Offshore M&A is only mature market to see growth

The offshore M&A market was one of the few world markets to have experienced growth in the cumulative value of transactions in Q3 2012, compared to the same period last year, according to a report from Appleby, a provider of offshore legal, fiduciary and administration services.

The third quarter of 2012 saw a 10% drop in the volume, and a 17% drop in the value (from 475 to 428, and from $40.4bn to $33.5bn), of transactions that took place offshore compared to Q2. This fall is typical of third quarter activity, but it is not as significant as the drop between Q2 and Q3 last year.

Values are 11% higher than they were in the same period last year, suggesting that conditions are improving year-on-year.

In the last 10 quarters, only three periods have seen a larger average deal size than what the offshore markets experienced in Q3 – at US$78m – suggesting some robustness returning to deal sizes.

The financial services sector continues to dominate activity in the offshore region, accounting for over a third of all deals. The second highest value sector was telecommunications, followed by manufacturing of computer, electronic and optical products.

Cayman remains the most attractive offshore target destination for investors, for the third quarter running, followed by Hong Kong, which witnessed a significant increase in the value of deals involving its companies as targets.

Peter Bubenzer, Appleby’s Group Chairman, said: “While we remain quietly confident of the early signs of activity returning to our markets, it is still impossible to overlook the macroeconomic situation and the continuing gloom on our doorstep. The uncertainty in the Eurozone, which we hoped might reach some kind of resolution back in Q1, remains far from entering an end game, while the close race for the White House will, we suspect, have a profound effect on US transactions through to year end.”

The financial services sector accounted for 139 of the 428 deals this quarter, worth a combined value of $4.2bn. Also of note was the $2bn sale of the minority stake in insurer AIA Group to institutional investors from Hong Kong as well as the $1.4bn sale of the holding entities of Conversus Capital, the Guernsey-incorporated asset management company, to HarbourVestPartners of the US.


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