The total value of M&A deals in Jersey nearly tripled in 2018 compared with the previous year, driven by three megadeals, each valued at $5bn or more, according to offshore law firm Appleby.
The latest edition of the firm's Offshore-i report, which provides data and insight on merger and acquisition activity in the major offshore financial centres, focuses on transactions announced over 2018. While the total number of deals dipped compared with 2017, value was up significantly.
“Not only did Jersey see a significant increase in total deal value in 2018,but the jurisdiction had the largest average deal size of any offshore jurisdiction, and accounted for nearly a quarter of the total amount spent on offshore companies over the course of the year,” said Wendy Benjamin (pictured), Partner and Group Head of Appleby’s Corporate Department in Jersey.
“When looking at the offshore region as a whole, the amount spent in 2018 was $344bn – over $100bn more than 2017 and the second highest annual figure on record.”
Jersey recorded a total of 141 deals valued at $82bn, representing a 297% increase in value over 2017. The jurisdiction also saw the highest value offshore deal announced in 2018 – Takeda Pharmaceutical’s $58.5bn acquisition of Jersey-incorporated Shire.
M&A across jurisdictions
With 2,781 transactions recorded, the offshore region as a whole experienced a 5% drop in deal activity in 2018 compared with the previous year. However, the 57 deals that each exceeded $1bn, including nine megadeals in excess of $5bn, fuelled a significant rise in value.
The Cayman Islands led the way in total deal value in 2018, with three transactions featured in the offshore region’s 10 biggest deals. Cayman was also the busiest jurisdiction for offshore deals, recording 867. It was followed by Hong Kong (709 deals), the British Virgin Islands (504 deals) and Bermuda (307 deals).
Specialised construction witnessed rapid growth in 2018, with 273 deals recorded, the highest level in a decade. An example of this is the $1.9bn acquisition of several Jersey-incorporated companies involved with the development of Battersea Power Station in London.
The report found that acquisitions have become increasingly popular over the past two years, compared with taking a minority stake in a company or releasing more shares to investors, and now make up nearly half of all offshore M&A activity.
“Investing companies are no longer content to just take a seat on the board, but want full control of an asset in order to gain a competitive advantage over rivals,” said Cameron Adderley, Partner and Global Head of Corporate at Appleby.
“This drive to do strategic deals is likely to continue, providing finance remains readily available, interest rate rises predictable, and markets stable. Gaining access to transformational technologies also remains a big incentive across almost every sector.”
Record IPO market continues
In total, 349 offshore companies spread over 60 different industries announced their intention to go to market. Despite stock market volatility, which can lead to IPOs being cancelled, a record 196 offshore companies completed their listing in 2018, raising almost $33bn.
“Investor confidence, large pools of liquidity, strong valuations and low interest rates have offset recent stock market turbulence, creating a very strong year for IPOs in the offshore region,” Adderley said. “We have seen a lot of activity from wholesale traders looking to raise extra working capital, and construction companies launching IPOs in order to invest in ongoing projects.”
Offshore IPOs typically occur on exchanges in the US, London or Hong Kong, with Hong Kong a popular choice among Cayman companies. The top sectors for announced offshore IPOs were information service activities and publishing activities.
Outbound deal volume
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 3,532 outbound deals announced over 2018 with a total value of $340bn, which includes 66 deals worth more than $1bn each.
The targets of these outbound deals were spread across the globe, with China, the US and the UK popular targets. Much of Western Europe is strongly represented, with a high concentration of billion-dollar deals, as well as several large individual deals targeting the Indian subcontinent. The 10 largest outbound deals were each worth over $4bn.
• To view the latest edition of Offshore-i click here