The offshore M&A market increased in value at twice the worldwide average last quarter compared to the previous quarter, according to a report released by Appleby, a provider of offshore legal, fiduciary and administration services.
The latest edition of Offshore-i, the firm’s quarterly report which provides data and insight on merger and acquisition activity in major offshore financial centres, focuses on Q2 2012.
The key themes emerging from the report show that in the second quarter of 2012 the value of deals involving offshore targets increased 12 per cent, up USD3.8bn from the previous quarter. This compares to a six per cent increase in the worldwide value, and vastly outpaces many of the major financial markets, including the US and Asia.
The number of deals involving offshore targets was down slightly, by four per cent, from the previous quarter, and down 34 per cent from the same quarter in 2011, an indication of continuing market consolidation exhibited by fewer, larger deals.
The Cayman Islands took the top spot as the most popular destination for investors doing deals involving offshore targets, completing 104 deals worth a combined value of USD19bn. Much of this value was encapsulated by a number of large transactions including the take-private by Alibaba Group, a global e-commerce group based in China.
The financial services sector continues to significantly dominate deal activity levels involving offshore targets.
The top 20 deals of the quarter, as well as the largest pending or rumoured transactions, paint a picture of ongoing confidence in Asian markets and in energy and natural resources.
The combined energy and natural resources sector continues to generate bullish deal flow, accounting for six of the top 20 deals of the quarter.
The overall deal value growth realised in the first quarter has continued into the second quarter of 2012, attributed in large part to the top eight deals which were valued at USD1bn or more each. Of particular significance were the two leading deals which related to the privatisation of the Alibaba Group, worth a combined value of USD9.4bn.
“This quarter we can observe a certain robustness returning at the larger deal end of the transactional landscape,” says Peter Bubenzer (pictured), Appleby’s Bermuda-based group chairman. “Financial sponsors find themselves sitting on cash that needs to be invested, and corporate balance sheets look strong and ripe for spending on the right deals in the right places.”
