August 5, 2021

Appleby: Bermuda tops deal value in 2014 Q4 [Cayman well placed]

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OffshreIFrom Bernews

With more than USD20bn in M&A deals and IPOs announced in the fourth quarter of 2014, Bermuda saw a higher cumulative deal value than any other offshore jurisdiction, according to a report released today [Feb 26] by Appleby.

The latest edition of Offshore-i, an Appleby report that provides data and insight on merger and acquisition and IPO activity in the major offshore financial centres, focuses on transactions announced during the fourth quarter of 2014, as well as the year as a whole. The final quarter of the year maintained the run of 600-plus deals per quarter that started in early 2013, the report found, and 2014 was the biggest year in terms of dollars spent in the past decade.

“When looking at the year as a whole, 2014 saw 2,687 deals with an aggregate deal value of USD277bn across offshore jurisdictions, making it by far the best year for offshore-targeted M&A for the past decade,” said Cameron Adderley, Partner and Global Head of Corporate. “The year was up more than 60% in value terms over the previous year despite being broadly flat in terms of volume.”

Bermuda Tops Deal Value in Q4

Bermuda led the charge in terms of cumulative deal value with USD20.1bn spent on deals involving local targets in the fourth quarter of 2014, the report found. This was in part due to the jurisdiction being home to five of the 10 largest deals announced in that time period.

Bermuda was also one of only three offshore jurisdictions examined in the report to experience an increase in both deal volume and value when compared to the previous quarter. Deal volume was up 9% over the previous quarter while deal value jumped a massive 134%.

“The year 2014 is a standout year for offshore M&A, and Bermuda continues to be an important destination for deal activity,” said Timothy Faries, Partner and Group Head of Corporate in Bermuda. “We see our markets stabilising at strong levels, and we expect that 2015 will set out on a similar footing.”

The M&A Environment Across Offshore Jurisdictions

In the fourth quarter of 2014, 628 deals were announced involving offshore targets, the report found. At USD69.2bn, the cumulative value represented an increase of 38% over the third quarter of the year.

While activity levels were similar to previous quarters, Q4 was second highest in terms of value in 2014 putting the average deal size at USD110m. That figure has been greater in only four quarters over the past 11 years and helped make 2014 as a whole the largest on record for average deal size, at USD103m.

The final quarter of 2014 was also the fourth in the last five to record more than 10 deals worth more than a billion dollars each, after only four quarters in the preceding decade did the same. There were 12 deals worth at least USD 1bn each in Q4 2014, and a mammoth 49 across the year, compared to 28 throughout 2013, according to the report. The strength of Q4 2014 can also in part be attributed to two megadeals worth more than USD5bn each.

Financial Services Dominate Offshore Activity

In the fourth quarter of 2014, insurance and financial services stood out as the dominant sector for offshore deal activity. The sector saw 161 deals with a cumulative worth of USD26.5bn, accounting for one in four deals done offshore in the time period and for more than a third of the dollars spent.

Examining the top 10 deals of the quarter, four were in financial services, two of which involved Bermudian targets including one reinsurance target and one financial leasing business. Three of the top 10 concern the movement of goods via shipping and pipelines, most notably the 5% share buyback completed by Golar LNG, a sea and coastal freight water transport business based in Bermuda, worth USD2.4bn.

Appleby said the key themes of Q4 2014:

There were 628 deals in the quarter, down on 689 recorded in Q3 but likely to edge higher as the flurry of year-end transactions is reported. This three-month period maintained the run of 600-plus deals per quarter that started in Q2 2013.
The value of deals was USD69.2bn, up 38% on the previous quarter and the second highest quarter of an exceptional year. Two megadeals each worth in excess of USD5bn were announced in Q4 after three announced in the first half of the year.
As a whole, the year 2014 was a peak year for value, with total deal value extraordinarily high at USD277bn, significantly ahead of a previous peak set in 2007.
This is the fourth quarter in the last five to record more than 10 deals worth over one billion dollars each. Forty-nine such deals were recorded across the year, compared with 28 in 2013.
The financial and insurance sector was once again on top, thanks to two deals worth north of USD5bn each. Deal value remains widely dispersed with 17 subsectors showing cumulative deal activity worth more than USD1bn each.
The most popular deal type is capital increase, a new definition to represent minority stake transactions that do not involve third-party acquirers.
The Cayman Islands dominated deal volumes as a top target. Bermuda, the BVI and Hong Kong were largely level-pegging behind, while in value terms, both Guernsey and Cayman sit on equal terms behind Bermuda.
Outbound deals involving offshore acquirers maintained high levels for every quarter of 2014, with 627 outbound deals worth USD55bn in Q4. The year was the busiest on record for outbound transactions.
The offshore region remains ranked sixth in the world by deal volume for Q4 2014, but rose back up two places to fourth for value activity.

