Firms retreat as funds raised through IPOs in the region fall 26%
Davis Polk & Wardwell and Kirkland & Ellis are the latest US firms to lose corporate partners from their Hong Kong offices as public listings in the region decline.
Last month it emerged Antony Dapiran is to leave Davis Polk’s Hong Kong practice amid claims a dozen Hong Kong-based corporate lawyers will also leave the US firm.
Dapiran focuses on securities offerings and cross-border M&A. He advised on many of the largest initial public offerings (IPOs) in China and was Freshfields Bruckhaus Deringer’s former Beijing managing partner before joining Davis Polk in 2010. It is not known where he will head to next.
Meanwhile, Kirkland equity capital markets partner Dominic Tsun resigned in March after almost six years at the firm. He has advised virtually all of the major international investment banks operating in Hong Kong.
These exits follow Cadwalader, Wickersham & Taft’s retreat from Asia, with the US firm shutting down its Hong Kong and Beijing offices last year and Fried, Frank, Harris, Shriver & Jacobson’s decision to shut down its Hong Kong and Shanghai operations in 2015.
The total funds raised in Hong Kong through public listings fell 26% to $24.35bn last year, an eight-year low, compared with $33bn in 2015. However, the city remains the largest IPO market by value worldwide.
‘If you’re doing an IPO at a competitive price, you might decide to stick around. Magic Circle firms have tougher stomachs.’
One London-based finance partner said: ‘For Davis Polk, if you’re doing an IPO at a competitive price, you might decide to stick around if you think that you’ve got a long-term client that then could do some outbound M&A activity into the States. But with congress and the new US president being anti-China, that game is seemingly no longer around.
‘Magic Circle firms have tougher stomachs. If you’re in when clients IPO, you potentially have a longer-term client and Europe is open for investment.’
The recent retreat by US firms follows a push into the region between 2008 and 2010, with firms bringing in heavyweight partners on lucrative US dollar guarantees. But firms struggled to make money as the dollar strengthened while other currencies dipped.
Another City partner added: ‘It was a very small community that used to operate there, particularly in equity capital markets, and there was obviously a boom for quite a long period of time. Everybody moved seats for big money and then ten minutes after everybody moved the equity capital markets in China completely shut down.’
Kirkland and Davis Polk did not comment.
madeleine.farman@legalease.co.uk