LEGAL REPORT Americas 11 Asia-Pacific 13 EMEA. 2 Global review 3 League tables 6 Project list IN THIS SECTION

Transcription

1 LEGAL REPORT 2014 IN THIS SECTION 2 Global review 3 League tables 6 Project list 9 Americas 11 Asia-Pacific 13 EMEA

2 FEATURES A TALE OF TWO MARKETS LARGER, MORE COMPLEX, DEALS IN MATURE MARKETS ARE BEING SIPHONED OFF BY TOP-TIER FIRMS WHILE LOCAL PLAYERS SEEM CONTENT TO PICK UP BETTER SUITED ROLES ON RENEWABLES AND STANDARDISED PPPS. EXPANSION INTO MEXICO, MYANMAR AND SOUTH AFRICA MAY CHANGE ALL THAT NEXT YEAR. BY COLIN LEOPOLD. There was a marked upswing in the number of project finance mandates won globally this year, up around 20% on last year to 318 deals. Among those benefiting, most noticeable is Latham & Watkins entry into the top three firms, buoyed by its six mandates in Asia-Pacific, compared with just one last year. The US firm replaces Clifford Chance in the number two spot. While Allen & Overy hangs on at the top with two more deals than last year, Clifford Chance slumped to nearly half of its previous total with 12 deals during the year. Its home market EMEA cannot be blamed. Western Europe in particular saw an increase in the larger more complex deals favoured by magic circle firms, with the megadeals absent last year returning to a number of countries around the world. There is no question competition has increased in emerging markets such as Sub-Saharan Africa, in Asia and Latin America, but in the race to open offices and build teams the nature of work in mature home markets also moved on. The highest-earning law firms, generally boasting around 1m of profit per-partner and including Allen & Overy, Clifford Chance and Linklaters, have recently focused their work on developing capital market expertise was the year it started to pay off. Examples include the A11 road in Belgium, the A7 motorway in Germany, the Greater Gabbard offshore power grid in the UK and the L2 road in France. In Europe, the work also fostered a cross-border approach as project bonds are often structured under UK law rather than German law, forcing firms to combine the two areas of expertise. The rise of alternative financing led by project bonds is a reality, says Tim Conduit at Allen & Overy. Although the banking market is currently very strong, there is a real funding mix that simply didn t exist until very recently. The size and complexity of offshore wind farms and German A-Model motorways often require a service that only top-tier firms can offer. The trend has been mirrored in both the Americas and Asia-Pacific, where jumbo LNG deals made it difficult for smaller firms to compete. In Australia, the East West Link, the North West Rail link and an increasing need for refinancing advice kept the largest firms busy. Somehow the same firms kept one eye on expansion, with South Africa, Mexico and Myanmar top of the list. Allen & Overy became the first magic circle firm to announce a new office in South Africa, no doubt looking to target country s vast IPP programme for renewable and baseload power and create a platform for work on other parts of the continent. Reforms in the Mexican energy sector captivated many in the Latin American market. Hogan Lovells entered into a partnership with prominent Mexican firm Barrera Siqueiros y Torres Landa and opened offices in Mexico City and Monterrey, making it the first global legal practice to merge with a large full-service firm in Mexico. DLA Piper and Mexican firm Gallastegui y Lozano also reached an agreement to combine in Mexico City in October. Meanwhile in Asia, close to 20 international firms have now set up offices in Myanmar in the past two years. Allen & Overy and Baker & McKenzie joined a list of regional firms mainly from Singapore and Japan, as well as Cambodia, Malaysia and Thailand. Many also announced plans for new offices in South Korea, the other market to watch. So what was left over for smaller firms in 2014? The German market may have been characterised by project bonds and toll roads, but along with France it also provided smaller-scale opportunities in renewables and accommodation PPPs. Small to medium-sized greenfield PPP deals have become more commoditised, says one lawyer. Magic circle and top firms are not doing these any more. We are focusing on larger projects and more complex financings. The smaller firms no longer targeting magic circle earnings-perpartner ratios are acting more nimbly and winning mandates on simpler projects more easily. In Spain, the big fees from greenfield project finance deals are also becoming less important for many local firms. The restructuring of projects in the energy sector has taken up some of the slack as firms such as Uría Menéndez, Garrigues and Cuatrecasas Gonçalves Pereira look abroad to make up for dwindling fees in their home market. Similarly in the US, firms have been racing to establish themselves in new sectors ahead of the deal flow. Squire Patton Boggs, for example, has been making a push toward healthcare and has interested parties in several major systems in the US. 2 Project Finance International November

3 LEGAL SURVEY The poaching of staff is expected to dominate in South Africa next year as many of the new arrivals seek to gain a head start on their rivals. But in mature markets such as Australia, recruitment trends have entered a more stable phase following previous years of hectic M&A activity. Partner and senior level moves throughout the year have been largely to fill gaps in Melbourne, Perth and Queensland where new privatisations and new infrastructure projects have come to market. With larger and more complex transactions increasing the number of hours required on each project, perhaps it s not surprising there has been little time for many lawyers to consider moving to another firm. GLOBAL LAW FIRMS 2014 Law firm Lender Sponsor Total Law firm Lender Sponsor Total Allen & Overy Latham & Watkins Linklaters White & Case Herbert Smith Freehills Milbank Tweed Ashurst Clifford Chance Allens Shearman & Sterling King & Wood Mallesons Skadden Arps Freshfields Bruckhaus Deringer Chadbourne & Parke Davis Polk Mayer Brown Baker McKenzie Norton Rose Fulbright Simpson Thacher & Bartlett Sullivan & Cromwell Vinson & Elkins Clayton Utz DLA Piper Gilbert & Tobin Lee & Co Arntzen de Besche BA-HR DFDL Mekong Estudio Fasken Martineau Gibson Dunn & Crutcher Hogan Lovells Nixon Peabody Pilsbury Pinsent Masons Rodrigo Elias & Medrano SNR Dentons A&L Goodbody ABNR Abuda Asia & Associates Adnan Sundra & Low Advokatfirmaet Wierholm Amarchand Mangaldas Andrews Kurth ARH Avance Attorneys Barnes & Thornburg Blake Cassels & Graydon Bonelli Erede Pappalardo Borenius Bridard & Urruita Abogados Burness Paul Cahill Carey y Cia Cassels Brock Chandler & Thong-Ek Law Claro y Cla Cleary Gottlieb Cravath Galicia Abogados Gianni Origoni Grippo Cappelli & Partners Goodmans Ince & Co Jara Favero Abogados King & Spalding Kinstellar Kirkland & Ellis Legance Levy Meidan & Co Luthra Mac Donald Steed McGrath Mattos Filho Veiga Filho Marrey Jr e Quiroga Advogados Mijares Angoitia y Fuentos Miles & Stockbridge Miranda Nauta Duilh Osler Hoskin & Harcourt Paksoy & Co Paul Weiss Philippi Yrarrazaval Pulido & Brunner PJS Law Prietocarrizosa PwC Rajah & Tanh, AHP and Oentoeng Suria & Partners Riolo Calderaro Crisostomo Ritch Mueller Heather y Nicolau Rubio Leguia Normand Russell Mc Veigh Sidley Austin Simpson Grierson Souza Cescon Avedissian Barrieu e Flesch Stibbe Tadmor & Co Taylor Wessing Torys Trilegal Wikbord Rein Wilkie Farr & Gallagher Wyatt Tarrant Yigal Arnon Yuksel krkin Kucuk Zaid Ibrahim Project Finance International November

