Budapest Business Journal 2711

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BUSINESS JOURNAL BUDAPEST

VOL. 27. NUMBER 11

JUNE 7 – JUNE 20, 2019

SPECIAL REPORT

Legal Market SPECIAL REPORT

Market Talk: Latest Trends and New Technologies The Budapest Business Journal assembled its annual legal panel, drawn from some of the leading law firms in Hungary, to ascertain how they see the local legal market. 17 SPECIAL REPORT

Depersonalization Could Aide Hard-toimplement GDPR One year on from the introduction of EU-wide GDPR regulations, the BBJ asks local experts how implementation has fared, and what might be next. 20

SOCIALITE

Building M&A Growth

Kolorádó Festival: an Adventure Close to Home Now that summer’s almost upon us, thoughts turn to festivals, of which Hungary has a surprising number, from the mega-event that is Sziget to far smaller gatherings all over the country.

This year, Kolorádó in the Buda hills has caught David Holzer’s eye. 37

NEWS

Tax Cuts and Growth Incentives A number of tax cuts and incentives to boost growth lie at the heart of the 2020 draft budget presented to Parliament on June 4. Along with the economy protection action plan, the aim is to safeguard the Hungarian economy from the impact of a global slowdown. 3

NE BUSI

SS

Although the mergers and acquisitions market moderated in 2018, the number of foreign investors grew, with real estate and technology the favored FDI targets, says Ferenc Nagy, following publication of EY’s annual BUSINESS M&A index. 12

MNB Aims to Boost Options Thru Corporate Bonds The National Bank of Hungary (MNB) is launching a new bond program next month with the aim of boosting and diversifying corporate fund raising. 7

News

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THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Balázs Barabás, Zsófia Czifra,

Kester Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Robert Smyth, Bálint Szőnyi, Zsófia Végh.

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It ought go without saying that our thoughts are with the survivors, victims and families of the Hableány (Mermaid) disaster, but I think it is important we do so in any case.

The Danube is such an ever present part of our everyday lives in Budapest, that we have become inured to its equally ever present theat. The sinking of the tourist ship is a salutary reminder of the dangers inherent around water; given the wrong circumstances, a person can drown in just a few centimeters, after all. Scores die every year at Balaton, caught out by the sudden storms that blow up over the lake.

Growing up, my bothers, sister and I were taught to swim early, the result of a tragedy that befell my father when he was a child; evacuated from the U.K.’s second city, Birmingham, during World War II, he watched helpless as a school friend was swept away and over a weir to his death in the River Severn in Worcester. My Dad was so determined never to see that again that he actually qualified as a life guard.

But even the strongest swimmer will struggle if thrown into the Danube unexpectedly, fully clothed and at night, during a storm, when the river is in spate due to recent rainfall. Little wonder that only seven out of 35 persons on board the Hableány on the night of May 29 made it to safety, and many of those were suffering from hypothermia.

At the time of writing, there are 14 confirmed dead, and 14 missing, presumed dead.

The recovery operation has been hampered by those recent rains, which mean the currents are particularly strong (and the eddies around the bridge piers and piles are always powerful), stirring up the riverbed around the wreck, nine meters deep, to create close to zero-visibility.

The high river level has also slowed the progress

of a giant crane capable of lifting the wreck, as it could not pass under some of the bridges.

The river is such an essential element of Budapest; it draws thousands of tourists, but is also a working river. Spend any time watching from the banks, and it won’t be long before you see craft of all sizes passing by. The BBC’s veteran Hungary reporter, Nick Thorpe, pointed out that river traffic has increased dramatically in recent years as tourism has boomed. He spoke to a crew member of a large cruise ship with 27 years of experience on the Danube, who described this as an accident he and others have long worried about.

“In his view, the practice of the river cruisers, which sail up and down the river between the five main bridges as an after-dinner excursion for their passengers, should be stopped,” Thorpe writes on the BBC website.

The danger in the discrepancy in size is laid bare by the fact that the police say the Hableány sank within seven seconds of the collision with the much larger cruise ship Viking Sigyn. There were no casualties on the bigger vessel. And yet the Danube through Budapest has a good safety record. This is said to have been the worst disaster in decades; I certainly don’t recall anything similar in the 20 years I have lived here.

While South Korea mourns (the fatal accident a painful reminder of the Sewol disaster when a ferry sank in 2014, killing 304, mostly schoolchildren), the local authorities must ascertain the cause and consider whether ships of such widely different sizes should be kept apart. Until that happens, enjoy the river, and do keep safe.

