Investor confidence is on the rise, offshore legal specialists Appleby said yesterday.

A report by the firm on the third quarter of the year said 538 offshore deals worth $34.5 billion had been done and that “positive signs” of a recovery from recession continued.

The report said: “A return of investor confidence is indicated by the tightening spread of deals, an increase in the number of acquisitions and a decrease in minority stake purchases.”

The offshore deals figure compares to 523 deals in the second quarter and 504 in the first quarter.

Cameron Adderley, Appleby partner and global head of the firm’s corporate and commercial group, said: “Other trends from past reports are also reaffirmed by the Q3 figures, most notably the strong story that is emerging from average deal sizes.

“After nine months in 2013, the average deal value is $65 million, which, if it persists for the remainder of the year, will be ahead of the average deal size for seven of the last ten years.

“Looking at just the third quarter, our average deal size — $64m — means transactions in our markets were larger than those done in Western Europe and all other world regions except the Americas.

“Finally, the ten largest offshore deals now consistently represent a steady 30 percent of the cumulative deal value overall, in contrast to the choppy markets of 2012 when in one quarter the top ten transactions represented 73 percent of all activity, a clear sign of figures being distorted by just a few so-called ‘mega deals’.”

And Mr Adderley said: “It is clear that offshore merger and acquisition markets are strengthening and deepening, with transaction levels in the mid-market gathering force after several years typified by many small deals and a limited number of multibillion dollar transactions achievable only because of atypical circumstances.”

The report looked at a total of nine offshore jurisdictions, including Bermuda, the Cayman Islands, the British Virgin Islands, Hong Kong, Mauritius and the Seychelles.

Cayman leads the offshore pack in mergers and acquisitions, with 140 of the total deals done in the quarter — $13.5 billion of the quarter’s $34.5 billion total, which equals 26 percent of all deals and 39 percent of the total deal value.

The report said: “Despite some close competition from Bermuda and the BVI in previous quarters this year, the Cayman Islands has consistently recorded the highest volume and value figures.”

Appleby group chairman Frances Woo added: “The evidence provided by the Q3 figures means that we continue to be cautiously upbeat about the prospects for our offshore region and therefore the wider economic landscape.

“However, we do not shy away from recognising that we are entirely interconnected to the global economy.

“The other major regions in which our clients operate are critical to the offshore revival and whilst the signs from the United States economy have been broadly positive throughout 2013, the budgetary impasse that caused the shutdown of the federal government in October may yet seriously affect confidence and deal flow around the world.

“Likewise, the international political climate remains unpredictable, as tensions surface over the handling of the Syrian conflict, for example, and stock markets and currencies, particularly in Asia, remain under pressure amid fears that the Federal Reserve might taper its quantitative easing programme.”

Ms Woo, based in Appleby’s Hong Kong office, added: “The Eurozone, though strengthening, still faces major sovereign debt challenges, particularly in the Southern European states.”