BATTERSEA POWER STATION SEES BAKER & MCKENZIE AND NRF TAKE THE LEAD
In one of the largest real estate financings in recent years, Bakers advised a syndicate of Asian and Middle Eastern banks on debt facilities worth £1.35bn. Norton Rose Fulbright (NRF) acted for the borrowers.
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Recently filed accounts at Companies House have shown the highest paid member of the Linklaters partnership took home £2.4m at the end the last financial year, £100,000 more than in 2013.
Turnover at the firm rose from £1.19bn in 2012/13 to £1.25bn in 2013/14 while profit before partner payouts increased by 7% to £377m from £353m.
Capital repayments to Linklaters’ partners fell by 74% during the last financial year, falling from £17.1m to £4.5m as the costs of the firm’s partner restructuring in 2012 fall away. However, the size of the partnership continued to shrink in 2013/14, with the average number of partners down two to 289. The accounts detail how partners in major global cities typically receive between seven and ten profit sharing units, which usually increases by 1.5 parts a year to a maximum of 25. On this basis it takes the average Linklaters partner 10 to 12 years to reach the top of lockstep.
Linklaters said its performance improved in the last financial year due to ‘significant demand for our services has come from banks and financial services clients with contentious and non-contentious regulatory enforcement work, litigation and arbitration being particularly active’.
The firm also benefitted from lower corporate tax rates in the UK, with corporation tax paid globally falling from £23m to £20.4m in 2013/14. Exchange rates made an even bigger impact on the Magic Circle firm’s results, losing £12.2m due to currency fluctuations in the 12 months to 30 April 2014. In the previous year, Linklaters gained £4.8m due to exchange rates.
The number of practising lawyers at the firm rose to 2,325 from 2,290, with the number of business services staff also increasing. Staff costs leapt from £566m to £597m as a result.
However, the firm noted that it had kept costs down by investing ‘heavily in bringing non-legal project management skills to the running of our largest deals and matters, in technology such as document automation, litigation and document comparison tools, in efficiency and flexible resourcing, making the best possible use of paralegals and of our tools’.
The firm also marked the end of its Indian support service, which ceased trading during 2014, with all ‘amounts owed to the LLP…were written down’.
tom.moore@legalease.co.uk
In one of the biggest deals the UK insurance sector has seen in years, Aviva‘s acquisition of Friends Life for £5.2bn has also gifted Magic Circle trio Linklaters, Allen & Overy and Clifford Chance with leading advisory roles.
Unveiled today (2 December), the deal includes a pledge to deliver £225m of annual cost savings at the expanded insurance group within three years of the acquisition. Linklaters advised Friends Life, with a team led by corporate partner Matthew Bland, while Allen & Overy corporate finance partner David Broadley advised Aviva on the deal. A team from Clifford Chance, co-led by capital markets partner Simon Thomas and corporate partner Lee Coney advised JP Morgan and Morgan Stanley which acted as financial advisers to Aviva.
Commenting on the proposed acquisition, Aviva chairman John McFarlane, said: ‘Aviva’s recent success and sound growth and return prospects already present a compelling investment proposition and enable us to advance our strategy through acquisition as well as organic growth.
The proposed acquistion not only consolidates Aviva’s leading position which Aviva has established in the UK, it is expected to enable a much stronger dividend flow and balance sheet position than would otherwise have been possible. It also offers Friends Life shareholders an attractive outcome.’
This heavyweight mandate follows Aviva’s overhaul of its main corporate panel in 2013 when Allen & Overy won a place alongside Slaughter and May as main board adviser, replacing Clifford Chance. These two firms were then automatically included in a eight-firm panel for UK and international work, which includes Linklaters.
Firms listed on the panel are typically called on for Aviva’s strategic corporate and contentious work. In order to secure a place on the panel, advisers were required to give assurances that they will act for Aviva in a wide context, including potentially against a bank.
sarah.downey@legalease.co.uk
The Linklaters partnership will vote on plans to shrink the firm’s international board by four members tomorrow (25 November 2014) in an effort to cut down time spent on management.
