The Isle of Man has seen further growth in the volume and value of mergers and acquisitions according to the latest research by leading offshore legal, fiduciary and administration services provider Appleby.
In the first three months of the year, there was consistent growth across the offshore jurisdictions, and the Isle of Man saw its total deal value increase 762% compared with the first quarter of 2013.
The details are contained in 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. The report shows total offshore deal value increased by 79% in the first quarter of 2014, compared with the same period in 2013, reaching its highest level since the end of 2012.
The publication focuses on transactions announced during the first quarter of 2014, a period which observed a considerable uptick in deal size. Considering the first quarter of the year is historically the quietest for deal making, the findings indicate that an active 2014 could be ahead.
Partner and Global Head of Corporate & Commercial Cameron Adderley said: “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.
“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.”
The report says that, as a jurisdiction, the Isle of Man had a busy first quarter in 2014, with 29 deals for a total deal value of USD1.7bn. In addition to the significant growth compared to the first quarter of last year, these numbers represent a 4% increase in the number of deals and a 9% increase in deal value over the impressive figures posted in the previous quarter. The jurisdiction’s average deal size grew to USD58m in the first quarter of this year, up from USD55m in the previous quarter and just USD9m from the first quarter of 2013.
While the report’s primary focus is on deals involving an offshore target, it also found that the Isle of Man had a positive story to tell in deals with an offshore company acting as acquirer. The jurisdiction had 16 acquirer deals in Q1 2014 worth a combined USD500m, a jump of 220% in terms of volume and 960% in terms of value against the same quarter last year.
Simon Harding, a partner in the Corporate & Commercial department at Appleby (Isle of Man) LLC, said: “Average deal size across all offshore jurisdictions this quarter is among the highest we have recorded in the past seven years, a trend we are also seeing in Isle of Man, where average deal size is up more than fivefold from this time last year.
“Taken as a whole, this 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.”
Offshore values increase
Overall, 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.
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