Legal Business

Dealwatch: Linklaters, HSF and Travers Smith win key roles as Man Group acquisition targets Japan

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Herbert Smith Freehills (HSF) won its first M&A mandate for Man Group, as the hedge fund acquired the investment management business of Mayfair-based NewSmith, with Linklaters and Travers Smith also picking up key roles.

HSF acted for Man Group, the world’s largest listed hedge fund manager, with a team led by corporate partner Mike Flockhart alongside employment partner Tim Leaver. Flockhart said: ‘We have a very good relationship with Man Group, particularly on the funds side, but this is the first M&A transaction we have done for them. Although we did have a role acting as Credit Suisse’s adviser when Man acquired Numeric in 2014.’

He added: ‘The asset management sector is hot at the moment and there is a lot of consolidation. Some transactions are driven by opportunistic factors, some by strategic ambition. Man is obviously in an acquisitive phase at the moment and has completed a number of acquisitions in the last 12 months.’

A Travers Smith team led by senior partner Chris Hale acted for the founding partners of NewSmith, which has $1.2bn funds under management and invests in UK, European and Japanese equities.

The other stakeholder, Japan’s Sumitomo Mitsui Trust Bank, which owns a 40% share of the UK asset manager was represented by Linklaters with M&A and restructuring partner David Holdsworth leading for the firm alongside corporate associate Peter McCabe. The acquisition is expected to complete in the second quarter of 2015, subject to regulatory and other approvals.

In a statement, Luke Ellis, president of Man Group, said: ‘We believe that NewSmith is a highly complementary business for Man GLG. The acquisition brings a new dimension to the firm, including a Japanese hedge fund and an excellent team in Tokyo, as well as adding further scale to our London business.’

This is one of just a number of asset management deals that HSF has acted on recently with Flockhart having also advised Veritas Asset Management and its founders on Affiliated Managers Group’s acquisition of a majority stake, and Keith McDermott and a related family trust on the sale of their stake in Longview Asset Management to Northill Capital.

HSF also recently worked alongside Travers Smith on the £500m IPO of thetrainline.com – Britain’s largest online rail booking company. Travers Smith advised the owner, Exponent Private Equity, while HSF advised Morgan Stanley and JP Morgan.

kathryn.mccann@legalease.co.uk

Legal Business

Building a ‘global oil and gas practice’: Latham & Watkins hires HSF energy partner in London

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Latham & Watkins has continued its hiring spree in London with the hire of Herbert Smith Freehills‘ energy partner Simon Tysoe.

Tysoe, who joined HSF as a trainee in 2000 and made partner a decade later, becomes Latham’s 70th partner in London and the firm’s first hire in the City this calendar year. It is the second time the US firm has poached a partner from HSF after having attracted Simon Bushell to spearhead its London litigation push in 2013.

Tysoe specialises in cross-border M&A in the oil and gas sector and counts BG Group, BP and Chevron among his biggest clients. His hire furthers Latham’s push in the African energy space, with Tysoe having worked on acquisitions in Tanzania and Namibia. The firm secured the hire of the Clifford Chance’s (CC’s) Africa practice co-head Kem Ihenacho at the end of 2012 as part of a prolonged raid on CC’s private equity practice, which last month resulted in the hire of that group’s co-head Oliver Felsenstein in Frankfurt.

Nick Cline (pictured), Latham’s London managing partner, said: ‘The investment we’ve made in our London corporate department, combined with our global strength in the energy and natural resources sector, makes Simon an exciting addition to our London office. Not only is he a highly regarded oil and gas practitioner, but he has significant experience in the African market that further enhances our credentials in the region.’

Michael Darden, global chair of the oil and gas transactions practice at Latham, labelled Tysoe’s arrival ‘another important step in building a market leading and truly global oil and gas practice’ following the opening its Houston office in 2010.

Latham, which had just 53 partners in London in 2010, hired 10 partners in London last year and has prioritised further growth in the City. The office has become a regional hub for the firm which last month announced plans to open a business service centre in Manchester, as it seeks to provide around the clock IT and accounting support in Europe.

tom.moore@legalease.co.uk

For more analysis on Latham’s global ambitions see: The firm most likely – can anything halt Latham’s global rise?

