Legal Business

Financials 2016/17: Baker McKenzie resilient in face of full year of global headwinds

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Financial results 2016/17 Baker McKenzie

Baker McKenzie has unveiled stable revenue and profits for the year end 30 June, the first global firm to unveil its financial performance covering a full 12 months after the UK referendum on exiting the EU and the US presidential election.

The firm increased its global revenues by 2% to $2.67bn. On a constant currency basis, gross income was up 5% on last year’s $2.65bn.

In the year in which the firm elected Paul Rawlinson (pictured) as first British global chair, profits per equity partner (PEP) also held steady at $1.3 million, a 1.2% or 0.2% growth in constant currency terms. .

Asia Pacific accounted for 26% of the firm’s global revenue, EMEA and Americas for 37% each.

Rawlinson, who took over as global chair in October 2016, told Legal Business the firm had shown resilience in ‘a troubled global economic market and increasingly competitive legal market’.

‘Brexit and the US election were the two key events, but in lots of markets where we operate – Turkey, Brazil, and Venezuela – we can point to a number of challenging events.’

‘Uncertainty in US and UK markets is unusual and impacts the other regions too: the EU, North America and Mexico.’

‘Any growth in that situation would have been positive, but actually achieving 5% growth globally with each region growing by at least 4% indicates a strong performance.’

He pointed to the firm’s work in cross-border deals as a factor in its resilient performance.

Growing practices included tax, dispute resolution, banking and finance, M&A and capital markets.

The firm’s technology, media and telecoms (TMT) group was the highest growth industry sector.

Rawlinson highlighted the firm’s work on Emerson Electric $4bn sale of its Network Power business to Platinum Equity as an example of the firm’s cross-border work over the past year.

‘It involved over 60 countries and required expertise on a cross-practice level.’ The firm’s corporate, tax, real estate, IT, employment, pensions and cash repatriation teams worked on the deal.

The firm also advised Yum! Brands on the corporate implementation of the $9.7bn global restructuring relating to the spin-off of its Chinese restaurant operations, as well as digital technology company Konica Minolta on its acquisition of diagnostic solutions provider Ambry Genetics Corporation for $1bn.

Marco.cillario@legalbusiness.co.uk

Legal Business

CC and Baker McKenzie advise as China joint venture pays $4.5bn for German energy smart meter company

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Corporate Baker McKenzieClifford Chance

Clifford Chance and Baker McKenzie advise on the €4.5bn (£4.03bn) takeover of German metering and energy management group company Ista by a CK Infrastructure Holdings (CKI) and Cheung Kong Property Holdings joint venture, as Chinese buyouts of European companies rise.

German firm Hengeler Mueller is acting for the vendors CVC Capital Partners Fund V.

The transaction is subject to regulatory and antitrust approvals and is expected to be closed in the fourth quarter of 2017.

German corporate partners Markus Muhs and Anselm Raddatz led the Clifford Chance team advising the joint venture.

Baker McKenzie London banking and finance partner Lynn Rosell Rowley headed the group working with the lenders for the deal. Berlin-based energy and infrastructure partner Tim Heitling, banking partners Kathrin Marchant in Frankfurt and Laurent Fessmann in Luxembourg also worked on the deal for Baker McKenzie’s team.

Legal Business understands that close to 13 banks were involved in financing the acquisition.

Ista provides energy management services for energy efficiency in buildings. Ista’s private equity owners, CVC, acquired the company in April 2013 in what was at the time the largest private equity transaction since the 2008 crisis, which valued the company at €3.1bn.

The deal is another sign of the strengthening interest in the energy market, which follows major Swiss electricity smart meter producer Landis+Gyr’s $2.4bn (£1.84bn) initial public offering (IPO) last week, Europe’s second largest this year.

Hong Kong-listed CKI is a global infrastructure company that has diversified investments in energy infrastructure, transportation infrastructure, water infrastructure and waste management. Its operations now span Hong Kong and mainland China to the UK, the Netherlands, Portugal, Australia, New Zealand and Canada.

