Appleby: Offshore Deals Continue To Rise

September 11, 2014

The combined value of deals across offshore jurisdictions in the second quarter of 2014 jumped 23% over the previous one, making it one of the highest value quarters of the past decade, according to a report released today [Sept 11] by Appleby.

The latest edition of Offshore-i, an Appleby report that provides data and insight on merger and acquisition activity in the major offshore financial centres, focuses on transactions announced during the second quarter of 2014, a period in which the firm observed a considerable uptick in deal size.

“For six consecutive quarters total deal values have either increased or remained level, and the last three quarters have seen values jump more than 20% on the quarter previously,” said Cameron Adderley, Partner and Global Head of Corporate & Commercial. “Companies appear to be putting more money to work on offshore deals, and an upward trajectory is gathering momentum.”

The Global M&A Environment

Appleby said, “In the second quarter of 2014, 632 deals were announced involving offshore targets, which in combination were worth USD80.9bn. The number of deals is almost identical to the 642 deals recorded in the first quarter of the year.

“The average deal size of USD128m in the second quarter of the year is the highest in the past decade, aside from the anomalous final quarter of 2012 when a single USD56bn transaction caused average deal values to spike.

“The firm attributed part of the quarter’s total deal value to the USD20bn planned IPO of Alibaba Group, the Cayman Islands incorporated ecommerce site, which is headed for the New York Stock Exchange. Still, with three deals worth north of USD2bn, even if the Alibaba transaction is excluded, the report found the quarter records a cumulative three-month deal value that exceeds anything seen in 2013.

Bermuda Deal Activity

“Bermuda was home to 88 transactions worth a combined USD7.86bn in the second quarter of 2014, giving the jurisdiction an average transaction size of USD89m. While the numbers represented a drop in deal activity from the previous quarter, the jurisdiction played home to two of this quarter’s top 12 deals. Appleby also noted that the biggest rumoured deal on the horizon is the anticipated USD6bn sale of Bermuda-incorporated Triton Container International by its private equity owners Warburg Pincus and Vestar Capital Partners.

“The bulk of Offshore-i focuses on international acquirers buying offshore assets, but the report also examines outbound deals in which an offshore jurisdiction acted as an acquirer. Bermuda-domiciled companies were the acquirer in 58 second quarter deals, up from 55 in the previous quarter. The deals combined worth was US8.03bn and included two of the quarter’s 10 largest outbound deals.”

“The second quarter saw a record-breaking USD84bn worth of outbound deals done by offshore businesses, the highest quarterly amount reported in a decade,” said Timothy Faries, Partner and Group Head of Corporate and Commercial in Bermuda. “Bermuda was an important player as companies based in this jurisdiction pursued growth opportunities further afield.”

Key themes of Q2 2014:

  • There were 13 deals worth in excess of USD1bn this quarter, compared to four in Q2 2013. Four deals were worth over USD2bn.
  • The most popular type of deal was once again minority stake transactions, which accounted for more than half of all offshore deals.
  • There were 52 debut listings either announced or completed by offshore companies in the period, a substantial increase over the 34 seen last quarter and the 39 seen in Q2 2013.
  • Half of the top 10 deals this quarter involved online businesses. Information and communication was the leading target sector — replacing financial and insurance for the first time since the end of 2012.
  • Among world regions such as North America, Western Europe and the Middle East, offshore remains at sixth by deal volume for Q2 2014, and retained the fourth spot in value terms, which it reached for the first time in Q1 of this year.
  • Averaging over the 61 working days in this quarter, USD1.3bn was spent each day on an offshore transaction, up from USD1bn per day in the preceding quarter.
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