4 AMERICAS SEPTEMBER 2013 TO SEPTEMBER 2014 Law firm Lender Sponsor Total ASIA-PACIFIC SEPTEMBER 2013 TO SEPTEMBER 2014 Law firm Lender Sponsor Total Latham & Watkins Milbank Tweed Shearman & Sterling White & Case Skadden Arps Allen & Overy Chadbourne & Parke Davis Polk Mayer Brown Simpson Thacher & Bartlett Sullivan & Cromwell Vinson & Elkins Carey y Cia Estudio Fasken Martineau Gibson Dunn & Crutcher Linklaters Nixon Peabody Rodrigo Elias & Medrano Andrews Kurth Ashurst Barnes & Thornburg Blake Cassels & Graydon Bridard & Urrutia Abogados Cassels Brock DLA Piper Cahill Cleary Gottlieb Clifford Chance Cravath Jara Favero Galicia Abogadas Goodmans Ince & Co King & Spalding Kirkland Ellis Mattos Filho Veiga Filho Marrey Jr e Quiroga Advogados Mijares Angoitia y Fuentos Miles & Stockbridge Miranda Norton Rose Fulbright Osler Hoskin & Harcourt Paul Weiss Philippi Yrarrazaval Pulido & Brunner Pilsbury Prietocarrizosa Ritch Mueller Heather y Nicolau Rubio Leguia Normand Sidley Austin Souza Cescon Avedissian Barrieu e Flesch Torys Wikborg Rein Wyatt Tarrant Wilkie Farr & Gallagher Allens Herbert Smith Freehills King & Wood Mallesons Latham & Watkins Allen & Overy Ashurst Gilbert & Tobin Lee & Co Baker McKenzie Clayton Utz DFDL Mekong ABNR Abuda Asia & Associates Adnan Sundra & Low Amarchand Mangaldas Chandler & Thong-Ek Law Clifford Chance Linklaters Luthra Mac Donald Steed McGrath Mayer Brown Milbank Tweed PJS Law Rajah & Tanh, AHP and Oentoeng Suria & Partners Pilsbury Russell Mc Veigh Simpson Grierson Skadden Arps Sullivan & Cromwell Trilegal Zaid Ibrahim Project Finance International November

5 LEGAL SURVEY EMEA SEPTEMBER 2013 TO SEPTEMBER 2014 Law firm Lender Sponsor Total Law firm Lender Sponsor Total Allen & Overy Linklaters Clifford Chance Ashurst White & Case Freshfields Bruckhaus Deringer Herbert Smith Freehills Latham & Watkins Norton Rose Fulbright Pinsent Masons BA-HR Baker McKenzie DLA Piper Hogan Lovells SNR Dentons Arntzen de Besche A&L Goodbody Advokatfirmaet Wierholm Artntzen de Besche ARH Avance Attorneys Bonelli Erede Pappalardo Borenius Burness Paul Chadbourne & Parke Davis Polk Gianni Origoni Grippo Cappelli & Partners Kinstellar Legance Levy Meidan & Co Nauta Duilh Paksoy & Co PwC Riolo Calderaro Crisostomo Simpson Thacher & Bartlett Stibbe Tadmor & Co Taylor Wessing Vinson & Elkins Yigal Arnon Yuksel krkin Kucuk Project Finance International November

6 PROJECT LIST SEPTEMBER 2013 TO SEPTEMBER 2014 Project Country Value (US$m) Lenders Sponsors Subsidiary roles Sector Cameron LNG United States 10, Latham & Watkins Sullivan & Cromwell Vinson & Elkins, Mitsubishi, Oil and gas Linklaters, GDF Suez Roy Hill Australia 10, Allen & Overy Latham & Watkins, Mining Herbert Smith Freehills Alberta Redwater Upgrader Canada 7, Latham & Watkins Paul Weiss Oil and gas Waad Al Shamal Saudi Arabia 7, Allen & Overy Baker & McKenzie Industry QML Australia 6, Allens King & Wood Mallesons, Clayton Utz Herbert Smith Freehills, Transurban Transportation Star Refinery Turkey 5, Allen & Overy, Paksoy & Co Vincent & Elkins, Yuksel Karkin Kucuk Mining East West Link Australia 4, Allens Herbert Smith Freehills Transportation Lundin Petroleum Australia 4, Herbert Smith Freehills Ashurst Oil and gas Gemini Offshore Netherlands 3, Allen & Overy Clifford Chance, Linklaters Kromann Reumert, ECAs, Power Fresfields Bruckhaus Deringer, EIB Sohar Refinery Oman 3, Clifford Chance Allen & Overy Petrochemicals IEP2 United Kingdom 3, Ashurst DLA Piper Hogan Lovells, DfT Transportation Det norske Norway 3, Herbert Smith Freehills BA-HR (acquisition) Arntzen de Besche (Marathon Oil) Oil and gas Usolskiy Potash Plant Russian Fed 3, Linklaters White & Case Mining Tangenziali Esterna Italy 2, Gianni Origoni Grippo Cappelli & Bonelli Erede Pappalardo Legance (CDP) Transportation Est Milan Partners Sabine Pass United States 2, Skadden Arps Latham & Watkins Oil and gas Sydney International Australia 2, Gilbert & Tobin Herbert Smith Freehills Clayton Utz, government PPP Convention Centre Bukpyung South Korea 2, Lee & Co In house Power Vinci Parking France 2, Clifford Chance Freshfields Bruckhaus Deringer Transportation Al Zour 1 Kuwait 2, Allen & Overy Latham & Watkins Chadbourne & Parke, PTB Power Tamar Israel 2, Simpson Thacher & Bartlett, Davis Polk, ARH Allen & Overy, Shearman & Sterling Oil and gas Yigal Arnon Antucoya Chile 1, Milbank Tweed, Philippi Yrarrazaval Suillivan & Cromwell, Jara Favero Mining Pulido & Brunner Abogados Sudeste Port Brazil 1, Allen & Overy, Mattos Filho Veiga Filho Shearman & Sterling, Souza Cescon Transportation Marrey Jr e Quiroga Advogados Avedissian Barrieu e Flesch Mirfa UAE 1, Linklaters White & Case Power Budapest Airport Hungary 1, Clifford Chance, Linklaters White & Case Transportation Enquest United Kingdom 1, Herbert Smith Freehills Ashurst Oil and gas Rabigh 2 Saudi Arabia 1, Allen & Overy, Latham & Watkins Chadbourne & Parke Clifford Chance, JBIC, Baker Botts, Power SEC, Zeyed S Khoshaim Law Firm 2i Rete Gas Italy 1, Linklaters Ashurst Oil and gas Newcastle Port Australia 1, Gilbert & Tobin King & Wood Mallesons Minter Elllison, government Transportation Sarulla Indonesia 1, Latham & Watkins Milbank Tweed, Baker & McKenzie Mochtar Karuwin & Komar, Hadiputranto Power Hadinoto & Partners, Ali Budiardjo, Nugroho Reksodiputro Itinere refinancing Spain 1, Clifford Chance Linklaters Transportation Carrix Port Terminal United States 1, Milbank Tweed Wilkie Farr & Gallagher, Sullivan Transportation refinancing & Cromwell R1 Slovakia 1, Allen & Overy Linklaters Infrastructure I-4 United States 1, Latham & Watkins Ashurst Transportation PNG LNG Papua New Guinea 1, Latham & Watkins Sullivan & Cromwell Oil and gas Newcastle Coal refinancing Australia 1, Allens Ashurst Transportation Alto Maipo Chile 1, Chadbourne & Parke, Carey y Cia Vinson & Elkins, Claro y Cia Power Southern Lights Canada 1, Latham & Watkins Vinson & Elkins Oil and gas Sydney North West Rail Australia 1, Allens Ashurst Transportation North Tarrant United States 1, Latham & Watkins Gibson Dunn & Crutcher Oil and gas Emirates Steel refinancing UAE 1, White & Case SNR Dentons Industry Midwest Fertiliser United States 1, Barnes & Thornburg Pillsbury Petrochemicals RJS Holdings United States 1, Cravath Vinson & Elkins Power Unicredit portfolio Italy 1, DLA Piper, Riolo Calderaro Crisostomo Freshfields Bruckhaus Deringer Power Queensland rolling stock Australia 1, Herbert Smith Freehills Allens Transportation Abbot Point refinancing Australia 1, Allens, Linklaters Allen & Overy Transportation Sandy Creek refinancing United States 1, Latham & Watkins White & Case Power GNL Quintero Mexico 1, Milbank Tweed Linklaters Oil and gas Sydney WestLink Australia 1, Allens King & Wood Mallesons Transportation Conmex Mexico 1, Milbank Tweed, Simpson Thacher & Bartlett, Mijares Infrastructure White & Case Angoitia y Fuentos 6 Project Finance International November