Legal Business

HSF strategy review puts US merger and new office launches on the agenda

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Herbert Smith Freehills (HSF) is accelerating its US development plans, launching consultations to explore a US merger and office openings outside of New York.

The performance of HSF’s New York office has exceeded early expectations after landing a number of large white-collar investigations and helping to win the firm a role advising JP Morgan Chase on the Asia end of the Securities and Exchange Commission (SEC)’s probe into whether the bank hiring the offspring of powerful Chinese officials helped it to win work in the country, as US regulators ramp up their checks on New York-based investment banks’ activities in Asia.

The consultations, launched in November 2014, have already resulted in external consultants being drafted in to explore a potential merger with one US firm, though those discussions are no longer on-going. However, one partner involved in the consultations told Legal Business that external advisers will not take part in the firm’s wider review of its US strategy: ‘We will not get a consultant to tell us what to do in the US. We will decide.’

The review will also explore expanding HSF’s range of practices in New York, with the firm having focused its initial effort around its renowned disputes group.

The New York office launched with a six-litigator hire from Chadbourne & Parke in September 2012 and has since expanded to 11 partners, with the return of arbitration specialist Laurence Shore from Gibson, Dunn & Crutcher in February 2013, and the hire of Cooley’s head of investigations and financial services litigation, Scott Balber, a year and a half later.

Sonya Leydecker (pictured), co-chief executive of HSF, is leading the review after spearheading the New York launch during her time as global head of disputes. Leydecker told Legal Business: ‘We are continuing to look for lateral hires. We are very keen to grow and enhance the offering. There are areas where we want additional capability in New York.’

One of the firm’s key targets, whether through a merger or a new office opening, is to expand its footprint into Washington DC, given it is home to the US Department of Justice (DoJ) and the firm’s aggressive push into the investigations space and longstanding reputation for antitrust work. That goal has become even more vital as the DoJ and the SEC link up with increasing frequency.

If Freshfields Bruckhaus Deringer was well placed in Washington DC in the 2000s, with its renowned arbitration team benefiting from the deluge of claims against Latin American states at the Washington DC-based World Bank arbitration court HSF’s leadership is hopeful that with an office in the capital, its Asian disputes practice will enable the firm to pick up more US-led investigation work. The firm is currently representing a Russian uranium transport company in a DoJ investigation.

One partner adds: ‘There’s not just one project and one initiative. They are rolling. No-one thinks the US is a one-hit project.’

tom.moore@legalease.co.uk

Legal Business

Strategy review puts US merger and new office launches on HSF agenda

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Further New York growth and Washington DC offering on the cards

Herbert Smith Freehills (HSF) is accelerating its US development plans, launching consultations to explore a US merger and office openings outside of New York.

The performance of HSF’s New York office has exceeded early expectations after landing a number of large white-collar investigations and helping to win the firm a role advising JP Morgan Chase on the Asia end of the Securities and Exchange Commission (SEC)’s probe into whether the bank hiring the offspring of powerful Chinese officials helped it to win work in the country, as US regulators ramp up their checks on New York-based investment banks’ activities in Asia.

Legal Business

Deal watch: Corporate activity in February 2015

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FRESHFIELDS, CC AND NRF CALLED IN ON BT’S £12.5BN PURCHASE OF EE

Freshfields Bruckhaus Deringer advised telecoms giant BT as it opted to acquire Britain’s largest mobile network group EE, over rival O2, for £12.5bn. The joint owners of EE, Deutsche Telekom and Orange, were advised by Clifford Chance and Norton Rose Fulbright respectively.

Legal Business

Trainee retention: Reed Smith, A&O and HSF keep on over 90% of spring 2015 qualifiers

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Allen & Overy (A&O), Herbert Smith Freehills and US firm Reed Smith have helped to quash the nervousness among trainee lawyers across the City, with each keeping over 90% of their recently qualified trainee intakes.

