M&A activity tipped for another strong year

Lloyds Banking Group's Scottish registration helped boost figures. Picture: Getty

Lloyds Banking Group's Scottish registration helped boost figures. Picture: Getty

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SCOTLAND’S corporate sector looks set for another busy year of mergers and acquisitions following a surge in the value of deals recorded in 2014.

The number of transactions dipped by 3.6 per cent to 478, but their value jumped by more than two-thirds to £14.8 billion, boosted by a number of big-ticket deals led by the UK government’s sale of part of its stake in Lloyds Banking Group.

UKFI, which manages the government’s shareholdings in banks bailed out during the financial crisis, offloaded a 7.8 per cent stake in Lloyds in March of last year for £4.2bn. The deal is included in the figures because Lloyds is registered in Scotland.

Volumes were dominated by the financial and insurance services sectors, which accounted for half of all deals. Financial services was also the largest sector by value, with £13.2bn worth of transactions.

Notable agreements included the March sale of Glasgow-based Ignis Asset Management to Standard Life Investments for £390m. That was followed a month later by the close of Aberdeen Asset Management’s £606m purchase of Scottish Widows Investment Partnership.

However, most transactions in Scotland were in the £500,000 to £10m bracket. This category accounted for 203 deals with a total value of £382m.

The mid-market of £10m to £100m accounted for 76 deals worth £2.8bn, and those in excess of £100m numbered 28 with a total value of £7.3bn. There were seven “mega-value” deals in excess of £1bn, worth a combined £14.7bn.

The top firms for handling transactions in Scotland were BDO, EY and JP Morgan, each of which closed 12 deals with a value of at least £500,000.

Craig Martin, director of corporate finance with BDO, said the growth in M&A activity was fuelled by increased liquidity, particularly in the mid-market where both volume and value increased by 58 per cent. Overall deal volumes were weighted towards the second half of the year, and peaked in the final quarter of 2014.

“Our current pipeline of opportunities suggests that 2015 will be another strong year, particularly in the mid-market that we specialise in,” Martin said.

“Despite the challenges that the ongoing low oil price presents, and the inevitable nervousness in the run-up to the general election, finance and opportunities are available for the right businesses.

“I expect that this improved access to capital will help to maintain the strong appetite for M&A activity in Scotland in the year ahead.”

According to Experian, the data services group which compiled the figures, Scotland accounted for 8.6 per cent of all UK mergers and acquisitions – both by volume and value – during the past year.

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