7 LEGAL SURVEY PROJECT LIST SEPTEMBER 2013 TO SEPTEMBER 2014 CONTINUED Project Country Value (US$m) Lenders Sponsors Subsidiary roles Sector TNB Manjung Five Malaysia 1, Adnan Sundra & Low Zaid Ibrahim Power Mersey Gateway Bridge United Kingdom 1, Freshfields Bruckhaus Deringer Ashurst DLA Piper, Hatton council, Allen & Transportation Overy, Macquarie Sydney Airport refinancing Australia 1, Allens King & Wood Mallesons Transportation Xe-Pian hydro Laos 1, Latham & Watkins, Chandler & Allen & Overy, DFDL Mekong Power Thong-Ek Law Offices Sabine Pass United States 1, Skadden Arps Latham & Watkins Oil and gas Pagbilao expansion Philippines 1, Abuda Asia & Associates Latham & Watkins Allen & Overy, existing lenders, Power Herbert Smith Freehills NRG Energy United States 1, Latham & Watkins Kirkland & Ellis Power Sabine Pass United States 1, Skadden Arps Latham & Watkins Oil and gas Nam Ngiep 1 Laos 1, Clifford Chance, McDonald Steed Allen & Overy, DFDL Mekong Power McGrath Melbourne Airport refinancing Australia Allens Herbert Smith Freehills Transportation Vias Nuevas de Lima Peru Mayer Brown, Rodrigo Elias & Medrano Davis Polk, Estudio Transportation Eversholt Rail refinancing United Kingdom Linklaters Allen & Overy Transportation Transmission Gully New Zealand 940 King & Wood Mallesons, Herbert Smith Freehills, Bell Gully, NZTA, Chapman Tripp, ACC Transportation Russell McVeigh Simpson Grierson Perth Stadium Project Australia King & Wood Mallesons Clayton Utz Herbert Smith Freehills, concession holder PPP Linden Cogeneration United States 925 Latham & Watkins Sheaman & Sterling Power refinancing Net4Gas Czech Republic 910 Allen & Overy Kinstellar, Linklaters Oil and gas Tripura India Luthra Power Kirikkale CCGT Turkey 900 Norton Rose Fulbright Dentons Power Pecem Steel bridge Brazil 900 Milbank Tweed Allen & Overy Industry Redexis Spain 887 Allen & Overy Clifford Chance Oil and gas Essar Sidhi India Amarchand Mangaldas Power Georges Besse II nuclear France 880 Herbert Smith Freehills Allen & Overy Power Vattenfall grid sale Germany Taylor Wessing Allen & Overy Flick Gocke Shaumburg Power (Vattenfall) Edinburgh Airport United Kingdom 844 Allen & Overy Transportation Atlantic Power United States 810 Latham & Watkins, Osler Chadbourne & Parke, Goodmans Power Hoskin & Harcourt Maran Nakilat LNG Qatar 807 Allen & Overy Latham & Watkins Oil and gas Moxie Patriot United States 800 White & Case Latham & Watkins Power Waterloo LRT Canada 800 Fasken Martineau Blake Cassels & Graydon Transportation Megalim solar Israel 790 Allen & Overy, Levy Meidan & Co Tadmor & Co Power A7 Germany White & Case Freshfields Bruckhaus Deringer Norton Rose Fulbright, gov, Transportation White & Case, EIB A11 Belgium 790 Freshfields Bruckhaus Deringer Clifford Chance, Stibbe Allen & Overy, concession holder, Infrastructure Nauta Dutilh, White & Case White & Case, EIB K2 Wind Canada Torys Chadbourne Power Aeroporti di Roma Italy 764 Linklaters White & Case, Legance Transportation Panipat - Jalandahar tollroad India Trilegal In-house Transportation N17/N18 Gort-Tuam Ireland Pinsent Masons A&L Goodbody McCann Fitzgerald, NRA Transportation Downtown Crossing United States 761 Nixon Peabody Wyatt Tarrant Dinsmore Transportation Wynn Macau Macau 750 Latham & Watkins Skadden Arps Leisure & property PAU Fertilizer Indonesia 750 Mayer Brown and ABNR Rajah & Tanh, AHP and Oentoeng Petrochemicals Suria & Partners Los Ramones Mexico 750 Shearman & Sterling Cleary Gottlieb Linklaters, GDF Suez Oil and gas Copenhagen Airport Denmark 744 Allen & Overy Clifford Chance Transportation Oneta United States 737 Shearman & Sterling Milbank Tweed Power Oro Negro Mexico 725 Wikborg Rein (for bondholders) Ince & Co Oil and gas Continental Wind United States 713 Simpson Thatcher Sidley Austin Power Kelar Chile 700 White & Case Linklaters Power Ravenhall prison Australia 696 Gilbert & Tobin Allens PPP Direct Energy acquisition United States 685 Cahill Power SPP Slovakia 683 Allen & Overy Baker & McKenzie White & Case (Slovak govt) Oil and gas Copper Mountain Solar 3 United States 681 Shearman & Sterling Latham & Watkins Power Morelos Gold El Mexico 675 Fasken Martineau Cassels Brock Sanchez Mejorada, Velasco y Ribe, Mining LImon-Guajes Loyens & Loeff, Ritch Mueller London Array OFTO United Kingdom 671 Hogan Lovells Allen & Overy Power Project Finance International November

8 PROJECT LIST SEPTEMBER 2013 TO SEPTEMBER 2014 CONTINUED Project Country Value (US$m) Lenders Sponsors Subsidiary roles Sector Agua Dulce Pipeline United States Milbank Tweed Latham & Watkins Jones Walker Oil and gas UKSH Germany 654 Linklaters PwC Legal Freshfields Bruckhaus Deringer, EIB PPP Ventika wind Mexico 650 Allen & Overy Skadden Arps Jones Day (sponsors) Power NRG Marsh Landing United States 649 Milbank Tweed King & Spalding Power Aramco cogen Saudi Arabia 645 Ashurst Herbert Smith Freehills Allen & Overy, ECAs, White & Case, Power Aramco Clermont Coal Mine Australia Herbert Smith Freehills King & Wood Mallesons Mining acquisition Greater Gabbard OFTO United Kingdom Pinsent Masons, Clifford Chance Allen & Overy, Linklaters K&L Gates, ECAs, Freshfields Power Buckhaus Deringer, EIB Guadalupe Power United States 625 Power acquisition Khanon Thailand 622 Ashurst Baker & McKenzie Power Westermost Rough United Kingdom Allen & Overy Linklaters Power Jabiru-1 Satellite Australia 611 Allen & Overy Pilsbury Winthrop Shaw Pittman Telecoms Puerto Bahia Terminal Colombia 600 Milbank Tweed, Bridard & Urrutia Clifford Chance, Prietocarrizosa Transportation Abogados El Paso Pipeline Partners United States 600 Andrews Kurth Oil and gas Opco Gasoducto Sur Peru 600 Shearman & Sterling Allen & Overy Power Peruamo bridge Osan South Korea Lee & Co In house Power M8 United Kingdom Allen & Overy, Linklaters Burness Paull, Ashurst Transportation Odebrecht Offshore Brazil 580 White & Case Davis Polk Oil and gas Newark Energy Center United States Shearman & Sterling Milbank Tweed Power Project NOP Agrowind Onshore Netherlands Clifford Chance Norton Rose Fulbright Allen & Overy, ECAs Power Wind Farm Cairn Energy United Kingdom 575 Herbert Smith Freehills Pinsent Masons Oil and gas Goethals Bridge United States 567 Nixon Peabody Gibson Dunn & Crutcher Allen & Overy, McCarter & English, Transportation NY body Saemangung South Korea Lee & Co In house Power Abengoa Transmission Sur Peru 560 Mayer Brown, Rubio Leguia Normand Shearman & Sterling, Miranda Power Davao Philippines 556 PJS Law Power Bayonne United States 555 Milbank Tweed White & Case Power Tarahumara & Tejas pipe Mexico 550 Simpson Thacher & Bartlett, Ritch Milbank Tweed, Galicia Abogadas Linklakers, NautaDutilh, Luxembourg Oil and gas Mueller Heather y Nicolau counsel CPV St Charles United States Chadbourne & Parke, Miles & Latham & Watkins Kirkland, Marubeni, Pillsbury, Toyota, Power Stockbridge Vinson & Elkins, mezzanine Royal Liverpool PFI Hospital United Kingdom Hogan Lovells Linklaters PPP Aeroexpress Rail Expansion Russian Fed Linklaters Freshfields Bruckhaus Deringer Transportation Infinis sale United Kingdom Norton Rose Fulbright Ashurst Power Petrobras 12 FPSOs Brazil 500 Norton Rose Fulbright Latham & Watkins Oil and gas Rutas de Lima Peru 520 Mayer Brown, Rodrigo Elias & Medrano Davis Polk, Estudio Transportation Long Beach Judicial United States 518 DLA Piper Mayer Brown PPP Spring Energy refinancing Norway 500 Advokatfirmaet Wierholm, Arntzen de Besche (acquisition) Oil and gas Allen & Overy Elenia Finland 500 Borenius, Linklaters Avance Attorneys, Allen & Overy Power Empire Generating United States 500 White & Case Latham & Watkins Power refinancing Oleoducto Central Colombia 500 Davis Polk White & Case Brigard & Urrutia Abogoados Oil and gas EPM Ituango Colombia 500 (Bonds) Skadden Arps Power 8 Project Finance International November

