Appleby: Busiest Start To Year For M&A Activity

November 19, 2019

The offshore region recorded more M&A transactions in the first half of 2019 than in the same time period over any of the past five years, according to a report released by law firm Appleby.

A spokesperson said, “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 over the first six months of 2019. While the total number of deals was above the same period in the previous year, total deal value was down on previous comparable periods.

“The offshore region recorded more than 1,500 deals in the first six months of 2019, the busiest start for M&A activity over the last five years,” said Cameron Adderley, Partner and Global Head of Corporate at Appleby. “The total value of these deals was just over USD120 billion, a lower total than we have become used to seeing recently, with the trend in full acquisitions coming to an abrupt halt and being replaced by smaller-scale minority stake investments.”

“The US and China remained the leading investors into offshore jurisdictions, with significant activity also coming from the UK, Norway and France in Europe and Taiwan and Singapore in Asia. Intra-offshore deals involving an offshore target and acquirer also remained popular.

The M&A Environment Across Jurisdictions

“A total of 1,514 transactions were recorded in the offshore region in the first half of 2019, accounting for USD120.4 billion in value. This value represents a drop when compared to recent half-year periods due in large part to fewer acquisitions and billion-dollar-plus deals in the first half of 2019.

“The 10 biggest offshore deals this year reflect the more cautious environment we’re seeing in 2019,” Adderley said. “Last year, the 10 largest deals were each worth well over four billion dollars, but there have only been three of that size so far this year. These megadeals typically originate from China or the US and have been curtailed largely in the face of trade wars, risk uncertainty and national security issues.”

“Most offshore jurisdictions experienced a drop in activity in the first half of the year when compared with the final six months in 2018. This was the case in Bermuda, which recorded 246 deals worth a cumulative USD14 billion to start 2019. The numbers reflect a slight 4% drop in deal volume when compared to the second half of 2018 and a 63% decline in deal value.

“While Bermuda experienced a drop in value in the first half of 2019, this can in large part be attributed to 2018 being an outlier with massive insurance industry acquisitions driving significant deal value,” said Timothy Faries, Bermuda Managing Partner and Group Head of Corporate at Appleby. “Bermuda saw a busy start to the year for deal volume, with the number of transactions over the first six months of 2019 higher than the same time period last year. We anticipate the insurance sector will remain busy, as companies continue efforts to increase scale and diversity.”

“Across the offshore region, the five sectors that made up the bulk of inbound offshore activity in the first six months of 2019 were finance and insurance, manufacturing, construction, wholesale and retail trade, and information and communication.

Outbound Deal Value and Volume Slightly Ahead of Inbound Activity

“While the primary focus of Offshore-i is on transactions in which offshore targets are purchased by investors, the report also examines deals in which the acquirer is based offshore. There were 1,589 of such outbound deals announced in the first half of 2019 with a total value of USD124 billion, representing numbers that were slightly ahead of inbound activity.

“Bermuda’s outbound activity was considerably higher than last year including one of the largest offshore acquisition deals of 2019 to date: the USD2.2 billion purchase of Vivat NV, the Netherlands-based insurance provider. Following intense interest, the company was eventually acquired by fellow Dutch insurer NN Group partnering with Bermuda’s Apollo Management, via Athora Holding.

“Offshore companies acquired targets across 62 different countries. China, the UK and United States received the most attention but there has also been considerable focus on the major Asian and Oceania countries. India, Japan, Singapore and Australia all feature heavily and there have also been large individual deals in Western Europe.

Key Findings of H1 2019:

  • “The total value of all offshore deals in the first half of 2019 was circa USD120 billion.
  • “There were 1,514 deals announced, more than South America, Africa and the Middle East combined.
  • “Twenty deals worth at least USD1 billion were recorded.
  • “There were 144 IPOs announced on six different exchanges.
  • “Eighty-five countries worldwide conducted offshore deals.
  • “There was an 82% increase in the number of Information & Communication deals from the start of last year.
  • “Cayman was home to the largest number of deals and total deal value.
  • “There was a drop in offshore-incorporated companies being targeted by investments financed via private equity and venture capital. There were 67 deals which is slightly below the typical six-month average total observed over the last five years.
  • “There were 1,589 outbound deals coming out from the offshore region, worth a combined USD124 billion.”

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