Mergers & Acquisitions 2017 - GLI Cayman Islands Chapter

The Cayman Islands’ global appeal means it services clients from all corners of the globe, thereby offering a hedge against the full brunt of economic fluctuations which ordinarily affect a single jurisdiction. Whilst M&A activity has decreased throughout 2016 on a worldwide basis by 22%, Cayman Islands M&A activity remained steady.

During 2015 and the first six months of 2016, 15,842 exempted companies and 4,971 exempted limited partnerships were incorporated or formed (as relevant). The continued use and attraction of Cayman Islands entities is not surprising, as the nature of capital has changed dramatically in the last few years, with investments increasingly being made on an international scale. Investors are at ease moving their capital from one jurisdiction to another to achieve the highest returns. The more international capital becomes, the more likely Cayman Islands entities are used to facilitate the investment of such capital due to the tax neutrality afforded, and the sophisticated and stable nature of the jurisdiction.

The Cayman Islands has historically been, and continues to be, successful in attracting funds (both hedge funds and private equity funds) as well as structured finance issuers. Over time, the Cayman Islands has become recognised as a jurisdiction that is central to M&A transactions, particularly cross-border M&A transactions in downstream private equity transactions.

As noted above, with global M&A decreasing in 2016 as compared to 2015, the need for strategic global structuring solutions has increased. Given that Cayman Islands exempted limited partnerships are the vehicle of choice for offshore private equity funds, the private equity sector has embraced the use of Cayman Islands vehicles as holding companies, joint venture vehicles and listing vehicles for M&A deals. In light of the increase in private equity backed M&A, the Cayman Islands has benefited from a number of deals involving Cayman Islands vehicles. Furthermore, the recent introduction in July 2016 of a Cayman Islands Limited Liability Company, or “LLC”, should further supplement the attractiveness of the jurisdiction for clients familiar with the benefits of such vehicles in onshore jurisdictions such as Delaware.

The following article is written by Cayman Islands partners Rob Jackson, Ramesh Maharaj and Melissa Lim for Global Legal Insights Mergers & Acquisitions 2017 Sixth Edition. This edition was edited by Michael E. Hatchard & Scott V Simpson of Skadden, Arps, Slate, Meagher & Flom (UK) LLP.

 

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