Posted: 10/10/2012
Activity in the local mergers and acquisitions (M&A) market is on the rise, according to a recent seminar held by KPMG in the Channel Islands.
Almost 50 delegates attended KPMG's seminar exploring the Channel Islands M&A market at the Pomme d'Or Hotel and were addressed by an expert panel comprising KPMG Advisory Senior Manager Mark Ashburn (pictured), Nick Evans and Stuart Hamilton of RBSI and Oliver Bevan of Private Equity house Dunedin.
Mr Ashburn outlined the importance of M&A activity in achieving growth in the current economic climate.
“A recent global KPMG survey showed that 30% of senior executives are looking to exploit growth opportunities through successful transactions. Those businesses that have successfully negotiated the past few years are now showing increased confidence in their business model and are acknowledging that factors such as regulatory pressure can actually create opportunities. Businesses that are serious about their growth agenda really need to be looking towards M&A activity to achieve this.”
A rise in the number of strategic alliances and joint ventures within the local market was one of the notable trends that Mr Ashburn detailed.
“This type of deal is a powerful way to penetrate emerging markets, another popular focus at the moment, and is a model that provides quick access to new markets, customers and expertise. When executed successfully this is acheivable at a lower capital investment and minimised risk,” he said.
The guest panellists each provided their own views on the current market with Mr Evans discussing current trends and methods of raising transaction finance. Mr Bevan provided an investors' perspective on what made investment in the Channel Islands financial services market attractive to Private Equity houses.
“We're looking to invest further in trust and fund administration, particularly in jurisdictions such as Jersey, as it's a business model where we see real benefits from working alongside management to grow the business. The attractiveness of the trust and fund administration business model to external investors is the reliable annuity cash flow it produces,” said Mr Bevan.
Mr Evans reflectled this when detailing how the “Wall of debt” challenge facing private equity houses was an additional driver in prompting these transactions.
“Many of the deals are driven by the need to sell or re-finance leveraged assets but this is two-pronged as distressed assets, once re-financed, can drive successful growth,” he said.
Rob Kirkby, Head of Advisory for KPMG in the Channel Islands, concluded the seminar by drawing together the different elements combining to create renewed market optimism.
“There really is positive interest in the market, particularly from private equity, and it's great to see some green shoots after the recent economic gloom. After a period of retrenchment, businesses need to be pushing the growth agenda and both our guest speakers have highlighted that there is means to do this, with access to finance and collaborative private equity investment. We envisage an exciting period for M&A activity across both Jersey and Guernsey.”