Offshore Merger And Acquisition Activity Rises
09 May 2012
A new report from Appleby shows that transaction values for mergers and acquisitions (M&A) in major offshore financial centers rose by 25% in the first quarter of 2012.
The first ever Offshore-i report from Appleby, the worlds largest provider of offshore legal, fiduciary and administration services, looks at M&A activity for the first quarter of 2012, providing sectoral analysis and expert insight on deal types and geographic trends.
The key findings of the report show that offshore deal values in Q1 2012 increased by 25% from the previous quarter's USD23.2bn to USD30.9bn. However, the volume of deals taking place offshore was down 24% on the last quarter of 2011 and was 26% lower than the same period of last year, revealing that corporate transaction activity continues to be depressed.
The number of transactions in the offshore sector in Q1 2012 amounted to 412. However, while deal volumes were lower than the same period a year ago, the report shows that there is still a reasonable amount of activity going on across the offshore world.
The most popular destinations for investors doing deals involving offshore targets are Hong Kong and the Cayman Islands, while the banking, insurance and financial sector continues to dominate offshore activity, well ahead of the next area of interest, wholesaling.
The report finds that most of the deals in the quarter were minority stake transactions rather than full takeovers.
It will be interesting to see if this positive increase in values continues into the rest of 2012, said Peter Bubenzer, Applebys Bermuda-based group chairman. The challenges ahead are manifold, but there are ongoing signs of real buoyancy in Asian and other emerging markets.
The report says offshore transactional markets have been affected by global economic pressures, and in the first quarter, the United States economy faltered amid fears that any recovery may be lacklustre. This impacted transactions in the offshore jurisdictions of Bermuda and the Cayman Islands, which derive the bulk of their business from America. Continuing uncertainty about the Eurozone, and the potential contagion from Greece of the sovereign debt crisis into the Spanish and Italian markets hit deal drivers elsewhere, the report said, while fears about China's ability to maintain high growth rates further dented confidence. Nonetheless, the report reveals that the continuing strength and attractiveness of the Asian markets is driving investors doing deals involving offshore targets, primarily in Hong Kong and the Cayman Islands.
Meanwhile, Mauritius emerged as the offshore economy experiencing the greatest growth in M&A activity, with the number of deals involving targets there jumping from six to 12 between Q1 2011 and Q1 2012.
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Offshore Merger And Acquisition Activity Rises