Please give us an overview of the current legal market in the BVI and how any recent developments have impacted your practice?
The BVI suffered severe damage by Hurricanes Irma and Maria in September 2017. In the aftermath of the storms, the financial services community formed an alliance and worked together to ensure the safety of personnel and business continuity. The Registrar of Companies was back online within a matter of days and the Commercial Court relocated and resumed operations within a matter of weeks. As a result of this well coordinated response, the jurisdiction rapidly returned to normal operations and legal services for both the corporate and dispute resolution sectors have remained active over the past year.
The Limited Partnership Act, 2017 (LPA) came into force in the first quarter of 2018. The LPA has modernised the limited partnership law regime and it is anticipated that limited partnerships will be increasingly used as a vehicle of choice in the BVI for private equity fund formation.
The BVI has recently become a jurisdiction of choice for initial coin offerings of crypto-currencies, tokens and other block chain based assets.
What significant trends exist in the M&A market presently?
BVI companies have been involved in a number of M&A transactions relating to FinTech and healthcare and there has been an increase in M&A activity in the oil and gas and mining sectors. Private equity M&A has been focused on the technology and fiduciary sectors in particular.
Minority equity acquisitions have become more prevalent as investors seek to retain existing management and participate in increased returns generated by private companies.
The BVI remains a preferred jurisdiction for special purpose acquisition companies (SPACs) which are newly-formed companies and which raise capital through an IPO for the purposes acquiring or merging with one or more existing operating businesses. In 2017, new BVI SPACs raised gross proceeds of approximately USD 2.5 billion.
What are the three biggest challenges to practising M&A in the BVI at the moment?
1. The uncertainties surrounding the effects of Brexit;
2. The relative strength of the US dollar and the negative impact this has had on emerging markets; and
3. A potential trade war between the US and China.
How does M&A fit into the firm as a whole? Is it easy to collaborate with other teams?
Appleby are experts in offshore corporate, finance, funds, restructuring and dispute resolution. The M&A team plays a central role in Appleby’s wider corporate and finance offering and is comprised of industry experts in private equity, energy, insurance, healthcare, real estate, media, telecommunications, investment products and FinTech.
Given the cross-jurisdictional nature of the M&A transactions on which we advise, our BVI team routinely work closely alongside the corporate and finance practices of other Appleby offices. Our unique global footprint enables us to provide a seamless cross-border service to our clients.
What advice would you give to the next generation of M&A lawyers?
M&A lawyers should strive to obtain a clear understanding of their client’s business with a view to delivering commercially-driven legal advice. Offshore corporate lawyers benefit from a multi-disciplinary practice with a broad understanding of both M&A and Banking/Finance. Successful offshore lawyers tend to be generalists with a wide array of experience in many practice areas. It is also helpful to develop knowledge and expertise in specific industries which tend to feature in M&A transactions (e.g. technology, healthcare etc.) as well as recent developments generally in the private equity industry.
What are your predictions for M&A in the BVI over the next five years?
We predict that we will continue to see an increase in volume in technology (including FinTech) M&A and that there will be a steady increase of M&A activity in the mining sector. We also anticipate the divestiture of non-core assets and business units of global industries (including IT) and the continued employment of BVI holding company structures for Chinese clients.