Since it exited from an emergency bailout from the European Commission, the European Central Bank and the International Monetary Fund, and began its rapid recovery, Ireland has enjoyed star-performer status in Europe. Ireland’s GDP grew by 6.7% in 2018, making it the region’s fastest-growing economy for the fifth consecutive year. Simultaneously, according to the EY Attractiveness Survey Europe, foreign direct investment (FDI) in Ireland has been reborn, leaping a remarkable 52% compared to 2017 while the EU suffered an overall decline.
Of the 265 new investment projects announced in Ireland last year, 134 featured first-time investors – the highest total in a single year, according to IDA Ireland. ‘The challenge now,’ says the IDA, ‘is to make sure the FDI portfolio grows further’. This is some challenge given the headwinds of Brexit and a broader economic slowdown. Although such external factors may ultimately derail their ambitions, Irish law firms have been making good while they can.
‘It has been a particularly busy period for FDI,’ says Michael Jackson, managing partner of Dublin’s Matheson. ‘Growth is coming from longstanding projects, which are expanding further, and new FDI, with the pharma, tech, life sciences and financial services sectors continuing to lead the way. Ireland is perceived by many as offering a degree of certainty, a strong track record, and a history of welcoming investment and being able to help FDI projects to establish and flourish over a period of time.’
‘It has been a particularly busy period for FDI. Ireland is perceived as offering a degree of certainty.’
Michael Jackson, Matheson
Julian Yarr, managing partner of Dublin leader A&L Goodbody, picks up the point: ‘We have seen a combination of continued FDI from the US and, since the Brexit referendum, an increase in investment opportunities from the UK and Asia, which might have otherwise gone to, or simply stayed in, the UK. It is a very competitive market – many of the Irish law firms have people on the ground in the UK or US and regularly have contingents travelling abroad.’
Certainly Irish advisers compete heavily for such work as it allows access to some of the most prestigious foreign companies operating locally. As such, Legal Business canvassed Dublin’s top law firms to find which outfits are securing the marquee work from international companies.
First stop Europe
For many tech giants, Ireland is their European hub of choice: in traditional tech (Apple, Hewlett Packard, IBM, Intel and Microsoft); social media (Google, Facebook, LinkedIn and Twitter); and e-commerce (Amazon, Airbnb, Groupon, PayPal and Uber). Dublin’s ‘Silicon Docks’, the grouping of tech companies including Google, Facebook and Twitter based around the Grand Canal Dock, is the epicentre with additional clusters of tech activity in Cork and Galway.
‘Nine of the top ten global tech companies have their European headquarters here and there is still a big flow of new start-up US tech companies coming to Ireland,’ argues Barry Devereux, managing partner of local leader McCann FitzGerald. ‘It goes right back to the early days of technology, when Microsoft, Intel and others arrived in Ireland. We’ve gone from strength to strength over the years because of that,’ says Andrew McIntyre, head of William Fry’s FDI group.
‘We have seen continued FDI from the US and, since the Brexit referendum, an increase in investment opportunities from the UK and Asia.’
Julian Yarr, A&L Goodbody
Big pharma is likewise well represented: AstraZeneca; Bayer; Gilead Sciences; GlaxoSmithKline; Johnson & Johnson; Novartis; Pfizer; Roche; and Sanofi are among those with substantive Irish operations, most of which also serve as their European headquarters.
‘Some FDI has been in green-field operations, while international organisations have significantly expanded their Irish footprint,’ says Brian O’Gorman, managing partner at Arthur Cox. In addition to providing extensive real estate advice for Facebook (see box below) as it expands locally, the firm is also advising Intel on ‘what will be the largest-ever Irish construction project in terms of manufacturing’, says O’Gorman. ‘Intel is undergoing enormous expansion in Ireland, spending up to $8bn, which will keep us busy for several years.’
Like elsewhere, big companies in Ireland rotate their use of law firms as relationships evolve. ‘Facebook came in with another firm some years ago, but we have been its main firm in Ireland for the last few years,’ says O’Gorman. ‘Its work has migrated to us gradually. Intel came to us on this project, which was a big win because it hasn’t previously been one of our institutional clients.’