The Magic Circle firm, which recently decided against combining its executive committee and international board as it bids to streamline its management structure, has proposed cutting its international board from 15 to 11 voting members.
The board, which is chaired by senior partner Robert Elliott, meets around eight times a year and has six London partners sitting, including banking partner Nick Syson, capital markets partner Paul Lewis, corporate partners William Buckley and Aedamar Comiskey, litigator Christa Band and IP specialist Ian Karet.
Just two partners on the international board come from outside Europe, Alberto Luzarraga holding the Americas spot and Teresa Ma the sole representative from Asia – their places are believed to be safe.
Proposals will now be tabled on how to reduce the size of the international board, which 14 of the members were elected to in a manner reflecting the firm’s geographic spread. The firm is looking to cut the amount of time spent managing, with five of the international board also on the firm’s Audit Committee that meets four times a year.
Herbert Smith Freehills and Clifford Chance have recently reduced the size of their boards with the same aim of getting senior partners more focused on fee earning.
It is understood that the firm is also voting on plans that would see managing partner Simon Davies continue to sit on the international board as a non-voting member, despite it being the body to which management is accountable.
tom.moore@legalease.co.uk
Linklaters’ partner Tom O’Neill has swapped Silk Street for Old Broad Street with King & Spalding making a double hire to anchor its capital markets practice in Europe.
A member of the New York Bar, O’Neill leaves Linklaters after 13 years as a partner. He specialises in corporate finance and securities offerings, representing issuers, sellers and underwriters in offerings of equity and debt securities.
He spent seven years in Linklaters Paris office before heading up the firm’s Turkey desk from London. He’s been involved in the £1.9bn privatisation of Royal Mail and the transactions for holiday retailer Thomas Cook Group and insurer Direct Line.
King & Spalding, which hired Bingham McCutchen’s London restructuring partner Elisabath Baltay last month, has also recruited Latham & Watkins New York-qualified counsel in capital markets Markus Bauman. The firm has brought him in as a partner in what marks a period of aggressive expansion for the firm. Bauman, who spent four years as executive director of Goldman Sachs’ investment banking legal department, joins after a recent spell in the debt capital markets legal department at JP Morgan.
‘Tom and Markus are strong additions to our corporate practice and bring us a new dimension,’ said Ray Baltz, head of corporate at King & Spalding. ‘Tom’s broad capital markets experience is a natural complement to the complex M&A, private equity and finance work we provide our clients, while Markus’s capital markets experience and his perspective as both in-house and outside counsel lend insight and depth to the firm’s growing European capital markets work.’
O’Neill added: ‘King & Spalding has a dynamic London office. We could not pass up the opportunity to work with the entire corporate team in London, New York and around the world to continue to build out the firm’s capital markets practice.’
Five banks have been collectively fined £2bn by UK and US regulators for failing to stop traders from trying to manipulate the foreign exchange market, in what constitutes the first settlement in a global investigation and the largest-ever imposed by the FCA.
HSBC, Royal Bank of Scotland, Swiss bank UBS and US banks JP Morgan Chase and Citibank have all been penalised, while Barclays continues to be investigated.
Linklaters advised RBS on the FCA investigation while Clifford Chance is advising Barclays but did not confirm which partners were instructed.
CC previously took a leading role advising its longstanding client Barclays in a case brought by Guardian Care Homes Group over alleged mis-selling of derivatives and alleged LIBOR manipulation. The bank said in a statement today that it ‘has engaged constructively with its regulators’ but, ‘after discussions with other regulators and authorities’, it had concluded ‘to seek a more general coordinated settlement.’
The current scandal relates to whether traders colluded to manipulate the estimated $5.3trn a day foreign exchange market (forex). Over a period spanning from January 2008 and October 2013, ineffective controls at the banks allowed ‘G10 spot’ FX traders to put their respective banks interests ahead of their clients, other market participants and the wider UK financial system. Consequently such failings enabled traders to behave ‘unacceptably’, sharing information about clients’ activities and colluding with traders at other banks to manipulate currency rates.
