Total offshore deal value increased a dramatic 79% in the first quarter of 2014 when compared to the same period last year and was the highest it’s been since the end of 2012, according to a report released today by Appleby, one of the world’s largest providers of offshore legal, fiduciary and administration services. Considering the first quarter of the year is historically the quietest for dealmaking, the findings set the stage for what looks to be an active 2014.
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 quarter of 2014, a period in which the firm observed a considerable uptick in deal size.
“The most significant conclusion to be drawn from the quarter’s figures is that we’ve turned a corner away from a difficult five years following the global financial crisis,” said Cameron Adderley, Partner and Global Head of Corporate & Commercial. “The number of deals in Q1 2014 was down compared to the previous quarter as expected, but total deal value and average deal size were up, setting the stage for a busy 2014.”
Guernsey M&A Environment
There were 36 deals involving Guernsey targets in Q1 2014 worth USD1.9bn. When compared to the first quarter of 2013, the jurisdiction’s average deal value increased from USD35m to USD54m and total deal value remained steady, decreasing a slight 2%, while the total number of deals was down from the 57 recorded in the same quarter one year earlier.
“Average deal size across jurisdictions this quarter is among the highest we have recorded in the past seven years, a trend we are seeing in Guernsey where average deal size is up 54% from this time last year,” said Jeremy Berchem, Corporate and Commercial Group Partner in Guernsey. “Taken as a whole, this is the clearest sign yet of a new depth to the market, as investors become ever-more willing to put money to work on larger transactions.”
Offshore values increase
Overall, there were 572 offshore deals in Q1 2014, down from the previous quarter but busier than the first quarter of 2013, which saw 528 deals. Though there were fewer deals, deal value came in at USD62.9bn—up 14% on the previous quarter and marking the fifth consecutive quarter for cumulative deal value growth.
This quarter’s average deal size of US110m is the highest in the past seven years, aside from the anomalous final quarter of 2012 when a single USD56bn transaction caused average deal values to spike. Additionally, total deal value in Q1 2014 has been topped only twice since the beginning of 2008.
Key themes of Q1 2014 across jurisdictions:
- There were 15 deals in excess of USD1bn this quarter, including five worth more than USD2bn, and these big deals spanned a wide range of sectors.
- Financial services and insurance continues to be the most active sector, while retail, construction, and media and publishing also feature heavily.
- The largest type of deal by both volume and value was minority stake transactions, which make up almost half of deal value this quarter.
- There were 34 IPOs announced in the quarter worth a total of USD11.7bn. In the past decade, that cumulative value has only been topped on five occasions. Additionally, this quarter’s average IPO of USD345m has only been beaten once in the last decade.
- The total value of deals involving an offshore acquirer was USD52bn. Only two quarters in the past four years have seen more money being invested by businesses incorporated offshore. Five of the 10 largest acquirer deals involved Bermuda-based businesses.
- In this quarter, the offshore region trailed only North America, Western Europe and the Far East and Central Asia in terms of deal value. More money was spent offshore than was spent in Eastern Europe, which includes Russia, and Oceania, which includes Australia, combined.
Category: Finance & Business