Cayman leads in offshore dealmaking

| 11/09/2014 | 0 Comments

(CNS Business): The Cayman Islands remained the top target destination for offshore dealmaking in the second quarter of 2014, according to a report released by offshore law firm Appleby. In total, Cayman attracted 205 deals with a cumulative value of USD40.6bn, accounting for 32% of the total volume and half of all dollars spent on offshore companies. The combined value of offshore deals in the quarter jumped 23% over the previous one, making it one of the highest value quarters of the past decade, according to 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.

“In 2013 the Cayman Islands emerged as the destination of choice for investors in offshore assets, and we’ve seen that trend continue into this year,” said Simon Raftopoulos, a Cayman-based partner and member of the firm’s corporate finance and insurance teams. “Cayman is once again on the receiving end of the biggest number of deals, including the quarter’s largest deal overall, that combine for the highest total deal value.”

In the second quarter of 2014, Cayman recorded 205 transactions, compared to 189 in the preceding quarter and 141 in Q2 2013. This represented a combined deal value of USD40.6bn, up 71% on the preceding three-month period.

Four of the quarter’s top 10 deals involved Cayman targets, including the largest: the planned IPO of Cayman-incorporated ecommerce site Alibaba Group, which announced it will float 12% of its stock on the New York Stock Exchange to raise USD20bn. The announced Alibaba IPO was also the largest deal in the information and communication sector, which dominated offshore activity this quarter.

In terms of deal volume, Cayman attracted nearly twice as many transactions as its nearest comparator, the report found. The British Virgin Islands (BVI) followed with 112 deals and Hong Kong recorded 100 deals. By value, Cayman outdistanced second place Hong Kong, which reported a cumulative deal value of USD14.5bn, while BVI followed with USD10.7bn.

The M&A environment across jurisdictions

In the second quarter of 2014, 632 deals were announced involving offshore targets, which in combination were worth USD80.9bn. The number of deals is almost identical to the 642 deals recorded in the first quarter of the year.

The average deal size of USD128m 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 USD56bn transaction caused average deal values to spike.

The firm attributed part of the quarter’s total deal value to the USD20bn planned IPO of Alibaba Group. Still, with three deals worth north of USD2bn, even if the Alibaba transaction is excluded, the report found the quarter’s cumulative three-month deal value exceeds anything seen in 2013.

“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.”

Key points of Q2 2014:

There were 13 deals worth in excess of USD1bn this quarter, compared to four in Q2 2013. Four deals were worth over USD2bn.

The most popular type of deal was once again minority stake transactions, which accounted for more than half of all offshore deals.

There were 52 debut listings either announced or completed by offshore companies in the period, a substantial increase over the 34 seen last quarter and the 39 seen in Q2 2013.

Half of the top 10 deals this quarter involved online businesses. Information and communication was the leading target sector — replacing financial and insurance for the first time since the end of 2012.

Among world regions such as North America, Western Europe and the Middle East, offshore remains at sixth by deal volume for Q2 2014, and retained the fourth spot in value terms, which it reached for the first time in Q1 of this year.

Averaging over the 61 working days in this quarter, USD1.3bn was spent each day on an offshore transaction, up from USD1bn per day in the preceding quarter.

While the bulk of the report focuses on international acquirers buying offshore assets, the report also looked at outbound deals in which an offshore jurisdiction acted as an acquirer. It found the total value of such deals was the highest quarterly amount reported in a decade— with USD84bn spent overseas by offshore companies.

 

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Category: Finance, Financial Services

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