are being hit, but Technology remains strong as has Real Estate – Google, Facebook, Samsung
• There are significant losses in the Automotive industry (investment almost halved last year alone)
• FDI into the UK has remained strong (EY, AT Kearney’s FDI Confidence Index)
• There’s increased activity from local authorities
UK companies are looking for growth markets – North America?
North American trends3
Global & North America investment trends
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
FDI Flows 2008 – 2017(USD m)
World North America
Source: UNCTAD World Investment Report 2018, FDI/MNE database (www.unctad.org/fdistatistics)
North America investment trends
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Mergers & Acquisitions vs. Greenfield FDI in North America 2008 – 2017(USD m)
Mergers & Acquisitions Greenfield FDI
Source: UNCTAD World Investment Report 2018, FDI/MNE database (www.unctad.org/fdistatistics)
North America destination trends since 2013
Source: Orbis Crossborder Investment by number of projects and deals excluding retails projects
US destination trends since 2013
Source: Orbis Crossborder Investment by number of projects and deals excluding retails projects
Key source regions for Greenfield FDI projects since 2013
Source: Orbis Crossborder Investment by number of projects and deals excluding retails projects
Source trends within North America
713 projects
1,464 M&A deals
1,500 projects
1,972 M&A deals
Source: Orbis Crossborder Investment by number of projects and deals excluding retails projects
Canada United States
Top investors in North America since 2013
Company name Country
1 DHL International GmbH Germany
2 Regus Plc United Kingdom
3 Daimler AG Germany
4 ABB Ltd Switzerland
5 Honda Motor Co. Ltd Japan
6 Toyota Motor Corporation Japan
7 Samsung Electronics Co. Ltd Republic of Korea
8 Sixt SE Germany
9 BASF SE Germany
10 Amazon Inc. United States
11 Intertek Group United Kingdom
12 Lidl Stiftung & Co KG Germany
13 Ernst & Young LLP United Kingdom
14 Clariant AG Switzerland
15 Microsoft Corporation United States
Company name Country
1 Hub International Ltd. Canada
2 Accenture Plc Ireland
3 Avison Young (Canada) Inc. Canada
4 Dentsu Aegis Network Ltd United Kingdom
5 Arthur J Gallagher & Company United States
6 Assa Abloy AB Sweden
7 Bunzl Plc United Kingdom
8 Colliers International Group Canada
9 Roche Holding AG Switzerland
10 SGS SA Switzerland
11 Descartes Systems Group Inc. Canada
12 Samsung Electronics Co. Ltd Republic of Korea
13 Open Text Corporation Canada
14 Publicis Groupe SA France
15 Allergan Plc Ireland
Most active greenfield investors by number of projects Most active crossborder investors by number of deals
Source: Orbis Crossborder Investment
Opportunities in North America
Industries
• Communications
• Computer software
• Food manufacturing
• Transport manufacturing
• Industrial, electric & electronic machinery
Business functions
• Software development centers*
• Logistics, distribution and transportation (e-commerce)
• Technical support centers
• R&D and innovation centers*
• Data centers
Source: Orbis Crossborder Investment – excluding Retail and Hospitality/Hotels by project numbers
Greenfield FDI projects of interest in 2019
Fiat Chrysler Automobiles – $900m expansion of SUV manufacturing plant in Detroit, MI (February)“Three years ago, FCA set a course to grow our profitability based on the strength of the Jeep and Ram brands by realigning our U.S. manufacturing operations… and will enable new electrified Jeep products, including at least four plug-in hybrid vehicles and the flexibility to produce fully battery electric vehicles.”
Bayer – $150m innovation, research & development center in Berkeley, CA (May) “We are especially proud to bring this investment to Berkeley… and to the greater San Francisco Bay Area, the birthplace of biotechnology and a global epicenter of drug development innovation.”
Ericsson – artificial intelligence research & development center in Montreal (May)“Maturing AI capabilities will have a significant impact on 5G and existing networks’ automation and evolution. The leadership shown by governments in Canada has helped create a robust Montréal AI ecosystem with world-class talent from which we can recruit.”
HCL Technologies – software development center in Frisco, TX (April)“Our CSFC in Frisco is designed to defend our clients’ digital assets from security threats by leveraging intelligent, predictive, and adaptive systems. The Frisco facility is ideally located to attract and build the best pool of Cybersecurity experts and to serve our most demanding customers.”
