Appleby: Bermuda Deal Value Rises 41% In 2015
Bermuda recorded the highest number of M&A transactions it has seen in the last five years in 2015, with the total value of those deals marking a 41% increase over the previous year, according to a report released today [March 3] by offshore law firm 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 course of 2015.
The total cumulative value of offshore M&A deals across all offshore jurisdictions measured in the report in 2015 increased 56% over the previous year, with average deal value topping highs not seen since 2007, the report found.
“Bermuda saw the biggest year-on-year percentage increase in deal volume of any jurisdiction in 2015 and recorded its best annual performance in the past five years,” said Timothy Faries, Bermuda Managing Partner and Group Head of Corporate in Bermuda.
“Its strength in the insurance and financial services sector contributed to the jurisdiction’s key role in offshore deal activity.”
With 489 total deals in 2015, Bermuda saw a 17% increase in volume over 2014. Meanwhile, cumulative deal value stood at USD 72.19bn, an increase of 41% over 2014.
The average deal size of USD$148m in 2015 nearly mirrored the average seen across jurisdictions, and marked a 20% increase over the average deal size recorded in Bermuda in 2014.
Bermuda was the home of several reinsurance acquisitions, including the USD6.9bn acquisition of PartnerRe Ltd by EXOR SpA., the USD4.2bn acquisition of Catlin Group Ltd by XL Group plc, and the USD1.8bn acquisition of Montpelier Re Holdings Ltd by Endurance Specialty Holdings Ltd. Appleby advised on all these deals.
The M&A Environment Across Jurisdictions
Three of the largest quarterly periods of the last decade occurred in 2015 and contributed to a cumulative deal value of USD442bn across offshore jurisdictions. The year also saw an impressive nine megadeals worth in excess of USD5bn each and more than USD150bn when combined.
“Early on we predicted that 2015 would likely be a stand-out year, and the end result fulfils that prediction,” said Cameron Adderley, Partner and Global Head of Corporate at Appleby.
“The fourth quarter capped a robust year for transactional activity by all key metrics, including deal value, deal volume and average deal size.”
There were 75 deals each worth in excess of USD1bn across the year, well above the 52 recorded in 2014. When looking at the full year, the annual average deal size closed at USD149m, streets ahead of the previous record, which was set back in 2007 when the annual average deal size stood at USD99m.
The top 10 biggest deals of 2015 were collectively worth USD163bn, only 37% of the full year deal total, demonstrating the strength in depth of high value deals over the course of the year.
Additionally, the value of the offshore region as a neutral venue for international deals is highlighted by the fact that just three of the top 10 involved acquisition companies that are based onshore, the report found.
Insurance and Financial Services Sector Stays Hot, Subsectors Pick Up Steam
Insurance and financial services continued to dominate in 2015, accounting for 883 deals or 30% of the total. Rounding out the top 5 were manufacturing [with 610 deals]; information and communications [287]; construction [233]; and mining and quarrying [192].
The report also noted that half a dozen sub-sectors have seen at least 45% growth in deal volume over the last three years. Among these, food and beverage services, crops and livestock, mining of coal and lignite and specialist construction all stand out, with the others being accommodation and telecommunications.
In addition, a further six manufacturing subsectors, ranging from leather goods to pharmaceuticals, have all also witnessed similarly impressive levels of growth.
“The offshore markets are thriving and enjoying some of the best deal activity ever witnessed,” said Frances Woo, Managing Partner of Appleby’s Hong Kong office. “Offshore saw more value than the Middle East, Africa, Eastern Europe, South and Central America combined.
“Although 2016 remains fraught with uncertainty and challenges at the macroeconomic level could slow global deal activity, we are quietly optimistic that such good news will continue in 2016.”
Key Themes of 2015:
- In volume terms, with 2,969 deals recorded so far, 2015 has matched the biggest on record, 2,966 back in 2010.
- The annual deal value of USD442bn was the largest Appleby has ever recorded. The annual average deal size of USD149m is the highest yet recorded, far out-triumphing the previous high of USD99m set back in 2007.
- There were 75 mammoth deals each worth at least USD1bn across the year, compared to 52 throughout 2014.
- The top five deals are each worth in excess of USD9bn, with the largest deal being the USD43bn sale of Hong Kong-based Nanyang Commercial Bank. Three of the top five deals were Hong Kong targets.
- Cayman has shown strong positive growth year-on-year since 2012, while Jersey, Mauritius and the Seychelles also show a consistent upward trajectory in deal volumes.
- The three dominant deal types for offshore deals continue to be minority stakes, capital increases and acquisitions. The majority of the largest deals in 2015 were offshore acquisitions, accounting for eight of the top ten largest deals and over USD250bn total spent.
- The offshore region as an acquisition force is enjoying a bumper period. Offshore has become a regular participant in some of the biggest transactions of the year; while annual volume has remained steady, value has catapulted upwards, increasing almost USD200bn against the previous year.
- Offshore has the highest average deal size of any region worldwide. The offshore region’s 56% increase in value compared to the previous year outpaced all other regions.
