After Pirelli, Chinese buying spree in Italy to persevere

Flush with funds, Chinese firms are increasingly pursuing deals in Italy, now home to several cash-strapped brands with sound technology.

Bankers say China's Sunrise Duty Free is one of several potential bidders looking to acquire a stake in travel retailer World Duty Free from the Benetton family.

Chinese firms are also circling troubled lender Monte dei Paschi di Siena, which is looking for a buyer, Reuters reported.

And Italian Prime Minister Matteo Renzi's regime has indicated that it will not stand in their way.

Alberto Forchielli, managing director of Mandarin Capital Partners, told the news agency that this week's ChemChina-Pirelli deal was a "clear signal that [the Chinese] do not want to invest behind the scenes any longer.

"They want to play a leading role, in the limelight."

Joel Backaler, the author of China Goes West, said Chinese firms also needed to invest in Europe to compensate for their own competitive home market.

Backaler said: "With labor and energy costs rising and the pressure on margins increasing, Chinese companies that want to sell at a premium price need to have something different, for example better quality tires than those you can find in China."

ChemChina

State-owned China National Chemical Corp (ChemChina) has agreed to buy Pirelli, the world's fifth-largest tire-maker, in a €7.1bn deal.

KPMG, in a report published prior to the Pirelli deal, said Chinese acquisitions in Italy have totaled €10bn over the past five years, half of which were struck in 2014.

PBoC's investments

The Chinese shopping spree has included power grid firms Terna. The Chinese central bank picked up a 2% stake in Terna in January.

The People's Bank of China (PBoC) also holds a number of small stakes in Italian blue-chips such as Fiat Chrysler Automobiles, Telecom Italia, insurance giant Assicurazioni Generali, oil and gas major Eni and utility firm Enel.

Other deals

In November 2014, State Grid Corporation of China completed the purchase of a stake in Italian energy grids holding firm CDP Reti for €2.1bn, marking the largest Chinese investment in Europe in 2014.

That deal was completed six months after Shanghai Electric Group's investment in turbine maker Ansaldo Energia.