HSF has kept on 39 of its 42 trainees as newly qualified lawyers, giving it a retention rate of 93%. All 39 trainees offered a permanent job at the firm accepted, with one trainee having chosen not to apply.

Last year, the firm posted a 90% retention rate with 24 lawyers of the 38 successful trainees qualifying into corporate and disputes.

Given the returning workloads at City law firms, early indications are that firms’ much-shrunken trainee intakes are more likely to be offered a job as a newly qualified lawyer than in previous years.

This is true in the case of A&O, which kept on 43 of its 46 qualifying trainees from its spring intake, also giving the Magic Circle firm a 93% retention rate. All but one of its spring intake applied.

This is markedly up on the 82% retention rate A&O posted with its autumn 2014 cohort, when just 41 of 50 qualifying trainees stayed on, and the 84% kept on six months earlier. However, the trainee intake has fallen sharply over the last four years in a bid to cut costs.

Plugging that gap left by the Magic Circle are the US firms rapidly gaining market share in the City, with the likes of Akin Gump Strauss Hauer & Feld having launched trainee schemes.

Reed Smith is keeping 12 out of 13 trainees on as newly qualified lawyers this spring. That gives the firm a 92% retention rate, with the firm not having fallen below 90% for over a year.

The NQs will be split between multiple practices areas with two each in corporate, finance, real estate and shipping plus one each in commercial disputes, employment, energy and media. All will be based in London with one shipping secondment to the Athens office for 12 months.

Lucy Crittenden, Reed Smith graduate recruitment manager, said: ‘We’re pleased to maintain a high trainee retention rate this spring. The quality of our trainees has been consistently high and the retention rate reflects both that and our philosophy of recruiting the best talent to retain on qualification.’

tom.moore@legalease.co.uk

Legal Business

Financials 2013/14: Herbert Smith Freehills cuts its debt after ‘outstanding’ disputes performance

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In the first full year of accounts since it merged, Herbert Smith Freehills has revealed its borrowings fell from £178m at the end of the 2012/13 financial year to £141m.

The firm said in the fillings at Companies House that the performance of its disputes practice had been ‘outstanding’, while in the UK, it highlighted the effect of the Belfast office which expanded its role to cover corporate and real estate work in March 2013. Firmwide, turnover for the 2013/14 financial year was recorded at £806m, generating an operating profit of £227m which, after financing costs and taxation, yielded £217m for division among member.

The 21% reduction in borrowing saw the amount falling due within one year fall slightly from £75m to £71m, but those borrowings due after more than one year dropping a considerable 31.4% from £102m to £70m. The firm also altered the denomination of debt away from being predominantly held in Sterling and Australian dollars towards a greater spread in Euros, US dollars and Hong Kong dollars.

Although the figures for the previous year are only from 1 October 2012 to 30 April 2013, they still reveal a slight drop in headcount from 3,950 initially after the merger, to 3,942 in 2013/14. However, this saw a rise in the number of fee earners from 2,180 to 2,209 while support staff shrunk from 1,770 to 1,733. The average number of members also decreased marginally from 358 to 353, though the highest paid member received £1.5m, up from 2013’s £1.2m. Staff costs for the 2013/14 financial year totalled £340m with £304m being spent on salaries.

For Legal Business analysis on Herbert Smith Freehills merger see: Consumed – Can burning ambition from Down Under recast Herbert Smith for the global stage?

michael.west@legalease.co.uk

Legal Business

Dealwatch: Simpson Thacher leads for KKR as thetrainline.com opts for sale over IPO

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Private equity powerhouse KKR has purchased travel ticket seller thetrainline.com, with its go-to law firm Simpson Thacher & Bartlett advising on a deal that diverted the company from carrying out its announced IPO on the London Stock Exchange.

Simpson Thacher has strong ties to the private equity house in the US, with London managing partner Gregory Conway the relationship manager for KKR in the City.

