2016 was not just about the Panama Papers. Powered by a boom in onshore M&A and capital markets in 2015 offshore firms continued to grow, as our round-up of the year reveals.
A year in the spotlight
The furore over the Panama Papers data breach has not stopped the top offshore law firms extending their reach
February 2016: The Offshore Top 30
With a 13 per cent rise in its lawyer headcount last year Maples and Calder grew faster than most of its rivals and consolidated its position as easily the largest offshore firm in the world. Combined, its fiduciary and legal arms now employ 1,264 people worldwide and, after the divestment of Appleby’s and Walkers’ fiduciary businesses, Maples is more than twice the size of its nearest competitor.
Last year Maples and Calder grew faster than most of its rivals and consolidated its position as easily the largest offshore firm in the world
From an onshore, UK perspective it was a tough start to 2016 for the offshore world. Thanks to the £130m tax deal sealed between HM Treasury and Google, which many see as a derisory settlement by one of the world’s largest corporations, the use of offshore structures to minimise tax payments is back in the headlines.
But offshore law firms are far from gloomy after what appears to have been a pretty good year in the world’s international financial centres. The boom in onshore M&A and capital markets work has had a positive knock-on effect – whether or not the use of the British Virgin Islands (BVI), the Cayman Islands, the Channel Islands and other jurisdictions in complex corporate deals is morally acceptable, it is a fact of modern business and there remains plenty of work offshore.
Click on table to enlarge
April 2016: big changes in the market
After a busy year in the offshore world several trends are evident: the ongoing divestment of fiduciary businesses, the move into more jurisdictions and a hot recruitment market.
In responses gathered as part of our annual offshore survey, the world’s biggest offshore firms give their thoughts on the key issues affecting their businesses.
Last year saw Appleby become the latest firm to offload its fiduciary business in a trend that sharply divides the offshore market.
Both Harneys and Walkers announced they were moving into Bermuda. They were the first firms from ‘off-island’ to open there, with Harneys finding a merger partner and Walkers looking for greenfield growth.
April 2016: the Panama Papers leak
In a now-historic moment for the offshore market, the leak of 1.5 million documents from the files of offshore ‘law firm’ Mossack Fonseca & Co is one of the largest data breaches ever. The offshore firm, which was branded the fourth-biggest in the world, was relatively little-known in the UK as a law firm and offshore firms said they do not come across the firm’s lawyers on deals.
Since the publication of the first stories – unearthed by a consortium of journalists from around the world – the focus of the public, the media and politicians has been squarely on the way the world’s wealthy seek to minimise their tax payments.
The leak has already led to the resignation of Icelandic prime minister Sigmundur Davíð Gunnlaugsson after it emerged his wife had used a BVI company to invest the proceeds of the sale of her father’s business. Gunnlaugsson had a stake in the company concerned but did not declare the interest.
Scores of other politicians, celebrities and their families and friends have been named in the leaks.
Mossack Fonseca’s head office in Panama has been raided by authorities since the leak and it looks as though a number of other firms – both offshore and onshore – are likely to be named in the newspapers as further documents are released over the course of the next few months. So far, a handful of well-known onshore firms have been linked to deals involving Mossack Fonseca, including Holman Fenwick Willan (HFW), Simmons & Simmons and Spanish firm Gómez-Acebo & Pombo.
The papers reveal the complex web of offshore structuring designed to minimise tax payments and, on occasion, keep secret the ultimate beneficial owner of a company. Much of what has been revealed is entirely legal, although questions have been raised about some of the structures unveiled in the data.
April 2016: SRA orders law firms to probe links to Panama Papers
The SRA asked a number of law firms to review of whether they are linked to the law firm at the centre of the Panama Papers data leak.
Firms that have received the SRA letter are understood to include HFW, Simmons & Simmons and London firm Child & Child.
May 2016: Clifford Chance, KWM and Norton Rose named in new Panama Papers leak
Clifford Chance, King & Wood Mallesons (KWM), Mishcon de Reya and legacy Norton Rose are among a number of global law firms linked to offshore entities uncovered as part of the Panama Papers document leak.
Now it has emerged that Clifford Chance, Clyde & Co, Forsters, Ince & Co, Mishcon de Reya, Taylor Wessing and Norton Rose plus a raft of US firms including Gibson Dunn & Crutcher and Simpson Thacher & Bartlett – and offshore firms – have advised offshore companies with ties to Mossack Fonseca.
