Luminance has shot to prominence unlike any other UK legal tech start-up. But Hamish McNicol finds there is still plenty to do to break into the top of the profession
‘We’re changing things to the extent Excel changed the way accounting is done,’ Luminance chief executive Emily Foges proclaims. ‘You can’t imagine doing anything financial without it.’
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As the market hunkers down for the festive season, GlaxoSmithKline’s (GSK) £3.1bn sale to Unilever of Horlicks has warmed the cockles of City teams from Baker McKenzie and Slaughter and May, while Pinsent Masons and Addleshaw Goddard have won key mandates on what is likely the year’s last big London listing.
The GSK deal sees it sell its malted drink brand Horlicks and other consumer healthcare nutrition brands to Unilever and includes the merger of listed GSK Consumer Healthcare India with Hindustan Unilever. GSK will also sell its 82% stake in GlaxoSmithKline Bangladesh in the deal, which is slated to complete by the end of next year.
Bakers stepped up for long-standing client Unilever on the deal, with a London team led by corporate partner David Scott alongside partners Steve Holmes, Sue McLean and Michelle Blunt, who advised on the IP and tech aspects of the deal, as well as tax partner Alistair Craig.
Indian firm Cyril Amarchand Mangaldas advised Unilever on Indian law, while Slaughter and May, with a team including partners David Johnson, Simon Nicholls and Christian Boney, acted for GSK.
Last year, Bakers advised Unilever on its acquisition of the personal care and homecare brands of Quala, the Latin American consumer goods company, as well as it joint venture with Europe & Asia Commercial Company in Myanmar.
Scott told Legal Business: ‘It was a pleasure to partner again with our great client, Unilever, and our friends at Cyril Amarchand Mangaldas, on this terrific acquisition, including an iconic brand such as Horlicks.’
Meanwhile, Slaughters earlier this year advised repeat client GSK on its $13bn acquisition of Novartis’ 36.5% stake in their consumer healthcare joint venture.
In other news, Pinsents secured a notable win to advise Manchester-headquartered AJ Bell, one of the largest UK investment platform providers, on a proposed listing on the London Stock Exchange which could raise up to £675m.
The price range for the offer has been set at £1.54 to £1.66 per ordinary share, implying a market capitalisation on admission of between £626m and £675m.
Pinsents corporate partner Julian Stanier led the team advising the company, which is also offering customers the opportunity to apply for shares via the AJ Bell website.
Stanier told Legal Business the IPO is slated to be the last big London listing of 2018 after what has been a choppy year for the capital markets.
‘It’s the same with all companies looking to list. If there is a growth story and strong management team, investors will back it, and we are confident that will be the case with AJ Bell.’
Stanier points to the customer offer alongside the institutional offer as being a point of interest.
He added: ‘The quasi-retail element is not the most common, although it has appeared before, such as in Ocado’s 2010 IPO. What’s interesting is that the whole customer offer can be done completely through AJ Bell’s website.’
Shares are due to be admitted on 12 December.
Addleshaws, meanwhile is advising Numis as sponsor, financial adviser, sole bookrunner and broker to AJ Bell on the float, led by partners Giles Distin in London and Richard Lee in Manchester.
The firm pointed to other notable listings it has worked on in the last two years, including the IPOs of Mind Gym, Sumo Digital, The City Pub Company and Ramsdens.
Distin commented: ‘Whilst UK IPO activity has generally been more muted this year, partly due to volatile market conditions and fears around Brexit, several sizeable and successful businesses have managed to complete a flotation. Like Numis, which has remained very active in the IPO market this year, we’re pleased to have been busy throughout 2018 advising on IPOs and other equity capital markets work.’
Competition for access to legal tech start-ups is heating up as global multimedia giant Thomson Reuters and City blueblood Slaughter and May tool up for legal tech incubator launches early next year.
Thomson Reuters is accepting applications for its first dedicated legal tech incubator until the end of this month, with further details expected to be announced in December. The company is shifting its focus towards legal tech, having also hosted a fintech incubator in Zurich, following the sale its financial risk business earlier this year.