At Matheson, the go-to law firm of choice for Google in Dublin, Jackson adds: ‘We are winning mandates from clients who were established in Ireland by other law firms – there is a long list.’ This includes: Horizon Therapeutics, Dell, Oracle, Gilead, Brown-Forman, Stryker, Abbott and L’Oréal. ‘We have also been doing more and more work for Facebook,’ he adds.
‘Nine of the top ten global tech companies have their European headquarters here and there is still a big flow of new start-ups.’
Barry Devereux, McCann FitzGerald
Since Facebook first established in Ireland more than a decade ago, it has been continuously advised by Mason Hayes & Curran (MHC). Managing partner Declan Black says: ‘We do not do everything for it, but we do its core data work and lots besides.’ Other prominent MHC clients include: LinkedIn, Fitbit, Verizon Media Services (formerly Yahoo), Adobe, WhatsApp, Oculus, Instagram, Riot Games and Uber. ‘The biggest story in Ireland has been the scaling of the larger tech companies, Google and Facebook in particular, but also the likes of LinkedIn and Twitter,’ he adds.
The roster of Facebook’s law firm advisers demonstrates how large international companies spread their Irish legal work. Others prefer more binary relationships. Devereux cites Boston Scientific as an example. ‘It has about 4,500 people in Ireland and it recently bought Cryterion Medical.’ McCann advised it on the $202m deal.
As joint lead counsel alongside US giant Kirkland & Ellis, the firm is also advising AbbVie on the largest Irish deal announced so far this year: its $63bn proposed acquisition of Allergan – an Irish company listed on the New York Stock Exchange. ‘That brings together two major pharma companies,’ says Devereux ‘with significant assets in Ireland’. Allergan is being advised by Arthur Cox.
‘The biggest story in Ireland has been the scaling of the larger tech companies, Google and Facebook in particular, but also the likes of LinkedIn and Twitter.’
Declan Black, Mason Hayes & Curran
William Fry has also continued to work with a number of clients since they first entered the Irish market over the past decade: Afilias, UPMC, Phillips 66 Company, X-Celeprint and Edwards Lifesciences. In real estate, it has advised either landlords, tenants, developers or funders on leases to Google, Facebook, Amazon, WeWork, AerCap and the National Treasury Management Agency of Ireland. ‘We’ve worked with LinkedIn and Facebook, and we also work with Microsoft,’ says McIntyre.
A glut of FDI projects has kept Goodbody’s lawyers busy. Prominent among them are: Euronext’s €137m acquisition of the Irish Stock Exchange; WuXi Biologics (a Chinese biologic medicine company) on establishing a new €325m manufacturing facility; Citibank’s merger of its UK and European business, which is now based in Dublin; and Bank of America Merrill Lynch on the migration of its European business from London to Dublin by merging with its Irish subsidiary. ‘This year, we are looking so far at double-digit growth. So, it has been a strong run,’ says Yarr.
Professional services is a key FDI sector, according to David Phelan, managing partner at Hayes Solicitors. ‘We have been advising IP firms and accountancy firms looking to come into Dublin and establish a presence, mostly from the UK,’ he says. Meanwhile, ByrneWallace is advising Spanish energy group Iberdrola on setting up in Ireland and entry into the domestic electricity and gas supply markets.
‘We have been advising IP and accountancy firms looking to establish a presence in Dublin, mostly from the UK.’
David Phelan, Hayes Solicitors
In addition, the firm has advised Phibro Animal Health Corporation on the acquisition of a facility from Elanco and Nuvo Pharmaceuticals on its acquisition of assets from Aralez Pharmaceuticals. ‘Notwithstanding the headwinds created by Brexit and potential tax rule changes being considered by the OECD, the current FDI climate in Ireland seems to be remarkably healthy and robust,’ says ByrneWallace head of corporate Neil Keenan.