Offshore giant Maples is named as the intermediary for 28 entities mostly registered in the BVI, for which Mossack Fonseca acted as agent, and which are now inactive. According to the data the firm was linked to the entities through Hong Kong.
Maples’ Cayman headquarters is also the registered office address for a handful of entities or shareholders of companies.
May 2016: China’s biggest firms linked to Panama Papers
Some of the biggest law firms in China are linked to Panama firm Mossack Fonseca as intermediaries to and shareholders of companies registered in the BVI.
Five of China’s top 30 firms by revenue are among a considerable number of law firms linked to offshore entities uncovered as part of the Panama Papers document leak.
A database collating millions of documents from Mossack Fonseca reveals that Haiwen & Partners, Hylands, Long An, Zhong Lun and Zhongyin are listed as “intermediaries” to holding companies incorporated in jurisdictions including the Bahamas, the BVI and Samoa.
October 2016: Dentons looks to offshore firms in network launch
Offshore firms Appleby, Carey Olsen, Ogier and Walkers are among 280 firms in 160 jurisdictions to join Dentons’ NextLaw global network.
Appleby, Carey Olsen, Ogier and Walkers are among the 280 firms to join Dentons’ NextLaw network
The firm aims to expand its presence internationally with clients while capitalising on its informal referral network.
Q&A: Brexit and the Panama Papers affair
Leading lawyers discuss the ramifications of two of the most important developments of the year for offshore jurisdiction
Q: How has Brexit affected your strategy, if at all?
Steve Meiklejohn, global senior partner, Ogier: There has been no significant impact on our strategy. The process of negotiation leading to Brexit is going to take some considerable time, and it is difficult or even impossible to predict what the detailed outcome will look like, especially with key elections next year in Germany and France.
We’ve looked at the situation from the perspective of our different service lines and it’s fair to say that the range of potential impacts vary from one line to the next. We foresee an increase in dispute resolution and restructuring work, and in the field of private wealth.
There were initially gloomy predictions about real estate and M&A activity but looking back at the results over the past few months there has been no significant decline. Indeed, many deals that had been postponed over Brexit have come back to life.
Antonia Hardy, Cayman Islands managing partner, Walkers: Our strategy over the past few years has been to increase our geographic diversification to reduce our reliance on any particular market.
The relative slowdown in the UK, while unhelpful for any business with operations in Europe, will therefore not have a significant impact on the firm. Over the longer term we expect the markets in the UK and Europe to adjust to the new reality – whatever that may be.
Jonathan Heaney, Jersey managing partner, Walkers: It has not really affected our strategy from a Jersey perspective. We continue to see dealflows from the UK, albeit that transactional work did slow down a little in the immediate aftermath of the Brexit vote.
Jonathan Rigby, global managing partner, Mourant Ozannes: Brexit has certainly knocked international markets, particularly in London and Europe more broadly.
We saw a slowing of transactional work around Easter, and whatever momentum remained on 23 June largely came to a standstill when the result became clear.
In a connected world of cross-border transaction structuring and capital flows it is inevitable that the slowdown in financial markets and deal activity onshore has been mirrored offshore.
This largely affected transactions that are reliant on institutional lending/structures, and caused a short-term pause (potentially market-altering) in the UK commercial real estate market in particular.
Since September, however, we have seen a steady flow of private equity transactions coming through our pipeline as investors leverage the opportunities created by a weaker pound and falling real estate values in the London market.
“Since September we have seen a steady flow of private equity transactions coming through” Jonathan Rigby
Whether or not this is a long-term trend remains to be seen, but the Bank of England base rate reduction and the sharp rebound in the UK services sector in August has seen the UK market stabilise over the third quarter.
Elsewhere, there has been little effect on transaction volumes and in fact in Asia we are seeing a marked uptick in activity.
The offshore economies are resilient and, to a large extent, firms such as Mourant Ozannes are hedged where volatility occurs in an onshore economy.
Brexit largely impacts the UK and Europe and correspondingly has had a bigger impact on European offshore locations more than those in the Caribbean, Asia and elsewhere, where we are continuing to see substantial growth.
Legislative change resulting from Brexit is a fair way off yet and the timeline for such change is unclear (though relatively certain in view of how Article 50 works, effectively requiring withdrawal to occur within a two-year period following service of notice by a member state of its intention to withdraw).
