Bermuda’s 2018 M&A deal value tops $70bn
The total value of merger and acquisition deals in Bermuda topped $70 billion in 2018, more than double the previous year's tally, a report released today by offshore law firm Appleby found.
The island was home to four deals of more than $5 billion, including the second-largest deal of the year, Axa's $15.3 billion acquisition of XL Group Ltd, a Bermudian-based global business insurer.
“Bermuda saw total deal value increase to more than $70 billion last year due in large part to a highly active insurance market,” said Timothy Faries, Bermuda managing partner and group head of corporate.
“The insurance industry experienced intense competition, and the need to increase scale and diversify, led to two of the largest deals of 2018 across the offshore region.”
The latest edition of Offshore-i, an Appleby report that provides data and insight on merger and acquisition activity in the major offshore financial centres, focuses on transactions announced over the course of 2018.
While the total number of deals in the offshore region dipped when compared to 2017, value was up significantly.
Bermuda led the way in the number of megadeals — those valued at $5 billion or more — although the island's total of 307 deals was down on 2017.
In total, there were 2,781 deals targeting offshore companies in 2018, representing a 5 per cent drop in deal activity. However, the 57 deals that exceeded $1 billion, including nine megadeals, fuelled a significant rise in value.
Appleby said acquisitions have become increasingly popular over the last two years, compared to taking a minority stake in a company or releasing more shares to investors, and now make up nearly half of all offshore M&A activity, the report found.
“Investing companies are no longer content to just take a seat on the board, but want full control of an asset in order to gain a competitive advantage over rivals,” said Cameron Adderley, partner and global head of corporate at Appleby.
“This drive to do strategic deals is likely to continue, providing finance remains readily available, interest rate rises predictable and markets stable. Gaining access to transformational technologies also remains a big incentive across almost every sector.”
While the primary focus of Offshore-i is on transactions in which offshore targets are purchased by investors, the report also examines deals in which the acquirer is based offshore.
There were 3,532 outbound deals announced over 2018 with a total value of $340 billion, which includes 66 deals worth more than $1 billion each.
Bermuda saw a slight decrease in the number of outbound deals from the previous year, but a 59 per cent increase in cumulative outbound deal value to $57.1 billion. The jurisdiction also accounted for the second-largest outbound deal, Bermudian-based Brookfield Property Partners' $9.4 billion acquisition of GGP.
The ten largest outbound deals across jurisdictions were each worth over $4 billion.
The report's key findings were:
• The total value of all offshore deals in 2018 was $344 billion, $100-plus billion more than 2017.
• There were 57 deals worth at least $1 billion, including a record nine megadeals worth more than $5 billion each.
• There were 196 completed IPOs, the offshore region's highest-ever annual total, raising $33 billion.
• A total of 2,781 offshore deals were announced, more than South America and Africa combined.
• Investors from nearly 60 countries across the world targeted offshore companies.
• The manufacturing sector saw a 135 per cent increase in M&A value, while the construction sector accounted for 273 deals in 2018, the highest number it has seen in a decade.
• Cayman was home to the largest number of deals and total deal value, while Jersey saw a 297 per cent increase in deal value fuelled by a $58.5 billion acquisition of Jersey-incorporated Shire by Japan's Takeda Pharmaceutical.
• A total of 161 offshore-incorporated companies were targeted by investments financed via private equity and venture capital, the highest volume seen over the last five years.
• There were 3,532 outbound deals coming out from the offshore region, worth a combined $340 billion. The top ten outbound deals were each worth over $4 billion.