Eversheds Sutherland, which has been in Dublin for more than 15 years, is acting as lead Irish tax counsel to Patreon in establishing their European HQ, and advised Vela Software (part of Constellation Software) in the acquisition and integration of Financial Risk Solutions. Eversheds also advised LinkedIn on its Irish expansion.
‘We advised Barclays on the legal and tax side of its new HQ in Dublin, and we have a number of Korean clients looking at investment opportunities in Ireland,’ says Alan Murphy, the UK firm’s managing partner in Ireland. ‘Being a global firm with a strong US, Middle Eastern and Asian presence helps us in terms of FDI.’
‘We advised Barclays on the legal and tax side of its new Dublin HQ, and have a number of Korean clients looking at investment opportunities in Ireland.’
Alan Murphy, Eversheds Sutherland
DLA Piper, which opened in Dublin last year, has hired seven partners ‘across all practice areas’, says finance and projects partner, Conor Houlihan. The aim is to reach 20 partners within a few years. ‘That is very much the plan regardless of what happens with the domestic economy,’ says Houlihan. ‘DLA is interesting – they’ve hired some very good people,’ says a rival. The new DLA partners have been busy on FDI, advising Avnet on taking a minority stake in Irish medtech company, Arc Devices; Pico Global Services on the acquisition of Dublin-based analytics company Corvil; and Jaja Finance on the acquisition of Bank of Ireland’s UK credit card portfolio.
Unlike most other international firms with a Dublin office, Walkers has an intentionally narrow client offering. ‘In the bubble that is financial services, Brexit has caused a sharp escalation in demand and we have been beneficiaries acting on Brexit migrations for the last two years,’ says managing partner Garry Ferguson. ‘Regulated firms – be they banks, MiFID firms, fintech – have had their Brexit contingency plans in place for some time and we have been acting across each of those sectors,’ he says. Among those that Walkers represents are ‘global organisations with a presence across more than 50 countries and who will have a substantial footprint in Ireland’.
‘I’ve felt for the last 12 months that the end of the cycle was imminent, yet we keep going.’
Brian O’Gorman, Arthur Cox
No deal looms
So is the current rate of FDI growth sustainable? John White, managing partner of Beauchamps, remains upbeat. ‘Firms are continuing to expand and that’s against the backdrop of Brexit,’ he says. ‘There is a degree of optimism, a belief that the Irish economy will continue to expand. Subject to macro-economic and international issues going our way, we should continue to get significant FDI in Ireland.’ McIntyre agrees: ‘FDI will only increase because businesses are looking to the least disruptive alternative to the UK for establishing their operations in Europe.’
Yet there is no doubt that uneasiness in Ireland has grown with the election this summer of Boris Johnson as Prime Minister, which has ushered in a hardline stance towards exiting the EU by 31 October without the previously negotiated withdrawal agreement. This ‘no-deal’ Brexit has huge implications for Ireland, as the UK remains one of its largest export markets, constituting around 12% of its goods and 16% of services exported in recent years.
‘There is a degree of optimism, a belief that the Irish economy will continue to expand. Subject to macro-economic and international issues, we should continue to get significant FDI in Ireland.’
John White, Beauchamps
O’Gorman sums up the mood of uncertainty in business circles: ‘I’ve felt for the last 12 months that the end of the cycle was imminent, yet we keep going. I have to think there is going to be a slow-down in the next 12 months.’ Yarr concludes: ‘The great imponderable is what happens in the next few months in terms of Brexit and what broader impact that has, and the signs of a global recession coming through, which impacts FDI.’
Set against that, the US by some way remains Ireland’s largest export market on both counts and its economy has over the last 20 years reduced its reliance on the UK, as trade links with the EU and US have grown.
Ireland, whose food and drink industries are heavily geared towards the UK and which imports more from the UK than any other nation, will certainly face a negative shock in the event of a no-deal Brexit. Yet the medium-term outlook will be buoyed by strong links with two huge trading blocs of the US and EU, while the EU would be likely to step in to help cushion short-term Brexit disruption. Ireland itself also stands to benefit from some investment that would have gone to the UK while it remained in the EU.