9 FEATURES FIRMS HIRE FOR EVOLVING MARKETS EVOLVING MARKETS IN US P3 AND LATIN AMERICA ENERGY, AS WELL AS MASSIVE FINANCINGS RELATED TO THE NATURAL GAS INDUSTRY WERE THE BIG STORIES FOR LAW FIRMS IN BY ALISON HEALEY AND NIC STONE. In 2014, law firms specialising in US P3 law made moves to get beyond the stops and starts and high-profile disappointments in the P3 space and get ahead of the next wave of P3 transactions. Courthouse and other social infrastructure transactions attracted a great deal of interest but were sparse in number, so firms raced to establish themselves in new sectors ahead of the deal flow. Squire Patton Boggs, for example, has been making a push towards healthcare and has interested parties in several major systems in the US, though that work is in its early days. Transportation work remained steady in US P3 despite continuing high-profile disappointments such as the cancellation of the P3 component of project NEON in August. P3 practices prepared for increased work in water deals in advance of the passage of the Water Resources Reform & Development Act (WRRDA) in May. The Act contains the Water Infrastructure Finance and Innovation Act, which authorises funding for the construction and repair of waterway and port projects across the United States. WIFIA is very closely modelled on the USDOT TIFIA programme and has many similar elements, including interest rates tied to long-term Treasury rates, credit rating requirements, and the nonsubordination/springing parity lien that kicks in during an event of bankruptcy. Infrastructure heavyweight Nossaman brought some key players on board including attorney Ann-Therese Schmid, who has returned to Nossaman as a partner in the firm s Washington DC office. She was previously a member of Nossaman s infrastructure practice in the firm s Austin office from 2005 through to 2006 and most recently worked as a partner at Holland & Knight, representing both public-sector and private-sector infrastructure clients in transactional and regulatory matters. The firm hired of counsel Andrée Blais, who led the crafting of legal services for several major P3 projects in Canada, advising public-sector owners from project development through to procurement, closing, and contract administration through her work with the Alberta government. Her initial work was centred on the Indianapolis Justice Center project in Indiana. Reed Smith hired Mayer Brown s Vanessa Gage as a partner in its financial industry group in San Francisco. Gage has expertise in asset-based lending and structured financing, particularly in large aviation and rail deals. Michael Ledgett joined Dentons Canada from Heenan Blaikie as a partner in the firm s corporate practice, specialising in corporate governance, private M&A, PPP/infrastructure and transportation, acting for governments, government agencies, private-sector developers, operators, lenders and investors on PPP projects in Canada and internationally. LNG export opportunities coloured the market throughout the year, but the mammoth size of the financing deals meant the work was not spread out to many firms but rather centred on a select few was an interesting year for project finance, especially for large LNG projects in the US such as the Cameron LNG project, said Inosi Nyatta, a partner in Sullivan & Cromwell s project development & finance group. Since one of Cameron s goals was to secure a sizeable amount of financing that was lowcost and would match the project s long-term assets and cashflows, the financing plan included two export credit agencies in Japan to provide financing, but also included commercial banks and allowed for future capital markets financing. As part of the financing structure we were able to marry the requirements of export credit agencies with those of commercial banks and, if ever required, bondholders, continued Nyatta. This avenue provides a model for longer-term and multi-source financing for projects with significant capital needs, such as the Cameron LNG project and other mega-projects likely to be developed based on the expanded natural gas and oil production in the United States. The year has been dominated by one-off moves from firm to firm, rather than the full team exodus theme of years past. Shearman & Sterling s global project development and finance practice expanded with the addition of partner Robert Nelson in San Francisco. Nelson joined from Akin Gump, where he worked in the San Francisco and Abu Dhabi offices. Nelson focuses on project development, finance, acquisitions and workouts, as well as private-equity fund formation and investment activity, in energy and infrastructure. In the renewables space firms devoted a considerable amount of time and energy to helping clients navigate Internal Revenue Service (IRS) start-of construction guidance related to the production tax credit (PTC) for wind projects. Project Finance International November

