Jersey Deal Value Rises 17% in Q1, Appleby Reports

The total cumulative value of offshore M&A deals and IPOs remained robust in the first quarter of 2015, with the average size of each deal among the highest on record, according to a report released today by Appleby, one of the world’s largest providers of offshore legal, fiduciary and administrative services.

The latest edition of Offshore-i, an Appleby report that provides data and insight on corporate transaction activity in the major offshore financial centres, focuses on deals announced during the first quarter of 2015. While there was a significant drop in the number of transactions when compared to the previous quarter, total deal value remained level due in part to three megadeals each worth in excess of USD5bn.

“At more than USD68bn for the first quarter of the year, cumulative deal value remains at the same high level as the preceding quarter, despite there being more than 150 fewer transactions,” said Cameron Adderley, Partner and Global Head of Corporate. “The result, clearly, is a bumper average deal size, which has been topped in only two quarters over in the past decade.”
 

Jersey Sees Increase in Inbound and Outbound Deal Value

In the first quarter of the year, Jersey recorded a total deal value of USD5.37bn, which marked a 17% spike over Q4 2014. The rise was fuelled in part by the USD1.5bn share buyback of Jersey-incorporated motor vehicle parts manufacturer Delphi Automotive, which was among the 10 biggest offshore deals of the quarter.

Like most of the offshore jurisdictions, Jersey saw a decrease in the number of transactions in Q1 2015, when compared to the previous quarter. However, its 55 deals represented just a 4% drop against the preceding quarter and a 17% increase over Q1 2014.

“Jersey remained an active location for dealmaking in the first quarter of the year, experiencing a notable increase in deal value,” said Wendy Benjamin, Practice Group Head for the Corporate department in Jersey.

The Transactions Environment Across Jurisdictions

Overall, there were 537 deals in Q1 2015, down 24% from the previous quarter. Deal value in the first three months of year, however, registered at USD68.3bn, which matches the previous quarter and is among the highest in the last decade.

This quarter’s average deal size came in at USD127m, fuelled by 14 deals worth more than a billion dollars each, including three USD5bn-plus deals and an additional two deals worth more than USD4bn each.  Looking back as far as 2004, there has only been one previous quarter that included three USD5bn deals, and in that case, two of the three were related to a single transaction, the acquisition of TNK-BP.

Low interest rates and cash on balance sheets have helped drive big deals, while M&A has proved a quick way to add revenue at a time when existing markets are mature or subdued, and opportunities for growth appear limited, the report found. There is also evidence that the rise of the megadeal is a global phenomenon that may be driven by more targeted M&A decision-making post-crisis, with acquirers willing to make sizeable investments but only after scrupulous analysis of targets.

“Last year was clearly the best year for offshore deal activity on record and the hot start to 2015 gives us reason to be optimistic,” said Frances Woo, Group Chairman of Appleby. “That said, we are ever watchful of potential bumps in the road, be they the result of the still ongoing uncertainty in the Eurozone, tensions between the West and Russia, the recent UK General Election and slower growth in parts of Asia. Offshore deal activity is robust, but ever-dependent on much larger constituents of the global M&A and capital markets.”

Key themes of Q1 2015:

  • There were 537 deals in the quarter, the lowest quarter by deal volume since the start of 2008. The total is likely to edge higher with late reporting of deals.
  • The value of deals was USD68.3bn, almost identical to the previous quarter and before that topped only a handful of times in the past 10 years. With value the same and more than 150 fewer deals than Q4 2014, average deal size is up to USD127m, one of the highest on record.
  • This is the fifth quarter in the last six to record more than 10 deals worth over USD1bn, after only four such quarters in the preceding decade. There were 14 billion-dollar deals in total in Q1 2015, including five deals worth in excess of USD4bn each.
  • The financial and insurance activities sector was once again on top, thanks to three insurance-related deals featuring in the top 10 for the quarter. Deal value remains widely dispersed with 14 subsectors showing cumulative deal activity worth more than USD1bn.
  • Capital increases are the most popular deal type, closely followed by acquisitions, which similarly represent about a third of total deal volume. Acquisitions dominate by deal value.
  • Q1 was one of the busiest quarters ever for outbound deals involving offshore acquirers, with 542 outbound deals worth USD84.7bn, a sum that makes it the second biggest quarter yet recorded. Outbound deal value jumped 32% from the previous quarter, which was part of a record-breaking 2014.
  • The offshore region remains ranked sixth in the world by deal volume for Q1 2015, and stays in fourth for value activity. By average deal size the region rose to second worldwide, behind only North America, as a result of the run of megadeals using offshore jurisdictions.

For further information please contact: 

Jesse Dungan, Infinite Spada
jdungan@infinitespada.com

or

Sarah Stone, Global Head of Communications
sstone@applebyglobal.com