‘FDI will only increase because businesses are looking to the least disruptive alternative to the UK for establishing operations in Europe.’
Andrew McIntyre, William Fry
Judged narrowly in the profession, Dublin’s legal market looks set to secure some gains as a key European hub as more UK firms requalify their solicitors locally and firms launch Irish branches. Last year already saw more than 2,000 solicitors at foreign law firms admitted to the Irish roll to protect right to practise EU law. The Law Society of Ireland figures show Eversheds, Freshfields Bruckhaus Deringer, Allen & Overy and Slaughter and May all have more than 100 solicitors on the Irish roll.
At Walkers, Ferguson sums up the case for optimism: ‘In a hard-Brexit scenario, we think the explosive growth that we have seen in the migration of regulated firms will continue. We will need to, and already have in anticipation of it, expand our product offering, most recently adding an employment service.’ Black develops the point: ‘Financial services and technology, and to a lesser extent pharma, are key sectors which are capable of driving the economy, despite the worst or harshest forms of Brexit materialising.’
A disorderly Brexit will be a major challenge, but recent history – and the changing shape of its increasingly globalised economy – strongly suggests that Ireland does far better than most nations at rising to such occasions. LB
The pecking order – Leading Irish firms ranked in key practice areas
➊ A&L Goodbody
➊ Arthur Cox
➊ Maples Group
➊ Mason Hayes & Curran
➊ Matheson
➊ McCann FitzGerald
➊ William Fry
➋ Beauchamps
➋ ByrneWallace
➋ Eugene F. Collins
➋ Eversheds Sutherland
➋ LK Shields Solicitors
➋ Philip Lee
➋ Ronan Daly Jermyn
➌ Dillon Eustace
➌ Hayes Solicitors
➌ Walkers
➌ Whitney Moore
➊ A&L Goodbody
➊ Arthur Cox
➊ Mason Hayes & Curran
➊ Matheson
➊ McCann FitzGerald
➊ William Fry
➋ Beauchamps
➋ DAC Beachcroft
➋ Eugene F. Collins
➋ Eversheds Sutherland
➋ LK Shields Solicitors
➌ ByrneWallace
➌ Philip Lee
➌ Ronan Daly Jermyn
➊ A&L Goodbody
➊ Arthur Cox
➊ Eversheds Sutherland
➊ Mason Hayes & Curran
➊ Matheson
➊ McCann FitzGerald
➊ William Fry
➋ Beauchamps
➋ ByrneWallace
➋ Dillon Eustace
➋ Eugene F. Collins
➋ Maples Group
➋ Ronan Daly Jermyn
➌ Hayes Solicitors
➌ LK Shields Solicitors
➌ McDowell Purcell
➌ O’Flynn Exhams
➌ Philip Lee
➌ Walkers
➌ Whitney Moore
Source: The Legal 500 EMEA 2019
Real estate, real returns – Is Ireland’s property market due a correction?
‘If I can get to the heart of Dublin, I can get to the heart of all the cities of the world,’ wrote James Joyce a century ago. The heart of today’s Dublin, many parts of which Joyce would find unrecognisable, is a 21st century city. Striking evidence comes in the Irish Times’ monthly crane count – an indicator of construction activity in Dublin’s city centre – which recently hit a record 123 cranes. Despite oversupply concerns, Ireland’s capital ranks third out of 31 European cities for real estate investment, according to the 2019 PwC/Urban Land Institute Emerging Trends in Real Estate Europe report.
‘Of the 20 deals over €100m in the past year, we have acted on 15: nine on the buy side and six on the sell side,’ says Julian Yarr, managing partner of A&L Goodbody. That includes advising DWS (the asset management arm of Deutsche Bank) on WestEnd Shopping Park Blanchardstown and several acquisitions in Dublin airport, Union Investment Real Estate on Five Hanover Quay, as well as South Korean investors on Irish acquisitions: Vestas (Charlemont Exchange) and Hyundai (The Reflector).