10 Regional firm Lathrop & Gage landed an eight-lawyer team from Polsinelli in St Louis led by partners Julie Gabel, Janice Hetland, Frederick Miller, Jared Minkoff, and Christopher Pierce, along with three associates. The team specialises in tax credit and finance work for lenders, investors and developers. The group has experience advising on state and local tax credits and incentives for renewable energy projects. Elizabeth Herdes joined the Denver office of Greenberg Traurig as national infrastructure safety counsel, supporting the firm s global energy and infrastructure safety practice groups. For nearly 15 years, Herdes served as senior counsel at El Paso Corporation. She focuses on advising clients in the energy space on the transportation of hydrocarbons. Latin American markets were dominated by concerted efforts by firms to bolster their abilities to handle the wave of reforms to the Mexican energy sector. President Enrique Peña Nieto s government has finally made the changes to the country s constitution and laws to allow for greater private investment in the ailing oil and gas and power sectors, and firms have responded accordingly. Hogan Lovells entered into a partnership with prominent Mexican firm Barrera Siqueiros y Torres Landa and opened offices in Mexico City and Monterrey. The move made Hogan Lovells the first global legal practice to merge with a large full-service firm in Mexico. As Hogan Lovells BSTL, the two offices will comprise roughly 70 lawyers, including 16 partners. That was a very significant event, says Raquel Bierzwinsky, partner at Chadbourne & Parke. They are a very successful Mexican law firm and for such a firm to think that it would not be successful on its own, that sent shock-waves through the local legal market. DLA Piper and Mexican firm Gallastegui y Lozano reached an agreement to combine in Mexico City in October. Locally, the combined firm will adopt the name DLA Piper Gallastegui y Lozano and will feature more than 23 lawyers. Rumour has it too that Dentons will try to purchase a local firm in the next year or so. Other firms simply increased the number of lawyers focusing on the country. Chadbourne & Parke added three lawyers to its energy and infrastructure team in its Mexico City office from KPMG, where they advised companies and agencies in Mexico on the implementation of energy and infrastructure projects. David Jiménez Romero joined as an international partner and will become managing partner of Chadbourne s Mexico City office. Squire Patton Boggs brought in Fernando Cano-Lasa as counsel into its energy practice at its Houston office, where he joins following a 12-year stint at state-owned energy giant Pemex. Baker & McKenzie also added seven lawyers to its Mexico City office, led by Carlos Valencia. BakerHostetler added Laura J McMahon as a partner in its energy and shale practice in Houston. She joined from Norton Rose Fulbright, where she co-chaired that firm s Latin America practice group. Mexico has been the big story, everyone and their mother doing work in Latin America has turned their cross-hairs to Mexico, says Dino Barajas, partner at Akin Gump Strauss Hauer & Feld. The energy reforms, he said, were not only seeing an increase in activity for lawyers in the power and oil and gas spaces, but in other infrastructure projects as large companies look to spread themselves across sectors. In terms of trends in financing, lawyers are seeing a greater number of sources of capital trying to be fit into capital stacks. Multilateral and agency debt is still proving to be most popular, but may subside in the coming year, according to observers. Knowing what caveats agencies such as the International Finance Corporation and the North American Development Bank have on their loans saves time later on in the deal-making process. Lawyers are also seeing increased activity from local banks, mezzanine lenders and private equity groups in the region, which is leading to more work in multi-tranche project financings and associated structures. I think there will probably be a lot more local bank financing moving forward, says Marissa Alcala, partner at Chadbourne & Parke, adding that it would be important to get those and international banks and multilaterals seeing eye to eye. The more that local banks do those transactions, the more their understanding of the deals grow and it will put them in a position to be the main lender in a deal, she adds. Another issue facing financiers has been securing land rights for projects, with indigenous populations and groups such as the ejidos in Mexico providing extra work for lawyers. This is particularly true of pipeline and transmission deals that cross multiple geographies, as well as larger power projects such as wind farms. If these problems aren t addressed in the deal, you could end up with a hold-out issue, which will affect a deal from a cost and timing point of view, Barajas tells PFI. He also mentions that smoothing out paperwork with off-takers on power projects and potential issues associated with cross-border deals are also becoming more prevalent. Lawyers are seeing more action in Central America, as countries such as Guatemala, Honduras, Panama and El Salvador ride the wave of increased activity in the rest of the region. Another trend is law firms teaming up with notable local players. In Peru, Spain s largest law firm, Garrigues, has hired four lawyers from local firm Rubio Leguía Normand as it looks to expand its operations in Latin America. The group of lawyers is led by Oscar Arrús and features Sergio Amiel, Thomas Thorndike and Joseph Francis Meier. LatAm is becoming a must-have practice area for firms, says Barajas. Where you have seen international firms look to Europe and Asia for expansion, with pressures such as revenue generation, you have to go where your clients are. A LatAm practice is now more valuable to a firm. 10 Project Finance International November

11 FEATURES STAYING PRAGMATIC IN ASIA-PACIFIC AFTER A PERIOD OF MERGERS AND ACQUISITIONS, THE AUSTRALIAN LEGAL SCENE IS CONCENTRATING ON WHAT IT DOES BEST WINNING MANDATES FOR THE BILLIONS OF NEW PROJECTS AND PRIVATISATIONS. ELSEWHERE, FIRMS CONTINUE TO FLOCK TO NEW MARKETS. BY JOHN ARBOUW AND MINERVA LAU. Australian legal firms are indeed vying to win those jumbo deals, which will not only be the sale of the century but also one the largest sources of fee income for law firms. While 2015 promises to be a good year, the past year has also seen an abundance of work as infrastructure projects such as the East West Link, the North West Rail link and a swag of large refinancing advice kept the Big 6 law firms busy. When you consider that our law firm ranked first in the world for value of deals closed in the third quarter of this year, we should not complain. However, much depends on the luck of the draw given that many of the deals involved bids, mainly PPPs and privatisations. More activity in greenfield energy and resources transactions would be welcome, says Allens Linklaters partner Phillip Cornwell. The consolidation phase of the past legal mergers and acquisitions has contributed to providing stability and growth, with poaching of law staff nowhere near the levels of the past few years. The partner or senior legal staff movements that have occurred have been largely to fill perceived holes in offices in Melbourne, Perth and Queensland where new privatisations and new infrastructure projects are coming on to the market. The number of privatisations coming up has meant we are on the lookout for more lawyers with suitable experience. At the moment, the pipeline in privatisations is so strong that it is hard to see the flow of work in that sector abating. Similarly, PPPs and infrastructure finance generally will continue to be strong, says Cornwell. With the merger wave turning into a trickle, the concentration this year has largely been on consolidation. The King & Wood merger with Mallesons (now KWM) in 2011 provided the firm with a swag of Chinese-based and Chinesespeaking lawyers but the difficulty of winning work inside greater China continues to be difficult in terms of the lack of a corporate legal framework in which to operate. However, as the first global law firm to be headquartered in Asia, KWM believes that the strategy is paying off in terms of providing clients with both international and domestic expertise. Blake Dawson has long held broader Asia- Pacific ambitions and had a partner stationed in Shanghai back in the early 1990s. The merger with Silver Circle firm Ashurst last year was meant to provide a Europe, Asia-Pacific and Australian connection for clients that has largely been achieved, says the firm. The structure of the firm is changing. After almost 30 years with the firm, including the past six years as its managing partner in Australia, John Carrington retired from the Ashurst partnership on October 31. In a sign of the times, the top-down leadership structure has been replaced and there will be no successor to the role of Australian managing partner, with the responsibilities of the position to be shared across the firm s Australia-based leadership group. Freehills took the Silver Circle plunge in its partnership with Herbert Geer. The merger made Herbert Smith Freehills the largest firm in the Asia-Pacific region as measured by number of lawyers, with 2,800 lawyers in total, 450 of which are partners. Last month, Herbert Smith Freehills entered into a new relationship with Singapore law firm Prolegis LLC, effective November 1. Gilbert & Tobin has always been proudly independent and, according to partner Damian McNair, 2014 was a strong year for the firm, with a number of greenfield projects driving activity levels. This included greenfield mining and resources projects with associated infrastructure such as deepwater ports and heavy haul rail networks, as well as greenfield wind and solar projects and more to come depending on the resolution of the RET and upon the ACT wind auction announcement at the end of December 2014, McNair says. Greenfield social and economic PPPs will continue at the current pace and infrastructure asset sales are primarily with buyers such as infrastructure funds and onshore and offshore superannuation funds. The need for resolution of the Renewable Energy Target in Australia to spur the renewables funding sector is a theme among all the law firms. The political uncertainty around Australia s renewable energy target has had an impact on the ability to obtain financing for new projects. However, we expect there will continue to be opportunities for smaller, less high-profile projects in the year ahead, says Bill Glover, Project Finance International November

