Cayman retained leadership in offshore deals in 2014

Cayman once again topped the league table for offshore deals in 2014. Cayman was also the most popular destination for mergers, acquisitions and IPOs in the last quarter of 2014, accounting for a quarter of all deals, according to law firm Appleby’s latest Offshore-i report, which covers transactions in the major offshore financial centers. 

The report found that 2014 was a peak year for offshore M&A activity, with 2,687 deals worth US$277 billion.  

The final quarter of the year again saw more than 600 deals, a run that started in early 2013. 

“Cayman undeniably played a key role in what was the best year for offshore-targeted M&A and IPOs in the past decade,” said Simon Raftopoulos, a Cayman-based partner and member of the firm’s corporate finance and insurance teams. “In each quarter of 2014, Cayman attracted the highest volume of offshore M&A transactions and the jurisdiction was also home to some of the year’s biggest deals in terms of dollars spent.” 

Cayman was home to 159 deals in the fourth quarter of 2014, almost 50 transactions ahead of its closest competitor. The deals amounted to $15.6 billion in cumulative value, 7 percent more than in the third quarter. 

The two largest transactions of the period, a $2.25 billion minority stake purchase of South Caucasus Pipeline Company Ltd. by Myanmar-based Petronas Dagangan Bhd, and the $1.2 billion acquisition of Hanwha Q-Cells Investment Co. Ltd. by Cayman-based Hanwha SolarOne Company Ltd., were also executed in Cayman.  

Last year, Cayman dominated offshore deals in the technology sector, not least as a result of the $21.8 billion listing of Alibaba Group, the Chinese Internet firm incorporated in Cayman, on the New York Stock Exchange in September. In another major technology transaction, Giant Interactive Group of Cayman was sold to a Chinese investment consortium for $3 billion. 

“With an aggregate technology deal value of $44.6 billion, Cayman was the favored offshore target of buyers of tech businesses, accounting for 43 percent of deals done and 75 percent of all tech dollars spent offshore over the course of 2014,” Mr. Raftopoulos said. 

In terms of overall deal volume last year, Cayman clearly led Bermuda, the BVI and Hong Kong, which were trailing on equal footing. In value terms, Bermuda attracted $20 billion of deals, 29 percent of the offshore total, followed by Guernsey and Cayman. 

During the quarter, the cumulative value of transactions in the offshore centers increased by 38 percent to $69 billion. 

The average deal size was $110 million, the second highest quarter of the year, but also the fourth highest quarter in the past 11 years. As a result, an average deal size of $103 million made 2014 a record year.  

The final quarter of last year recorded more than 10 deals with a value of more than $1 billion each for the fourth time in the past five quarters. 

There were 12 deals worth at least $1 billion each in the period, and 49 in total during the year, compared to just 28 throughout 2013.  

In addition, there were two mega-deals worth more than $5 billion each during the final quarter. 

However, the outlook for the offshore transactions is mixed.  

“U.S. President Barack Obama called the end of the financial crisis in his State of the Union address in January, and that is a sentiment we tend to share,” said Frances Woo, group chairman of Appleby.  

“But still, global financial markets are far from stable and capable of seriously unsettling dealmakers at short notice. Faltering growth in parts of Asia, ongoing government austerity programs, fluctuating oil prices and a pending general election in the United Kingdom, may all have the capacity to dampen M&A activity during 2015,” she said. 

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The report found that 2014 was a peak year for offshore M&A activity, with 2,687 deals worth US$277 billion.
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