Leonard Green acquires gym chain for £600m
2017 has continued to provide rich pickings for firms with marquee private equity practices on either side of the Atlantic, with Latham & Watkins, Ropes & Gray and Travers Smith leading as US private equity house Leonard Green & Partners announced its £600m acquisition of PureGym from buyout firm CCMP Capital Advisors in November.
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Travers Smith, one of Bridgepoint’s go-to firms, has sealed another mandate in the form of the private equity (PE) house’s acquisition of a raft of UK Burger King franchises.
The mid-market deal saw Travers advise its longstanding client, while Macfarlanes – itself no stranger to Bridgepoint – advised the management buy-in team. The acquisition from Burger King Europe (BKE) means Bridgepoint will now own Caspian UK Group, the franchisee of some 74 fast food outlets.
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Travers Smith, Slaughter and May and Hogan Lovells all advised as Tata Steel last month signed a long-awaited agreement to separate its business from the £15bn British Steel Pension Scheme (BSPS), in what is the largest pensions scheme restructuring ever in the UK.
As a result of the separation, achieved through a regulated apportionment arrangement, Tata will pay £550m to BSPS, which will also be given a 33% equity stake in the steel company. With the support of The Pensions Regulator and the Pension Protection Fund (PPF), a new BSPS will be created after an assessment period.
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Travers Smith, Slaughter and May and Hogan Lovells have all advised as Tata Steel today signed a long-awaited agreement to separate its business from the £15bn British Steel Pension Scheme (BSPS), in what is the largest pensions scheme restructuring ever in the UK.
As a result of the separation, achieved through a regulated apportionment arrangement (RAA), Tata Steel will pay £550m to BSPS, which will also be given a 33% equity stake in the steel company. With the support of the Pensions Regulator and the Pension Protection Fund (PPF), a new BSPS will be created after an assessment period.
Slaughter and May advised long-standing client Tata Steel on the restructuring, with pensions and employment partners Charles Cameron and Phil Linnard, restructuring partner Ian Johnson, finance partner Andrew McClean and M&A partner Padraig Cronin comprising the team. PwC also represented Tata Steel.
The BSPS trustee has been a Travers Smith client for ten years, and the firm represented it on the restructuring with a team that included pensions partners Paul Stannard, Dan Naylor and Susie Daykin, finance partners Jeremy Walsh and Ed Smith, corporate partner Adrian West, tax partner Richard Stratton and derivatives partner Jonathan Gilmour.
The separation of the BSPS had been seen as a barrier to a potential merger of Tata Steel with Germany’s ThyssenKrupp, but the separation may now accelerate merger discussions.
In a statement, Tata Steel’s group executive director Koushik Chatterjee said: ‘Considering the continued challenges in the global steel industry as well as the uncertain global politico-economic environment, the RAA presents the best possible structural outcome for the members of the British Steel Pension Scheme and for the Tata Steel UK business.’
The PPF, which was represented by Hogan Lovells, said in a statement: ‘Members of the British Steel Pension Scheme will have seen a lot of speculation about the future of their pensions, so we want to reassure them the PPF is there to protect them throughout this process.’
Slaughter’s Cameron added: ‘This restructuring is unusual in a number of ways, and unprecedented in its scale. It is by far the largest pension scheme restructuring carried out in the UK.’
In April 2016, Forsters lined up opposite Slaughter and May on Tata Steel’s deal to sell its European long-products business to UK investment house Greybull Capital.
Weil, Gotshal & Manges, Clifford Chance (CC) and Travers Smith have advised on the £1bn sale of Civica by the private equity arm of Canadian pensions company OMERS to funds managed by global investor Partners Group.
Weil advised its longstanding client OMERS private equity on the transaction, while CC acted for Partners Group and Travers Smith represented Partners Group’s management.
OMERS private equity originally purchased software company Civica just four years ago for £390m. With the sale valued at just over £1bn, OMERS private equity has made a significant profit on its investment.
Weil London-based private equity partner Marco Compagnoni led for the firm on the deal, alongside banking and finance partner Tom Richards and tax partner Oliver Walker.
Compagnoni told Legal Business that the deal was done ‘extremely quickly.’
‘We bought Civica for OMERS a few years ago. It is always very satisfying when you have bought a company for a client and then you get to see that company thrive and move on to the next stage in its development’, Compagnoni said.