12 finance and projects partner at global law firm DLA Piper. The stage is set for more law firm growth in 2015, with all the major firms registering increased profits. The internationalisation of law firms is mostly complete. Whether its Australia, Hong Kong, China, South Korea or Japan, the larger firms all have a footprint in those markets. Nonetheless, there are other new markets in the region to explore and focus on. And Myanmar is making a big splash as it opens its doors after five decades of economic isolation. The country wants to attract investments, and investors would be followed closely by their bankers and lawyers. Indeed, the country has recently awarded licences to nine foreign banks ANZ of Australia, Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corp and Mizuho Bank of Japan, OCBC and UOB of Singapore, Bangkok Bank of Thailand, Industrial & Commercial Bank of China and Malayan Bank of Malaysia. Law firms similarly are flocking there, to help pave the way for new investors. A number of firms, with no practice in Asia (except for one or two), just want to be first in setting up an office there, said one international lawyer based in Singapore. His own US-based firm is still to set up a presence in Yangon, but he said that the firm was taking its time. According to a report published by PFI s sister magazine Asian Legal Business, about 20 international firms have set up offices in Myanmar over the past two years, and they include Allen & Overy of the UK and Baker & McKenzie of the US. A majority are regional firms, mainly from Singapore and Japan, as well as Cambodia, Malaysia and Thailand. B&M opened its office in Myanmar recently, with Christopher Hughes as partner based there. Myanmar has been covered by the firm primarily from its office in Bangkok, which will continue to provide support. It boasts of being the only major international law firm so far with a senior person a partner actually based in Yangon, and is still expanding its team there. South Korea is an important a topic as a few law firms have announced plans to set up office there but have not yet actually done so. With increased involvement and participation in projects by South Korean companies such as Samsung, Daewoo, Daelim and Kogas, as well as Korea Exim Bank and K-Sure, law firms would have to mull how to best cover that market and build relationships. Some firms, such as L&W, are currently covering the Seoul market from their Tokyo offices and from Singapore as well. Singapore is home to a number of international law firms and, like Houston, it has made a name in becoming a global hub for LNG business. A number of law firms have boosted their presence in the city state, and providing services to South Korean chaebols may come from offices in Houston, Singapore and Tokyo. Paul Hastings, for example, has an office in Seoul, but their main guy Joseph Kim has moved to join the Tokyo finance practice of Hogan Lovells. He is a partner in the infrastructure, energy, resources and projects (IERP) team. Setting up an office is Singapore is relatively easy but opening an office in Seoul is more challenging. Law firms are finding it difficult to move people there and one probable factor is the low fees paid to law firms. Two years ago, many firms were announcing plans to open offices there, but apparently there have been a lot of shake-ups. Some firms are taking it slow, and just letting things shake out and settle down. Tokyo however is a different market. There is a big base of clients [in Japan] who used to pay international rates. They also have a long history of involvement in the US, said another lawyer. He added that South Korea was an exact opposite. The legal market there was still very much developing. There is a noticeable divergence in strategies among law firms. Some are looking at a much broader range of mandates, others are more focused on the high end. Keeping the practice is not just about huge US$10bn $20bn LNG deals, there are law firms that are also taking the smaller US$10m $15m deals. We build relationships not because we are doing the US$10bn $20bn deals, but because we are doing US$10m $15m small oil and gas deals, said a law firm partner. Lawyers, however, continue to move around, although there seem to be fewer this year. One is Joseph Kim, mentioned earlier as joining Hogan Lovells. He is a Tokyo-based lawyer focusing on power projects, upstream and midstream natural resource projects, and renewable energy projects, including LNG related. He is expected to enhance the firm s Japan and South Korea outbound investments and financing offerings. Gibson, Dunn & Crutcher has expanded in Hong Kong and in Beijing with the addition of two partners, Patricia Tan Openshaw and Fang Xue respectively. Openshaw, formerly from Paul Hastings and Skadden Arps, will continue her energy and infrastructure practice. Xue will also continue to focus her practice, which is cross-border mergers and acquisitions, private transactions and other general corporate transactions. Xue was previously counsel with Shearman & Sterling. At Baker & McKenzie, Milan Radman is a new partner in the Singapore office, and his practice focuses on resource and energy transactions, in particular, structuring, restructuring and implementing transactions in the mining and oil and gas sectors. Shearman & Sterling has expanded its global project development and finance practice in Singapore with the addition of Anthony Patten, who joined from Allens and previously was with Ashurst. He led Allen s oil and gas sector team in Asia and Australia. 12 Project Finance International November

13 FEATURES CHASING THE FEES AND STAYING AHEAD AS THE EUROPEAN PROJECT FINANCE MARKET REINVENTS ITSELF, LEGAL ADVICE NEEDS TO CHANGE TOO. WITH THE RISE OF PROJECT BONDS AND HYBRID FINANCINGS, PROJECT FINANCE LAWYERS NEED TO ADAPT THEIR PRACTICE TO FIND NEW PROFITABLE MARKETS. BY STEFANO BERRA. Here is the advice a project finance banker gave me to stay abreast of what is happening in the infrastructure market. Talk to the lawyers, he said, they are the ones who know which projects are coming up long before the news reach the lenders. The banker s point was simple. Lawyers, like other advisers, get involved in the structuring of projects in the early stages and must act quickly to secure a mandate. I check the market news every morning, but if I learn about a project from the news I know it s too late, says a French project finance lawyer. As a consequence, lawyers say it is paramount for them to keep pace with the latest trends in the shifting European project finance market. Two years ago, project bonds were all the rage. Everyone was talking about them but nobody had closed one. Then last year, project bonds finally began to be issued and within another 12 months the banking market returned to the fore very aggressively. The rise of alternative financing led by project bonds is a reality, says Tim Conduit at Allen & Overy. Although the banking market is currently very strong, there is a real funding mix that simply didn t exist until very recently. As a lawyer, rather than advising only banks you find yourself advising investors who are themselves becoming very powerful and becoming more and more involved in projects at an early stage, he adds. It is important to understand the approach of these investors as a simple example, unlike banks, they may not wish to be repaid early. This kind of dynamic can affect the approach of the advice you give them. Law firms are always scouting for untested financing structures and first-of-a-kind deals because they tend to be more profitable. Generally, deals with higher levels of complexity and higher risks require better quality legal advice and command higher fees. Over the past three or four years when we were asked to submit a quote for project bond work as part of a project finance transaction, we put it in and we knew that this option was very unlikely to be drawn, says Dirk Trautmann, at Norton Rose Fulbright in Munich. Now, especially after the A7 motorway, it is much more realistic. This changes the way in which you advise, and the skill set required, he continues. Project bonds are often structured under UK law rather than German law, so you need to combine the two areas of expertise. With a project bond you can charge higher fees but only due to the higher amounts of time and resources required for the work. It is also more interesting intellectually, because it s a new field that you have to contribute to develop. The highest-earning magic circle law firms, which generally boast around 1m of profit per-partner Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters and a handful of other Anglo-Saxon firms have focused their work on developing capital market expertise applied to project finance transactions. Such deals included the A11 road in Belgium, the A7 motorway in Germany, the Greater Gabbard offshore power grid in the UK, the L2 road and the Axione broadband project in France. These firms have tried to expand their infrastructure teams by adding new lawyers with different skills and practising different areas of law depending on the expertise needed on each project. Conduit says his firm has assembled teams with lawyers focusing on M&A, or construction law, or banking and finance, or capital markets all specifically applied to the infrastructure and energy field. The market has changed and it is no longer enough for a lawyer to be a jack of all trades, he says. Every deal needs to have a bespoke structure. You can t unthinkingly apply standard schemes to these projects. Others stress that project finance lawyers now need to understand a wider array of types of law to co-ordinate work successfully. You become a bit more like a conductor, trying to direct everyone, says Eric Fiszelson, at Herbert Smith Freehills in Paris. As a project finance lawyer you need to demonstrate you can handle lots of different areas of expertise securitisation, corporate, DCM and so on. The toolbox is expanding and this makes the practice more exciting. Because the lines are moving we are involved from the early stages in how the deals are structured, while a few years ago it was just during the debt financing. Paule Biensan, at White & Case in Paris, says the experience accumulated over the years on complex project finance transactions stands practitioners in good stead as new skills and expertise are thrown into the mix. Project Finance International November

