What trends are you seeing in overall activity levels for private equity firm buyouts and investments in your country during the past year or so?
Simon Raftopoulos: The bulk of activity continues to occur in the middle market in Cayman. Significant investments by private equity firms into multi- jurisdictional trusts and corporate services continue as well. Recently, the acquisition by Bridgepoint of the Appleby Fiduciary and Administration Business (AFB) highlights this.
Asset classes that provide key historic earnings growth, the potential for strong new business flows and opportunities for expansion are always going to be attractive. I would also not be surprised if we see more substantial acquisitions for this sector and perhaps a few exits in the luxury real estate sector. Five Mile Capital’s significant investment into Cayman has elevated the Ritz Carlton to the premier resort destination in the Caribbean. They may exit this year and this, I suspect, will encourage further PE investments into this sector in Cayman.
Globally, so far, 2016 has seen a continuation of the follow-on investment trend. In June, Cayman joined in the party when Intertrust BV snapped up Elian from majority-owned Electra Partners.
Looking at types of investments and transactions, are private equity firms continuing to pursue straight buyouts or are other opportunities, such as minority-stake investments, partnerships or joint ventures, also being considered?
SR: Globally, minority stakes remain popular. The thawing of the equity market in Q2 saw a few IPOs get away. Generally, equity cheques (as a percentage) remain elevated and, given the multinational nature of many operating companies coupled with recent uncertainty in debt markets, potential external shocks (such as securing favourable debt and servicing it, and foreign exchange concerns) seem to be keeping the market moving quickly.
Luxury real estate and corporate and trust services remain an attractive asset class in Cayman and will continue to do so in the future. A stable political landscape and certainty of rule of law is certainly not discouraging PE firms from divesting their capital into jurisdictions like Cayman.