Legal CF map
LEGAL CORPORATE FINANCE MAP WE’RE LIVING IN UNCERTAIN TIMES FOR CORPORATE FINANCING AS STORM CLOUDS GATHER OMINOUSLY OVER THE WORLD ECONOMY. PREDICTING THE WEAKEST EXPANSION SINCE 2003, THE IMF RECENTLY REDUCED GLOBAL ECONOMIC GROWTH PROJECTIONS TO 4.1% FROM 4.8%, THE SECOND CUT WITHIN THE LAST TWO MONTHS IN THE FACE OF RAPIDLY WORSENING CONDITIONS. Everyone knows the ingredients of the story; sub-prime mess, credit crunch, tougher lending conditions and tumbling equity markets, but do they all add up to a global meltdown and the end of M&A activity as we know it? It seems unlikely. But we are seeing evidence that a new international deal landscape is emerging and that the commercial world is adapting to the different realities that surround it. The starkness of the contrast between M&A activity in the first half of last year and that recorded at the beginning of 2008 depends largely on where you are located in the world. It is the world’s traditionally dominant financial blocs the USA, the Eurozone and Japan - that have seen their growth figures slashed by the highest margins and which are now hovering around the 1.5% projected growth mark. It comes as no surprise therefore that it is the deal watchers in these economies that are reporting the most significant squeeze on credit. Outside these zones, the M&A machine trundles on as usual. While China’s growth prediction has dropped to single digits, it is still at a rate most Western leaders would kill for. Despite fears of an overheating stock market, the drive towards consolidation on the Chinese market means that there is still a huge strategic M&A impetus in the country. In another newly emerged economy, Russian firms involved in international mergers report no direct effect from the credit squeeze: indeed Russian trade buyers have been busy booking shopping trips overseas in the last few months. Last year saw a new type of investor materialising into the global consciousness – the sovereign wealth fund. Buoyed up by huge surpluses of foreign currencies resources generated from oil, gas and export activities, government-backed investment funds from Russia, China and the Middle East have emerged as fundamental props to the Western economy, even if they are viewed with suspicion by some politicians. It was sovereign wealth funds that stepped in to inject the cash-strapped US investment banks caught short by the sub-prime crisis with Merrill Lynch receiving a cash injection from Singapore’s Temasek fund and Citigroup being thrown a lifeline by the Kuwait Investment Authority. Together, sovereign wealth funds now control almost $3 trillion, five times more than private equity and bigger than the global hedge fund industry. Since the fallout from the sub-prime crisis, sovereign wealth funds have pumped around $75 billion to stabilise the West’s teetering banks. Despite the general gloom, it seems that even in the credit-strapped zones that are earmarked for lower growth next year, particularly in the Eurozone, advisers remain confident that M&A activity will not
come to an abrupt halt. Most are expecting some kind of slowdown, albeit one that is short and shallow. Commentators from mainland Europe confirm that although the highly leveraged mega-deals have dropped away, mid-market activity continues at a robust level. Some countries even report the return of the strategic buyer now that prices are set to come down to a more realistic level. Even if global growth dips into the negative, canny investors will still find opportunities. David DeBenedetti from Warsaw based law firm DeBenedetti Majewski Szczesniak said: “The good part of a recession is that it creates opportunities for those who are willing to invest. I believe that there will be more crisis-based and restructuring work. The funds that have been quiet during the good times will be out on their shopping sprees.” It seems like a case of weather-watching for the whole world, and if necessary getting ready to bend in the wind if there is trouble ahead.
May 2009 Corporate INTL 61
Legal CF map
Legal CF map
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UK - Ashurst
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Charlie Geffen - Partner charlie.geffen@ashurst.com + 44 020 7638 1111 www.ashurst.com
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FRANCE - Gide
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Antoine Bonnasse bonnasse@gide.com + 33 140753617 www.gide.com
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62 Corporate INTL May 2009
Albena Goleminova office@lexlocus.com + 359 2 954 99 91 www.lexlocus.com
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Tom Kyriakopoulos tk@kelemenis.com + 30 210 3612800 www.kelemenis.com
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Mr Yiannos G. Georgiades - Managing Partner Yiannos.georgiades@gmadvocates.com Miss. Rebecca E. Howarth - Legal Consultant & Advisor Rebecca.howarth@gmadvocates.com + 357 22 819 292 www.gmadvocates.com
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Maya Ghellal contact@ghellal.com +213 21 91 42 30 www.ghellal.com
Sam Habbas/Ahmed Barakat/Rob Little asar@asarlegal.com +965 2240 0061 / 2 / 3 www.asarlegal.com
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Sam Habbas/Mike Durgavich asarbh@asarlegal.com +973 17 533182 / 3 www.asarlegal.com
Vladimir Sokov, Partner v.sokov@pgplaw.ru +7 495 967 0007 www.pgplaw.ru
Daniel Del Río delrio@basham.com.mx Miguel Angel Peralta peralta@basham.com.mx + 52 55 5261 0400
CHILE - Larraín, Rozas, Lackington, Rencoret & Urzúa Abogados
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BAHRAIN - Al Sarraf & Al Ruwayeh (In Association with Elham A. Hassan & Associates)
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MEXICO - Basham, Ringe y Correa, S.C.
KUWAIT - Al-Sarraf & Al-Ruwayeh
ALGERIA - Ghellal & Mekerba
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Gabriel Oussi go-law@oussico.net + 963 11 33500090\1
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RUSSIA - Pepeliaev, Goltsblat & Partners
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SYRIA - Oussi Law
CYPRUS - GEORGIADES & MYLONAS Advocates & Legal Consultants
GIBRALTAR - Hassans Javier Chincotta, Managing Partner javier.chincotta@hassans.gi +350 200 79000 www.gibraltarlaw.com
BULGARIA - Lex Locus
Matthias Benecke matthias.benecke @freshfields.com + 49 30 20 28 36 00 www.freshfields.com
GREECE - Kelemenis & Co
SPAIN - Uria Menendez Carlos de Cárdenas Smith ccs@uria.com + 34 915 860 662 www.uria.com
GERMANY - Freshfields
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Carlos Urzúa curzua@lyrabogados.cl +56 2 4119200 www.lyrabogados.cl
BOLIVIA - Moreno Baldivieso
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Luis F. Moreno G. lmorenog@emba.com.bo +591 2 244 1600 www.emba.com.bo
May 2009 Corporate INTL 63