Robin Marshall Editor-in-chief

Photo: MTI/György Varga

Photo: Fortepan.hu/Zoltán Nagy

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress.

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To the left, the picture from the Fortepan public archive taken in 1968 shows an approaching storm looming menacingly over Lake Balaton. The photo to the right shows lightning strikes at Nagykanizsa (214 km southwest of Budapest, near to Lake Balaton) on June 1 as a thunderstorm sweeps through the capital.

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News///macroscope

Tax Cuts and Growth Incentives in Next Year’s Budget

A number of tax cuts and incentives to boost growth are in the focus of the 2020 draft budget that was presented to the Parliament at the beginning of June. The plans, paired with the recently introduced economy protection action plan, are aimed at safeguarding the Hungarian economy from the impact of a global slowdown.

Administration would also be eased: the Simplified Business Tax (EVA) will be phased out, while other taxes will be consolidated.

The four main elements of the draft budget for 2020 are higher family subsidies, an economic protection action plan to protect the Hungarian economy from a global slowdown, lower taxes and increased defense spending.

Mihály Varga, Minister of Finance, hands over the budget bill for 2020 to László Kövér, Speaker of the National Assembly, on June 4 in Parliament. Photo: MTI/Tamás Kovács. increased defense spending. For the latter, the government has earmarked HUF 550.7 bln, up from this year’s HUF 428.7 bln.

Law and Education

As for public safety and law enforcement, the available amount will be HUF 919.5 bln, up from HUF 867.8 bln this year. The government plans to spend HUF 2.078 tln on education, which is HUF 48 bln more than in this year’s budget.

As for the much-criticized area of healthcare, next year’s draft budget

includes

ZSÓFIA CZIFRA

Next year’s budget will focus on demographic policy and sustainable economic growth, said Minister of Finance Mihály Varga on June 4, when he submitted the document to Parliament.

As for the cornerstone figures of the draft, central expenditures come to HUF 21.791 trillion, with revenues set at HUF 21.424 tln. This will result in a central budget deficit of 1% of GDP, which is below the previously stated 1.5% in Hungary’s European Convergence Plan.

The draft has been based on 4% GDP growth for the next year, which is slightly above international (and some domestic) forecasts, which caution that the economy could somewhat loose is momentum in the coming years, in line with a global economic slowdown.

Inflation is expected at 2.8% in 2020 and the budget also contains HUF 225 billion in general reserves. Public debt is expected

to fall to

66%

of GDP by the end of next year.

The four main elements of the draft budget for 2020 are higher family subsidies, an economic protection action plan to protect the Hungarian economy from a global slowdown, lower taxes and

HUF 1.968 tln,

up from HUF 1.784 tln in 2019. For social expenditures, the planned budget is HUF 6 tln, which is also more than was earmarked for this purpose this year. Of this amount, pension care will take up HUF 3.580.5 tln. There is a strong focus on real estate and residential housing issues; for these purposes, the government plans to earmark HUF 707 bln in 2020.

Only a few days before the draft budget was submitted to the Hungarian Parliament, Varga came out with the economic protection action plan, which contains 14 points, and was created to shield the Hungarian economy amidst a possible (and quite likely) slowdown of the European and the global economy.

While the government still calculates with a 4% growth rate in 2020, the finance minister stressed that projections show that the growth of the European economy, including the eurozone and Germany, will slow. The government wants the Hungarian economy’s growth rate to remain at 2% above the average EU growth rate, Varga emphasized.

In order to assure the resilience of the Hungarian economy and maintain the sustainability of its current high growth rate, the government has come up with several tax cuts and also plans to reduce the administrative burden of companies.

Social Contributions

According to Varga, the social contribution tax will be reduced from 19.5% to 17.5% from July 1. The measure, which the minister said would leave HUF 144 bln with businesses this year and HUF 156 bln next year, is in line with an agreement reached by the government with employers and unions that links social contribution tax cuts to private sector wage growth from 2019.

Also, the advertising tax will be reduced to 0% until the end of 2022. The government wants to lower the Small Business Tax (KIVA) rate from 13%

to

12%

from January 1, 2020. The measure would leave HUF 5 bln with the estimated 40,000 businesses that opt to pay the tax. The KIVA rate is well over the 9% corporate tax rate, but KIVA companies enjoy a number of exemptions, Varga pointed out.