14 Project finance lawyers are generally still required to handle a variety of aspects of law, she says. A big project finance deal has always had finance, public law, construction, environment and EU lawyers involved. The golden rule of a project finance lawyer is to be able to gather together all these various expertise. You need to be a generalist lawyer who is capable of understanding all different aspects of a project. It s an exciting time, she continues. Our training as project finance lawyers has prepared us for the changes in the market. Working with expertise of others is what we have always been doing. It s in our nature. The players in the market may be changing but this principle remains the same. The growth of the project bond market is only one of the developments that are affecting the practice of project finance law in Europe. The uptick in infrastructure M&A compared with greenfield deals and the rise of hybrid financings have also been important. Each country and sector has its peculiarities. Germany has been characterised by competition among the main law firms to get on a few large greenfield projects namely upcoming offshore wind farms and A-Model motorways. Due to their complexity and size these deals require good quality and flexible legal advice. Altogether we are in a very competitive market, where all top firms want to be in any of the projects above 200m, says Daniel Reichert- Facilides at Freshfields Bruckhaus Deringer in Frankfurt. Quality of advice and strong relationships are key, but we also have to be highly efficient to be competitive on pricing. The offshore wind sector is the domestic market segment with the most interesting projects, he adds. On the infrastructure side, the A-Model has turned into a product line with its own pace, a stable market where a project comes up every year. The recent UKSH hospital project was also well run, but I feel this is not the start of a new era of large-scale German infrastructure PPP financings. The German legal market has experienced a certain stratification, perhaps due to the marked split between large projects that attract the big international firms and the small-scale deals, mostly renewables, that cater for smaller and often domestic outfits. A lot of renewable projects like small and midsized onshore wind farms have become more of a commodity, says Norton Rose s Trautmann. Onshore wind is very developed with much more standardisation. In case of domestic projects, there is a tendency that more players are doing due diligence and documentation work internally, especially for small projects. Further some smaller boutique firms have come up in the market. As a consequence, we are rather focusing on portfolio transactions and on offshore wind. Something similar is happening in France too, where a host of simpler and smaller PPPs such as university and government building projects represent one end of the market and toll roads the other, says Biensan of White & Case. Small to medium-sized greenfield PPP deals have become more commoditised, she says. Magic circle and top firms are not doing these any more. We are focusing on larger projects and more complex financings. In the energy sector there are five large offshore wind farms that will sometimes be financed. Motorways are also coming back, with their challenges on how to approach traffic risk. Smaller firms that do not target the high magic circle earnings-per-partner ratios can be more nimble and competitive and win mandates on simpler projects more easily, says Driss Bererhi at Bird & Bird in Paris. Now it has become easier for public law lawyers or general banking lawyers to assist on certain types of deals, for example certain standard PPPs, he says. On standardised projects Lawyers aim to stay ahead. REUTERS/Peter Nicholls 14 Project Finance International November

15 EUROPE the clients are looking for good documentation but nothing too complicated. Depending on complexity, the clients will make different choices: if your deal is extremely complex you usually go for a top-five firm, if it s less complex you go for another firm. If you have a small project you don t need to use a Rolls-Royce, you can do it with a good Volkswagen. Other markets such as Italy s can be a bit messier. The project finance legal market in Rome and Milan features a few big local names that regularly advise on the most high-profile deals Bonelli Erede Pappalardo and Gianni Origoni Grippo Cappelli & Partners above all, both of which advised on the 1.2bn TEM toll road deal last year. This could be linked to the bigger role of domestic sponsors and lenders compared with other countries, even though this could change as more deals are done through English law-based capital market solutions. Another pillar of the Italian market are international firms that would not necessarily count among the top-five players in other countries but have scooped some of the best Italian practitioners, such as Ashurst, DLA Piper and Norton Rose. Magic circle firms on the contrary have a much smaller footprint. It is not uncommon to find much smaller local firms on large greenfield deals too, leading to a certain overcrowding. The market is very aggressive on fees, says Franco Vigliano, at Ashurst in Milan. There are only a few firms with excellent lawyers alongside firms with little experience bidding for the same mandates. In this changing market you need to have international know-how otherwise you would find yourself working on outdated schemes within six months. And at the same time you need to have Italian lawyers well connected to the national market. In this scenario of strong competition even the big international firms with experience are not able to support large teams of professionals that would be required for the most complex projects, he adds. They are undercut by smaller firms with little know-how that are trying to enter the market with very low fees. As a result you don t see any of the magic circle firms here. On paper, Italy offers a decent number of 1bnplus greenfield deals such as big toll roads, but such projects are very slow-moving and often delayed. They seldom offer the best value for legal advisers, who generally charge fees based on billable hours capped at certain levels based on estimates of the time needed to close a deal. Infrastructure acquisitions and leveraged finance can offer better opportunities, says Vigliano. The most profitable sectors are not the classic greenfield project finance market, but the M&A and structured finance market for secondary infrastructure deals, he says. The project bond is also a promising area, but we still need to close the first such deal. These deals are shorter-term transactions where it is easier to value your contribution as a lawyer correctly. Greenfield project finance deals continue to be interesting for the large firms because of the size of the transactions, but margins on fees are proportionally lower. Spain has a peculiar market. Unlike Italy, magic circle firms are very strong. Allen & Overy, Clifford Chance and Linklaters have all advised on the two largest projects of the year, the Redexis gas network bond refinancing and the Redexis gas network bond. New financings, however, currently represent only a small fraction of the Spanish legal market. Less visible restructurings in both the renewable power and infrastructure sectors account for a big part of law firms earnings. What s more, as Spanish sponsors and lenders strive to diversify away from domestic sovereign risk and into Latin America and other emerging markets, Spanish lawyers tend to follow suit. Fees from greenfield project finance deals in general are not as relevant as they were in the past, says Alfredo Barona, at DLA Piper in Madrid. The most relevant area is the restructuring of projects in the energy sector. After that come deals of Spanish companies or Spanish banks with an international element. Finally, there are the local project finance deals, which, so far, are small in size. The market is still quite challenging, he says. Clients are consistently seeking to reduce legal costs. Although this trend started with the crisis, I think that it will not change in the near future. Clients are able to pay more only on innovative deals. On those deals that are not rocket science you have to be prepared to be more competitive. Legal firms must try to be positioned in innovative deals, although since there are not too many of this nature, the challenge is also to remain competitive in ordinary deals whilst keeping the provision of excellent legal services. Domestic firms such as Uría Menéndez, Garrigues and Cuatrecasas Gonçalves Pereira are key players that compete very strongly with international firms in the Spanish market and are increasingly expanding abroad to make up for dwindling fees in their home market. What keeps us busy is the work on projects by Spanish firms abroad, says Fernando Bernad at Cuatrecasas in Madrid. Little by little we are trying to develop our international practice linked to local law other than UK law or New York law. Our point of view is that we can complement the Anglo-Saxon firms but it doesn t make sense to compete with them. As another example of the diversification the project finance legal sector is undergoing, the increasing complexity of solutions available in the debt market is creating more and more niches that law firms are trying to adapt to in a profitable way. Credit reality is getting more complex as there are hedge funds providing direct loans, high-yield and project bonds, concludes Bernad. Standards such as the LMA [Loan Market Association] will be used but will not monopolise the market. Project Finance International November

16 FEATURES LAW, DISORDER AND SHIFTING SANDS UK LAW FIRMS HAVE BEEN PILING INTO THE AFRICAN PROJECT FINANCE MARKET OVER THE PAST FEW YEARS IN A NUMBER OF DIFFERENT WAYS. INFORMAL PARTNERSHIPS HAVE WORKED IN SOUTH AFRICA, BUT MAY COME UNSTUCK AS OPPORTUNITIES SHIFT. BY COLIN LEOPOLD. Lawyers in South Africa must be an anxious lot. Partnerships alliances best friends. When it comes to tie-ups with international law firms you might forgive them for wondering where things are leading, and at what speed. At the end of last year, PFI reported on the list of UK law practices setting up shop on African turf. Allen & Overy had opened an office in Casablanca at the end of 2011, followed by Clifford Chance in Since then A&O has said it will open a second in Johannesburg, making it the first of the magic circle law firms to establish a presence on the ground in South Africa. It is rumoured that Clifford Chance will follow early next year. Clyde & Co is also rumoured to be preparing to enter the market, Dentons boosted its Casablanca team last month, and there is continued speculation as to whether local firm Bowman Gilfillan will partner with an international firm. Adopting a different strategy, Simmons & Simmons tied itself to Canadian firm Fasken Martineau s Johannesburg operation in August. Although not relocating any of its own lawyers to the city, Simmons move which taps into Fasken s 2013 acquisition of local 76-lawyer strong Bell Dewar in 2013 is the perfect example of how UK lawyers are using strategic alliances in South Africa to expand beyond the south. The advantages of a South African base are obvious and many: a shared language, time-zone, rule of law and a market open to international brands. US firm White & Case claims to be the first foreign law firm to have opened an office there, in 1995, adding five new partners last year (three from South African firms Webber Wentzel and Bowman). It now describes itself as wellpositioned, with 18 lawyers on the ground and a network that can draw from more than 150 project finance lawyers globally. To be credible on the continent you have to have a presence, says Jeremy Brittenden, partner at Hogan Lovells. But many firms haven t. Some still see African political risk and a lack of bankable projects as reasons to tread carefully. This has given rise to a bespoke approach. Rather than following A&O and Clifford Chance with a new office, in 2012 Linklaters entered into an alliance with South African powerhouse Webber Wentzel. Our approach is to have people on the ground as much as possible, said Linklaters Sarosh Mewawalla to PFI last year. In addition to London and Dubai, we are in Lisbon and Paris, and this gives us strong lusophone and francophone capabilities. We can better cover the market from the bigger hubs. DLA Piper s Africa group is an alliance of independent law firms located in 13 countries throughout the continent, from Egypt to Zambia, Namibia to Kenya, and including South Africa, Ghana and Tanzania. In South Africa, Hogan Lovells has merged with Routledge Modise. Eversheds entered the market twice in just a few years creating an alliance with Routledge Modise in 2008, and then again with Mahons Attorneys in In contrast, Norton Rose operates almost independently with a franchise-type model, taking over Deneys Reitz in 2010, but holds on to its capabilities in London, Paris and the Middle East. The lack of a traditional business strategy in a market still very much in its infancy can seem confusing. But it is the informal non-exclusive partnerships that seem most popular. They provide a short-cut to years of reputation-building and fostering client relationships without the commitment of opening an office or making a takeover. Partnering has become an accepted norm in South Africa now that the major international law firms have arrived. There is no doubt the landscape of law in South Africa has forever changed. It s reshaped our practice enormously, says Warren Drue at Hogan Lovells in Johannesburg. For the South Africans, this new shape takes the form of greater legal expertise, the ability to Jeremy Brittenden, Hogan Lovells 16 Project Finance International November

