Asian rush for European assets more than doubles price multiples Asian companies are paying more than double the price of European assets, relative to earnings as they did three years ago in their determination to secure brands, technology and resources in western economies. Price multiples paid by Chinese, Japanese and Indian buyers for European companies have jumped from 3.3 times earnings before interest, tax, depreciation and amortisation (ebitda) in 2010 to 9.9 times ebitda in 2012. This comes even as global multiples have fallen over the same period. Chinese buyers have become the most frequent buyers, revealing a voracious appetite for an increasingly diverse range of industries, according to a recent study from valuation advisory group American Appraisal. It added that a pick-up in demand from Asian buyers last year helped to drive European deal valuations to their highest levels since 2007. China has been home to the most acquisitive buyers among Asian peers, paying 11 times ebitda in 2012 against 5.5 times ebitda in 2010. State-backed companies have expressed a particular interest in infrastructure, spotting an opportunity in debt-laden countries to scoop up distressed government assets. For example, CIC bought a 10 per cent stake in Heathrow last year for £450m, paying 14 times ebitda, as well as a 30 per cent stake in GDF Suez for the equivalent of £2bn, giving the deal an ebitda multiple of 17.5 times. There is no sign that the trend for outbound China M&A will slow as heavily indebted governments in France and the UK make overtures to the Chinese for investment. Chinese banks are expected to launch a fresh wave of acquisition this year with a particular focus on Europe, where lenders are considered cheap relative to historical valuations. The banking sector has underperformed the market by 60 per cent since 2007, according to Citi strategists. European banks have been on a roller-coaster ride since the late 1990s . . . We think the fortunes of European banks are changing for the better," said Jonathan Stubbs, European equity strategist at Citi. Chinese companies have also been active on a smaller scale, scooping up smaller companies in countries such as Germany and the UK. "The market [for Chinese M&A] is more active than it was last year and there are more companies going outbound - not only state-owned enterprises but also listed companies, privately owned and entrepreneurial ventures in many different industries," said Tom Eastling, American Appraisal's Hong Kong director. Some Japanese companies are also paying hefty multiples to earnings for stakes in western companies, the firm said. For example, Sumitomo bought Sutton and East Surrey Water Group in February for £165m, paying an ebitda multiple of 10.5 times. In addition, Mitsui Chemicals bought Germany's Heraeus Dental in April for £381m, paying 27.8 times earnings before interest and tax.