Appleby, the world’s largest provider of offshore services, has released its latest report for Offshore M&A activity for the fourth quarter of 2012 and found some reason for optimism. They reported the largest quarter-to-quarter rise in M&A transactions in three years, with a volume up 27 percent and a value up 202 percent. While overall, 2012 had 14 percent fewer deal than 2011, and 26 percent fewer than 2010, Appleby still recommends tentative optimism for 2013.
“While we remain positive about activity levels going forward, there is no escaping the fact that 2012 was another challenging year for M&A in our markets,” said Cameron Adderley, Global Head of Appleby’s Corporate and Commercial department. “2012 was peppered with uncertainty, most notably around the Euro crisis, the US presidential election, and changes of leadership in China and elsewhere. Moving into 2013, the outlook is far from clear and the very real questions remain around the single European currency and America’s challenges related to the so called Fiscal Cliff and China’s continual growth.”
After all, one thing that made Q4 so extraordinary was the biggest transaction for the quarter, the $56 billion sale of British Virgin Islands-listed oil exploration business TNK-BP. But even without that, the quarter had a deal value of $48.8 billion, still making it the third highest month period of the last three years.
“We are optimistic that the M&A markets in which we operate will gradually strengthen, not least as a result of the relative health of strategic buyers, the emerging markets and the energy sector,” said Frances Woo, Appleby’s Hong Kong-based Global Chairman. “Offshore jurisdictions generated two of the world’s largest transactions in 2012 — that of TNK-BP and Jersey based Glencore’s $33 billion purchase of Xstrata. We have plenty of reason to be cautiously hopeful going forward, with general robustness returning to deal value as well as the number of deals coming out of our region growing faster than any other world region apart from the Nordic States this quarter.”
Mr. Adderley agreed with the optimism: “We hope to see IPO activities accelerate through 2013, initially with smaller offerings but probably gathering depth as the year progresses. There is no doubt that the outlook for 2013 is uncertain however, in view of the strengthening US economy, combined with reduced stock market vitality globally, assertive action from central banks and brightening economic prospects in both Europe an Asia, we are cautiously optimistic that companies will be tempted back to fundraising on the public markets.”
Ms. Woo said “It is encouraging to see the offshore market average deal size for the quarter, at $173 million, far outstrips those of North America, Western Europe, and the Far East an Central Asian and is second only to South and Central America’s. The region’s cumulative deal value is on par with that of Eastern Europe, the Nordic States, and the Middle East combined.”