The programme is interested in working with more mature start-ups who have successfully secured significant funding, with Thomson Reuters not seeking any equity in return for access. The initial duration is likely to be a minimum of three months, but can run longer depending on the success. Start-ups will not have to take residence in Zurich as the incubator can run virtually.
The company will also vet out any start-ups considered direct competitors, and believes the company’s tech clout will be a unique attraction for potential cohort members.
‘We have the advantage of knowing what it takes to sell technology into legal,’ Thomson Reuter’s customer proposition lead Jim Leason told Legal Business. ‘Law firms are the buyers of technology whereas we are the creators of it.’
Meanwhile, Slaughters’ highly-symbolic legal tech incubator, which it confirmed in June, is now expected to launch as early as the first quarter of next year.
The incubator, which will sit alongside Slaughters’ existing Fast Forward fintech incubator, mirrors moves from Magic Circle counterpart Allen & Overy, which has its own space called Fuse. Mishcon De Reya and Dentons also have similar ventures, while banking giant Barclays this year entered the legal tech space through its Eagle Labs programme.
A leading start-up’s co-founder told Legal Business Slaughters’ foray into legal tech was an exciting development for start-ups, citing potential exposure to Slaughters’ premium corporate client list. Meanwhile for Slaughters – typically viewed as conservative – the move will further its tech credentials, with the firm also having one of the sector’s leading equity stakes courtesy of a 5% share in AI platform Luminance.
Accelerating development of legal tech incubator programmes come as an increasing amount of money finds its way into the start-up market, with Kira, Legatics, Eigen Technologies and Apperio among the companies winning significant funding in recent months.
Overall interest in legal tech is booming, with about 2,000 people attending yesterday’s (17 October) Legal Geek conference as companies and firms alike look to gain a long-term advantage over their competitors.
thomas.alan@legalbusiness.co.uk
For our law tech focus, see ‘The wheat from the chaff’ (£)
Slaughter and May and Kirkland & Ellis have led on the $12bn combination of UK Plc offshore drilling companies Ensco and Rowan Companies as Travers Smith and Eversheds Sutherland wrap up Legal & General’s £2.4bn buyout of Nortel Networks UK Pension Plan.
The drilling merger – an all-stock deal and a court-sanctioned scheme of arrangements – will see the shareholders of Ensco and Rowan own 60.5% and 39.5% respectively of the combined business.
Kirkland & Ellis clinched a significant win in UK plc land in advising Rowan with a team including City partners David Higgins, David Holdsworth and Dipak Bhundia. The deal was led out of Houston by corporate partners Sean Wheeler and Doug Bacon and included Dallas partner Ryan Gorsche and New York-based executive compensation partner Scott Price and tax partners David Wheat, Lane Morgan and Mike Carew.
Latham & Watkins is advising Rowan on antitrust aspects, with a team including corporate partner Michael Egge in Washington, Brussels managing partner Lars Kjolbye, and London partner Jonathan Parker.
Meanwhile, Slaughters is acting for Ensco with a team led by corporate partners Hywel Davies and Christian Boney and including partners William Turtle (competition), Jonathan Fenn (pensions) and Mike Lane (tax).
Elsewhere, a Legal & General deal on Monday (8 October) saw the UK insurer complete a £2.4bn buyout of pensions relating to the now-defunct telecoms equipment provider Nortel.
The buy-out relates to around 15,500 pensioner members and around 7,200 deferred members of the pension scheme, which entered a Pension Protection Fund (PPF) assessment after Nortel went into administration in 2009, pending litigation and insolvency proceedings.
The Travers team advising the trustees was led by Dan Naylor and Susie Daykin and also included partner Peter Hughes. Advising Legal & General was an Eversheds team led by Hugo Laing.
Naylor told Legal Business that the deal represented the biggest ever PPF plus arrangement, in which the pension scheme members receive more options, via a member option exercise, and better benefits than the PPF compensation would have offered. A further transaction is likely to follow as more recoveries are made.
