ACCORDING to latest OECD data and reports, international M&A investment in 2010 is on way to match 2009 levels, having reached USD 300 billion in the first half of 2010. This would bring to an end the sharp declines in international investment activity in 2008 (-21%) and 2009 (-53%) and could signal that the bottom of the cycle has been reached, the report says.

Private sector international M& A investment is also set to grow by almost 20% in 2010, the first increase since the start of the crisis in 2008. The peak of USD 1.7 bn was scaled in 2007. What contributed to the decline was the bursting of the dot.com bubble which resulted in a 72% decline in international M&A between 2001 and 2003, suggesting that international investment has been more resilient during the current economic crisis.

Governments’ role as major international investors in 2009 was very important. The significantly increased government involvement in international M&A activity took place through two channels: financial rescue packages that resulted in de facto ownership of foreign assets and a significant increase in international investments by sovereign wealth funds.

According to the report,Government involvement in international investment patterns looks set to fall back significantly in 2010.However,the fact that overall international M&A investment activity is projected to stay steady at around $600 billion in 2010 despite the sharp drop in international M&A investment by governments shows that private international M&A investment has been growing to pick up the slack. Indeed, once government-driven M&A is excluded from the overall international M&A investment trend, private international M&A investment is projected to increase by almost 20% in 2010, the first increase since the start of the crisis in 2008, says the report.