Alibaba IPO main contributor
Boosted by the imminent initial public offering of Alibaba group, mergers, acquisitions and IPOs involving companies based in offshore financial centers reached the second highest value in the past decade during the second quarter of 2014.
The 632 deals announced during the period amounted to a combined transaction value of US$80.9 billion, an increase of 23 percent over the first quarter. While the number of transactions was about the same as the 642 transactions in the first quarter of the year, the second quarter average deal size of $128 million was the highest in the past 10 years, with the exception of January 2012 when a single $56 billion transaction resulted in an unusual spike.
Law firm Appleby, which collects the data from various offshore financial centers in its quarterly Offshore-I report, said the planned $20 billion IPO of Cayman-registered Alibaba Group was the main contributor to the increase. However, three deals worth more than $2 billion would have pushed the second quarter transaction values beyond all of 2013’s quarterly results even without the Alibaba listing.
“For six consecutive quarters, total deal values have either increased or remained level, and the last three quarters have seen values jump more than 20 percent on the quarter previously,” said Cameron Adderley, partner and global head of Corporate & Commercial at Appleby. “Companies appear to be putting more money to work on offshore deals, and an upward trajectory is gathering momentum.”
The Cayman Islands remained the top target destination for offshore dealmaking, with 205 deals at a cumulative value of $40.6 billion, which represents 32 percent of the total volume and about half of the value spent on offshore companies.
“In 2013, the Cayman Islands emerged as the destination of choice for investors in offshore assets, and we’ve seen that trend continue into this year,” said Simon Raftopoulos, a Cayman-based partner and member of the firm’s corporate finance and insurance teams. “Cayman is once again on the receiving end of the biggest number of deals, including the quarter’s largest deal overall, that combine for the highest total deal value.”
In the second quarter of 2014, Cayman recorded 205 transactions, compared to 189 in the preceding quarter and 141 in Q2 2013. The transactions represented a combined deal value of $40.6 billion, up 71 percent on the preceding three-month period.
Four of the quarter’s top 10 deals involved Cayman targets, including the largest: the planned IPO of Cayman-incorporated e-commerce site Alibaba Group, which announced it will float 12 percent of its stock on the New York Stock Exchange. The announced Alibaba IPO was also the largest deal in the information and communication sector, which dominated offshore activity this quarter.
In terms of deal volume, Cayman attracted nearly twice as many transactions as its nearest comparator, the report found. The British Virgin Islands followed with 112 deals, and Hong Kong recorded 100 deals. By value, Cayman outdistanced second-place Hong Kong, which reported a cumulative deal value of US$14.5 billion, while BVI followed with US$10.7 billion.
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