Thetrainline.com’s owner, UK private equity house Exponent, announced plans to list Britain’s largest online rail booking company for £500m earlier this year. However, KKR’s interest saw that plan derailed in favour of a quicker departure, with Exponent more than tripling its investment after purchasing Trainline in 2006 for £160m.

Since launching in 1999 Trainline has gone on to become the most downloaded travel app in the UK. The company has 4.7m active customers and received nearly 21m visits each month.

Travers Smith’s head of corporate Spencer Summerfield, alongside corporate partner Adrian West and US securities partner Charles Casassa, were originally instructed by Trainline to execute the IPO and were retained to handle the sale to KKR.

Herbert Smith Freehills corporate partner Chris Haynes and the firm’s global head of capital markets Steve Thierbach were enlisted by Morgan Stanley and JP Morgan, the banks charged with spearheading an IPO.

tom.moore@legalease.co.uk

Legal Business

Dealwatch: Travers Smith and Herbert Smith Freehills on board for thetrainline.com £500m IPO

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Constituting the first technology IPO of the year, Travers Smith and Herbert Smith Freehills have both landed key roles advising Britain’s largest online rail booking company thetrainline.com as it prepares to float on the London Stock Exchange later this year.

Having been purchased by Exponent Private Equity in 2006 for £160m, the London-based company expects to raise £75m and is aiming for a valuation of £500m.

Travers Smith, which is a long-standing adviser of Exponent, is advising thetrainline.com, with corporate head Spencer Summerfield leading a team including corporate partner Adrian West and US securities partner Charles Casassa. Herbert Smith Freehills corporate partner Chris Haynes is advising the banks Morgan Stanley and JP Morgan alongside the firm’s global head of capital markets Steve Thierbach.

Travers Smith previously advised Exponent and thetrainline.com on the latter’s £190m dividend recapitalisation, a deal which also saw Hogan Lovells act for the lenders and constituting the largest unitranche facility put together for a UK-based company in 2013.

Herbert Smith Freehills has been gifted with several high profile IPO mandates in recent months including online appliances website AO and Just Eat.

Clare Gilmartin, chief executive of Trainline, said: ‘We are witnessing continued strong growth in rail and, having experienced first-hand the transformative effect of online and mobile in other e-commerce markets, I am hugely excited by the opportunity that the fast-developing online rail market offers.

‘Trainline is the clear leader in the online rail ticket market in the United Kingdom and we believe that we are therefore well positioned to capitalise on mobile and e-ticketing, which are changing the way consumers plan and purchase travel. In addition, we are seeking to leverage our considerable experience in the UK market to grow our presence in Europe.’

sarah.downey@legalease.co.uk

Legal Business

Dealwatch: HSF, Debevoise, Weil, and Freshfields double down on Sky Bet sale

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Herbert Smith Freehills (HSF) continues to cash in on its ever strengthening relationship with Sky as the digital giant goes through a major overhaul of its operations, this time advising on the company’s £800m sale of a stake in Sky Bet to private equity group CVC Capital Partners, which instructed Freshfields Bruckhaus Deringer.

Sky Bet, which was formed in 2001, has a strong partnership with Sky Sports and has built a large roster of TV, mobile and online gaming products, including Sky Poker and Sky Bingo. Sky Bet made £182m in revenue in the last financial year, but Sky were keen to offload the betting unit after securing takeovers of Sky Italia and Sky Deutschland for £7.4bn earlier this year.

HSF’s global head of M&A Stephen Wilkinson handled that European expansion and the London office again profited from Sky’s business overhaul, with London-based corporate partner Mark Bardell advising Sky on the sale of Sky Bet. Tax partner Howard Murray and TMT partner Amanda Hale supported Bardell on the sale. Goldman Sachs worked with Sky on the sale, advised by Weil Gotshal & Manges.

Private equity partner at Debevoise & Plimpton, David Innes, advised Sky Bet management on the deal while Richard Ward, London co-managing partner, advised on tax elements. Freshfields corporate partner Tim Wilmot advised CVC Capital Partners, with Andrew Craig providing IP advice.

tom.moore@legalease.co.uk