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Cayman mergers and acquisitions activity highest in five years

The Cayman Islands reached a five-year high in the number of local mergers and acquisitions in 2015.

Deals involving entities registered in Cayman accounted for about a third of the overall deal volume and more than a quarter of the transaction value in major offshore financial centers analyzed by offshore law firm Appleby.

Target countries offshore M and A deals (Read-Only)“For four years now, we have seen the Cayman Islands ranked as the most popular destination for investors seeking to acquire offshore assets,” said Simon Raftopoulos, a Cayman-based partner and member of the firm’s Corporate Finance and Private Equity teams. “With nearly 1,000 deals recorded in 2015, Cayman had another standout year and was a significant contributor to a robust year for transactional activity in the offshore markets by all key metrics – deal value, deal volume and average deal size.”

Cayman attracted 974 deals in 2015 worth a cumulative US$125 billion, a 14 percent increase in deal value over 2014. Both the number of deals and the average deal size of US$129 million were 7 percent higher than in the previous year, the Appleby’s Offshore-i report found.

Two of the 10 largest transactions of 2015 involved Cayman-incorporated companies as targets. In one notable institutional buyout, Qihoo 360 Technology, a software publishing business incorporated in Cayman, was sold to True Thrive, a consortium of investors also incorporated in Cayman, for $9.3 billion.

This deal reflected the trend of large transactions emerging in the information and communications space, Appleby said.

The total cumulative value of offshore M&A deals across all offshore jurisdictions measured in the report in 2015 increased 56 percent over the previous year, with average deal value topping highs not seen since 2007.

Three of the largest quarterly periods of the last decade occurred in 2015 and contributed to a cumulative deal value of US$442 billion across offshore jurisdictions. The year also saw an impressive nine megadeals worth in excess of US$5 billion each and more than US$150 billion when combined, Appleby reported.

Moreover, there were 75 deals each worth more than $1 billion last year, compared with 52 recorded in 2014.

As a result, the annual average deal size reached a record high $149 million. The previous high set in 2007 stood at $99 million.

“The top 10 biggest deals of 2015 were collectively worth US$163 billion, only 37 percent of the full year deal total, demonstrating the strength in depth of high value deals over the course of the year. Additionally, the value of the offshore region as a neutral venue for international deals is highlighted by the fact that just three of the top 10 involved acquisition companies that are based onshore,” Appleby noted.

“The offshore markets are thriving and enjoying some of the best deal activity ever witnessed,” said Frances Woo, managing partner of Appleby’s Hong Kong office. “Offshore saw more value than the Middle East, Africa, Eastern Europe, South and Central America combined. Although 2016 remains fraught with uncertainty and challenges at the macroeconomic level could slow global deal activity, we are quietly optimistic that such good news will continue in 2016.”

The majority of M&A deals, about 30 percent, involved insurance and financial service companies (883 deals), followed by manufacturing with 610 deals; IT and telecoms (287); construction (233); and mining and quarrying (192).

Initial public offerings

The Cayman Islands also led offshore financial centers in the number of initial public offerings involving offshore-incorporated companies, despite an overall drop in the number of offshore IPOs in 2015.

Cayman-incorporated entities accounted for 45 out of a total 82 IPOs of offshore companies last year.