CAYMAN ISLANDS Trends and Developments Contributed by: Jason Allison, Christopher Brett Young, James Murrie and Michael Beck, Walkers
approximately 95% of the SPACs launched globally during this period used a Cayman Islands domiciled vehicle. The stability of the jurisdiction along with the flexibility afforded by the Cayman Islands Companies Act (the “Companies Act”) to accommodate complex warrant structures, redemption mechanics and any subsequent business combinations (also known as “de-SPAC” transactions) are contributing factors to this trend. De-SPAC business combinations trended upwards compared to recent years, where the previous focus heavily centred on the extension of the terms of SPACs to permit more time to consummate such a business combination (failing which SPACs would be required to liquidate in accordance with the time lim - its set out in their constitutional documents, typically 18–24 months). In addition, Cayman Islands entities are continually used as holding company structures for Asia-based businesses that are seeking listings on US securities exchanges. A Catalyst for a Stronger Market Outlook The momentum of global deal value growth also continued, with this positive outlook being driven by several key factors despite continued inflationary pressures and the ever-present threat of tightening monetary policy. However, a stabilisation of interest rates by major central banks (particularly the US Federal Reserve) returned a degree of balance to the debt markets, noting that predictability around financing costs is crucial to the continued growth of M&A. This created a resurgence of leveraged buyouts and debt-funded acquisitions, which were arguably suppressed dur - ing the rate-hike cycles of previous years. Cayman Islands structures – which are most typically used as holding companies or acquisition vehicles in such cross-border deals – enjoyed a slight uptick in incor - porations and general transaction activity. Private equity firms started 2025 sitting on historically significant reserves of unallocated capital. With a gen - eral stabilisation in the macroeconomic environment throughout the year, pressure from limited partners to
deploy capital and generate returns intensified. The Cayman Islands remained the premier jurisdiction for offshore private equity fund and hedge fund formation, and, in turn, continued as the jurisdiction of choice for structuring downstream acquisitions, largely owing to its tax neutrality, corporate flexibility and streamlined governance regime. Take-Private Transactions Take-private transactions of Cayman Islands-domi - ciled companies remained a steady feature of deal activity in 2025. From a Cayman Islands perspective, these transactions primarily target companies listed in the US or Hong Kong that are deemed to be underval - ued by the public markets. There has been a steady trend upwards of private equity sponsors and man - agement consortiums using Cayman Islands vehicles to acquire these targets, delist them, restructure their operations and ultimately relist or sell such structures for a premium. Take-privates are typically structured using two primary mechanisms under Cayman Islands law – notably, statutory mergers and (less commonly) schemes of arrangement. A statutory merger provides a relatively straightforward and well-trusted mechanism that requires, among oth - er things, a special resolution (a two-thirds majority of shareholders who attend and vote at a shareholders’ meeting, unless the articles of association specify a higher threshold). The merger regime is user-friendly, quick and efficient, making it highly popular for acqui - sitions of US-listed Cayman Islands targets. Conversely, a scheme of arrangement is a court- approved compromise or arrangement between a company and its shareholders. While this approach is more time-consuming and requires court sanction, schemes are binding on all shareholders (thus elimi - nating minority holdouts) and are therefore frequently the preferred route for Hong Kong-listed Cayman Islands targets due to specific listing rule require - ments in that jurisdiction. One advantage of a scheme of arrangement over a merger is that the parties can avail themselves of an exemption from some of the registration requirements for securities under the US Securities Act of 1933 (Section 3 (a)(10)).
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