U.S. investment in the developing world is making a comeback, but with a notable shift in the mix of high-growth markets that U.S. companies are investing in, according to a survey just released by KPMG. The biannual survey monitors merger and acquisition (M&A) transactions in which the investing business takes at least a 5 percent shareholding interest in the other organization.

In the first half of 2008, businesses from the United States took an ownership stake in twice as many companies from China as from any other emerging market, including Brazil and India. By the first half of 2013, India had reversed that statistic, and Brazilian businesses were the targets of nearly four times as many U.S.-originated M&A deals as were Chinese companies. (See Figure 1, below.) For companies from other developed nations, however, China remained the second most frequently targeted emerging market in M&A deals, behind South and East Asia; third was Central and Eastern Europe.

Overall, the number of mergers and acquisitions in which U.S. companies invested in emerging-market businesses rose 5 percent, from 110 in the second half of 2012 to 116 in the first half of 2013, while global developed-to-high-growth (D2H) investment fell by 13 percent, from 607 deals to 526. In more than one in five deals involving a U.S. acquirer, the target was a Brazilian business, and 15 percent involved Indian firms. Other popular high-growth destinations for U.S. investments in H1/2013 included South and East Asia, the rest of South America, and Central America and the Caribbean.