But the jewel in Goodbody’s real estate crown has been advising Henderson Park Capital Partners on its €1.3bn acquisition of Green REIT, which put itself up for auction in April, described as ‘an acid test for Irish commercial property’ by The Financial Times. ‘That’s the deal that has made everybody stand up and look,’ says Yarr. At Arthur Cox, which advises Green REIT, managing partner Brian O’Gorman concurs: ‘We’ve had a fantastic run in real estate.’
Arthur Cox has also advised Kennedy Wilson, which builds and leases properties, on its 50% stake in the 690,000 sq ft Capital Dock development, and Facebook, both on a new data centre, and what O’Gorman labels ‘one of the biggest acquisitions of real estate in Irish history’ – the acquisition of AIB’s former headquarters. The Ballsbridge site will deliver space for 5,000 Facebook employees across 870,000 sq ft in its new European HQ.
Given that Dublin’s last real estate bubble burst with dramatic consequences, is he anxious about another downturn? ‘I’m not overly concerned because there’s a lot of pent-up demand for high-quality commercial real estate,’ says O’Gorman. ‘Between 2007/08 and 2013/14, nothing was built in Dublin, and I mean nothing. So, there’s an enormous amount of catching up to do.’ Yarr adds: ‘On the development side, we’re still in a strong phase of large commercial development – that window, in terms of being really significant, is probably another 12-18 months.’
McCann FitzGerald acted for Salesforce in ‘the largest office letting in Irish history’, notes managing partner Barry Devereux. ‘They’re putting 5,000 jobs in Dublin – their new EMEA headquarters. When you have that kind of tenant demand and confident tech investment, then you have the confidence of property investors.’ Eversheds Sutherland advised the developer, Ronan Group Real Estate, on the letting of 400,000 sq ft of office space at Spencer Dock to Salesforce and on letting 350,000 sq ft at Fibonacci Square to Facebook.
Devereux identifies another ‘poster child for real estate in Dublin – The Sorting Office (a 210,000 sq ft, eight-storey building), which has been sold mid-construction by Marlet and M&G Investments for €240m to our client, Mapletree, a Singaporean investor’. He argues that such investments ‘de-risk the Irish real estate construction sector because if there’s another economic downturn, the risks are spread across a very wide base, not just concentrated in Irish banks. That type of FDI has been massively beneficial to providing a stable underpinning for the wider economy’.
Matheson’s chairman, Michael Jackson, agrees: ‘There’s a lot of international finance now, which spreads the risk.’ Demand, he notes, is high for all the same reasons that are driving foreign direct investment, but Brexit is also a factor. ‘It tends to be already identified before cranes go onsite and the buildings start appearing from the ground,’ he says, noting that development is ‘often a bit more thoughtful than it was during the previous boom. It’s also more mixed use, so there’s some hedging taking place through the nature of the developments’.
Jackson points to Google’s €300m acquisition of Bolands Quay as ‘the big real estate transaction in 2018. We acted for Google in the largest urban mixed-use regeneration project in the city centre for many years and the only one to have been acquired in its entirety by a single occupier investor’. On the residential side, Matheson recently advised Ballymore and Oxley Group on the €60m funding of two residential blocks in the Dublin Landings waterfront regeneration project.
William Fry has been busy too, advising Hines (and Hong Kong-based real estate investment fund Peterson Group) on the acquisition, financing, development and pre-lets of Central Bank, Dame Street: 135,000 sq ft of retail, office and restaurants, as well as the National Asset Management Agency on the regeneration, development and sale of Boland’s Mill – a flagship 400,000 sq ft mixed-use development in Dublin’s docklands.
In May, the firm opened a Cork branch, following Matheson, which opened there last September. Local commercial real estate has been active as Fry’s partner Lisa McCarthy comments: ‘There’s a lot of real estate development going on in Cork, some of it quite meaty and high level.’ Jackson adds: ‘They are extending the city boundaries and projecting that Cork will treble in size as a city, so it will become one of the fastest-growing regions in Ireland.’