The deal is also the second biggest pension buyout ever, after the £2.5bn transaction with Legal & General relating to pensions of US-headquartered automotive supplier TRW in 2014.
Hughes and Naylor, the latter then an associate, were also part of the team advising the trustees of the TRW Pension Scheme, while Laing, then an associate at Clifford Chance, was part of the team advising Legal & General on that deal.
Another major deal this week saw Kirkland, Latham and Allen & Overy score key roles on the sale of shareholdings in fin-tech company FNZ to Canadian pension fund La Caisse de dépôt et placement du Québec (CDPQ) and private equity investor Generation Investment Management.
The deal sees Kirkland advise the sellers, FNZ and funds advised by HIG Capital and General Atlantic, led by London corporate partners Gavin Gordon, Carl Bradshaw and Tom McCarthy. A Latham team led by Michael Bond advised CDPQ and Jonathan Wood at Weil Gotschal & Manges advised Generation. Karan Dinamani at Allen & Overy advised the CEO of FNZ.
The acquisition is the first investment by CDPQ-Generation, the sustainable equity joint venture launched by CDPQ and Generation. Kirkland has a nine-year relationship with FNZ, having advised on HIG Capital’s initial investment in 2009, General Atlantic’s investment in 2012 and FNZ’s recently announced deal to acquire European Bank for Financial Services (ebase) from comdirect bank.
It has been a busy few weeks for Linklaters’ transactional team as the firm scooped spots on two multibillion pound deals, in the insurance and education sectors respectively.
Corporate partners James Inglis and Nick Rumsby joined Magic Circle rivals Clifford Chance (CC) and Slaughter and May as US insurance broker Marsh & McLennan agreed to acquire the entirety of UK listed rival Jardine Lloyd Thompson (JLT) for £4.9bn.
Slaughters’ senior partner Steve Cooke, corporate partner Richard Smith and finance expert Ed Fife led the team advising Marsh & McLennan in a transaction that Smith described as ‘a vote of strong support for the UK’.
Linklaters advised Jardine Matheson, the 40% shareholder of JLT, which is backing the transaction alongside JLT’s board. The public shareholders will meet to approve the transaction next month.
CC’s corporate partners Tim Lewis and Katherine Moir advised JLT.
‘What Marsh & McLennan and JLT have shown is that it is possible to create a very successful business in this market,’ Smith told Legal Business. ‘These companies have been the best performers among the competition: that’s why bringing them together makes sense.’
Long-standing friend firm from across the pond, Wachtell, Lipton, Rosen & Katz, worked alongside Slaughters advising on the US side of the deal, led by Dan Neff and Greg Ostling. Davis Polk & Wardwell advised on the financing.
Meanwhile, Linklaters’ sponsor partners Alex Woodward and David Martin acted alongside Clyde & Co on investment firm Jacobs Holding’s £2bn acquisition of private education group Cognita.
‘This is a landmark transaction for the education sector, which demonstrates the increasing prominence of global school groups and their attractiveness to investors,’ said Clydes’ co-head of education Ross Barfoot, who led the team alongside fellow corporate partner Simon Gamblin. A team of 60 lawyers worked on the transaction across Clydes’ London, UAE, Madrid, Sao Paolo, Hong Kong and Singapore offices.
Linklaters’ leveraged finance partners Ed Aldred and Dan Gendron led on the debt financing side and tax partner Mavnick Nerwal also supported on the deal.
Established in 2004, Cognita operates more than 70 schools across eight countries in Europe, Asia and Latin America, employs 7,000 teachers and support staff and educates more than 40,000 children.
Following the much-anticipated confirmation of David Green’s move to Slaughter and May earlier this week, a government document has revealed the extent of limitations on the ex-Serious Fraud Office (SFO) chief’s new role.
Topping the list was a permanent restriction on Green drawing on any privileged information seen during his six-year SFO stint.
