Volume and deal value leaps in offshore M&A market

The offshore M&A market increased in value at twice the worldwide average in Q2 this year, compared to Q1, according to a report from global offshore legal firm Appleby.

In Q2, the value of deals involving offshore targets increased 12%, up $3.8bn from the previous quarter. This compares to a 6% increase in the worldwide value, and vastly outpaces many of the major financial markets, including the United States and Asia, the report, published quarterly, notes.

The number of deals involving offshore targets was down slightly, by 4%, from the previous quarter, and down 34% from the same quarter in 2011, an indication of continuing market consolidation exhibited by fewer, larger deals.

The Cayman Islands was the most popular destination for investors doing deals involving offshore targets, completing 104 deals worth a combined value of $19bn. 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 report, which uses Q1 figures calculated at end June, said the financial services sector continues to 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 continued into Q2, attributed largely to the top eight deals which were valued at $1bn or more each. Of particular significance were the two leading deals related to the privatisation of the Alibaba Group, worth a combined value of $9.4bn.

“This quarter we can observe a certain robustness returning at the larger deal end of the transactional landscape,” said Peter Bubenzer, Appleby’s Bermuda-based group chairman. Bubenzer observed that 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”.


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