The Isle of Man has once again experienced a rise in deal volume according to a report released by Appleby.
The latest edition of Offshore-i, an Appleby report that provides data and insight on merger and acquisition (M&A) activity in the major offshore financial centres, said that the Isle of Man secured 35 deals across Q3 – an increase of 59% from Q2.
Globally, offshore markets have seen a dip in the value and volume of deals made in the third quarter of 2014 but, in spite of this, the year as a whole is on track to be among the best showings for offshore M&A in the past decade. According to the report, the period from beginning of July to end of September experienced a 46% drop in total value of offshore deals when compared to the exceptional previous quarter.
However, Appleby, one of the world’s largest providers of offshore legal, fiduciary and administration services, noted that historically the Q3 2014 numbers are strong with deal value up 25% over the same quarter in 2013.
Cameron Adderley, Partner and Global Head of Corporate & Commercial, said: “Overall, the year 2014 is set up to be a peak year for value of deals conducted in our offshore markets. The first three quarters of the year have a combined total deal value north of USD200bn, which has only been exceeded in two years over the last decade. This year should surpass even those two annual totals when the Q4 numbers are included.”
Faye Moffett said: “Considering the latest report from Offshore-i shows that, globally, the offshore region has experienced something of a dip in comparison to earlier 2014 quarters; it is pleasing to see the Isle of Man continuing to perform well in spite of this trend, having experienced a substantial increase in deals made in Q3 from the previous quarter.”
The M&A Environment
In the third quarter of 2014, globally 626 deals were announced involving offshore targets, which in combination were worth USD48.1bn. Following the 677 recorded deals in Q2 2014, the quarter maintains an impressive run of 600-plus deals per quarter that began in 2013, the report found.
In addition, the average deal in the third quarter of 2014 was worth USD77m, making it the fifth most prosperous quarter for average deal size since the start of 2010, a period of almost 20 quarters. For the first three quarters of 2014, Appleby said an average of USD102m has been spent on each transaction. Only the boom year of 2007 has come close to that level, when the average was USD100m.
The third quarter boasts nine transactions worth in excess of USD1bn, and two that exceed USD2bn. Appleby also noted that deals worth less than USD100m made up a significant proportion of the quarter’s spending, marking a welcome return of activity in the lower end of the value chain.
Whilst overall numbers for 2014 are positive, the report continues to strike a cautionary note due to uncertainties in some global markets, including Asia.
“Austerity measures in place in so many of the developed nations are biting consumer confidence, and a pending general election in the United Kingdom will bring with it its own uncertainties in the months ahead,” said Frances Woo, Group Chairman of Appleby. “Faltering growth in China and other parts of Asia also continue to fuel hesitancy. Nonetheless, 2014 looks set to be one of the best years for offshore M&A for some time.”
Key themes of Q3 2014:
• There were 626 deals in the quarter, down on the 677 recorded in Q2 2014. That number is expected to creep higher as late deal news is announced.
• The third quarter maintains the run of 600-plus deals per quarter that started in 2013.
• The value of deals was USD48.1bn, which represents a 46% drop on the previous quarter, but is up 25% on the third quarter of last year.
• The most popular type of deal was minority stake transactions, which once again accounted for more than half of all offshore deals.
• The financial and insurance sector was the busiest in the third quarter, returning to the top after being overtaken by information and communications, and manufacturing, in the last quarter.
• Acquisitions dominated in terms of value. IPO activity, meanwhile, slowed down in Q3 after several quarters of major activity.
• Whilst the bulk of the report focuses on international acquirers buying offshore assets, it also looked at outbound deals in which an offshore jurisdiction acted as an acquirer. A total of USD61.7bn was spent overseas by offshore companies this quarter, including 10 deals worth in excess of USD1bn. China was the main target for offshore outbound deals.
• There were 11 outbound deals for Russian targets, disproving the belief that Russian activity would cease due to sanctions now being applied to various economic interests in the country.
Photo - Appleby's Faye Moffett
