Posted: 13/02/2014Quarter by quarter offshore deal volumes rose steadily throughout 2013, resulting in a cumulative 12-month deal value topped only three times in the last decade, according to a report released today by Appleby.
The latest edition of Offshore-i, which provides data and insight on merger and acquisition activity in major offshore financial centres, focuses on deals during the fourth quarter of 2013, as well as the year overall. The firm observed considerable gains in Q4 over the previous quarter in terms of the number of deals, their cumulative value, and average deal size.
“While the final quarter of the year is typically the busiest, every one of the principal indicators has progressively improved,” said Cameron Adderley, Partner and Global Head of Corporate & Commercial. “Indeed, the global M&A environment is fragile and to an extent lacks depth, but we can't help but view these year-end numbers as positive.”
Guernsey M&A Environment
There were 49 deals involving Guernsey targets in Q4 2013 worth USD2.7bn, with an average deal size of USD56m. While this number represents a decrease in the amount of deals when compared to the previous quarter, an increase in the number of Guernsey companies acting as acquirers is cause for optimism.
“The growing strength of offshore companies as acquirers in the global M&A markets is beginning to gain traction,” said Jeremy Berchem, Corporate and Commercial Group Partner in Guernsey. “In Guernsey, we saw a significant gain in the number of deals involving a local acquirer in the fourth quarter of 2013 when compared to the previous quarter, as well as an uptick over the same period of 2012.”
There were 27 purchases by Guernsey-based companies totalling USD865m in the fourth quarter of 2013, which represents a 29% increase in volume and a 9% jump in acquisition values over the previous quarter. Compared to the same quarter of 2012, that represents an 8% increase in deals and an uptick of 6% in deal value in which Guernsey-based companies were the acquirer.
Global Offshore Markets Heat Up
For the year, offshore companies have been busy and were involved in transactions across a wide range of sectors and geographies. The return to form of the equity capital markets, and particularly the heating up of the IPO pipeline, has been a notable feature for 2013, as has the steadily growing frequency of deals in the USD1bn-plus range. The year ended with a cumulative 12-month deal value of USD151bn, an annual total topped only three times in the last decade.
In Q4 2013 the offshore markets ranked sixth amongst world regions for deal volume, fifth for deal value and third for average deal size. Only North America and South and Central America came in with a higher deal average.
Key themes of Q4 2013 across jurisdictions:
• There were more deals in the fourth quarter of 2013 than in any other quarter last year, with 607.Throughout the year deal volumes rose steadily quarter-on-quarter.
• The value of deals was USD47.9bn in Q4, up 32% on the previous quarter. The average deal size was USD79m and has only been higher in three quarters in the last four years.
• There were 11 USD1bn-plus deals in Q4 2013, almost double the number in the previous quarter, including two worth over USD2bn. Energy and natural resources deals feature heavily.
• Financial services and insurance continues to be the most active sector, while mining, quarrying and various manufacturing sectors were also busy.
• The largest type of deal by volume was a minority stake, but acquisitions continue to grow in number and were the biggest deal type by value, making up almost half of the deal value in Q4 2013.
• IPO activity remains encouragingly strong, with 62 IPOs pending or completed in Q4 2013 as against 28 in the same quarter of 2012.
• The frequency of buying activity made by offshore companies continues to grow and the combined value of such deals was USD37.8bn in Q4 2013, one of the largest amounts in the past few years.