Appleby Reports Positive Q2 Offshore Activity

New York, September 4, 2013 – Deal volume in offshore jurisdictions held steady in the second quarter of 2013 when compared with the previous quarter, offering hope that transactional activity levels may be stabilizing after several years of volatility. Offshore jurisdictions also experienced a more than 100% increase in the number of IPOs when compared to the first quarter of the year, according to Appleby, one of the world’s largest providers of offshore legal, fiduciary and administration services.

A total of $31.6 billion in deals were completed during the second quarter of 2013, according to 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.

“The number of deals has started to form a pattern with around 500 transactions per quarter in five of the last six quarters and so far this year we have seen 493 deals in Q2 and 491 in Q1,” said Cameron Adderley, Partner & Global Head of Appleby’s Corporate & Commercial department. “We feel comfortable asserting that business confidence is at last returning to the markets,” he commented.

U.S. Emits Positive Signs, Dealmakers Remain Cautious

The signs from the United States are largely positive, the report found, but global dealmakers are not yet fearless. Continued concerns about the strength of the Eurozone and the robustness of certain Southern European economies remain and are compounded by the macroeconomic debates in Germany ahead of its upcoming elections. Nonetheless, Appleby has seen a healthy pipeline of transactions and expects continued dealflow into the autumn.

Frances Woo, Appleby’s Group Chairman, said: "When we look to  gauge the relative strength of the offshore markets as compared to other major world regions, this quarter we find these numbers are encouraging with the offshore markets now ranking sixth globally in terms of cumulative deal value, only just behind South and Central America. 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 Q2 2013.”

The largest acquisition by an offshore company in the second quarter of 2013 was that by Shuanghui International of Hong Kong, China’s biggest pork producer, which paid $7.1 billion for United States meat producer Smithfield Foods. That deal, however, could face scrutiny from regulators in the United States, where there appears to be concerns about whether the completion of the deal would present a food supply risk.

The key themes emerging from the report show that in the second quarter of 2013:

 

·         There were 493 deals involving offshore targets completed with an aggregate value of$31.6 billion, putting the quarter slightly ahead of Q1 2013.

·         The average offshore deal size was $64 million for Q2 2013, the same as for 2013 to date. If this is maintained or improved to the year end, average deal size in 2013 will be greater than it has been in at least five of the last eight years.

·         Acquisition activity led by companies incorporated offshore rebounded in Q2 2013 after a weaker first quarter, and there were 426 deals with a cumulative value of $34 billion, up 11% in terms of volume and 29% by value.

·         In Q2 there were only three deals announced valued in excess of $1 billion. Instead, the majority of money was spent in the mid-market on transactions valued at between $200-$700 million. The strengthening of the mid-market is a crucial step towards recovery.

·         Finance and insurance deals continued to drive the offshore M&A markets with 168 deals with a combined value of $10 billion, up quite considerably on Q1 2013, when there were 147 deals in the sector worth $6.5 billion.

·         Three of the largest deals of the second quarter involved securing energy and resource supplies from emerging markets.

·         The most popular deal type was the minority stake transaction, of which there were 295 that contributed $11.5 billion to the cumulative deal value for the quarter.

·         Hong Kong acquirers spent the most money in Q2 2013, with an aggregate deal value of $13.7 billion that represented 40% of total spending by offshore acquirers.

·         Initial Public Offering activity is looking increasingly bullish, with both the volume and value of IPOs up considerably in Q2 2013 with 17 deals and a cumulative value of $2.4 billion. There were 8 IPOs in Q1.

·         Q2 2013 was the best quarter since 2011 for IPOs and planned IPOs, with 39 deals in total worth USD4.1bn.