The Appleby report highlighted “renewed confidence in offshore transactions, and an increase in deals” between the first and second quarters between Q1 and Q2 2013.
The latest edition of Appleby‘s quarterly report, which provides data and insight on merger and acquisition activity in major offshore financial centres, also shows that both the number of deals completed and their value remained “broadly consistent” with the first quarter, compared with Q1, suggesting, Appleby said in a statement, that there may be “some stabilisation of transactional activity levels after the volatility of the last few years”.
Cameron Adderley, partner and global head of Appleby’s corporate and commercial department , noted that the number of deals taking place had “started to form a pattern averaging out around 500 per quarter in five of the last six quarters”.
So far this year, he added, “we have seen 493 deals in Q2 and 491 in Q1.
“We feel comfortable asserting that business confidence is at last returning to the markets.”
Adderley said the average size of the deals being struck – $64m – is running higher than it has for five of the last eight years.
“The offshore region average is also higher than all other regions except for North America [$119m] and Central and South America [$109m].”
Top deals = ‘just 1/3 total’
The top 10 offshore deals accounted for just a third of the cumulative deal value overall, as was the case in the first quarter, which Adderley said was a cause for further optimism. This is because one-off mega deals have previously distorted values in previous quarters, he said.
“We can now see genuine substance returning to the mid-market, and activity returning across the spectrum of business sizes,” Adderley noted.
“Transaction sizes show tangible signs of settling at pre-boom levels, on a par with 2006 data, when $61m was spent on the average transaction,” Adderley said.
Appleby group chairman Frances Woo said the latest data was encouraging to those in offshore business circles because the numbers showed the offshore market’s ranking, relative to the other major world regions, to be strong.
“The offshore markets now rank sixth globally in terms of cumulative deal value, only just behind South and Central America,” Woo noted.
“The offshore market is more active than Oceania, Africa and the Middle East. And when we look at average deal size we again find a source of positive news – here the offshore region ranks third globally, behind only North America and South and Central America in [the second quarter].”
Financial services, resources deals dominate
As for the types of deals being done on the offshore arena, next to deals involving financial services (which “once again…powered the offshore M&A markets” in the second quarter), the biggest tended to be in the energy and resource sector, Appleby noted.
Specifically, they were deals that involved companies in the business of supplying energy and resources to the emerging market economies, Appleby found.
The Appleby data showed there were a total of 168 deals in the offshore financial services and insurance sector in the second quarter of 2013, with a combined worth of $10bn, up from 147 deals worth $6.5bn in the first three months of the year.
The single largest financial services deal in the second quarter saw Platform Acquisition Holdings, a special purpose acquisition vehicle incorporated in the BVI, list on the London Stock Exchange in an IPO that raised $905m.
The biggest deal of all in the three month period, though, involved an agreement by the Indian state oil firms ONGC and Oil India to buy a 10% stake in a Mozambique gas oil field, with the acquisition of the BVI-incorporated Indian conglomerate Videocon Group, for $2.4bn.
Another major deal was the acquisition by a company owned by Alexander Djaparidze, the Russian billionaire, of an 18% stake in the Eurasia Drilling Company, a Cayman-incorporated onshore oil and gas drilling company, for $941m, in April. In May, China Resources Power Holdings acquired Elite Wing, a BVI-incorporated wind farms development services company, for $552m.
Appleby is one of the world’s largest providers of offshore legal, fiduciary and administration services.
To read a summary of the Appleby report in full on the global law firm’s website, click here.
