Appleby reports on offshore M&A and IPO activity

The third quarter of 2013 has continued to provide positive signs of a marked stabilisation of transactional activity in the offshore markets, according to a report from Appleby, a leading provider of offshore legal, fiduciary and administration services.

The number of deals done and the value of those deals is broadly consistent with Q1 and Q2 2013.

Crucially, a return of investor confidence is indicated by the tightening spread of deals, an increase in the number of acquisitions and a decrease in minority stake purchases.

The findings are highlighted in the latest Offshore-i Report released today. Appleby‘s quarterly report, which provides data and insight on merger and acquisition activity in major offshore financial centres, focuses on the third quarter of 2013.

The Appleby report indicates that in Q3, Jersey recorded 41 transactions, almost the same as the previous quarter with values also staying at a similar level. In eight deals, Jersey registered companies were the acquirers in the transaction with a total value of USD720m.

During the third quarter of 2013 the value of deals completed in the offshore markets totalled USD34.5bn, broadly flat against the Q2 total of USD35.6bn. Given that the figures are a snapshot and further Q3 deals will be recorded in the coming weeks, Appleby states that it is likely Q3 will be slightly up on Q2 this year.

When it comes to volume, there were 538 deals in Q3 2013 as against 523 in Q2 and 504 in Q1.

Cameron Adderley, Partner & Global Head of Appleby's Corporate & Commercial group comments: "The offshore markets, which represent critical links in the global supply chain of trade and investment flows worldwide, are exhibiting signs of robustness after several years of volatility. That is a development we have been looking out for since we began our Offshore-i series, and we view it as a critical requirement of a sustainable macro-economic recovery.”

“Other trends from past reports are also reaffirmed by the Q3 figures, most notably the strong story that is emerging from average deals. After nine months in 2013 the average deal value is USD65m which, if it persists for the remainder of the year, will be ahead of the average deal for seven of the last ten years."

Frances Woo, Appleby's Group Chairman added: "The evidence provided by the Q3 figures means that we continue to be cautiously upbeat about the prospects for our offshore region and therefore the wider economic landscape. However, we do not shy away from recognising that we are entirely interconnected to the global economy. The other major economic regions in which our clients operate are critical to the offshore revival, and whilst the signs from the United States economy have been broadly positive throughout 2013, the budgetary impasse that caused the shutdown of the federal government in October may yet seriously affect confidence and deal flow around the world.”

In the second quarter Appleby noted the growing strength of the capital markets, with Initial Public Offering (IPO) activity looking increasingly bullish. In Q3 Offshore-i reveals that the same high levels of IPOs and planned IPOs are continuing, with 11 offerings completed in Q3 and a further 27 announced. The biggest IPO to be announced in Q3 2013 was that of Riverstone Energy, an investment fund based in Guernsey that plans to list on the London Stock Exchange to raise at least GBP500m.

With USD3.5bn of planned IPOs announced in Q3 there are clear signs that confidence is returning to the capital markets as businesses seek to raise funds for growth.

The average IPO in Q3 2013 was USD115m, up from USD29m in Q3 2012, which appears to represent the bottom of the market. Private equity larger acquisition deals are also back Q3 2013 saw three institutional buyouts with a combined worth of USD834m. The return of these deals – the most common private equity structure for mid to large transactions – marks a positive step forward for the private equity industry, where offshore activity in recent years has been heavily focused on smaller management buyout deals.

For a full copy of the report or for any further information, please contact: Sarah Stone, Global Communications Manager, Appleby sstone@applebyglobal.com or Paul Jaffa, Myddleton Communications, London paul.jaffa@myddleton.com