International Business

Bermuda saw $36.9bn of M&A deals last year

  • Big deal: Bermudian-domiciled Marvell Technology Group, whose operational headquarters is in Santa Clara, California, was involved in one of the biggest offshore deals of last year

Bermuda saw $36.9 billion of merger and acquisition deals last year, according to a report by offshore law firm Appleby.

Island-based entities were involved in 402 deals which represented 15 per cent of deal volume and 16 per cent of deal value across the offshore region in 2017.

The number and value of offshore mergers and acquisition deals rose in 2017, making it one of the busiest years recorded for the region — and the busiest year on record for offshore IPOs — Appleby said.

The finance and insurance sector dominated the offshore landscape in terms of deal value.

“In the face of the substantial geopolitical uncertainty which overshadowed 2017, the offshore region’s positive performance is all the more remarkable,” said Cameron Adderley, partner and global head of corporate at Appleby.

“These deals were led prominently by acquisitions, although a number of companies also chose to add additional financing firepower by issuing new stocks and bonds to eager investors.”

In total, there were 2,771 deals targeting offshore companies in 2017, representing a total value of $227 billion, the report found. This marked an increase over 2016, which saw 2,735 deals recorded at a value of $219 billion.

Each deal in the offshore top ten in 2017 was worth well over $2 billion, with the largest offshore deal being the $6.8 billion purchase of all the issued shares of Belle International, a Cayman Islands-incorporated footwear manufacturer listed on the Hong Kong Stock Exchange.

Over the course of the year, the offshore region saw three megadeals — those valued at $5 billion or more.

The Offshore-i report also examines deals in which the acquirer is based offshore. Up until 2014, there was parity between the levels of activity inbound and outbound from the offshore region. Since that time, however, offshore companies on the acquire-side have come to dominate, and the report found that figures from 2017 continue to reflect this, Appleby reported.

The year 2017 recorded 3,313 such deals worth a cumulative $347 billion. China, the US, India and the UK make up the bulk of the locations targeted but there were also many large deals conducted elsewhere, such as the $1 billion institutional buy-out of Portugal’s Novo Banco by Bermuda-registered private-equity firm, Lone Star.

In the fourth largest deal of the year involving an offshore acquirer, Bermuda-incorporated Marvell Technology Group Ltd acquired Cavium Inc, a US electronic components manufacturer for $6.8 billion.

The report points to a number of factors that could impact M&A in the coming months, including US tax reforms and regulatory scrutiny, the Chinese government’s concern over outbound deals and the deployment of private equity, among others.

Well over 300 IPOs were reported across the offshore region in 2017, making it by far the busiest year on record. The top sector for announced IPOs is technical and engineering consultancy, for fundraising to assist with project finance and the acquisition of additional equipment.

“In 2016, companies delayed IPOs amid heightened volatility in the financial markets,” Adderley said. “This pent-up demand was released in 2017 and IPO announcements by offshore-incorporated companies are at an all-time high.”

The offshore region also experienced a busy year with completed IPOs, seeing 179 companies successfully complete their listing. Hong Kong exchanges are the most popular for offshore companies, followed by US and London exchanges.

Cayman was home to the largest number of deals, followed by Hong Kong, the British Virgin Islands and Bermuda.

Appleby said 128 deals targeting offshore-incorporated companies were financed via private equity and venture capital, for a total value of $40 billion marking a considerable uptick in offshore activity over 2016.