M&A growth bucks the trend

FRIDAY, NOVEMBER 9: The offshore M&A market was one of the few world markets to have experienced growth in the cumulative value of transactions in Q3 2012 compared to the same period last year, according to a report released today by Appleby, the world’s largest provider of offshore legal, fiduciary and administration services.

The latest edition of Offshore-i, the firm’s quarterly report which provides data and insight on merger and acquisition activity in major offshore financial centres, focuses on Q3 2012.

Bermuda continues to be among the most popular destinations for offshore investors, and in the third quarter, had the highest value per deal and was home to the largest deal involving an offshore target, the US$3.6bn stake taken in the locally incorporated Dutch telecoms Vimpelcom by Russia’s Altimo.

The US$1bn acquisition of Genpact Ltd by Bain Capital Partners LLC made the jurisdiction home to two of the six biggest offshore deals of the third quarter. Bermuda had 74 deals in the quarter with compositive values of $9.08bn, according to the report.

In Q3, traditionally the quietest for M&A activity each year, Bermuda found itself bucking the trend and experienced an increase in deals from 69 in Q2 and aggregate deal value from just under US$6.6bn the previous quarter. Deal volume, however, was below the 89 reported in Q1 as was value, with US$9.55bn reported in Q1.

“It is clear the jurisdiction remains an attractive area for offshore investors, particularly in the financial sector,” said Timothy Faries, Bermuda Group Head, Corporate & Commercial. “Despite an anticipated lull for the third quarter, the jurisdiction saw an increase in deals and value, and led offshore in value per deal.”

Bermuda’s role in the global insurance market continues to be revealed in the transactions reported this quarter.  The jurisdiction reported one of the biggest insurance deals of the year during the period, with the US$623m acquisition of Flagstone Reinsurance by Validus Holdings.

Tim Faries said: “The insurance transactions reported so far this year indicate the market is confident and key players are looking to add scale and capacity to their businesses.

“The Flagstone acquisition by Validus Holdings is a good example of this strategy. It allows Validus to further build on its market leading position by adding a strong client base that adds scale to its business.  

Looking at this alongside the other insurance deals we have been involved in this year, including the US$227m acquisition of Hardy Underwriting Bermuda by CNA Financial Corporation, and the US$257m acquisition of Omega Insurance by Canopius Holdings, we are confident the sector will continue to dominate the Bermuda transactions landscape for the full year, and well into 2013.”