Although none of our home offshore jurisdictions are directly impacted by Brexit, such that they offer relative political and economic stability, we can be sure that the reality of Brexit will impact business as much as the prospect of it has done – though the challenge for the protagonists in Brexit will be to neutralise some of the adversity.
We expect there to be a continuing impact on transactional activity until the UK Government sets out its plan and timetable. It will be slower and there will be less institutional backed dealflow, but in private equity, including real estate, we are already seeing an uptick and expect this to continue into 2017.
Our firm is extremely well-placed to capitalise on this given our profile in the private equity and funds field. Our strategy is to amplify this.
Narinder Hargun, Bermuda director and co-chairman, Conyers Dill & Pearman: The terms of the UK leaving the EU have yet to be drawn up and the nature of the UK’s relationship with the EU post-Brexit has yet to be agreed so it is early in the process to know for certain what the impact will be and what the UK market will look like. Nevertheless, we are confident that our jurisdictions are well-positioned to continue to provide the same benefits, standards and quality in services and governance post-Brexit.
In particular, Brexit will not have any negative effect on Bermuda’s commercial (re)insurers when writing EU business as Bermuda has gained equivalence in accordance with the requirements of Solvency II. Bermuda’s status under Solvency II will be unaffected by Brexit.
“Brexit will not have any negative effect on Bermuda’s commercial
(re)insurers” Narinder Hargun
Michael O’Connell, group managing partner, Appleby: Our strategy is centred on providing an excellent service to our clients and Brexit has not changed that. The CDOTs [Crown Dependencies and Overseas Territories] already have an independent relationship with the EU under Protocol 3 of the UK’s Treaty of Accession to the European Community so we do not see Brexit having a major impact on how we are positioned to help our clients. The landscape could change, of course, depending on the exit negotiations, but we will adapt, just as we do when we have to consider any other major external influences on our clients and/or markets.
David Cadin, group managing partner, Boydells: I suppose Brexit came as a shock to everybody. I’m not sure that firms in offshore centres expected the UK to leave the EU. There was a quiet period before the vote; there was a stunned silence after the vote. But people have seen that there is no cessation of activities in Europe.
Q: Do you expect your firm’s referrals from UK firms to be affected and why?
Meiklejohn: At the time of the referendum the fear was that London might lose a chunk of its financial services sector to Paris or Frankfurt. However, more recently the talk has been about whether it could be Dublin or Luxembourg that benefits. Ogier has a significant practice in Luxembourg, so such a move would benefit us.
To the extent that UK firms do suffer a downturn in work there would be an impact on offshore firms because that’s where a large chunk of our referrals flow from – but that’s all conditional on there being a downturn. So far, that downturn has not materialised despite forecasters and commentators saying it would.
Rigby: For institutional-backed transactional and financing work, yes. We’ve already seen an impact on institutional-backed dealflow and we expect to see a shift in referrals for this type of work where the large banks chose to move their operations out of the UK. That said, we are still seeing a healthy pipeline of work in private equity.
We also believe that London will continue to be a significant international financial centre, with a broader global and possibly less EU-focused outlook. Even if there is a shift, our bases in the Channel Islands, Caribbean and Asia mean we are well-placed to sustain our longstanding symbiotic relationship with the City as it broadens its global reach.
Heaney: Those active in the commercial real estate sector did pause for breath. However, there are increasing signs that deals are now coming back to life. Asset managers still have disposal/acquisitions strategies to follow and bank facilities to renegotiate. Our own approach to marketing and business development therefore remains unchanged. Our target clients remain the same.
O’Connell: No-one can anticipate where the Brexit vote will take the UK and the EU. Any major political change inevitably causes uncertainty in the business community and we know from talking to our clients that certain types of transactions were put on hold at the time of the referendum. However, the negative impact of Brexit has not materialised to the level many predicted and activity levels remain strong.
“There’s no reason to believe that referrals will not be impacted in a positive way” Michael O’Connell
We are finding the City resilient and our referrals from UK firms have not been impacted so far. There’s no way of telling until there is more certainty on the exit strategy, but there’s no reason to believe that referrals will not be impacted in a positive way. UK firms may well need to look at helping their clients relocate and/or restructure outside of the UK and we are well-positioned to help them with this.
Cadin: At the moment we are not seeing any change in those relationships. We saw a change in the run-up to the vote and after it. Now, there is still money coming into the UK. People are still structuring from Jersey and Guernsey. We are starting to see more conversations at government level, with increased levels of work.