There were also conditions stating that he must not deal with the SFO on behalf of Slaughters, advise Slaughters on any work related to the SFO or be involved in lobbying the government or the SFO on behalf of the Magic Circle firm for two-year.
The letter was published on Wednesday (12 September) by the Advisory Committee on Business Appointments (ACoBA), the government body which delayed Green’s hire over the summer to complete its process of vetting ministers and civil servants for conflicts when they move into commercial roles.
There had been concerns over a conflict of interest, as Slaughters advised the SFO on a dispute triggered by a botched raid against the Tchenguiz brothers, in addition to representing Rolls-Royce on its deferred prosecution agreement (DPA) with the SFO. Notably, the letter stated that Slaughters received ‘circa £15m’ for the instruction on the Tchenguiz matter.
It seems the SFO had a number of options available to them for the mandate, with the letter revealing: ‘The SFO also confirmed that 4 City firms were approached but that Slaughters were selected… as they had no conflicts preventing them from acting; and they offered a lower rate.’
To prevent any conflicts of interest, the Magic Circle firm has agreed to form what it termed an ‘information barrier’ to prevent Green from accessing any information on matters relating to the SFO. However, Slaughters noted that Green would be free to work on SFO cases which were ‘completely new after 21 April 2018’, the date Green left the agency.
Green is set to join Slaughters on 22 October, six months after he stepped down from the SFO. Former FBI general counsel Lisa Osofsky was named as Green’s permanent replacement on 4 June.
Slaughter and May’s high-profile move for former Serious Fraud Office (SFO) director David Green QC has finally been confirmed, following a drawn-out regulatory approval process.
Green will join the firm as a senior consultant on 22 October, six months after leaving the SFO. The firm says Green, who led the SFO for six years, will not work on any matters at the firm that he was involved with while at the SFO.
Slaughters was after the highly-coveted Green for months but his appointment was held up by regulatory approvals , particularly in the form of the Advisory Committee on Business Appointments (ACOBA). Its clearance was required before Green could swap public office for work in the private sector.
Green (pictured) has considerable expertise following his stint at the SFO and his move to Slaughters was seen as potentially problematic, given its role advising the SFO on a legal wrangle triggered by a botched raid against the Tchenguiz brothers, as well as advising Rolls-Royce on its deferred prosecution agreement with the SFO – viewed as one of Green’s key wins during his term heading the agency.
ACOBA was set up to vet moves by ministers and civil servants into commercial roles for conflicts. The maximum job restriction period it can apply on future employment is two years, although such restrictions are very rare.
Green will be advising companies and individuals facing investigations brought by criminal and regulatory agencies in the UK and internationally. His hire follows Slaughters’ third-ever lateral hire in April this year, when it brought in former Hong Kong Securities and Futures Commission director of enforcement, Wynne Mok, to its Hong Kong office.
Green commented: ‘I am delighted to be joining a firm which has such a deep understanding of the interests and needs of companies and individuals facing criminal investigations across the world. Slaughter and May is a natural fit for me and I look forward to being a part of the firm’s global investigations practice, which rightly enjoys a pre-eminent reputation.’
Richard Swallow, co-head of Slaughter and May’s global investigations group, said: ‘David will give us a unique perspective and his arrival at the firm is great news for our clients. The appointment of David, and Wynne in Hong Kong, reinforce the firm’s commitment to, and existing expertise in, this very significant area.’
hamish.mcnicol@legalbusiness.co.uk
For more on Green’s tenure at the SFO, read: ‘Under the sword’
Slaughter and May has landed key roles on the high-profile collapse of payday lender Wonga and Coca-Cola’s £3.9bn acquisition of national coffee house Costa, joined by Skadden, Arps, Slate, Meagher & Flom, Clifford Chance (CC) and Ashurst.
The demise of Wonga, the UK’s largest payday lender, was confirmed yesterday (30 August) amidst a flood of compensation claims as the government cranks up the pressure on companies offering high-cost, short-term loans.
