Offshore-i ANNUAL REVIEW 2017 SUMMARY OFFSHORE M&A INSIGHTS AND DEAL INTELLIGENCE

Offshore-i ANNUAL REVIEW 2017 SUMMARY OFFSHORE M&A INSIGHTS AND DEAL INTELLIGENCE

OFFSHORE 2017 IN NUMBERS 227bn Cameron Adderley Partner & Global Head of Corporate The Offshore region enjoyed a busy year in 2017. Worldwide, deal activity fell just short of the record-breaking figures from previous years. While the circumstances surrounding the timing and background to deal making is wide and varied, political developments in Washington and Europe have undoubtedly caused consternation. In China, capital controls were introduced by their foreign exchange regulator at the end of 2016 followed by a government-directed assessment of any crossborder financing arrangements. However, the spate of ongoing positive economic news being reported in most regions of the world, along with improved oil prices, has provided a bedrock of confidence. European elections, tax reforms in the US and Brexit negotiations with the UK have not led to the economic fallout feared by some. In China, the renminbi has strengthened and strategic, prudent deals continue to be approved. The opportunities to expand internationally to fill product and production line gaps and to acquire technology, remain tempting and accessible. Meanwhile, worldwide GDP is still low, and achieving robust growth is likely to require M&A commitment. In the midst of all this, the Offshore region has maintained a high level of deal activity, with inbound and outbound volume outpacing the previous year, while IPOs and Private Equity deals have been especially prevalent. Please don t hesitate to get in touch with your usual Appleby contact should you wish to discuss any of the issues highlighted in this report. CONTENTS The M&A Environment 3 Sector Analysis 6 Initial Public Offerings 7 Geographic Trends 8 Acquirer Deals 9 The Private Equity Environment 10 Contact Us 11 spent on Offshore targets, 8bn more than last year 2,771 deals announced so far; similar to Spain and to India 41 deals worth at least 1bn, including three worth over 5bn 326 IPOs announced; a record-breaking total 40bn spent by Private Equity to finance Offshore purchases 97 countries have conducted Offshore deals worldwide this year Offshore-i Annual Review 2017 2

The M&A Environment WORLD REGIONS IN 2017 Global activity has declined year-on-year, but underneath this headline, several regions are experiencing positive growth. Africa proved to be the biggest mover as deal making there rocketed to 59bn in 2017, thanks mostly to a series of large mining deals. In South & Central America, the economic slowdown and the economic and political turbulence currently facing the region has made some companies affordable targets, and deal activity has picked up after a steep decline last year. Elsewhere, the uncertainty around China s restrictions on capital outflows has led to a sharp decline in Chinese outbound activity. The drop was not only expected but wanted, the Chinese regulators having become alarmed at the number of overseas deals that made questionable business sense, and took up large chucks of the country s foreign reserves. The US remained the highest-value region, with 1.6tn of deals, though the value of M&A there fell 10% from a year ago. In contrast to the US, Europe enjoyed an increase in deal value YoY and climbed to 1.3tn. Cross-border activity remains a key component of M&A, enabling dealmakers to spread risk and expand their global footprint, which is more commonplace and necessary in today s economy. This is particularly true of expansion into emerging markets, which can provide a much needed source of growth for legacy firms that have reached market saturation in developed economies. Despite the slowdown, the typical M&A motivations remain as relevant as ever; scope for efficiency savings, gaining access to operational or sector expertise, upgraded systems and IT structures and expansion into adjacent industries and geographies. In addition, rapid technological and logistical advances are making industry convergence all the more common, with Fintech becoming the new buzzword for this phenomenon. Offshore-i Annual Review 2017 3

