Appleby: Bermuda Deal Value Doubles In 2018 - Bernews

“The total value of M&A deals in Bermuda rose by a massive 100% in 2018 when compared to the previous year, driven by four megadeals each valued at USD 5 billion or more,” according to a report released by law firm Appleby.

The company said, “The total value of M&A deals in Bermuda rose by a massive 100% in 2018 when compared to the previous year, driven by four megadeals each valued at USD 5 billion or more, according to a report released today by offshore law firm Appleby.

“The latest edition of Offshore-i, an Appleby report that provides data and insight on merger and acquisition activity in the major offshore financial centres, focuses on transactions announced over the course of 2018. While the total number of deals in the offshore region dipped when compared to 2017, value was up significantly.

“Bermuda saw total deal value increase to more than USD 70 billion last year due in large part to a highly active insurance market,” said Timothy Faries, Bermuda Managing Partner and Group Head of Corporate. “The insurance industry experienced intense competition, and the need to increase scale and diversify, led to two of the largest deals of 2018 across the offshore region.”

“Bermuda led the way in the number of megadeals – those valued at USD 5 billion or more – accounting for a total of four. This included the second-largest deal of the year, AXA SA’s USD 15.3 billion acquisition of XL Group Ltd., a Bermuda-based property and casualty insurance provider holding company. Like the offshore region as a whole, the 307 deals recorded in Bermuda in 2018 represented a decrease when compared with the previous year.

The M&A Environment Across Jurisdictions

“In total, there were 2,781 deals targeting offshore companies in 2018, representing a 5% drop in deal activity. However, the 57 deals that exceeded USD 1 billion, including nine megadeals, fuelled a significant rise in value.

“Acquisitions have become increasingly popular over the last two years, compared to taking a minority stake in a company or releasing more shares to investors, and now make up nearly half of all offshore M&A activity, the report found.

“Investing companies are no longer content to just take a seat on the board, but want full control of an asset in order to gain a competitive advantage over rivals,” said Cameron Adderley, Partner and Global Head of Corporate at Appleby. “This drive to do strategic deals is likely to continue, providing finance remains readily available, interest rate rises predictable and markets stable. Gaining access to transformational technologies also remains a big incentive across almost every sector.”

Outbound Deal Volume Continues to Rise

“While the primary focus of Offshore-i is on transactions in which offshore targets are purchased by investors, the report also examines deals in which the acquirer is based offshore. There were 3,532 outbound deals announced over 2018 with a total value of USD 340 billion, which includes 66 deals worth more than USD 1 billion each.

“Bermuda saw a slight decrease in the number of outbound deals from the previous year, but a 59% increase in cumulative outbound deal value to USD 57.1 billion. The jurisdiction also accounted for the second-largest outbound deal, Bermuda-based Brookfield Property Partners’ USD 9.4 billion acquisition of GGP Inc.

“The 10 largest outbound deals across jurisdictions were each worth over USD 4 billion.

Key Findings of 2018:

“The total value of all offshore deals in 2018 was USD 344 billion, over USD 100 billion more than 2017.

“There were 57 deals worth at least USD 1 billion, including a record nine megadeals worth over USD 5 billion each.

“There were 196 completed IPOs, the offshore region’s highest-ever annual total, raising USD 33 billion.

“A total of 2,781 offshore deals were announced, more than South America and Africa combined.

“Investors from nearly 60 countries across the world targeted offshore companies.

“The manufacturing sector saw a 135% increase in M&A value, while the construction sector accounted for 273 deals in 2018, the highest number it has seen in a decade.

“Cayman was home to the largest number of deals and total deal value, while Jersey experienced a 297% increase in deal value fuelled by a USD 58.5 billion acquisition of Jersey-incorporated Shire PLC by Japan’s Takeda Pharmaceutical.

“161 Offshore-incorporated companies were targeted by investments financed via Private Equity and Venture Capital, the highest volume seen over the last five years.

“There were 3,532 outbound deals coming out from the offshore region, worth a combined USD 340 billion. The top 10 outbound deals were each worth over USD 4 billion.”