The Travers Smith team was led by senior partner Chris Hale, with support from private equity partner Adam Orr and tax partner Hannah Manning. Clifford Chance’s global private equity head Jonny Myers led for his firm alongside M&A partner Spencer Baylin.
Since the beginning of the year, Weil has advised on 14 deals over the £1bn mark with a total transaction value in excess of £30bn. In January, it advised Advent and Bain Capital Private Equity in its $745m purchase of German payment provider Concardis.
Civica is a company which provides software solutions to organisations in the public sector, employing around 3,700 employees worldwide.
Travers Smith has recorded a 4% rise in revenue to £125m, marking eight consecutive years of growth, while the firm’s profits fell amid investment and challenging market conditions.
The firm’s 2016/17 financial results revealed a dip in profit per equity partner (PEP), alongside a decline in the pace of expansion at the firm, whose financial year runs until 30 June.
PEP fell 4.4% to £970,000, meaning the firm was back below the £1m barrier it broke with last year.
However, Travers managing partner David Patient (pictured) attributed the fall in PEP to the firm’s investment in its people and business, stating that it was ‘right in the middle’ of a period of ‘significant investment’.
‘The costs of running our business have gone up. Our results are, therefore, encouraging in the context of the investments made to date, and we are pretty happy with the direction of travel over the last few years,’ he said.
The results would have been ‘at the very top end of my expectations 12 months ago’ Patient added.
‘Our latest financial year started one week after the surprise Brexit vote, and there is no denying that, as a result, this year has presented a number of challenges for our clients, our firm and the legal profession as a whole. But with uncertainty comes complexity and opportunity,’ Patient added.
There are 77 partners at the firm, which is headquartered in London with a Paris office.
Chris Hale, who was re-elected senior partner at the beginning of 2017, highlighted transactional, advisory and dispute resolution as best performing practices in the firm over the financial year.
In July 2016, Travers acted for the Lehman Brothers International Europe administrators at London’s High Court against ExxonMobil Financial Services over a multimillion dollar loan. The firm also advised Pinewood Group during its £323m takeover by PW Real Estate Fund III in August 2016 and on Xafinity’s £190.3m flotation in February 2017.
Hale said the firm remained ‘cautiously optimistic’ for the coming months and ‘the opportunities that will flow from these unusual times’. He added that the next few years would remain challenging.
The Solicitors Regulation Authority (SRA) this week opened to tender its search for an assessment provider to deliver the new Solicitors Qualification Examination (SQE), also known as the ‘super-exam.’
The UK regulator has published documents for the first phase of the process, with potential bidders invited to send their non-disclosure agreements to the SRA by 22 June, with a final deadline to submit outline solutions by 1 September. The SRA expects to select the assessment provider by March 2018. The contract will last for up to ten years. The SQE is due to be implemented by September 2020.
Fieldfisher is the sole firm assisting the SRA in procuring an appropriate assessment provider, with technology partner Sam Jardine and head of privacy Hazel Grant leading its team.
The SRA decided in April to introduce the SQE, an independent assessment to be taken ‘at the point of entry to the profession’, after a two year consultation, despite the proposals being hit with criticism from the profession.
This January, Travers Smith managing partner David Patient voiced ‘serious reservations’ over the scope and rigour of the SQE being too narrow to test the full breadth of legal knowledge and cutting certain aspects of the current law assessments.
The City of London Law Society (CLLS) has also objected to the SQE, stating that the multiple-choice nature of the assessment lacks the ability to test the full nuance of law knowledge.
The SRA has been pushing to make reforms in other areas of the profession, announcing this week its review of proposals to slash the length of the solicitors’ code of conduct and relax the rules on solicitors practicing in non-legal businesses.
As part of the shake-up, the organisation’s code of conduct may be reduced from 30 pages to 14 and could result in significant changes to the way law firms and legal service providers employ solicitors.
Robert Bourns, president of the Law Society this week criticised the SRA’s proposal, published under the remit of a commitment to ‘allow solicitors to work more freely in the legal sector.’
Bourns told Legal Business that he was ‘very concerned’ with the proposals, arguing they could cause ‘consumer confusion.’
Travers Smith has unveiled its partner promotions for 2017, with four female associates making the cut. The number is slightly less than last year, when six associates (two of whom were women) were made up.