17 MEA offer a seamless service across all jurisdictions to the client and the goodwill generated from piggybacking on an international reputation. And so, not surprisingly, South Africa s largest remaining law firms have stated their desire to remain independent, feeding off the work that these international alliances can deliver. There are still opportunities to partner in South Africa or alternatively for international firms to set up shop on their own, says Drue. There will always be a place for boutique-type practices but the inclusion of international firms will obviously make the environment much more competitive. Although it has offices in Casablanca and soon Johannesburg, in South Africa A&O also partners with local firms Bowman and ENS. Elsewhere, it has built up a network of local law firms to be active in 35 of the 54 jurisdictions. While some firms have taken an alliance approach, it has developed a best friends strategy, as opposed to the exclusive alliance that Linklaters and Weber have done. In our experience, the exclusive alliance approach can ultimately create a lot of tension if the financial benefit is not shared, says Tim Scales, partner at Allen & Overy. One or other of the parties may end up getting disappointed under an exclusive referral arrangement if they feel they aren t getting their fair share. But the alliance or best friends approach may not last. South Africa is seen as a special case because the local firms have a strong coverage of the market with some international contractors. Elsewhere in Africa it s generally an English-law environment, so sponsors and developers turn to UK firms. Everyone interviewed for this article stressed how the market for law firms outside South Africa was a wholly different one. Outside South Africa, 11 of the 12 other offices that international firms have established on the continent are located in North Africa. That s partly because there is a lot of resource there, says Brittenden. Libya has more oil and gas than Nigeria with a much smaller population and there is proximity to Europe. Of course there are political issues there also that need to settle down before you can announce in a more public way what you are doing. From an office in Casablanca, there is little difficulty expanding across North Africa, he says, adding: The trade links are quite strong, across and down into Central Africa. Finding the right local firms is the challenge. The few that have opened offices in South Africa may stay put. Jason Kerr, partner at White & Case, says the firm is seeing more appetite for on-theground support in South Africa. As such, we see South Africa developing into one of the major African drivers of cross-border business, particularly into Southern and Eastern Africa, he adds. Looking upwards into Southern and Eastern Africa makes sense, of course. Mozambique and Tanzania are the new gas powerhouses in the east, and in the west Nigeria s power reform programme has attracted a lot of attention from UK firms all over the continent. So where in In Nigeria, now Africa s largest economy, the leading law firms have been very reluctant to form exclusive partnerships and are looking to set up in London Africa will the next alliances with UK law firms take shape? Norton Rose is understood to have started an operation in Tanzania. As Nigeria and the East African market continue to grow there could be demand and appetite for us to do something similar there, says Andrew Gamble, a consultant at Hogan Lovells. But it is also in some of these countries where the alliance approach could fall down. Many law firms in Nigeria and Mozambique are already terribly busy with referral work, says Drue. Their concern about partnering is being excluded from such referral opportunities. In Central and East Africa there is less appetite among local law firms to share the same brand and they prefer to have looser associations where they can work with a number of different international firms, says Britten. That s a reflection of partly the local market doesn t value international brands in the way South or North Africa does, he says. One [also] senses the local law firms don t have the confidence in their own economy to support that kind of large platform. In Nigeria, now Africa s largest economy, the leading local firms have been very reluctant to form exclusive partnerships and are instead looking to establish their own presences in London. Regardless of their next move, the trend towards a global elite based on the UK s expansion model seems clear. UK firms have prospered in the international field while the US model, with the exceptions of Baker & McKenzie and White & Case, are not so much stay-at-home as reluctant Tim Scales, Allen & Overy Project Finance International November

18 to open offices elsewhere, and when they do they haven t necessarily had the same type of success as the operations run from the UK. Old colonial ties are oft-cited reasons for this, but it would be unwise to rule out the US firms just yet. Their greatest opportunity yet could come from President Obama s recently upsized Power Africa initiative, which supports US developers and is backed by OPIC and US Ex-Im. Latham & Watkins and Orrick Herrington & Sutcliff, which advised on Nigeria s first toll road and is now working on Congo s Inga 3 dam, would be first in line. And of course, links with Washington will always be an advantage in the African market along with a London or Paris head office. Work may also begin to flow in the other direction. Increasingly, instructions are flowing from African firms to international firms, as well as in the other direction, says Scales. It seems unlikely that the informal nature of many alliances will continue in the long-term though. While some firms try to keep a close eye on referral work and on which relationship is proving the most useful, others will inevitably be left waiting in the rain. Scales says: We keep close track of referrals to and from local firms. Secondment programmes and opportunities for local lawyers to move within an international partner organisation may strengthen ties and create a sense of loyalty but the profit motive may be harder to see when arrangements are not exclusive. So what s the best approach? Scales says the opportunities in East and West Africa make Nigeria and Kenya the obvious hubs of the future and the firm is keeping a close eye on how the legal market in these jurisdictions evolves. It s inevitable that international firms will continue to open in Africa, he adds. But they will need to find the right fit. Local firms will often operate different business models that would need to be accommodated, and there are also regulatory issues to overcome a number of these markets are quite protective. Indeed, one lawyer at a well-known US firm described how partnering with local firms in some markets might actually be a burden due to hidden loyalties and political alliances. Another path may be to follow the sponsors, or indeed the lenders, which are most active in the market. The sponsor and lender community has traditionally been quite small, says Scales. That is changing, however. While much of the activity in the Sub-Saharan African IPP market in the past has been down to regionally-focused developers such as Globeleq, Aldwych and Contour, a number of larger international players such as GDF-Suez, Taqa, Acwa and EDF are now showing increasing interest in Africa. On the lender side, we are also seeing a broadening of interest, with commercial banks becoming more active, in addition to the multilaterals and DFIs that have been the primary source of financing for many years. This strategy has been working well for the firm, which works closely with developers in the first category and already has strong relationships with the bigger players. On the lender side, it s a similar story. A traditionally tight market has been dominated by DFIs such as the EIB, IFC, FMO and AFDB and they have tended to work with preferred firms, but the entrance of commercial banks into more project financings may provide opportunities for law firms with firmly established lender relationships. Ironically, of course, many of the commercial bank transactions in Africa are dominated by South African banks such as Standard, Nedbank and First Rand, so perhaps that new Johannesburg office might not be such a bad idea after all. n This article first appeared in PFI s Middle East & Africa Report in September Cityscape of Johannesburg in South Africa. CITYSCAPE REUTERS/Euroluftbild.de 18 Project Finance International November