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In order to boost competitiveness, plans were announced to reduce the VAT on commercial accommodation from 18% to 5%, while at the same time introducing a 4% tourism contribution in the sector.

There is a strong emphasis on research and development activities as well, so the government has allocated some HUF 32 bln more for supporting the area.

As part of the protection plan, a new residential government bond has also been released, the “Hungarian government securities plus” has an interest rate starting from 3.5% but rising to 6% by the end of the fifth year.

Numbers to Watch in the Coming Weeks The Central Statistical Office (KSH) will release figures for the consumer price index for May today (June 7).

Construction sector statistics for April will be out on June 14.

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The Ritz-Carlton, Budapest Names GM The Ritz-Carlton hotel in Budapest has announced the appointment of Hugo Lecanda as general manager, responsible for overall hotel performance and operations.

The says Lecanda will continue to grow the hotel’s position within the local, regional, and international markets. The GM Hugo Lecanda has 28 years of experience in the hotel industry, with a decade in luxury brands. He has led teams in all aspects of hotel operations during his career, working in locations, including Spain, Ecuador and Mexico.

In his last role, held since 2015, Lecanda was responsible for managing The RitzCarlton, Abama in Tenerife, Spain, the only hotel in the country with a twoMichelin star restaurant. Under Lecanda’s leadership, the hotel was recognized with several awards, becoming one of the leading hotels in the region.

Lecanda himself was named General Manager of The Year, Marriott Luxury Europe in 2015. He was also recognized as Best General Manager in Spain by the Luxury Institute in 2016. Previously, in 2013, he received the Five Diamond Award for the Caribbean and Latin America Region as GM of The RitzCarlton, Cancún.

The Ritz-Carlton, Budapest is owned by the United Arab Emirates’ Al Habtoor Group.

Associate Partner Appointed at Horizon Development

Gabriella Sasvári has been appointed to the board of Horizon Development as associate partner, the company has said.

She will retain her current position as development director, which she has held since 2018, the company says. She has been with the company since 2015, initially as senior project manager.

Prior to joining Horizon Development, she worked as project manager of the Ludovika Campus Project Office at the National University of Public Service, served as asset director and managing director of the Károlyi István City Center development, and was the project manager of Építők SC Sports Complex in Népliget.

“We were in complete agreement about appointing Gabriella Sasvári to the associate partner position of our privately-owned development company, established in 2006,” Horizon owners and managing partners Attila Kovács and Balázs Czár remark.

“She is an indispensable part of our board both in terms of managing our ambitious development projects in Hungary and abroad, and shaping the future of our company by setting new goals and directions. We wholeheartedly welcome Gabriella to the Horizon Development board and look forward to reaching new heights with her.”

Sasvári explains: “I saw two main opportunities Gabriella Sasvári when I joined the company.

On one hand, I was intrigued by the premium projects present only in the Horizon Development portfolio; on the other hand, I embraced the possibility to evolve professionally by learning from Attila and Balázs, acquire a developer’s perspective, immerse myself in creative thinking, and surround myself with true team spirit. Even though my scope of activities and the projects I work on will remain the same, I see a great challenge in stepping up to the owner level as a partner.”

Majubu Becomes Invitech CFO Dániel Majubu took over the job of CFO at infocommunications company Invitech in April, after his predecessor Gerald Grace was named CEO of the company, according to a press release sent to the Budapest Business Journal.

Majubu joined Invitech Group in 2015, and has worked in a variety of financial management positions until his most recent appointment.

Previously, he was responsible for coordinating the financial reporting of Viacom Media Group’s subsidiaries in the EMEA region.

Majubu began Dániel Majubu his career at KPMG in 2007, spending seven years as an auditor, gathering experience in the field of taxation and accounting.

He earned his degree in finance and accounting at the Budapest Business School, and is a member of the Association of Chartered Certified Accountants.

Horizon Picks Business Development Director Real estate developer Horizon Development has announced the appointment of Tamás Ádány, ex-CEO of OTP Real Estate Plc., to the newly created position of business development director. Ádány started his career as real estate asset advisor at PwC, followed by senior management positions in project and real estate financing at FHB Bank and Raiffeisen Bank. He served as CEO of OTP Real Estate Plc. from 2011 until his latest appointment.

Horizon Development board members – partners Attila Kovács, Balázs Czár and Gabriella Sasvári – welcomed the new expert.