The new partners will assume their roles on July 1 2017, and all offer a different expertise. Heather Gagen has been made up in dispute resolution, possessing extensive experience as a commercial litigator. Gagen’s practice is broad and includes acting on shareholder claims and fraud cases.
Hannah Manning has been promoted to Travers’ tax department, specialising in tax on private equity transactions. Manning recently advised the management team of Source Holdings on its sale to investment managers Invesco UK.
Emma Havas will become a partner in the firm’s private equity practice. Havas advises clients such as Treehouse Group and Camden Ventures on matters such as group simplifications, management incentive plans and bolt-ons.
Travers’ real estate team has been broadened with the promotion of Emma Pereira. Pereira advises real estate funds on high-value investments and carries experience in the retail, student accommodation and logistics sectors.
Travers’ senior partner Chris Hale (pictured) commented: ‘We are excited not just to be able to promote these talented lawyers to the partnership, but to have our first ever female cohort of new partners. Each individual has demonstrated a strong track record of delivering an outstanding service to clients and we are confident they will each play an important part in the future success of both the teams in which they work and the firm as a whole.’
Elsewhere, Taylor Wessing also posted a slightly reduced promotion round as the firm made up ten partners, down on last year’s 15. RPC has promoted one more than last year, making up four partners to the firm’s London office.
tom.baker@legalease.co.uk
LLP accounts show City elite firms Travers Smith and Mishcon de Reya both saw double digit turnover growth in 2016. While Travers lifted its top paid member to £1.5m, Mishcon’s highest paid dipped slightly.
For Travers, revenues jumped from £105.2m to £120.3m over the year to 30 June 2016, accounting for a 14% increase. As a result of another year of double-digit growth, operating profit at the firm also grew 12% from £52.4m to £58.5m. The highest paid member at Travers bagged £1.5m in 2016, increasingly slightly from last year’s figure of £1.3m. This figure in LLP accounts does not necessarily equate to the highest paid equity partner and can relate to ‘golden handshakes’ to retiring members.
As the firm continues its upward financial trajectory, staff numbers and costs have also expanded, with the number of fee earners increasing from 265 in 2015 to 282 this time round. Support staff numbers were also up from 152 in 2015 to 167 this year, with staff costs increasing in tandem from £36.2m to £42.7m.
Travers Smith senior partner Chris Hale commented: ‘It was a good set of results, with a good performance all-round. Our transactions teams did well, as did our disputes team and advisory businesses. The current year won’t be as spectacular, but is likely to be good in the circumstances.
‘Unlike many other firms, we won’t benefit from a massive currency uplift because we have very little income to convert from Euro or dollars into sterling but on a like-for-like basis, I’m sure this year we’ll hold our own.’
In the firm’s first year as an LLP, Mishcon recorded another period of growth as turnover rose 18% to £130m from £110m for the year to 9 April 2016. Operating profit was up from £40.6m to $45.1m.
Mishcon managing partner Kevin Gold told Legal Business that he attributed the firm’s success to ‘the development of the brand and the continuing development of our people. Altogether it was a reasonable year.’
Gold (pictured) added: ‘The continued growth of our twin strategies, aspiring to be the leading disputes house in London and one of the leading private client firms, was aided by a good year in the dispute and private wealth markets.’
The average number of members at Mishcon rose from 83 to 91, but remuneration for the highest paid member dipped slightly from £1.74m to £1.73m. Staff costs were up to £45m from £39.2m, while the average number of partners was up from 525 to 588.
Gold explained the drop in highest paid member as ‘spreading the love.’ Gold also indicated that profit per equity partner at the firm was ‘around the £1m mark’, which would be a potential increase on last year’s reported figure of £950,000.
The firm entered a revolving credit facility in March 2015 in order to fund the fit out of its new offices, which it moved into in July 2015. According to the accounts, while the facility was originally agreed at £18m, some of the loan has been repaid and the facility has been reduced to £10.8m. The statements say the firm expects to pay the loan back by March 2020 when the facility expires.
tom.baker@legalease.co.uk
An ambition to improve business services at Travers Smith has seen senior partner Chris Hale re-elected, after completing his first term of four years.
Hale, who in 2013 amended the firm’s partnership deed to restrict his own term in the job, will retire from the senior partner post in 2019 after a further two-year stint. In the past, senior partners had a three-year term, but there was no limit to the number of terms one could complete.
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