Q: Where do you see fresh opportunities?
Meiklejohn: It’s interesting that when the trade body Jersey Finance repeated their work concerning the value of the island’s financial services sector to the UK they added a separate report about the value of Jersey’s financial services sector to the EU. That report shows that there are opportunities for Channel Islands firms in Europe.
Also, we need a more focused approach to Africa and the Middle East, and to be prepared to focus on new jurisdictions and areas of work.
Heaney: In the immediate aftermath of Brexit many real estate transactions stalled and some were pulled indefinitely. This certainly affected a number of our clients who had to revisit their buy and sell models.
That said, certain clients are taking advantage of weaker sterling rates – UK real estate has just become significantly cheaper for those spending in US dollars, for example. One of our clients, based in the Middle East, has never been busier, and we are acting on multiple transactions.
Rigby: Definitely in private equity, but also we continue to see high volumes of regulatory and governance work flowing through our business. Having two bases (in the Channel Islands) that are effectively outside the EU, and are regarded as secure and stable offshore environments, we are well-placed to continue to meet the needs of investors and others in a post-Brexit world.
O’Connell: We see a lot of opportunities for our clients in light of Brexit. Many of the fundamentals that drove transactions to record levels in 2015 remain in place. Companies and funds still have plenty of cash available and ready access to affordable finance in a low-interest rate environment. The sterling fall means opportunities for investors that may lead to specific transactions and private equity or fund activity.
Much will depend on the exit negotiations, but a world outside the EU will present opportunities and once the exit process becomes clear we will be ready to advise clients in the new environment.
Cadin: I see opportunities in structuring for financial services going forward. People in the UK looking to structure deals have an automatic tendency to rebel against anything pre-Brexit. We can help by saying things like ‘this works and this doesn’t work’. Coming offshore gives you a European perspective that can provide an acceptable solution for both parties.
Will Brexit make offshore centres such as Jersey and Guernsey less attractive to international businesses?
Meiklejohn: I don’t think so. We’re not EU members; we’re third countries – we have that status under the AIFMD. Britain has made the decision to de-couple itself from the EU and stand alone. I see the Channel Islands becoming strategically more important to the UK post-Brexit. Therefore, I think Brexit will create opportunities; the job for us is to identify them.
“I see the Channel Islands becoming strategically more important to the UK post-Brexit” Steve Meiklejohn
Heaney: We see no reason why the Channel Islands should become less attractive. Jersey and Guernsey are not and have never been members of the EU. In terms of financial services the Channel Islands have always relied on bilateral agreements with individual members states. Nothing changed overnight for the Channel Islands. Nonetheless, the UK is a very important market for the Channel Islands and anything that affects the UK will be watched carefully.
Rigby: On the contrary these centres are coming into their own as politically stable and reputable places to transact, with strong economies and a solid base of skilled workers in the financial services sector.
O’Connell: As CDOTs we do not have the same issue as the UK in relation to disentangling 43 years of EU legislation. Some of our legislation is influenced by the EU but it is not subject to EU law and our jurisdictions are not obliged to enact laws to comply with EU law. In effect, we are already what the UK will become – a third country. In some areas, this means that we are already ahead of the game: for example, Bermuda has already negotiated with the EU as a third country and obtained Solvency II recognition, which the UK will have to obtain.
The Panama Papers effect
In the past 12 months the reputation of the offshore market has suffered after Panamanian offshore firm Mossack Fonseca was embroiled in one of the biggest global tax scandals of all time.
Here, our experts discuss whether there was any blowback on the rest of the offshore market, and the lessons learned from the security breach.
Q: How do you believe the Panama Papers affair affected the reputation of offshore firms?
Meiklejohn: It has certainly affected the reputation of Panama, and of Mossack Fonseca. But given the amount of information that was leaked – some 11.5 million documents – and it’s interesting that so much related to activity from 20 or even 30 years ago – and given that very little damaging material came out about the Channel Islands, this rather confirms what we thought was the case, namely that there is little unwanted business being done on a wholesale scale in the Channel Islands today.
The other key point is that levels of regulation and transparency since then have changed beyond recognition. The proceeds of crime legislation, the Common Reporting Standard that’s about to come in, the work on base erosion and profit shifting (BEPS) and registers of beneficial ownership – these things have changed the face of the sector, and that is widely acknowledged and understood, outside of the mainstream media at least. I don’t think the offshore ‘brand’ – not best represented by activity in Panama or activity 30 years ago – has been tarnished.
