The combined value of deals across offshore jurisdictions in the second quarter of 2014 jumped 23% over the previous one, making it one of the highest value quarters of the past decade, according to a report released by Appleby, a global provider of offshore legal, fiduciary and administration services. Given that the first half of the year is frequently quieter than the second half, Appleby said this is encouraging news for the remainder of 2014.
The latest edition of Offshore-i, an Appleby report that provides data and insight on merger and acquisition activity in the major offshore financial centres, focuses on transactions announced during the second quarter of 2014, a period in which the firm observed a considerable uptick in deal size.
“For six consecutive quarters total deal values have either increased or remained level, and the last three quarters have seen values jump more than 20% on the quarter previously,” said Cameron Adderley, Partner and Global Head of Corporate & Commercial. “Companies appear to be putting more money to work on offshore deals, and an upward trajectory is gathering momentum.”
The global M&A environment
In the second quarter of 2014, 632 deals were announced involving offshore targets, which in combination were worth US$80.9bn. The number of deals is almost identical to the 642 deals recorded in the first quarter of the year.
The average deal size of $128 million in the second quarter of the year is the highest in the past decade, aside from the anomalous final quarter of 2012 when a single $56bn transaction caused average deal values to spike.
The firm attributed part of the quarter’s total deal value to the $20bn planned IPO of Alibaba Group, the Cayman Islands incorporated e-commerce site, which is headed for the New York Stock Exchange. Still, with three deals worth north of $2bn, even if the Alibaba transaction is excluded, the report found the quarter records a cumulative three-month deal value that exceeds anything seen in 2013.
Jersey deal activity
In Q2 2014, Jersey was home to 36 deals including two of the quarter’s top 10 overall deals. These were the $1.89bn acquisition of Jersey-domiciled Kentz Corporation by SNC-Lavalin (GB) and the $1.58bn acquisition of Heritage Oil by Energy Investments Global.
While the bulk of Offshore-i focuses on international acquirers buying offshore assets, the report also examines outbound deals in which an offshore jurisdiction acts as an acquirer. Jersey-domiciled companies were the acquirer in 32 outbound deals in Q2 2014, representing a 23% increase in volume over the prior quarter. In terms of deal value the improvement was even greater, with a 133% increase over Q1 to USD2.9bn spent by Jersey companies abroad