“We are looking forward to Tamás Ádány working together with Tamás in exploring new business opportunities and stepping onto new markets,” they said. “ His track record in the real estate industry and his experience in commercial banking guarantee that he

András Sávos New DUIHK President

András Sávos (left) with Dale A. Martin. (Photo: ahkungarn.hu)

The German-Hungarian Chamber of Industry and Commerce (DUIHK) has elected András Sávos as its new president, following in the footsteps of Dale A. Martin, according to an announcement posted on the chamber’s website.

Sávos is managing director of Knorr-Bremse Rail Systems Budapest, and has been at the helm of the Munich-based Knorr-Bremse Group’s Hungarian subsidiary since 2015. The company develops and manufactures brake systems for rail vehicles and has 1,900 employees, the Budapest rail system development and manufacturing center employs more than 500 engineers.

Dale A. Martin was president of DUIHK from 2013 until the May 7, 2019 members’ assembly, when the new president was elected.

According to the chamber’s rules, Martin was ineligible to run due to a six-year term limit.

Under Martin’s guidance, the chamber’s cooperation with the Hungarian Investment Promotion Agency and the economic administration became more intensive, according to the website.

The “TechCsajok” event series and the DUIHK Vocational Awards were also established under his tenure.

Martin is president and CEO of Siemens Zrt.

will bring added value to our company, increase our development volume, and look beyond sectors and borders when considering our business development options.” Ádány said he is confident there is a significant and growing market for the firm, not just in Hungary, but cross-border as well. “I am very excited about our prospects at Horizon Development. I aspire to increase the shareholder value of the company, helping it to secure new development opportunities and promoting Horizon Development’s expansion to foreign markets and new business areas,” he concluded.

Fresh Chairman at British Chamber of Commerce The British Chamber of Commerce in Hungary (BCCH) has elected Duncan Graham as its new chairman, replacing Raiffeisen Bank’s Vazul Tóth at the helm of the organization, according to an announcement by the chamber.

“My aim as chairman is to guide, with the help of the elected council and our managing director, the chamber through the uncertain Duncan Graham times ahead,” said Graham of his appointment, according to a BCCH Facebook post.

“We have a unique opportunity to show our commitment to the BCCH, demonstrating our ability to showcase the strengths of the British business community whilst developing our bonds and connections still further,” he continued.

“The support and work undertaken by the council over the last few years has given us an extremely solid foundation, [which] we will build still further to cement and enhance our relationship with our host country Hungary. We will endeavor to ensure that we support our existing members, as well as offering relevant and interesting events to attract new ones.”

Graham is the managing director of G&G Wealth Limited, as well as the head of the St. Andrew’s Association in Hungary, which promotes Scottish culture and manages charity programs to support underprivileged and sick children.

In addition to the new council, the BCCH will have new management: after 13 years, Csilla Csurgai, who has been Executive Director since 2009, steps down and left the chamber as of May 31. Her successor will be Oliver Strommer, who has led the British Business Center in Budapest from 2014 to 2019.

The British Chamber of Commerce in Hungary is an independent non-profit organization, which has been serving its members since its foundation in 1991. Its stated mission is “to represent British, Hungarian and international companies with the overarching principles of British business values and promote trade and investment flows between the U.K. and Hungary.”

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Erste Real Estate Acquires Advance Tower capital, Perez-Ellischewitz concludes. His consultancy has traced low investment

Futureal has completed the sale of the 12,000 sqm Advance Tower, located in the Váci Corridor, to the Hungarian Erste Real Estate Fund. This, the second investment deal between Futureal and Erste Investment Fund, was provisionally agreed last year.

activity of

EUR 150 million

GARY J. MORRELL

Advance Tower by Futureal.

The fund has acquired the first phase of the center and has an option on the second 8,000 sqm phase of the complex, currently under development and due to be completed in the second half of the year, bringing the total space

to

20,000 sqm.

The deal reflects the current strong demand for high end office assets, the dominance of domestic capital in the Hungarian investment market and the ability of local funds to conclude deals at earlier stages in the development process through their established contacts in the market.

“The recent agreement is a new milestone in a tried and tested professional relationship that will further strengthen

our unique real estate portfolio,” says Balázs Pázmány, chairman of the managing board of Erste Asset Management.

“The state-of-the-art solutions provided

by Advance Tower and its international tenant portfolio provide us with innovation and stability for the long-term,” he adds.

