More money was spent on M&A transactions in Jersey than any other offshore jurisdiction in the first half of 2018, according to a newly released report by offshore law firm Appleby.
The latest edition of Offshore-i, which provides data and insight on merger and acquisition activity in the major offshore financial centres, focuses on transactions announced over the first half of 2018.
Following a similar pattern to most of the world’s regions, the volume of offshore deals has fallen back from levels seen in the latter half of 2017, while value is on the rise.
Jersey, meanwhile, experienced a six per cent increase in deal activity, with a 411 per cent increase in deal value driven by the $62bn acquisition of Jersey-incorporated Shire by Japan’s Takeda Pharmaceutical – the largest offshore transaction of the first six months of the year.
“Deals targeting Jersey-incorporated companies accounted for nearly one-third of the value of all offshore transactions in the first half of the year,” said Wendy Benjamin (pictured), Partner and Group Head of Appleby’s Corporate Department in Jersey. “Additionally, Jersey has gone against a global trend by experiencing an increase in deal volume over the final six months of 2017.”
Jersey-incorporated companies were the target of 75 deals in the first six months of 2018, worth a cumulative value of $69.86bn. The jurisdiction was also home to two of the 10 biggest offshore deals of the half-year period: the Shire acquisition and the $5.08bn acquisition of business-to-business event organiser UBM by Informa.
Collectively, the Crown Dependencies of Jersey, Guernsey and the Isle of Man performed well in the first half of 2018, with investment funds and manufacturing companies featuring prominently into deal activity.
The jurisdictions showed a strong preference for domestic deals, demonstrating faith in the local economies and a recognition that there are local targets that are worth investing in.
M&A environment
In total, there were 1,344 deals recorded in the first half of 2018 – a 10 per cent decrease from the last six months of 2017. The total deal value of $216bn, meanwhile, marked a 68 per cent increase over the second half of 2017 due in part to the Shire acquisition. Each of the offshore region’s top 10 biggest deals was worth more than $2bn.
Billion-dollar deals have become frequent in the offshore region, with 28 reported in the first half of this year. The surge of high-value transactions has been bolstered by a desire by boards of major companies to head off disruptive technological threats and accelerate growth, according to the report.
The most frequent types of deal were acquisitions, capital increases and minority stakes in other companies. Typically, these three categories have balanced out, but the past 18 months have seen acquisitions move notably ahead to where they now make up 40 per cent of all deals.
“Increasingly, firms are choosing to top up an existing stake and secure control of an investment outright,” said Cameron Adderley, Partner and Global Head of Corporate at Appleby. “This makes sense with the increasing competition for quality targets, a low-risk environment and easy access to finance.”
IPO market continues into 2018
Last year saw new highs for offshore IPOs and that momentum has continued into 2018, with 180 companies announcing their intention to go public in the first half of the year.
“Pent-up investor demand for fast growth investments, including small-cap listings, makes it a good time to go public,” Adderley said. “Economic conditions remain encouraging, equity valuations remain high in many parts of the world and interest rates remain low.”
The top sub-sector for announced offshore IPOs is information service activities, while another popular field is financial services, the report found. Both are benefiting from the positive effects of dramatic change in their underlying industries.