China has been on the forefront of mergers and acquisitions (M&A) in Brazil this year, according to data compiled by Bloomberg. The data shows that Chinese companies have so far spent $4 billion to acquire new companies in Brazil, crossing the highest investment made in 2010.  

China Daily reported that over the years Brazil has become a lucrative market for Chinese companies, who have been on an acquisition drive. A significant devaluation of Brazil's currency Real has helped in the propelling interest of Chinese companies.

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"Brazil has been welcoming towards Chinese investment given the economic challenges the country is facing," said Joseph Gallagher, head of mergers and acquisitions at Credit Suisse Group AG. "Chinese appetite for Brazilian assets will continue to be high."

Experts claim that Brazilian companies are facing immense pressure to cut their huge debts, pushing them to sell some of their lucrative assets to Chinese companies at a good valuation. For instance, Camargo Correa SA, a debt-ridden Sao Paulo-based builder, agreed to sell its entire 24 percent stake in CPFL Energia SA to State Grid Corp of China in June this year.

For Chinese companies, who have unable to buy high-valuation companies back home, Brazilian firms are a good bargain. Presently, nearly 11 percent of the 473 publicly listed companies in Brazil are trading at less than half of their book value, according to Bloomberg.

Chinese firms may have many more M&A opportunities in the coming months with several European and North American firms considering making from Brazilian companies, said Zilong Wang, head of M&A at China International Capital Corp.

Analysts also feel that recovery and stability in commodity prices may propel Chinese companies to buy metals and mining assets in Brazil.

TagsChinese companies, Brazil and China, Brazil, Chinese Companies in Brazil