By Sarah Young

Sitting on about £700m worth of profits from its eight month-long investment in UK bank Barclays, the Qatari foray into European M&A is looking a lot more successful today than it was this time last year.

The Qatari investment in Barclays was jointly made by the Qatar Investment Authority, Qatar’s sovereign wealth fund, and Challenger, a vehicle owned by the Emirate’s royal family. 

It was QIA that was looking somewhat out of its depth 12 months ago. Having shelved a takeover bid for supermarket giant J Sainsbury at the last minute in late 2007, in July last year it emerged that Four Seasons, the UK nursing homes operator QIA bought through the Three Delta fund in 2006, was in trouble.

The high-profile collapse of the bid for J Sainsbury led to questions about QIA’s deal-making experience and this was only compounded by the failure of the highly leveraged buyout of Four Seasons, which subsequently saw QIA’s £110m equity investment wiped out.

But a bit further along the road and QIA is sitting pretty on private equity-like returns from its bet on Barclays.

It seems that the sovereign fund is moving away from its attempts to control companies and is focusing instead on buying stakes in stalwarts of the European corporate world.

As well as its stake in Credit Suisse, hiked to 8.9% after the Swiss bank’s capital raising in October 2008, QIA is currently in exclusive talks with Porsche that could lead to an investment in the sports-car maker and possibly the acquisition of the derivatives package controlling VW shares.

Two years ago when companies such as Four Seasons and J Sainsbury were in play, QIA had to compete hard to put its money to work. It made some mistakes trying to find its feet.

In the post-credit crunch world, QIA’s liquidity is regarded as a valuable commodity and as such the investment landscape is infinitely more amenable to a sovereign wealth fund looking for opportunities. It can make choices rather than trying to win auctions.

An investment in Porsche in its hour of need could prove to be just as successful for QIA as the Barclays deal. 

EMC on Monday increased its offer for Data Domain by 12 percent to $33.50 a share, valuing the specialty storage maker at $2.4 billion and raising stakes in a bidding war against rival NetApp.

EMC also removed a breakup fee from its offer for Data Domain and said it was ready to complete a deal within two weeks.

The battle for Data Domain, which began with an offer of $25 a share from NetApp,  has grown increasingly acrimonious. Last month, EMC took out a full-page ad in The San Jose Mercury News explaining to Data Domain’s employees why a deal with EMC is better than one with NetApp.

Data Domain, for its part, has maintained that a deal with NetApp makes more sense and raised questions about EMC’s motives. In an interview with The Mercury News, NetApp’s chief marketing officer called EMC’s bid a “defensive move to try to limit Data Domain’s growth.”

In an environment where getting any deal done is proving to be very difficult, this is a rare bidding war. And given the shaky markets, investors might prefer a cash bid.

Additionally, as the amount of data that companies store — and the cost to store it — is on the rise, demand for data-reduction technology, which boosts the efficiency of data storage equipment by deleting duplicate pieces of information, is likely to increase as well. This bidding war could drag on.

After falling off a cliff at the start of this year as the global financial crisis gripped, mergers and acquisitions by Japanese companies overseas are likely to pick up again in the second half of this year, according to boutique Japanese M&A advisory firm Recof Corp.

There won’t be a flood of deals, Recof President Hikari Imai says, but the ones there are, are likely to be chunky as Japanese companies expand their frontiers beyond domestic markets where growth prospects are limited.

Geographically the focus is likely to be Asia — China, India in particular and possibly the Philippines or Australia. And the types of companies looking abroad will broaden as well, Imai told the Reuters Japan Investment Summit.

Recof expects Japanese power utilities, paper, food and beverage and retailing firms to look abroad at markets where they can put their advanced technology and inventory control systems to use.

The sort of companies that up till now have been focused on their home base. Driving all of this will be expectations of lack of growth in Japan’s own markets as it climbs slowly out of recession and its population ages — and saturation domestically.

So Imai reckons yen strength and the big drop in stock markets everywhere mean it may be an opportune moment for companies with overseas ambitions.

Photo credit: REUTERS/Yuriko Nakao

New European regulations made headlines on Tuesday as the former chief executive of Man Group hit out at proposed changes to hedge fund rules and the first details of new European bank regulations emerged.

Other stories to make the newspapers include:

* Bondholders to Northern Rock, the UK bank rescued by the state, are being repaid ahead of the British government due to a contract breach in 2008, the Guardian reported.

* London Residential Opportunities, a new residential property fund, is looking to raise 50 million pounds ($81.16 million) in equity ahead of floating on the London Stock Exchange later this year, according to the Daily Telegraph.

* Preparations are being made to put Independent News & Media (INNZF.PK) into examinership — an Irish form of bankruptcy protection — in case restructuring talks fail, the Times reported.

* China’s state-owned Beijing Automotive faces long odds in its bid to buy European carmaker Opel due to Chinese reluctance to buy foreign auto firms, according to influential Chinese magazine Caijing.

For all the latest deals news from Reuters, click here.