On the news, RPC banking disputes partner Simon Hart told Legal Business: ‘Now the regulatory piece is complete, claimants are expected to use that in considering their next move. Forex has been around for some time but the general mood has been to hold fire for these regulatory findings and use some of that as a springboard to frame their claims. There are also competition angles to this which is still ongoing and that may give rise to potential claims.’
He added: ‘Any accusation that the FCA is watery in its approach is firmly in the past. They’ve been showing a tougher approach for some time.’
The FCA said in addition to taking enforcement action against and investigating the six banks where it found ‘the worst misconduct’, it is launching an industry-wide remediation programme to ensure firms address the ‘root causes’ of these failings and drive up standards across the market. This includes requiring senior management at firms to take responsibility for delivering the necessary changes and attest that this work has been completed.
FCA’s director of enforcement and financial crime Tracey McDermott, who led the investigation, said: ‘Firms could have been in no doubt, especially after Libor, that failing to take steps to tackle the consequences of a free for all culture on their trading floors was unacceptable. This is not about having armies of compliance staff ticking boxes. It is about firms understanding, and managing, the risks their conduct might pose to markets. Where problems are identified we expect firms to deal with those quickly, decisively and effectively and to make sure they apply the lessons across their business. If they fail to do so they will continue to face significant regulatory and reputational costs.’
The FCA’s conclusion of illegal activity could now potentially generate forex-related claims in the UK that are predicted to significantly outweigh those relating to Libor-rigging.
Such movement is already well underway in the US where a class action has been filed by over a dozen investors, including several large US pension funds who signed up to an antitrust lawsuit in the Southern District of New York in November last year.
That action listed Barclays, Citigroup, Citibank, Credit Suisse, Deutsche Bank, JPMorgan Chase, The Royal Bank of Scotland, UBS, Bank of America, BNP Paribas, Goldman Sachs, HSBC and Morgan Stanley as defendants, and gifted a raft of firms including Allen & Overy with heavyweight instructions.
sarah.downey@legalease.co.uk
Corporate partner Simon Witty, who Davis Polk & Wardwell hired from Freshfields Bruckhaus Deringer in 2012 to launch its English law practice, has been selected by FTSE 250 events company UBM to run a £565m rights issue to fund the purchase of trade show organiser Advanstar.
Witty and corporate partner Jeffrey O’Brien are handling the issue of 196.7 million shares, which represents about 80% of its existing issued share capital. Witty said: ‘We’ve had a busy year. A few things didn’t complete, which was disappointing, but activity levels have been high.’
Should shareholder approval be received, the rights issue will be complete by Christmas and the deal for Advanstar finalised by the end of January. The purchase of Advanstar, which owns men’s fashion event PROJECT NYC and runs a 10-city motorcycle show that attracts 600,000 visitors a year, will cost UBM £599m and makes it the number one fashion events company in the US.
Linklaters‘ John Lane, who heads the Magic Circle firm’s equities practice, is advising joint brokers and underwriters for the rights issue JP Morgan and Credit Suisse. A £100m bridge facility has been established to support the acquisition.
Lane, who recently handled the IPO of over-50s insurer Saga, was supported on the rights issue Patrick Sheil, a partner in Linklaters’ London-based US practice.
On the acquisition itself Morgan, Lewis & Bockius led for UBM with a team including international managing partner Charles Engros, co-head of M&A partner Jonathan Morris and London-based partners Iain Wright and Matthew Howse. Advanstar was advised by Slaughter and May led by partners Stephen Cooke and Bertand Louveaux and a team from Paul, Weiss, Rifkind, Wharton & Garrison including partners Thomas de la Bastide and Tarun Stewart.
Tim Cobbold, CEO of UBM, said: ‘In addition to being financially attractive, it strengthens UBM’s core events business while balancing and complementing UBM’s strong events portfolio in emerging markets. UBM will become the largest events organiser in the US – the biggest events market in the world.’
Davis Polk’s London office was involved in one of Europe’s biggest IPOs this year when it advised the underwriters on the €7bn float of Dutch insurer NN Group and in a nod the City, made up its first London partner in five years with the promotion of corporate lawyer Reuven Young this summer.
tom.moore@legalease.co.uk
Lathams & Watkins, Linklaters and Herbert Smith Freehills have all won roles advising on The Carlyle Group and Euromoney Institutional Investor’s acquisition of Dealogic.
