Total offshore deal value increased a dramatic 79% in the first quarter of 2014 when compared to the same period last year and was the highest it’s been since the end of 2012, according to a report released today by Appleby, one of the world’s largest providers of offshore legal, fiduciary and administration services. In Jersey, deal value was consistent when compared to the first quarter of last year, but experienced a massive 456% jump over the final quarter of 2013.
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 first quarter of 2014, a period in which the firm observed a considerable uptick in deal size. Considering the first quarter of the year is historically the quietest for dealmaking, the findings set the stage for what looks to be an active 2014.
“The most significant conclusion to be drawn from the quarter’s figures is that we’ve turned a corner away from a difficult five years following the global financial crisis,” said Cameron Adderley, Partner and Global Head of Corporate & Commercial. “The number of deals in Q1 2014 was down compared to the previous quarter as expected, but total deal value and average deal size were up, setting the stage for a busy 2014.”
Jersey M&A Environment
Jersey was one of the standout jurisdictions in Q1 2014, with 38 deals worth a combined USD5.6bn. The total deal value increased by about USD4.6bn over the previous quarter despite the total number of deals dropping from the 50 recorded in the last quarter of 2013.
Jersey was home to three USD1bn-plus transactions in the first quarter of this year, including the London Stock Exchange IPO of Kennedy Wilson Europe Real Estate, the acquisition of companies with interests in Westfield shopping centres, and the share buyback of car parts manufacturer Delphi Automotive.
With an average deal value of USD148m, Jersey was also among the jurisdictions that attracted the largest average deal size, trailing only Hong Kong (USD154m) while coming ahead of Cayman (USD126m) and Bermuda (USD111m).
“This quarter’s average deal size was among the highest in the last seven years with Jersey acting as a significant contributor,” said Wendy Benjamin, Practice Group Head for the Corporate & Commercial department in Jersey. “The landmark Broadgate and Chiswick Park deals both closed in the end of 2013—with Appleby’s help—and the momentum has carried into the beginning of the year. Taken as a whole, the increase in average deal size is the clearest sign yet of a new depth to the market, as investors become ever-more willing to put money to work on larger transactions.”
The M&A Environment
In total, there were 572 offshore deals in Q1 2014, down from the previous quarter but busier than the first quarter of 2013, which saw 528 deals. Though there were fewer deals, deal value came in at USD62.9bn—up 14% on the previous quarter and marking the fifth consecutive quarter for cumulative deal value growth.
This quarter’s average deal size of US110m is the highest in the past seven years, aside from the anomalous final quarter of 2012 when a single USD56bn transaction caused average deal values to spike. Additionally, total deal value in Q1 2014 has been topped only twice since the beginning of 2008.
Key themes of Q1 2014 across jurisdictions:
- There were 15 deals worth in excess of USD1bn this quarter, including five worth more than USD2bn, and these big deals spanned a wide range of sectors.
- Financial services and insurance continues to be the most active sector, while retail, construction, and media and publishing also feature heavily.
- The largest type of deal by both volume and value was minority stake transactions, which make up almost half of deal value this quarter.
- There were 34 IPOs announced in the quarter worth a total of USD11.7bn. In the past decade, that cumulative value has only been topped on five occasions. Additionally, this quarter’s average IPO of USD345m has only been beaten once in the last decade.
- The total value of deals involving an offshore acquirer was USD52bn. Only two quarters in the past four years have seen more money being invested by businesses incorporated offshore. Five of the 10 largest acquirer deals involved Bermuda-based businesses.
- In this quarter, the offshore region trailed only North America, Western Europe and the Far East and Central Asia in terms of deal value. More money was spent offshore than was spent in Eastern Europe, which includes Russia, and Oceania, which includes Australia, combined.
Category: Finance & Business