Hardy: In terms of offshore jurisdictions the affair has obviously focussed attention on Panama, which has taken the brunt of the criticism, but it’s fair to say that the unhelpfully sensationalised coverage has not done any of the offshore centres any favours.
The nature of the leak underlines just how crucial IT- and cyber security is for law firms now. Traditionally, we expected hackers to attack financial institutions – that’s where the money is – but increasingly we hear of onshore and offshore law firms being attacked.
We expect most law firms – whether onshore or offshore – to invest in their IT security over the coming years.
David Lamb, Hong Kong chairman, Conyers Dill & Pearman: Panama is different. All the jurisdictions in which Conyers operates are well-regulated and adhere to the international transparency initiatives and international standards of the OECD, FATF, UN and other international authorities. The products and services we offer in our jurisdictions meet or exceed international standards and will continue to do so. In these circumstances we don’t anticipate any long-term reputational damage to the offshore centres in which Conyers operates.
“We don’t anticipate long-term reputational damage to the offshore centres in which we operate” David Lamb
Rigby: The Panama Papers story has ramifications for all international finance centres, whether onshore or offshore. There are many elements to the story, though at its heart are two important themes.
First, the fight against corruption and money laundering is a global one, and the CDOTs are, for the most part, at the forefront of this international effort. It’s important that we continue to co-operate through organisations such as the OECD and the Financial Action Task Force to establish a framework of law and regulation that not only eliminates criminality from our platforms but also facilitates transparency and cross-border co-operation in the enforcement of sanctions against criminals who seek to subvert them.
Second, professional services firms must take steps to enhance their information security systems. Those perceived to be weak will be vulnerable to attack and misuse. Historically, law firms have been seen as a soft target when it comes to IT and it is clear that for our industry information security is under the spotlight.
That said, all organisations, regardless of industry, are of interest to cyber criminals and we are no different in facing continuous attempts from those seeking to access our networks.
O’Connell: When a negative story on a offshore firm appears then yes, of course there is a real risk that the word ‘offshore’ is used indiscriminately to tarnish the whole sector with highly biased and unjustified connotations. That approach is unfair and wrong on the true facts. It is a convenient tabloid label which is long on rhetoric and short on analysis. Lumping all offshore jurisdictions and the professionals within each of those jurisdictions, together with this negative label is misguided, inaccurate, and grossly unfair.
Of course there are professionals who break the law and they should be subjected to the full scrutiny of the legal process, and these occasions should be used to improve standards to even higher levels of accountability.
The vast majority of those who work in the offshore sector are well-trained, skilled, law-abiding people who fulfil all their duties with conspicuous care and propriety. There may also be certain jurisdictions that have not yet attained the standards of others. Merely because such jurisdictions have chosen a particular path cannot, as a matter of fairness and analysis, be held against those which have been at the forefront of developing standards and processes whose purpose and function is to detect, report and expose criminal activity.
The ‘real’ offshore world is, in fact, when viewed properly and fairly, one that is part of the global financial system and that plays a full part in co-operating with larger states to fight against and prevent the sorts of unacceptable activities that are rightly making the headlines.
That said, in the longer term we believe that the impact of the Panama Papers affair will be a positive one for the offshore world with further review and focus on those jurisdictions, such as Panama, that have less robust client take-on procedures and poor or no adherence to international financial transparency agreements.
Cadin: In terms of the offshore firms, I don’t think the Panama Papers affair had any impact.
If you change the nature of the question, the impact on the reputation of offshore generally is more interesting and challenging.
[At first] there was an automatic assumption that anything offshore was tainted but as people looked at the material they started to realise that this was a Panamanian issue, with security questions about the robustness of Panama as a jurisdiction, and looking at where these companies were set up – which was the British Virgin Islands [BVI].
You can see some fallout from Panama, some fallout from BVI, and then you start to think about the fallout of Mossack Fonseca itself – in Jersey, they closed.
What have you done to safeguard clients’ information?
Meiklejohn: Security is something we look at and review continually, not just within the context of the Panama Papers.
Aside from the technical control aspect of security – for which we are regularly audited and for which we also use external cyber security expertise – there is a groupwide internal focus on behaviour and security for all staff, and for all our employees to be tech-savvy which, of course, includes consideration of security issues.
