Jump in offshore transactions involving Cayman

The Cayman Islands saw an 85 percent increase in the number of mergers, acquisitions and initial public offerings in the second quarter of 2015 compared to the first quarter.

According to a report by Appleby that tallies offshore transactions, Cayman continued to dominate corporate deals in offshore financial centers, representing more than a third of the deal volume and value.

Overall, 732 deals were concluded in the period, an increase of 25 percent over the first quarter, with a cumulative value of US$94.4 billion.

“The Cayman Islands were again way out in front for offshore deal activity both in volume and value terms in the second quarter of 2015,” said Simon Raftopoulos, a Cayman-based partner and member of the firm’s Corporate Finance and Private Equity teams. “While Cayman routinely leads offshore deal activity, the jurisdiction had a particularly strong quarter in Q2, with the number of deals up 85 percent on the previous quarter, while the value of those transactions has more than doubled.”

Cayman-registered companies were involved in 253 transactions as the acquisition target, for a total value of $37.9 billion.

Four of the 10 largest deals took place in the jurisdiction, including the largest transaction, Hutchison Whampoa’s sale of a 30 percent stake in Cayman-based Telefonica U.K.

In addition, Cayman accounted for 28 of the 40 IPOs reported in the second quarter. Seven companies from Crown Dependencies went public during the period, in addition to three companies from Bermuda and two from the BVI.

According to the Offshore-i report, most of the remaining offshore transactional activity took place in Hong Kong and Bermuda, which saw 113 deals worth $25 billion and 127 transactions worth $13.8 billion, respectively.

Overall, the second quarter deal volume increased 25 percent and the average deal size remained robust, Appleby reported.

Large corporate transactions have become more frequent. In the second quarter, 21 deals were valued at more than $1 billion, six more than the previous quarterly record of 15 billion-dollar deals.

“Globally, deal values are increasing at a much faster rate than volumes, as shrewd acquirers learn the lessons of the past and become more selective of their targets, and at the same time more willing to invest large sums in the right deals,” said Cameron Adderley, partner and global head of Corporate. “Buyers are willing to pay a premium for acquisitions that help them to achieve long term strategic ambitions.”

The average deal size during the period was $129 million, the third highest value in the past decade.

The volume of offshore transactions is also settling at a high level, with six of the last seven quarters recording more than 700 deals.

The drop-off in transaction volume during the first quarter of this year now appears “to have been a blip as the market paused for breath after a strong and busy 2014,” the report said.

The majority of the activity offshore was generated by the financial and insurance sector as insurance and reinsurance deals continued to feature heavily offshore.

Capital increases were the most popular deal type, followed by minority stakes and acquisitions.

Overall, more money was spent on offshore targets than on deals in Eastern Europe, Africa, the Middle East and South and Central America combined, the report noted. The offshore region trailed only North America in terms of average deal size.

However, the offshore region ranked sixth in the world in deal volume and fourth for total deal value.