CKI has now entered in a joint venture with Cheung Kong Property Holdings, a property developer based in Hong Kong.

The latest in a run of Chinese buyouts in Europe, the deal followed last week’s announcement that Mayer Brown, Berwin Leighton Paisner(BLP) and CMS Cameron McKenna Nabarro Olswang all advised on Hong Kong investors LKK Health Products £1.3bn purchase of London landmark skyscraper, 20 Fenchurch Street, or the ‘Walkie Talkie.’

Marco.cillario@legalbusiness.co.uk

Legal Business

Baker McKenzie brings in three City lawyers from Freshfields, Morrison Foerster and Travers Smith

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Strategic recruitment Baker McKenzie

Baker McKenzie has appointed three new City lawyers, taking on Freshfields Bruckhaus Deringer banking partner Geoff O’Dea, Travers Smith finance counsel Matthew Smith and Morrison & Foerster tech counsel Sue McLean – both of whom will be made up to partner in the move.

O’Dea was made up to partner in 2012 at the Magic Circle firm. Specialising in restructuring and insolvency and acquisition finance, O’Dea has a wide range of clients including sponsors, special situation funds, creditors and debtors, and insolvency practitioners.

Smith began at Travers Smith nine years ago. He began his legal career at Halliwells. He specialises in acquisition and leveraged finance, corporate lending, debt restructurings and general financing matters across a range of sectors.

Joining from MoFo, McLean has a broad practice advising on commercial and technology matters with particular experience advising on FinTech. She spent 10 years at the firm after moving from legacy Lawrence Graham, where she was an associate.

Baker McKenzie’s London banking and finance head Nick Tostivin said: ‘Geoff is a highly regarded banking lawyer whose excellent experience and reputation in the market makes him an ideal addition to our team.’ He added that O’Dea will ‘work closely with our restructuring experts to build out our capabilities even further.’

Freshfields has lost a number of finance partners this year, with some departing as part of a finance team restructure while other voluntarily left for other firms. Six finance partners exited Freshfields Bruckhaus Deringer at the end of April, with two more losing equity status following the implementation of the restructure.

Kirkland & Ellis took on financial restructuring partner Sean Lacey in May, just six months after it brought on real estate finance partner Jonathan Birks from Freshfields. In April Fieldfisher recruited former Paris finance head Dougall Molson.

Last week, Freshfields confirmed joint managing partner Chris Pugh will step down less than half way into his term, the second person to vacate the position early in four years and the firm’s third unscheduled c-suite departure since 2013.

Madeleine.farman@legalease.co.uk

Legal Business

Former Linklaters global COO to head Baker McKenzie’s London office

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Leadership Baker McKenzieLinklaters

Former Linklaters’ global chief operating officer Simon Thompson (pictured) has joined Baker McKenzie’s London office as its new chief operating officer (COO) with effect from August.

Thompson will serve on the firm’s London management committee, led by London managing partner Alex Chadwick.

The new COO will join Bakers from independent legal management consultancy Change Harbour, which he co-founded in 2011 after seven years at Linklaters.   

With responsibility for London operations, he will support the implementation of the firm’s strategy in London, which the firm said included further investment in the firm’s corporate and transactional centres and recruitment of up to 20 transactional partners in London over the next three years, as outlined to Legal Business by Baker McKenzie’s global chair Paul Rawlinson in March. 

‘We have around 400 lawyers in London but we would want to increase the bench strength in regular M&A, private equity, banking and finance by 10 to 20 partners in two or three years from around 30 at the moment,’ Rawlinson said at the time.

Chadwick told Legal Business that the firm’s London strategy was centred on ‘bolstering our transactional practices with a view to attracting more high-value mandates’.

He added: ‘Simon will play a key operational and delivery role at management committee level as we continue with the strategy implementation.’

The London office, whose revenues jumped 20% to £176m this year, hired partners from Magic Circle firms earlier in the year: David Duncan and Melanie Howard joined the M&A department from Allen & Overy and Clifford Chance respectively in April.