Hardy: At Walkers we understand the importance of protecting our systems and data.
Like most companies we rely heavily on our IT system. Given the critical role technology plays in the day-to-day running of our business we invest in ensuring systems remain available at all times, and that the integrity and confidentiality of data is maintained.
With a record of innovation, Walkers benefits from years of planning and investment in first-class infrastructure. We are also able to avail ourselves of the expertise that has been built up in the law firm and have access to a team of IT professionals located in our offices around the world.
Hargun: International clients have, for some time now, expected offshore firms to have adequate management of IT risk and cyber security. The release of the Panama Papers highlights this issue. At Conyers we employ best-in-class control to protect our clients’ confidential and privileged information. We meet or exceed industry information security standards.
Rigby: At Mourant Ozannes we take information security seriously, recognising the threats we face as an organisation. The very fact that we have a global head of information security underlines this.
We are on high alert and have a continuous programme of review and education for our people to ensure we are as resilient as possible.
This has simply become a fact of life in today’s world and, accordingly, it is embedded in every element of our business.
“People are asking about IT security vulnerabilities and information testing” David Cadin
Cadin: Clients have always been extremely wary about information security. The fact that this information has come out has made them more sensitive about the issue.
People are now asking about IT security vulnerabilities and information testing.
Against the M&A tide
Most offshore firms are hanging tough, despite the Brexit slowdown in deal activity that has hit onshore outfits
In the six months preceding the Brexit vote the number of M&A deals that stalled (or did not take place) in the UK stands in stark contrast to the boom during the same period of 2015. Turbulent market conditions scared investors into retracting or delaying deals.
But it is not only the UK that is affected. In the US, IPOs have fallen through and deals that were a ‘sure thing’ just didn’t happen.
The consequences of the dip in M&A have yet to be fully manifested in law firms, although sources in the market tell The Lawyer that many are considering a return to strategies that hark back to the 2008 financial crisis. This would involve a shift away from transaction-heavy practices once more.
Bucking the trend
However, many offshore firms – always at the centre of these big deals – have yet to feel even the initial effects of the slowdown.
“There have been lost deals, but there’s also increased volume in terms of restructuring work and, we expect, dispute resolution,” Ogier global senior partner Steve Meiklejohn says. “Apart from Brexit other things going on in the world – the advent of the Common Reporting Standard, the Base Erosion and Profit Shifting agenda and the Register of Persons with Significant Control – that have created regulatory and advisory work, and we expect this pipeline to continue.”
But not all offshore firms have been completely unscathed. Appleby group managing partner Michael O’Connell says the firm has tracked a drop in the volume and value of M&A deals.
“This year’s figures are being compared to the frantic levels of 2015,” O’Connell says. “In many ways the numbers reflect ‘business as usual’ and are more comparable to the levels of activity we saw in 2013 and 2014. There’s been an adjustment, but not one we feel too downbeat about.”
According to O’Connell, his firm has adapted to this by maintaining M&A as a core part of its corporate offering, as well as having a diversified business.
“On a global level our M&A practice continues to grow” David Lamb
“We are not over-reliant on M&A so it’s business as usual for us,” he adds.
Walkers Cayman Islands managing partner Antonia Hardy says her firm has a similar strategy.
“We’re well-diversified across our core practice areas of insolvency and dispute resolution, funds (hedge funds and private equity), finance (including asset finance, structured finance and banking) and private wealth, as well as geographies,” she says. “Activity in a number of areas remains strong, which has compensated for a quieter M&A sector.”
Boydells group managing partner David Cadin says that it has been pretty stable for his firm too.
“We haven’t seen much change in income in M&A,” he says. “It’s consistent. We’ve heard less noise around it, but deals are still happening.”
Mourant Ozonnes global managing partner Jonathan Rigby concurs.
“We haven’t seen a huge impact,” Rigby explains. “We’re seeing year-on-year revenue growth – well ahead of our target for the year. “Our business is not as reliant as others on general M&A workflows. We’ve been hedged for some time on the volatility of this work as our teams in the Channel Islands handle large volumes of fund and private equity work.”
Some offshore firms are actually growing in M&A thanks to cross-border capability. Conyers Dill & Pearman is one, according to its Hong Kong chairman David Lamb.