The Washington DC based private equity giant agreed to acquire the software and data company Dealogic for $700m, alongside two other co-investors – online information and events group Euromoney, and, co-founder and former CEO of Capital IQ, Randall Winn.
Latham & Watkins’ cross-border team advised Carlyle, led by London corporate partners Mike Bond and Richard Butterwick, and Washington DC corporate partner David Brown, with advice on financing matters by fellow Washington-based partners Jeffrey Chenard and Scott Forchheimer, and London partner Dominic Newcomb. Herbert Smith Freehills advised Euromoney with partners Mark Bardell and Howard Murray.
Linklaters advised Dealogic with London senior corporate partner Charlie Jacobs leading the team alongside corporate partner Nick Rumsby, and Scott Sonnenblick out of New York.
Barclays Capital and JP Morgan provided financial advice to Carlyle, while Investec acted as financial advisor to Dealogic, and Gleacher Shacklock acted for Euromoney.
Carlyle will be the controlling shareholder in Dealogic with its equity for the transaction coming from its $13bn US buyout fund Carlyle Partners VI. Dealogic’s long-serving chief executive Tom Fleming will continue in his leadership role.
Euromoney will acquire 15.5% of the equity of Dealogic for $59.2m, funding the investment through the sale Capital DATA and Capital NET, valued at $85m, and which Dealogic and Euromoney have jointly operated since the 1980s. In addition to its $59.2m share, Euromoney will also receive $4.6m in cash on completion and a further $21.2m of zero-coupon preference shares issued by Dealogic.
The transaction, which is expected to close by the end of 2014, is structured as a leveraged buyout by Dealogic and is subject to customary regulatory approvals.
jaishree.kalia@legalease.co.uk
Freshfields Bruckhaus Deringer, Taylor Wessing and Linklaters have won the lead roles advising on the sale of UK-based United Biscuits to Turkey’s largest food and beverage company Yildiz Holding (Yildiz).
The British food manufacturer – which makes McVitie’s biscuits including Jaffa Cakes and Hob Nobs, Penguins, Jacob’s Cream Crackers, and Twiglets – will be acquired from private equity owners Blackstone and PAI Partners by Yildiz.
Yildiz, which is headquartered in Istanbul and owns 65 companies, including Godiva Chocolatier and DeMet’s Candy Company, says the acquisition comes as its pushes to further diversify its business internationally.
Freshfields advised United Biscuits and its principal shareholders Blackstone and PAI Partners, led by corporate partner Sundeep Kapila, while Linklaters corporate partner Nick Garland and his team acted for Yildiz on the deal which is reportedly worth £2bn.
Taylor Wessing private equity specialists Emma Danks and Martin Winter represented United Biscuits management board with support from tax partner Ann Casey. Winter said: ‘It’s a great example of the global market place flourishing in the UK and it has been a real privilege to have been involved.’
With United Biscuits primarily covering Europe and UK, and Yildiz presence predominantly covering North America, the Middle East, North Africa, and China and Japan, together, the two businesses will form the world’s third largest biscuit maker.
Freshfields’ Kapila told Legal Business: ‘It was a great result for all parties concerned. The purchaser is active in emerging markets, mainly in Middle East and Easter European, and United Biscuits is a strong brand in the UK and various Continental markets, together, it is a very strong global brand.’
Yildiz will work closely with United Biscuits’ management team to drive further growth for the combined business.
Freshfields previously advised the biscuit maker on the £500m sale of its KP Snacks to European snacks manufacturer Intersnack in 2012, which Kapila also led.
jaishree.kalia@legalease.co.uk
Carlyle abandons flotation to sell half of its majority stake
Since the summer, London’s IPO market has seen postponements, cancellations and low pricings as confidence ebbed. Feeling the effects, US private equity giant Carlyle, advised by Linklaters corporate partners Charlie Jacobs and Alex Woodward, recently abandoned plans to exit roadside recovery service company RAC through a flotation, in favour of a sale to Singapore’s sovereign wealth fund GIC.
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