Timothy Faries, Partner and Group Head of Corporate and Commercial in Bermuda. *Photo supplied/File photo
Timothy Faries, Partner and Group Head of Corporate and Commercial in Bermuda. *Photo supplied/File photo

Bermuda closed out 2013 with an especially strong fourth quarter, one that saw it more than double the value of deals done when compared to the previous quarter, according to a report released today by Appleby, one of the world’s largest providers of offshore legal, fiduciary and administration services.

The latest edition of Offshore-i, which provides data and insight on merger and acquisition activity in major offshore financial centres, focuses on deals during the fourth quarter of 2013, as well as the year as a whole. Overall Appleby observed considerable gains in Q4 over the previous quarter in terms of the number of deals, their cumulative value, and average deal size across offshore jurisdictions.

“The scope of the deals consummated in Q4 sweep across the entire array of the commercial spectrum, not just Bermuda’s strengths such as insurance or shipping, and reflect the continued restoration of general commercial activity which had been slowly recovering in recent times following the financial challenges of the latter part of the last decade,” said Timothy Faries, Partner and Group Head of Corporate and Commercial in Bermuda. “These results are a testament to Bermuda’s return to strength as a jurisdiction with enterprises which are attractive to investors.”

Deal Values Increase

Bermuda’s strong fourth quarter resulted in 116 deals with a combined worth of USD15.3bn, making the jurisdiction’s Q4 value up 132% on the previous quarter, and volume up 26%. When compared to Q4 2012, the value of Bermuda’s transactions was up 51%.

In Q4 2013, across jurisdictions there were two deals in the top 10 that involved investors increasing their stakes in targets from minority stakes to 100% ownership, including the Alford Financial purchase of Alliance Oil Company of Bermuda, where the buyer acquired the remaining stake for USD1.2bn. Bermuda was also home to the biggest offshore deal in Q4 2013 with acquisition of CSL New World Mobility, a telecoms group, by HKT of the Cayman Islands for USD2.4bn.

Offshore Markets Heat Up

For the year, offshore companies have been busy and were involved in transactions across a wide range of sectors and geographies. The return to form of the equity capital markets, and particularly the heating up of the IPO pipeline, has been a notable feature for 2013, as has the steadily growing frequency of deals in the USD1bn-plus range. The year ended with a cumulative 12-month deal value of USD151bn, an annual total topped only three times in the last decade.

“While the final quarter of the year is typically the busiest, every one of the principal indicators has progressively improved,” said Cameron Adderley, Partner and Global Head of Corporate & Commercial. “Indeed, the global M&A environment is fragile and to an extent lacks depth, but we can’t help but view these year-end numbers as positive.”

In Q4 2013 the offshore markets ranked sixth amongst world regions for deal volume, fifth for deal value and third for average deal size. Only North America and South and Central America came in with a higher deal average.

Key themes of Q4 2013 across jurisdictions:

  • There were more deals in the fourth quarter of 2013 than in any other quarter last year, with 607. Throughout the year deal volumes rose steadily quarter-on-quarter.
  • The value of deals was USD47.9bn in Q4, up 32% on the previous quarter. The average deal size was USD79m and has only been higher in three quarters in the last four years.
  • There were 11 USD1bn-plus deals in Q4 2013, almost double the number in the previous quarter, including two worth over USD2bn. Energy and natural resources deals feature heavily.
  • Financial services and insurance continues to be the most active sector, while mining, quarrying and various manufacturing sectors were also busy.
  • The largest type of deal by volume was a minority stake, but acquisitions continue to grow in number and were the biggest deal type by value, making up almost half of the deal value in Q4 2013.
  • IPO activity remains encouragingly strong, with 62 IPOs pending or completed in Q4 2013 as against 28 in the same quarter of 2012.
  • The frequency of buying activity made by offshore companies continues to grow and the combined value of such deals was USD37.8bn in Q4 2013, one of the largest amounts in the past few years.