Alex Lewis joined Bakers’private equity team leaving Rope & Gray. Will Holder and Carl Richards also made the move to the firm’s corporate team from Kind & Wood Mallesons at the start of 2017.

The firm also made up 80 new global partners last month, including five in London, as well as electing Matthias Scholz as German managing partner.

Thompson’s career began at British Petroleum where he worked in IT management, before joined Linklaters in 1994. There, he became director of information systems and strategy in 2001 and developed Linklaters’ IT, organisation and governance strategy, before his appointment to COO in 2007. 

Marco.cillario@legalbusiness.co.uk

Legal Business

Race to the top: Baker McKenzie promotes 80 new global partners and elects German managing partner

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Partnership promotions Baker McKenzie

Baker McKenzie has made up 80 new global partners, bringing this year’s partnership intake to 139, while electing Matthias Scholz as Germany and Austrian managing partner for three years.

The firm, which now counts almost 1,600 partners globally, elected the highest number of new partners to its dispute resolution team, followed by mergers & acquisitions (M&A) and tax.

16 new partners were made up in dispute resolution, comprising three in Spain, one in Austria and one in Italy, while four were appointed in North America. Two new partners also joined its South African Johannesburg team.

The 80 promotions, effective from 1 July, included five in London (pictured) bringing the number of partners based in the UK capital to 100: Susie Davies in corporate, Kim Sartin in employment, Jennifer Revis in international commerce and trade, Mark Simpson in financial services, and Ben Farnell in real estate.

Paul Rawlinson, global chair of Baker McKenzie, told Legal Business said that investigations work in North America was a factor driving growing work in the region.

The firm’s M&A global team will have 14 new partners, half of them in Asia.

‘We are focusing on New York, London and China as three key centres for us,’ added Rawlinson. ‘Where we excel is cross border deals.’

He emphasised that specific sector capability was as much a factor in the leadership promotions as general M&A experience.

The firm appointed 12 partners to the tax team, half of them in the US.

‘Currently we are seeing controversy work in the US which is driving a lot of tax work,’ added Rawlinson. ‘Obviously the potential changes in the US tax regime are something to look out for: this is not driving any of these new appointments, but it is something to look at in the future.’

During this year, Baker McKenzie also added 59 lateral hires.

In London, Steve Labrum joined the tax practice from KPMG, Will Holder and Carl Richards were recruited to the M&A/private equity and employment practices respectively from King & Wood Mallesons. David Duncan and Melanie Howard joined as M&A partners from Allen & Overy and Clifford Chance. Alex Lewis joined the private equity practice from Ropes & Gray.

‘These people – we like to think – give a positive endorsement of our strategy: they say they like the firm because it is truly global and want to be part of it,’ Rawlinson said.

On 1 July, Scholz will replace Constanze Ulmer-Eilfort, who was Germany and Austria managing partner for five years.

‘IT and AI expertise is not just about advising clients but rather changing an organization to make it fit to be able to work in an environment which is constantly changing. Innovation is part of our global strategy, not just for the clients but also for us, internally.

Scholz worked in the London office in 1995-96 and ‘got to know Paul [Rawlinson] very well. We will work towards integrating our practices around the globe.’

‘We do have a good German client base, but we want to expand it further.’

marco.cillario@legabusiness.co.uk

Legal Business

Linklaters advises L’Oreal on €1bn sale of The Body Shop alongside Baker McKenzie and Davis Polk

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Corporate Baker McKenzieDavis Polk & WardwellLinklaters

Linklaters, Davis Polk & Wardwell and Baker McKenzie are advising as L’Oreal looks to sell The Body shop for €1bn to Brazilian cosmetic company Natura.

Natura is in exclusive negotiations with L’Oreal, which put The Body Shop up for sale in February after it bought the business in 2006 for £652m.

The world’s largest cosmetics company announced the decision following a fall in The Body Shop’s operating profits, which sat at €34m at year end in 2016, down a 38% from €55m the previous year. The deal is expected to close later this year.