“Our practice is cross-border and on a global level our M&A practice continues to grow; in fact we have seen an increase in work in this sector in the past 12 months,” Lamb claims. “However, we will be monitoring the impact of broader market effects.”
Deals
Q3 saw offshore firms steer deals ranging from the sale of Formula 1 to the privatisation of a billion-dollar Asian funeral company
Bermuda
IPO of offshore financial giant Butterfield Bank
Agreed 21 September 2016
Butterfield is Bermuda’s first and largest independent bank, and a specialist provider of international financial services in offshore jurisdictions.
Earlier this year the bank launched its $287.5m (£234m) IPO of 12,234,042 voting ordinary shares on the New York Stock Exchange at a price of $23.50 per common share, of which 5,957,447 were issued and sold by Butterfield and 6,276,595 were sold by certain selling shareholders (including 1,595,744 common shares pursuant to the underwriters’ option to buy additional shares, exercised in full prior to the closing of the IPO).
For Butterfield: Directors David Cooke and Sophia Greaves and associate Edward Rance of Conyers Dill & Pearman’s Bermuda office.
For the underwriters: Wachtell Lipton Rosen & Katz acted as US advisers while Davis Polk & Wardwell advised the underwriters. Goldman Sachs, Citigroup and Sandler O’Neill & Partners acted as the joint book-running managers, and Keefe Bruyette & Woods, Raymond James and Wells Fargo Securities acted as co-managers for the offering.
British Virgin Islands
Intertrust’s acquisition of Elian Group
Agreed 5 October 2016
This cross-border deal involved legal advice in the British Virgin Islands, Guernsey, Jersey and the Cayman Islands. Through the £435m acquisition of Elian, Intertrust will be boosted by significant growth and diversification in key jurisdictions.
For Intertrust: Mourant Ozannes provided advice with an international team led by partner Simon Felton and counsel Vic Cabot, working with Simmons & Simmons, to deliver advice in relation to the laws of BVI, Cayman, Guernsey and Jersey.
Cayman Islands
AerGen’s debut ABS issuance
Agreed July 2016
AerGen, a relative newcomer in the aircraft leasing market, made its first-ever ABS issuance – a $324.7m asset-backed loan. The deal was a success and three tranches of the issuance were oversubscribed.
For AerGen: Maples and Calder partner Tina Meigh and associate Barnabas Finnigan, with assistance from associate Shari McField, and in Dublin partner Donna Ager with assistance from associate Aine O’Hara.
Qihoo 360 go-private
Agreed 15 July 2016
US-listed Chinese security software and internet browser developer Qihoo 360 Technology’s $9.3bn privatisation is the latest in a growing list of US-listed Chinese companies that have decided to go private. The Qihoo deal is especially notable because of its size. It is the largest take-private deal of a US-listed Chinese company so far.
The privatisation used the merger provisions of the Cayman Companies Law, a structure which was pioneered by Conyers Dill & Pearman in the very first public merger transaction, the Tongjitang Chinese Medicines Company transaction, back in 2010.
For Qihoo: Partner and co-chair David Lamb and associate Angie Chu of Conyers’ Hong Kong (HK) office.
For the committee of the Qihoo 360 board of directors: Maples and Calder partners Greg Knowles and Richard Spooner
For the buyer group: Kirkland & Ellis in the US with partners David Zhang, Jesse Sheley, Xiaoxi Lin, Amie Tang, Julia Yu and Henry Yin (HK office). Fangda Partners acted as PRC adviser to the buyer group with partners Shawn Pan and Joyce Zhou (Shanghai office).
For the independent committee: Skadden Arps Slate Meagher & Flom partners Julie Gao, Clive Rough, Peter Huang, Daniel Dusek and Joseph Yaffe.
Formula 1’s sale to Liberty Media
Earlier this year, Liberty Media acquired 100 per cent of the shares of Delta Topco, the parent company of Formula 1, for $8bn. The iconic global motorsports business was acquired from a consortium of sellers led by CVC Capital Partners.
Liberty is backed by John Malone, the American media tycoon.
For CVC Capital partners: Freshfields Bruckhaus Deringer partners Charles Hayes and Valerie Ford Jacob advised CVC, which owns Formula 1 parent company Delta Topco.
For US bank Lehman Brothers: Weil Gotshal & Manges partner Peter King.
For Liberty Media: Walkers partner James Burch and senior counsel Zoe Hallam.