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Related story:

2014 Set to be Peak Year for Offshore Dealmaking

From Lawdragon News

Despite a dip in the value and volume of offshore deals in the third quarter of 2014, the year as a whole is on track to be among the best showings for offshore M&A in the past decade, according to a report released today by Appleby, one of the world’s largest providers of offshore legal, fiduciary and administration services.

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 third quarter of 2014.

According to the report, the third quarter of the year experienced a 46% drop in total value of offshore deals when compared to the exceptional previous quarter. Appleby noted, however, that historically the Q3 2014 numbers are strong with deal value up 25% over the same quarter in 2013.

“Overall, the year 2014 is set up to be a peak year for value of deals conducted in our offshore markets,” said Cameron Adderley, Partner and Global Head of Corporate & Commercial. “The first three quarters of the year have a combined total deal value north of USD200bn, which has only been exceeded in two years over the last decade. This year should surpass even those two annual totals when the Q4 numbers are included.”

The M&A Environment

In the third quarter of 2014, 626 deals were announced involving offshore targets, which in combination were worth USD48.1bn. Following the 677 recorded deals in Q2 2014, the quarter maintains an impressive run of 600-plus deals per quarter that began in 2013, the report found.

In addition, the average deal in the third quarter of 2014 was worth USD77m, making it the fifth most prosperous quarter for average deal size since the start of 2010, a period of almost 20 quarters. For the first three quarters of 2014, Appleby said an average of USD102m has been spent on each transaction. Only the boom year of 2007 has come close to that level, when the average was USD100m.

The third quarter boasts nine transactions worth in excess of USD1bn, and two that exceed USD2bn. Appleby also noted that deals worth less than USD100m made up a significant proportion of the quarter’s spending, marking a welcome return of activity in the lower end of the value chain.

While overall numbers for 2014 are positive, the report continues to strike a cautionary note due to uncertainties in some global markets, including Asia.

“Austerity measures in place in so many of the developed nations are biting consumer confidence, and a pending general election in the United Kingdom will bring with it its own uncertainties in the months ahead,” said Frances Woo, Group Chairman of Appleby. “Faltering growth in China and other parts of Asia also continue to fuel hesitancy. Nonetheless, 2014 looks set to be one of the best years for offshore M&A in the past decade.”

Cayman Again Leads in Deal Value and Volume

The Cayman Islands was once again the busiest offshore destination in Q3 2014, with 155 deals announced worth a total of USD13.7bn. The jurisdiction accounted for one quarter of all offshore deals and 29 percent of all dollars spent on offshore targets.

The dominance of Cayman, however, was not as stark as it has been in previous quarters. In Q2, for example, Cayman accounted for 33% of offshore deals and 48% of offshore spending. Those numbers reflected the USD20bn planned IPO of Alibaba Group, the Cayman Islands incorporated e-commerce site.

A look at the top 10 deals of the third quarter reveals a broad spread of offshore activity, with two targeting Cayman, three targeting the British Virgin Islands, two Jersey, two Bermuda, and one Hong Kong. Following Cayman, Appleby noted that Hong Kong and the BVI were largely neck-and-neck in terms of deal volume, with 114 and 110 deals respectively. Bermuda followed with 89, and then Guernsey with 64.

Key themes of Q3 2014:

· There were 626 deals in the quarter, down on the 677 recorded in Q2 2014. That number is expected to creep higher as late deal news is announced.

· The third quarter maintains the run of 600-plus deals per quarter that started in 2013.

· The value of deals was USD48.1bn, which represents a 46% drop on the previous quarter, but is up 25% on the third quarter of last year.

· The most popular type of deal was minority stake transactions, which once again accounted for more than half of all offshore deals.

· The financial and insurance sector was the busiest in the third quarter, returning to the top after being overtaken by information and communications, and manufacturing, in the last quarter.

· Acquisitions dominated in terms of value. IPO activity, meanwhile, slowed down in Q3 after several quarters of major activity.

· While the bulk of the report focuses on international acquirers buying offshore assets, it also looked at outbound deals in which an offshore jurisdiction acted as an acquirer. A total of USD61.7bn was spent overseas by offshore companies this quarter, including 10 deals worth in excess of USD1bn. China was the main target for offshore outbound deals.

· There were 11 outbound deals for Russian targets, disproving the belief that Russian activity would cease due to sanctions now being applied to various economic interests in the country.

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