London and Paris-based Linklaters corporate partner Vincent Ponsonnaille (pictured) led the Linklaters team advising L’Oreal, which included London banking partner Naidenov and Paris corporate partner Laurent Victor-Michel. The cosmetic company also instructed Baker McKenzie with a team led by London Funds partner James Burdett.

Natura turned to Davis Polk for advice, with Jacques Naquet-Radiguet leading the firm’s team.

L’Oreal previously turned to Linklaters for advice in its original purchase of The Body Shop, with London-based Corporate partner Richard Godden leading the Linklaters team. Baker McKenzie advised The Body Shop on the deal.

The Magic Circle firm also advised L’Oreal over its buyout of China-based cosmetic mask manufacturer Magic Holdings International for around $845m in 2014. Paris-based corporate partner Bruno Derieux led the team. 

Madeleine.farman@legalease.co.uk

Legal Business

Emerging empires – Bakers, CMS and DLA Piper rise up the ranks as global giants march on

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Europe Baker McKenzieCMSDLA Piper

Ella Marshall and Jonathan Armstrong assess the latest EMEA rankings from The Legal 500

The market continues to evolve in Europe’s key heartlands, as a band of expansive globalised firms spread out their tentacles, while another grouping of more transactionally-driven players strip down their businesses with an eye on profitability. Following the recent publication of The Legal 500 Europe, Middle East & Africa (EMEA) 2017 edition, we look at the winners and losers among major international law firms this year.

Legal Business

Revolving doors: Baker McKenzie and Fieldfisher hire in Europe, while Kirkland opens in Boston

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Strategic recruitment Baker McKenzieFieldfisherKirkland & Ellis

 

Despite a slightly less active week for lateral hires in the UK, firms continue to grow their European footprint. Baker McKenzie and Fieldfisher added to their Paris and Dusseldorf bases respectively, as national firm Weightmans hired in Manchester and Kirkland & Ellis opened a new office in Boston.

Adding to its 170-strong Paris office, Baker McKenzie has hired Matthieu Grollemund from Dechert to head its corporate practice there. Davin has been tasked with continuing the development of the private equity and capital markets practices.

Baker McKenzie’s Paris managing partner Arnaud Cabanes said: ‘We are very happy to welcome Matthieu Grollemund and his team to the Paris office which now has 26 partners. His arrival is part of the strategy adopted by our office and our Firm to reinforce our corporate practice in Paris as well as in the world’s principal financial centres.’

Fieldfisher has expanded its Dusseldorf intellectual property (IP) base, hiring partner Benjamin Grzimek from IP specialist firm EIP where he was the head of the Dusseldorf office. A patent litigation expert, Grzimek specialises in enforcement campaigns and cross border work in the US and UK, in particular in the telecoms and consumer electronics sectors.

 Fieldfisher’s Germany managing partner Philipp Plog said: ‘Ben is a superb addition to our IP offering in Germany and we warmly welcome him to the firm. His cross-border expertise will further bolster our strong international offering.  Our German offices have had a strong year and we are looking at continuing to invest in key lateral hires.’

In the US, Kirkland & Ellis announced this week they are opening an office in Boston. This would be Kirkland’s thirteenth office worldwide, and its eighth US base. Kirkland partners Armand Della Monica, Neal Reenan and Ian Bushner will relocate to Boston to join in launching the office.

Kirkland’s chairman of the global management committee Jeffrey Hammes said: ‘Kirkland has strong ties to the Boston community, and we have been fortunate to develop longstanding client relationships in the city. Our new office is a natural evolution for our firm that will help us to provide even better service to Boston-based clients as we continue to grow, and we are very excited to be here.’

Elsewhere, national firm Weightmans has hired Richard Bate as a partner in Manchester to head up its wills, tax, trusts and probate team. Bate was head of private client at Brabners in Manchester, specialising in estate planning, focusing on wills, trust creation and administration, power of attorney and probate work.