Wonga’s overseas businesses will continue to trade, while the Financial Conduct Authority (FCA) supervises Wonga in seeking fair treatment of customers. The UK business is not accepting any new loan applications.
Slaughters is advising the company with a team consisting of head of corporate, Andy Ryde, and restructuring and insolvency partners Ian Johnson and Tom Vickers. The Magic Circle firm is also expected to advise the administrators, Grant Thornton.
‘It’s still the very early stages,’ Johnson told Legal Business. ‘I think in this case it’s business-specific issues: they had a number of legacy issues which have led us to where we are now.’
Elsewhere, Slaughters also had a key role in Coca-Cola’s acquisition of the largest coffee company in the UK, Costa. Upon completion, Coca-Cola will acquire nearly 4,000 Costa outlets across the country as it expands its coffee portfolio, which already includes the Georgia brand in Japan among others globally.
Slaughters advised Costa’s owner Whitbread, a long-standing client of the firm. Its team includes corporate partners Martin Hattrell and Simon Nicholls, IP partner Duncan Blaikie, tax partner Mike Lane, real estate partner Jane Edwarde, pensions and employment partners Jonathan Fenn and Phil Linnard, competition partner Anna Lyle-Smythe and finance partner Matthew Tobin.
CC partners Robert Crothers and Gareth Camp advised Coca-Cola on the corporate elements of the deal. Skadden, meanwhile, fielded a team led by London-based tax partner Alex Jupp, with assistance from New York partners David Rievman and Chase Wink, in advising Coca-Cola on the tax aspects of the deal.
Coca-Cola president and chief executive James Quincey commented: ‘Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand. Costa gives us access to this market with a strong coffee platform.’
City heavyweights Slaughter and May and Freshfields Bruckhaus Deringer have taken the driving seat on the proposed initial public offering (IPO) of Aston Martin, a float reportedly valuing the luxury car maker at £5bn.
Slaughters won the mandate advising Aston Martin with a corporate team led by Nilufer von Bismarck and including Roland Turnill and Filippo de Falco. The firm is working alongside Aston Martin’s general counsel (GC) Michael Marecki, while Simpson Thacher & Bartlett is advising on US law, led by London-based partner Gil Strauss.
Freshfields, meanwhile, is advising the underwriters, with a team led by Mark Austin and including Charlie Hayes.
Aston Martin is understood to have watched with interest the 2015 IPO of Ferrari on the New York Stock Exchange and, amid strong financial results for the first half of 2018, deemed it the time right to follow suit.
If it goes ahead, the float will make Aston Martin the only independent British car manufacturer to be listed on the London Stock Exchange (LSE).
In a LSE announcement published today (29 August), Aston Martin pointed to an 8% year-on-year uptick in revenue to £445m for the six months to 30 June 2018 and a 14% increase in adjusted EBITDA to £106m, compared with £93m for the first half of 2017.
‘The improved performance was primarily driven by increased revenue from sales of special edition vehicles, in particular the Vanquish Zagato family and DB4 GT Continuation models and revenue from the Aston Martin Consulting business,’ the announcement said.
The results are a fillip for a company that has a chequered financial history, having endured no fewer than 7 insolvencies over the years.
Austin told Legal Business: ‘This is the next step in a great turnaround story for Aston Martin and it’s also a good news story for the London IPO market, including in the context of Brexit. The transaction is notable for being the first to be announced since new IPO rules came into force on 1 July 2018 which, broadly require unconnected analysts to be involved in the transaction and for the registration document to be published before the prospectus.’
One City corporate partner added: ‘The IPO of Aston Martin has been anticipated as the next logical float after Ferrari’s and is also a logical way of giving liquidity to shareholders. The main driver for the regeneration of the company has been the new management team led by president and chief executive Andy Palmer, who have championed a vision for the creation of new brands and new models – a focus Aston Martin didn’t have before.’
The company’s refreshed strategy launched in 2015 and includes the opening of a new plant at St. Athan in Wales in 2019.