Guernsey
Ancala Partners’ acquisition of Energy Group Ltd
Agreed 8 Aug 2016
Ancala completed the acquisition of 100 per cent of International Energy Group (IEG) for its UK infrastructure platform. IEG has more than 40,000 customers connected to its networks and has been supplying gas in the Channel Islands and the Isle of Man since the 1830s.
Bedell Cristin worked with Travers Smith, acting as Jersey and Guernsey legal advisers on behalf of Lloyds Bank and Commerzbank AG in connection with the provision of multi-currency term and revolving facilities to a special purpose vehicle.
For Lloyds Bank and Commerzbank: Bedell Cristin Jersey banking partner Mark Dunlop, assisted by senior associate Antony Clerehugh and associate Lauren Taylor. Banking partner Kate Ovenden, assisted by senior associate Sukh Chana, led the Guernsey team.
For Ancala Partners: Herbert Smith Freehills (HSF) partner Patrick Mitchell led the team, with Simon Caridia on finance and Tim Briggs on competition and regulatory. They were supported by partner Silke Goldberg, senior associate Richard Flint and associates Kate Laidlow, Jordan Joannides and Adrienne Lai.and Mourants in Jersey. HSF worked with Mourant Ozannes partners Robert Hickling, who advised on Jersey, and Caroline Chan who advised on Guernsey.
Hong Kong/Cayman
CVC Capital Partners’ privatisation of Nirvana Asia
Agreed 5 October 2016
CVC completed the $1.1bn privatisation of funeral company Nirvana Asia by way of a scheme of arrangement. This was the first public-to-private transaction on The Hong Kong Stock Exchange completed by a private equity fund.
The scheme was approved following a vote in favour of the offer from investors holding over 99 per cent of the company’s shares on 28 September. It was subsequently sanctioned by the Cayman Islands Grand Court on 30 September.
For CVC Capital Partners: Mourant Ozannes HK managing partner Paul Christopher led the team, assisted by partners Shaun Folpp and Simon Lawrenson, counsel Claire Fulton, senior associate Hannah Crews, associate Jessica Lee and legal assistant Tracey Forbes. CVC also instructed Clifford Chance in HK and Kadir Andri & Partners in Malaysia.
For Nirvana Asia: Sullivan & Cromwell, alongside Conyers Dill & Pearman in Cayman.
For the banks: Kirkland & Ellis, Rahmat Lim & Partners and Walkers advised JPMorgan and CIMB bank.
Jersey
Quotient Ltd’s $120m senior loan notes issuance
Agreed 21 October 2016
Medical diagnostics company Quotient Ltd issued fixed rate senior secured loan notes of up to $120m of 12 per cent senior secured notes due in 2023.
At the initial closing of the transaction Quotient issued $84m of notes and received net proceeds of approximately $79m, after expenses.
For Morgan Stanley: Bedell Cristin partner Alasdair Hunter led the team advising on all commercial and regulatory aspects of Jersey law in connection with the issue. Hunter had assistance from associates Mark Nisbet and Ross Rennie.
For the other side: Clifford Chance in New York and Carey Olsen.
Sony Music Entertainment’s acquisition of Ministry of Sound Recordings.
Agreed 10 August 2016
Sony Music Entertainment’s acquisition of the Ministry of Sound (MoS) was one of the most significant in the music industry in recent years – MoS Recordings has sold more than 70 million records and its compilation team is responsible for around one in six of the compilation albums sold in the UK.
Ogier advised on matters of Jersey law on the transaction, working alongside Olswang.
For Ministry of Sound: Ogier partner Raulin Amy and senior associate Lisa Floris.
Mauritius
Greenko’s $500m notes issuance
Agreed 22 September 2016
Appleby advised The Bank of New York Mellon as trustee, notes collateral agent and common collateral agent in connection with the Greenko Energy Holdings and Greenko Investment Company offering of $500m senior notes due 2023 by Greenko Investment Company.
The offering marked India’s first high-yield green bond issuance and addressed the financing needs of Greenko Energy Holdings’ Indian operating subsidiaries. The goal of the company is to grow the portfolio to about 2,000MW in 2018.
Appleby advised The Bank of New York Mellon as trustee, notes collateral agent and common collateral agent.
For the Bank of New York Mellon: Appleby team led by partner Malcolm Moller.
For Greenko Energy Holdings and Greenko
Investment Company: Shearman & Sterling.
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