Local capital is now a structural feature of the Hungarian investment market and, as with Czech Republic, is considered to bring increased market security and an exit possibility for developers. The performance of Hungarian funds is expected to remain very strong at circa 50% of market activity, although more new foreign capital is expected to enter Hungary this year.

Benjamin Perez-Ellischewitz, head of Hungary capital markets at JLL describes the strong showing of domestic funds

as “reassuring”. It shows “a positive evolution in the accumulation of capital and the development of a robust local saving systems channeling money towards real estate investments (this is the role of local open-ended funds) and also the development of local private investment groups including developers and asset managers,” he adds.

Liquidity

This gives international investors a clear sign that local investors can provide liquidity to the market if there is an exit of international

for the first quarter against an annual volume of EUR 1.3 billion-1.5 billion.

The lack of product is continuing to limit activity. Further Váci Corridor core office products, established logistics assets and retail assets are expected to close soon, bringing the volume to EUR 600 million for the first half year. Stronger second and third quarters are expected by investment consultants.

“Erste Open-Ended RE Funds (the Funds) aim for a stable and attractive return from the long-term lease of properties in its real estate portfolio,” says Róbert Varga, real estate asset manager at Erste Asset Management and LEED green associate.

“The fund mainly invests in premium assets, including offices and commercial properties, which mostly have long-term rental contracts with stable, multinational partners from the start of the investment,” he explains.

“We see the local market attracting international investors, but our local knowledge, market experience and multinational background ensures that the funds will continue to play a leading role in the Hungarian market,” Varga adds.

Advance Tower phase 1 was designed by the Mérték architectural studio (since re-named Paulinyi-Reith & Partners) and has been awarded BREEAM certification and WELL Building Standard precertification according to Futureal.

In another Budapest office development designed by Paulinyi-Reith & Partners, Skanska is due to deliver the 14,000 sqm Nordic Light Trio in the second quarter of 2020; the third phase of Nordic Light has been designed in accordance with WELL Building stipulations and has also achieved LEED “Gold” certification.

GRT Group Commences Latest Phase of Office Garden The Hungarian developer, GRT Group, has commenced construction of the 20,000 sqm fourth phase of the Office Garden office park in District XI in South Buda.

GARY J. MORRELL

Phase 1 of the long-term project was handed over in 2008 and upon completion the complex will consist of 95,000 sqm of office space in five phases with a capacity for 7,000 workers. GRT have been operating on the Hungarian market as developers and constructors in the office and residential sectors since 1989 and has completed 180,000 sqm of space.

According to GRT, the company intends to acquire LEED certification as it did with the preceding stages of the project: the second phase achieved “Gold” accreditation. All phases of the project were designed by László Szekeres of Skicc architect studio, based on a longterm relationship. Handover of the latest phase is planned for the second quarter

of 2021; the third installment of Office Garden was completed in 2017.

The South Buda sub-market is very popular among tenants, with 15% of the annual net take-up in 2018, according to GRT; the leasing figures for the first quarter of 2019 are also promising.

The strongest occupational activity was recorded in the Váci Corridor, which attracted

significant requirements may need to wait for deliveries in 2021 in order to secure office areas of the required size and quality.

“Practically speaking, this increased interest boosted the launch of Office Garden IV, as no vacant areas were left in the previous phases. We firmly believed in the success of the project from the beginning, and the feedback and great performance of

the office park confirmed that our concept was right,” says Róbert Tilki, managing director of Robertson Hungary.

A member of the BNP Paribas international network, Robertson Hungary has been the exclusive letting agents on all phases of the project. Tilki expects to have concluded significant lettings by the end of the year.

more than

35%

of total demand, compared to South Buda with 14%. Strong demand is continuing to be registered for new developments: 78% of the new office space delivered in 2018 was preleased before completion.

Preleases now constitute a significant segment of take-up on a market with record low vacancy. Tenants with

Office Garden by GRT Group.

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Academics Warn About ‘Lost Generation’

Hungarian and South Korean teams recover a body on June 4 at Margit Bridge, close to the site of the wreck of the tourist boat Haleány (Mermaid). The boat and the much larger Viking Sigyn collided at night on May 29. Photo: MTI/Zoltán Balogh

Recovery Operation at Tourist Boat Wreck Continues South Korean and Hungarian divers have been working together to recover bodies from the wreck of the tourist boat which was hit by a larger ship and sank last week in Budapest, international news agency Reuters reported, citing the Hungarian counter-terrorism unit running the recovery operation.

