A strong end to 2013 marked a notable increase in transactional activity and underlined positive trends which had emerged during the year, according to the latest Offshore-i Report released by Appleby, one of the world’s largest providers of offshore legal services.
The report, which provides data and insight on merger and acquisition activity in major offshore financial centres, shows quarter 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. Appleby reports considerable gains in Q4 compared with the previous quarter, in terms of the number of deals, the cumulative value and the average deal size.
Offshore-i reports there were 607 offshore deals announced in Q4, with a combined deal value of USD47.9bn, continuing 2013’s steadily upward-moving offshore deal volumes and reflecting strengthening investor confidence.
After remaining within a tight range during the first half of 2013, the Isle of Man enjoyed a robust quarter in Q3. This trend continued in Q4, with the value of deals up 97% on Q3 and 698% up on the final quarter of 2012. During the period, the Isle of Man handled 28 deals worth a total of USD1.5bn, including the completion of several deals involving the sale of minority stakes in Exillon Energy, an oil production services business.
Simon Harding, a partner in the corporate & commercial department at Appleby (Isle of Man) LLC said: “While it is expected that there will be a slight increase in business during the final quarter of the year, the figures for the Isle of Man continue to demonstrate that, following a long period of volatility, there is growth in investor confidence building on the stabilisation of transactional activity witnessed in early 2013.”
“The robustness of the M&A environment must remain under scrutiny, but these figures give reason for confidence as they indicate the markets have strengthened and deepened.”
He continued: “It is particularly important that the figures contained in the latest edition of Offshore-i signal a strengthening of activity across the deal-size spectrum, so that the largest value deals contribute a smaller percentage of the total number of deals. This indicates the return of the mid-market engine, albeit slowly.”
“Previous results have been distorted by the disproportionate influence of high value deals. In 2012, the largest transactions accounted for 50% of total deal values, while in 2013 that figure has fallen to around 33%. An increasingly broad range of deal values provide a much more sustainable platform for stability and growth.”
Cameron Adderley, Partner and Global Head of Corporate and Commercial department, added: “While the final quarter of the year is typically the busiest, the key volume and value indicators have progressively improved over 2013.”
“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.”
Global Offshore Market: Q4, 2014
Key themes emerging from the report show that:
- 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 over 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.
- Bermuda as an offshore target had a breakout quarter and more than doubled the value of deals done on its shores, almost equaling the USD15.6bn deal value for Cayman.
- The frequency of buying activity 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.
- Offshore ranks sixth amongst world regions for deal volume in Q4 2013; fifth for deal value; and third for average deal size. Only North America and South and Central America record a higher deal average.
Category: Finance & Business