- Prevailing market conditions – Despite continuing global geo-political risks and uncertainty, private equity continues to deliver strong returns aided in no small part by the prevailing climate of low interest rates. Asset prices have consistently risen as large pools of yield hungry private equity backed cash have sought out limited quality assets.
- Private equity still an attractive proposition to investors – The private equity model remains attractive to investors resulting in significant quantities of dry powder in the market ready to be deployed.
- Recent offshore trends – Cayman – The sheer size of private equity funds being raised is ever increasing. This has resulted in ever larger M&A deals with private equity backing/involvement. With deals valued at over USD60 billion in the first half of 2018 alone and Cayman Islands companies being the target of 421 transactions, the Cayman Islands, by deal volume, ranks as the number one offshore jurisdiction for M&A transactions with considerable private equity capital backing those deals. Deals are typically structured via a statutory merger, (ii) a scheme of arrangement and/or (iii) a tender offer.
- A focus on the offshore fiduciary space – Ever increasing interest in the sector by private equity is resulting in aggressive consolidation in the fiduciary space. Examples include (i) the disposal by TMF Group, a global provider of compliance and administration services, to CBC partners for total consideration of $1.75 billion and (ii) Apex Group Ltd. and Genstar Capital acquiring the Deutsche Bank Alternative Fund Services business. Fiduciary assets are attractive to private equity given the strong recurring cash flows derived from annuity like revenues and the opportunity to apply rigorous management methods. These deals are almost exclusively cross-border often involving Cayman Islands structures highlighting the importance of careful structuring.
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