Appleby: Home To Biggest Average Deal Value
The average size of M&A deals in Bermuda was larger than that of any other offshore jurisdiction in the first half of 2016, according to a report released by 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 first half of 2016. Following a record-setting 2015, the number and value of offshore M&A deals fell in the first half of 2016 to levels more familiar prior to last year’s boom, according to the report.
Like the offshore region as a whole, Bermuda saw a drop in deal activity in the first half of 2016 when compared to the highs of 2015. However, with 196 deals worth USD18bn in the first six months of the year, Bermuda’s average deal size was greater than that of any other jurisdiction.
“Bermuda continued to be a leading jurisdiction for offshore dealmakers in the first half of 2016, a period in which it attracted three of the offshore region’s top 10 deals by value,” said Timothy Faries, Bermuda managing partner and group head of Corporate in Bermuda. “This included some of the biggest deals in the technology and mining sectors.”
The M&A Environment Across Jurisdictions
While the volume and value of deals involving offshore targets across jurisdictions dropped in the first half of this year when compared to the second half of 2015, the report did find that the offshore markets continue to record the largest average deal size for any of the world’s regions, at USD72m.
The report attributes the drop-off in volume in the first six months of the year in part to the uncertainty emanating from the United States presidential elections and fallout from the Brexit vote in Europe, and noted that concerns over the strength of the Chinese economy and the downturn in Latin America may further temper M&A activity globally during the remainder of 2016.
“Similar to nearly all other major world regions, deal volume offshore has moved away from last year’s frantic activity and dropped back to levels seen before 2015,” said Cameron Adderley, Partner and Global Head of Corporate at Appleby. “There has certainly been a readjustment, but not one that we feel too downbeat about.”
Across jurisdictions, there were 1,406 deals targeting offshore companies in the first half of this year, representing a total value of USD101bn. While the number of deals was down 10% when compared to the second half of 2015, the first six months of the year marked the sixth straight half-year period in which the offshore region has recorded more than 1,400 deals.
The first half of the year also saw 10 separate deals each worth in excess of USD2bn. The technology and software sectors accounted for six of the top 10 deals of the quarter.
Key Findings of H1 2016:
- There were 1,406 deals involving offshore targets in the first half of the year, down 10% on the second half of 2015. This total is likely to edge higher as late transactions are added to the figures.
- There has now been a consistent run of over 1,400 deals per half starting in the second half 2013.
- The total value of deals involving offshore targets in the first half of the year was USD101bn, with an average deal size of USD72m.
- The top 10 deals were each worth in excess of USD2bn, with the biggest deal being the USD4.8bn acquisition of China’s CITIC Real Estate and BVI-incorporated Tuxiana Corporation by Hong Kong’s China Overseas Land & Investment. Six of the top 10 deals are in the technology and software sectors.
- Once again, the financial services and insurance sector was the biggest sector offshore by value as well as volume. In all, 20 subsectors recorded deal value in excess of USD1bn.
- The most popular deal type was capital increases, with 474 such deals in the half. The most value went on acquisitions, where USD47bn was spent in H1.
- Cayman continued to be home to the largest number of deals, although Jersey and the BVI were the only offshore jurisdictions to see more deals in this half than the last.
- While no large IPOs completed in the first half of the year, there was much more positive news about IPOs when looking at the numbers being announced. With no fewer than 115 potential stock market debuts of offshore companies publicised, the first half of 2016 was among the most active Appleby has seen.
- The top sector for announced IPOs was property development, with companies in Bermuda, Mauritius and Cayman among those seeking to list, while financial services was also popular, with several securities dealing firms intending to debut on the stock markets imminently.
- The offshore region as an acquisition force is enjoying a bumper period and has become a regular participant in some of the biggest global transactions.
- The offshore region remains ranked sixth in the world by deal volume for H1 2016, and still ranks fourth for value activity. Average deal size remains strong, and continuing from 2015, offshore still has the highest average deal size of any region worldwide.