ZBOM Home Collection Co. – new warehouse in Los Angeles, CA (February)“We have an ambition to globalize and become an international company that is able to offer products to consumers all around the world. American market is an important step toward the goal.” The company is also planning investments in Utah, Kansas, Missouri, Illinois, New York, Washington DC, and Florida.
Mergers & acquisitions of interest in 2019
Renesas Electronics Corporation – $7.1bn acquisition of Integrated Device Technology (March)“The product portfolios of Renesas and IDT are highly complementary. The combination allows us to bring more innovative and comprehensive portfolio of products to the market, with a larger global footprint, sales force and distribution network.”
Blackberry – $1.4bn acquisition of Cylance Inc. (February) “Today BlackBerry took a giant step forward toward our goal of being the world’s largest and most trusted AI-cybersecurity company. By adding Cylance’s technology to our arsenal of cybersecurity solutions, we will help enterprises intelligently connect, protect and build secure endpoints that users can trust.”
Ferrero SpA – $1.3bn acquisition of Kellogg’s cookies, snacks, pie crusts, etc. businesses (July)“This divestiture is yet another action we have taken to reshape and focus our portfolio… better growth. Kellogg Company’s cookie, fruit snack, ice cream cone and pie crust businesses are an excellent strategic fit for Ferrero as we continue to increase our overall footprint and product offerings in the North American market.”
Smith & Nephew – $600m acquisition of Osiris Therapeutics (February)The acquisition is expected to accelerate growth from Smith & Nephew's Advanced Wound Management franchise.
GB Group – $301m acquisition of Idology Inc. (May)“The combination of IDology and GBG will enable us to meet the growing customer appetite for an identity verification provider with global capabilities and scale in key markets.”
Greenfield FDI rumors
Congenica Ltd (May)A cloud-based clinical genome diagnostic SaaS provider may invest in the United States further to raising funds.
Invert Robotics (May) A robotic inspection technology research and development services provider plans to open a sales office in USA as part of a recently secured funding round.
Chemesis (April)A medical cannabis products manufacturer plans to invest in USA and invest in Michigan, Missouri, Illinois and Wisconsin in early 2020.
CAI Time Data Solutions (April)The acquisition is expected to accelerate growth from Smith & Nephew's Advanced Wound Management franchise.
SilverEdge Technologies (April)An online artificial intelligence-based marketing technology platform operator, trading under SilverPush, plans to invest in the USA.
Mergers & acquisitions rumors
Peugeot SA (PSA) (March)Considering a $55bn+ bid for General Motors.
Sony Corporation (March) Nearing $13.9bn to acquire Take Two Interactive Software Inc.
Veolia Environnement (April)Rumored to be selling its North America heating and cooling business.
Venture capital4
Venture capital in 2019
0
200
400
600
800
1,000
1,200
1,400
0
5,000
10,000
15,000
20,000
25,000
North America - Venture capital deals 2019 - USDm
Number of deals Deal value (m USD)
Company Name Country
Y Combinator Management LLC United States
Google Ventures United States
Bain Capital Venture LP United States
New Enterprise Associates Inc United States
Sequoia Capital Operations LLC United States
Accel Management Company LLC United States
Bessemer Venture Partners LLC United States
Investitsionnaya Kompaniya Starta Kepital AO Russian Federation
NVP Associates LLC United States
Tiger Global Management LLC United States
41%
11%
8%
5%
4%
4%
3%3%3%2%
Companies citing expansion (by state)
California New York
Texas Massachusetts
Colorado Florida
Washington Ontario
Illinois Maryland
How you can harness FDI data5
Using FDI data
• FDI trends into
you own location
• Location strengths
and weaknesses
• Monitoring
outbound
investment
Product
Intelligence
• Understanding
what is happening
in the market
(both sector and
market)
• Grasping the
industry dynamic
(is there really
potential in the
market?)
Market
Intelligence
• Know who your
real competitors
are
• Understanding
where else the
prospect has
invested in the
region
Competitor
Intelligence
• Identifying
potential investors
• Understanding
their market-entry
strategies
• Qualifying and
contacting
potential investors
• Cross-referencing
with company
information
Investor
Intelligence (Lead generation)
Summary6
Summary
• Global FDI 23% in 2017*
• FDI in North America 39% in 2017*
• Value of mergers & acquisitions into North America 20% but…
• A 59% in value of Greenfield FDI*
• Predictions for FDI in 2018/19 show fragile growth
• Escalating tensions related to trade/tariffs and policy uncertainty is negatively impacting investor confidence
• Data is knowledge and knowledge is power