One body has been pulled from the river some 115 km downstream from Budapest, near the village of Harta. The number of confirmed deaths is now 14.

Some 14 people are still missing, presumed dead, following the accident - the worst river disaster in Hungary in more than half a century. The Hableány (Mermaid), a pleasure boat carrying 33 South Korean tourists and two Hungarian crew members capsized after a collision involving a much larger cruise ship named Viking Sigyn.

Joint Operation

After several days in which Hungarian divers were unable to reach the wreck, due to the Danube’s

fast currents, boosted by high springtime water levels, and near-zero visibility under water, South Korea sent its own recovery team, which joined the operation on June 3, Reuters reported.

The South Koreans aim to recover bodies while the Hableány is still on the river bed, although the Hungarians, concerned for the safety of divers entering the wreck under the current circumstances, are making plans to lifting the hull out of the water.

CBC News reported that a huge floating crane capable of hoisting the boat out of the water is expected at the scene within days. Hungarian state television reported on June 4 that the crane was moored roughly 120 kilometers upriver, unable to pass under bridges on its way to Budapest because of the Danube’s high water levels.

The Ukrainian captain of the Viking Sigyn has been detained and faces a criminal investigation, although his legal representation says he denies any wrongdoing.

In an open letter to Prime Minister Viktor Orbán signed by more than 100 grant winners of the “Lendület” research program of the Hungarian Academy of Sciences (MTA), academics express “absolute incomprehension” with regard to the draft law that the government aims to present to Parliament on scientific research in Hungary.

The government wants to take control of the funding of research by introducing legislation in Parliament that would come into effect on August 1. Perhaps most controversially, the MTA would be obliged by law to hand over the buildings of its 15 research facilities, as well as its infrastructure, tools, and possessions for “free use”, a move which critics say is tantamount to nationalizing the dominant part of the research sphere.

The proposal includes the creation of a new state research network to which the 15 institutes would belong, controlled by a 13-person body, with six appointees from the academy, and six from the government, with a president appointed by Orbán personally, based on a joint proposal.

Furthermore, the government aims to create a National Council of Scientific Policy (NTT), headed by Minister for Innovation and Technology László Palkovics, who will be in charge of appointments. The MTA would only have a single representative on this body.

“We [.…] have read with absolute incomprehension the draft law that [Minister for Innovation and Technology] László Palkovics intends to present to Parliament regarding scientific research in Hungary,” reads the open letter from the academic grant recipients.

‘Ill-Considered’

The letter goes on to say the draft law is “ill-considered” and “is not justifiable by professional reasoning, and, as such, is extraordinarily harmful in its present form”.

In conclusion, the letter warns: “If the draft law were to be accepted, irreplaceable national values would be lost, and even in the short-term, irreparable scientific, cultural and economic damage would be done. The continually deepening crisis of confidence threatens to lead to the emigration of our internationally competitive young researchers, and ultimately to the loss of an entire generation of scientists.”

On Sunday, June 2, a demonstration in support of the MTA was organized in Budapest by the Forum of Academy Staff, a civil initiative of researchers from the network of research institutes of the MTA, state news agency MTI reported.

In a message read aloud at the demonstration, MTA President László Lovász said: “We must not lose sight of our main goal: for researchers of the network of institutions to be able to continue their research in Hungary, free of political pressure, free to pick topics [of research] in line with international norms, with predictable material support.”

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Business

MNB Aims to Boost Options Thru Corporate Bonds

The National Bank of Hungary (MNB) is launching a new bond program next month with the aim of boosting and diversifying corporate fund raising.

ZSÓFIA VÉGH

Starting on June 1, a new mortgage bond program by the MNB is set to stir the still waters of non-bank financing in Hungary. The program, christened the Bond Funding for Growth Scheme (BGS), is in a way the successor of the Funding for Growth Scheme (FGS), a program that MNB launched in June, 2013, to restore corporate lending to pre-recession levels.

FGS targeted mostly small- and medium-sized enterprises, as it were these that suffered most in the credit crunch. As a result of the roughly 5% annual decline for almost five years, by the beginning of 2013, corporate loans outstanding had

shrank to

75%

of the pre-crisis level, according to data

by MNB. The program helped contribute to reversing the downward trend: by 2018, the annual growth rate of SME lending was around 12%, MNB statistics show.