Palmer said: ‘Today’s results show that we have continued to deliver sustainable growth, margins and value for our shareholders whilst launching three new models and variants in the first half of the year. Since launching the Second Century Plan in 2015, Aston Martin Lagonda has been transformed into a luxury business focused on creating the world’s most beautiful high-performance cars. This transformation has delivered significant growth in revenues, unit volumes and profitability.
The strategy also encompasses branching out into other luxury vehicles, as well as the manufacture of planes and submarines.
Weil Gotshal & Manges and Slaughter and May have scooped key mandates on Bain Capital’s proposed £1.2bn takeover of UK insurer esure as RPC and Clifford Chance (CC) wade into the House of Fraser saga.
Weil is advising Bain on the proposed take-private, which will see the private equity player acquire, via its Blue (BC) Bidco Limited subsidiary, all shares in the motor and home insurer for 280 pence per share. The Weil team is led by private equity partner Marco Compagnoni and senior consultant Ian Hamilton.
The mandate is significant for a firm which has historically acted for Bain in conjunction with Advent International on multiple payment processor transactions. These include the $745m acquisition of Concardis and its subsequent merger with NETS in 2017, a $1bn deal to acquire the payments units of Intesa Sanpaolo Banking Group in 2016, as well as the acquisition and subsequent London listing of Worldpay in 2015.
Compagnoni commented: ‘We have worked with the Bain team for a number of years on a range of opportunities, so it is also pleasing that this is our first announced solo deal for them.’
Slaughters, meanwhile, acted for esure in a continuation of its longstanding relationship with the company. The firm’s corporate team was led by partners John Papanichola and Robert Innes.
Papanichola told Legal Business: ‘The team is pleased to have advised esure on its London listing in 2013, its demerger from GoCompare in 2016 and now on this proposed take-private in a relationship that has spanned several years.’
A Skadden, Arps, Slate, Meagher & Flom team led by London corporate partner Scott Hopkins advised the joint financial advisers to Bain Capital: Goldman Sachs; Cenkos Securities and Dean Street Advisers.
The cash consideration will be funded from equity financing drawn down from Bain Capital funds as well as minority equity invested from a number of HarbourVest, Lexington Partners and LGT funds. Debevoise & Plimpton, led by partner Katherine Ashton, advised HarbourVest.
Elsewhere, the administration of UK department store chain House of Fraser last Friday (10 August) and its subsequent £90m disposal to Mike Ashley, the owner of High Street chain Sports Direct, has led to RPC and CC being added to the list of advisers.
RPC is advising Sports Direct and CC is advising EY, which is acting as the administrator of the company. The pre-pack administration came about after Chinese investor C.banner, the owner of iconic London toy shop Hamleys, earlier this month backed out of a deal to inject £70m into House of Fraser and issued a profit warning.
Earlier this year, House of Fraser had been looking at a controversial company voluntary agreement (CVA) with landlords, which would have seen several stores closed and rent reductions agreed with unsecured creditors.
To that end, Freshfields Bruckhaus Deringer was mandated by House of Fraser, with Kirkland & Ellis acting for the bondholders. The Freshfields team was led by restructuring partner Ken Baird and included partner Adam Gallagher, and dispute resolution partner Craig Montgomery. Kirkland has also this week been mandated to advise beleaguered UK DIY brand Homebase on its CVA, with a team led by restructuring partners Kon Asimacopoulos and Elaine Nolan. The CVA, which would see 42 stores shut, is set to be put to a creditor vote later this month.
Travers Smith, with a team led by restructuring partner Edward Smith, advised KPMG as the supervisor of the House of Fraser CVA.
The CVA took an interesting turn recently as a group of landlords, represented by restructuring firm Begbies Traynor and property agency JLL, filed a legal challenge to the proposed arrangement.
The petition in the Scottish Courts challenged ‘alleged unfair prejudice against certain creditors as well as material irregularities in the implementation of the CVA’, according to a joint statement from Mark Fry of Begbies Traynor and Charlotte Coates of JLL. The challenge was last week settled out of court.