The M&A Environment (cont d) THE YEAR AHEAD We believe that the following factors will influence M&A activity over the coming months: BULL MARKET SCENARIO Powerful fundamentals are in place strong corporate cash balances, buoyant equity markets and continued ready availability of debt financing and acquisitions are still seen as an easy way to boost revenue and earnings. However, the risk remains of overpaying for assets. In the face of the substantial global geopolitical uncertainly which has overshadowed 2017, the Offshore region s positive performance is all the more remarkable. Offshore has improved its position, with almost 2,800 deals taking place (similar to levels seen in India and in Spain over the period), making it one of the busiest years recorded for the region. Offshore deals were led prominently by acquisitions, although a number of companies also chose to add additional financing firepower by issuing new debt and equity to eager investors. Despite the new regulatory restrictions, China continued to be the prominent acquirer of Offshore targets, with the UK, Taiwan and the USA also highly placed. OFFSHORE DEALS BY VOLUME & VALUE TECHNOLOGY DISRUPTION Every industry is being disrupted, as companies utilise technology to adapt to changing distribution channels and consumer preferences. Many non-tech companies are buying strategic assets to better position themselves to differentiate and compete on a global scale. US TAX REFORMS & REGULATORY SCRUTINY American companies will benefit from the US tax reform, which lowered the headline corporate tax rate to 21% and permitted US companies the ability to repatriate cash. Offsetting this are increased efforts to block high-profile mergers, along with greater scrutiny of foreign buyers. CHINESE GOVERNMENT CONCERN OVER OUTBOUND DEALS Chinese outbound M&A has slowed during in 2017, as Beijing imposes newly introduced capital controls that make it difficult to move money out of the country. While signs of a resurgence have emerged, China s bank regulator recently cautioned on systemic risk in overseas buying. 2017 227bn 2,771 deals 2016 2015 219bn 2,735 2,901 421bn POLITICAL UNCERTAINTIES Will the markets continue to remain sanguine in the face of a range of political uncertainties, including the impact of midterm elections in the US, Brexit in Europe, trade disputes and potential geopolitical flare-ups, notably in the Middle East and North Korea. PRIVATE EQUITY DEPLOYMENT Cheap debt, generous lending terms and plenty of dry powder has powered Private Equity to new post-financial crisis heights. Interest in Private Equity funds intensified in 2017, as investors hunted for returns at a time of low interest rates but this also meant more competition for deals. Offshore-i Annual Review 2017 4

Contact Us Click on an image below to visit individual team member biographies RESEARCH METHODOLOGY Cameron Adderley HONG KONG +852 2905 5790 cadderley@applebyglobal.com Timothy Faries BERMUDA +1 441 298 3216 tfaries@applebyglobal.com Simon Raftopoulos CAYMAN +1 345 814 2748 sraftopoulos@applebyglobal.com This report details mergers and acquisitions and capital markets activity in offshore jurisdictions in 2017 using data from the Zephyr database, published by BvD. Private equity dry powder data is provided by Preqin. The offshore region covers target companies in Bermuda, British Virgin Islands, Cayman Islands, Hong Kong, Guernsey, Jersey, Isle of Man, Mauritius and Seychelles. The date range for 2017 analysis is 1 January 2017-31 December 2017. All deal types are included except joint ventures and share buybacks. IPOs and planned IPOs are calculated separately. Deal status is as announced within the time period covered. Certain deals are subject to standard closing terms. Where necessary, deal values have been converted to at a rate set by Zephyr. Not all deals have a publicly known value. Not all deal details are reported immediately, and the figures are subject to change as new information becomes available. ABOUT US With a broad global footprint, strong working relationships with local regulators and deep transactional experience, Appleby s M&A team is well-positioned to swiftly advise clients on a wide range of M&A activities in the offshore region. Our team regularly works with FTSE 100 and Fortune 500 companies around the globe to help them deploy strategic growth and restructuring initiatives whether involving single jurisdictions or complex multi-jurisdictional, multi-disciplinary transactions. Our expertise includes advising on: Wendy Benjamin JERSEY +44 (0)1534 818 057 wbenjamin@applebyglobal.com Jeffrey Kirk BRITISH VIRGIN ISLANDS +1 284 393 5318 jkirk@applebyglobal.com Kyle Sutherland ISLE OF MAN +44 (0)1624 647 653 ksutherland@applebyglobal.com Jeremy Berchem GUERNSEY +44 (0)1481 755 601 jberchem@applebyglobal.com Malcolm Moller MAURITIUS +230 203 4301 SEYCHELLES +248 429 5283 mmoller@applebyglobal.com Capital markets transactions including debt and equity issues, and capital raising transactions including private placements, initial public offerings (IPOs), and (in Jersey) cashbox structurings linked to placings and rights issues of Jersey-listed companies Complex joint ventures and strategic alliances Corporate restructurings Disposals Private M&A Click here to visit applebyglobal.com Appleby Global Group Services Ltd 2018. Published in the Isle of Man. All Rights Reserved.