Georgiana.Tudor@legalbusiness.co.uk

Legal Business

Weil adds to banking practice with Baker McKenzie infrastructure specialist Hibbert

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Finance Baker McKenzieWeil, Gotshal & Manges

Weil, Gotshal & Manges confirmed today (19 April) that it has hired infrastructure and real estate finance partner Paul Hibbert from Baker McKenzie, as the US firm continues to ramp up its finance coverage in the City.

Hibbert (pictured) covers leveraged finance, structured finance, real estate finance and general corporate banking, with a particular focus on advising both sponsors and lenders on financings of real assets.

He will work closely with private equity (PE) partner James MacArthur, who quit to join the US firm from Herbert Smith Freehills (HSF) last May, and funds partners Ed Gander and James Sargent, to further Weil’s push into real assets.

Hibbert joined Bakers as a partner in 2013 from Clifford Chance, where he was an associate for eight years. Macarthur was HSF’s London head of PE when he joined Weil last year. His hire was a blow to HSF, as firms are increasing investment in this area.

Last month, following its loss of a seven-partner City team, Kirkland & Ellis hired Munich-based corporate partner Volkmar Bruckner from Weil. Kirkland also took on Weil’s banking head Stephen Lucas back in 2014.

Meanwhile, earlier this year Bakers took on a team of seven lawyers, including private equity and employment partners Will Holder and Carl Richards, from King & Wood Mallesons’ (KWM) European partnership following its collapse. Holder had previously been head of KWM’s China Group and spent ten months seconded to Chinese offices.

In 2015, Bakers also lost star litigator Tom Cassels to Linklaters, after the firm’s New York litigation head Douglas Tween had also moved to Linklaters the week before. Also in 2015, Proskauer hired one of Bakers’ highest City earners, EMEA co-head of private equity Bruno Bertrand-Delfau.

Impressing with a significant hike last year, Weil’s global financials showed a revenue jump of 9% to $1.27bn with PEP increasing by more than 22% to $3.1m, while Bakers’ London office has seen its revenue jump by more than 20% in the firm’s latest LLP accounts, with turnover up to £176m in 2016 from £145.2m the previous year.

georgiana.tudor@legalease.co.uk

Read more about US firm banking teams in: ‘To the hilt – Meet the US firms going all in to dominate the City’s leveraged finance scene’

Legal Business

Linklaters, Bakers and Mills & Reeve all get a taste on $1.76bn Weetabix deal

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Dealwatch Baker McKenzieLinklaters

St Louis-based consumer goods group Post Holdings is set to take on UK brand Weetabix Food Company for $1.76bn after five years of Chinese ownership, with Baker McKenzie, Linklaters and Mills & Reeve all winning mandates on the deal.

Bakers acted for Post Holdings with a team led by London corporate partner Charles Whitefoord along with Bill Batchelor in Brussels and Regine Corrado in Chicago.

In the US, Post turned to its mainstay adviser Lewis Rice, with partners Tom Zook and Alfred Ludwig working on the deal alongside Bakers.

Linklaters and Ropes & Gray acted for Weetabix owners Bright Foods and Baring Private Equity Asia. The mandate is a repeat deal for Linklaters, which advised the Chinese food group when it took a 60% take in the cereal group in 2012. Shanghai based senior consultant Richard Gu and London corporate partner Carlton Evans lead on the deal for the firm.

Ropes & Gray’s team included London private equity partner Will Rosen and Peng Yu, with support from anti-trust partner Ruchit Patel.

UK national firm Mills & Reeve also picked up a role on the deal, acting for Northamptonshire-based Weetabix’s management team. Mills & Reeve has been a longstanding adviser to Weetabix, also picking up a role acting for the cereal company on its acquisition by Bright Group in 2012, with corporate partner Anthony McGurk advising on both deals.

Post’s management said it aimed to secure £20m in cost synergies from the deal as it takes on the Weetabix brand as well as cereal bar brand Alpen and Weetos. The firm also holds assets in North America and has aimed to expand its international presence into China.

matthew.field@legalbusiness.co.uk