But while the volume of corporate lending has returned to a more adequate level, corporate financing is still based on one pillar: bank loans. At the end of 2018, the bank loans of non-financial corporations as a percentage of GDP

exceeded 17%, however, their bond portfolio amounted to only about 1.5%.

By comparison, in 2018 Q4, the ratio of bonds in corporate financing stood at 11% in the eurozone, 18% in France, 22% in the United Kingdom and 10% in Germany, according to data from the EU’s statistical body Eurostat.

Regional Laggard

Hungary doesn’t only lag behind Western Europe, however; it also fares badly in regional comparison. Only Romania is worse off with 0% of bond volume, other countries such as Czech Republic (7%), Poland (5.3%), Slovenia (2.1%) and Slovakia (2.7%) are all well ahead.

To improve the structure of corporate lending, MNB announced the introduction of the new program at the beginning of this year.

Supporting the diversification of corporate fund raising has several advantages. A bond market can create competition for bank loans, leading to a fall in funding costs. A liquid bond market

The Benefits of a Well-functioning, Liquid Bond Market For corporate sector

For MNB

Funding costs may decrease

Monetary transmission efficiency is increasing

Flexible conditions

Easier intervention in a crisis

No cover

Supports economic growth

No lending target Less dependency (crisis) May positively impact the SME sector Source: Equilor Investment Zrt.

contributes to improving the efficiency of monetary policy transmission, while healthy competition between markets providing funds for companies may render the central bank’s interest rate decisions more effective, MNB says.

In addition, a sufficiently liquid, advanced bond market may increase financial stability and also mitigate the effects of any potential economic crisis.

To support the creation of such a market, MNB will launch the program on

July

1.

Within the scope of the scheme, the central bank will purchase bonds with good ratings issued by non-financial corporations as well as securities backed by corporate loans from a HUF 300 billion funding pool.

Potential Participants

The number of potential issuers interested in the program is around one hundred.

MNB says it is already in talks with many of the companies, and the rating process has also started, market insiders say.

Among the main criteria are a company’s cash flow, its sectorial prospects and refinancing ability. Volume is another consideration; companies that are only able to issue low volume bonds may not be interesting for institutional investors, Ágnes Svoób, head of corporate finance at Equilor Investment Zrt. told reporters at an event on MNB’s new program.

Large firms with at least HUF 1 bln debt volume, with good sectorial prospects and low refinancing risks are the most likely participants of the program, according to Equilor. Companies from a wide cross section, from the food industry to manufacturing to production, are all highly

Tried and Tested Hungary’s bond purchase program in is not entirely new. In 2015, for fear of deflation, the European Central Bank started its so-called quantitative easing program to hold down interest rates and encourage lending. During the bond-buying program, which ended last year, the ECB bought up mostly government but also corporate debt, asset-backed securities and covered bonds and it pumped EUR 2.5 trillion into the market.

interested in the program, Svoób noted.

Most of them would use the funds to invest, but foreign acquisition is also on the list of potential uses.

In terms of cost, bond issuance is not supposed to significantly exceed the cost of borrowing. For a bond issuance of HUF 10 bln-15 bln, the costs would be

20-30 basis points,

Equilor calculates. Those interested typically think of HUF 10 bln bond issuance, which means that around 20-30 companies may participate in the program, Equilor notes.

The process may take as long as three or four months, of which rating may last as much as eight weeks. The costs of rating are financed by the MNB. The cost of the credit rating itself is put at nearly HUF 15 million, and there is also an annual maintenance cost of HUF 6 million–7 mln, again MNB financed. Issuers must have at least B+ rating to issue bonds.

8|2

Business

2nd district

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

2nd district

2nd district

39 sqm – 2 rooms, Frankel leó street

89 sqm – 3 rooms, Hankóczky jenő str.

116 sqm – 5 rooms, Frankel leó street

Beautiful view over the Parliament and the Danube, this completely renovated, high floor apartment has separate rooms. It is situated within a period building with elevator.

Beautiful panorama over the Buda Hills, this very sunny apartment in good condition has separate bedrooms, private gas heating, and parking space. It is located in a quiet and green area.

Close to the Lukács Thermal Bath, this street and garden facing, very sunny, well divided, spacious apartment in good condition has 4 sqm of balcony.

39.900.000 HUF

73.900.000 HUF

83.900.000 HUF

+36.1.336.1706

2nd district

+36.1.336.1706

2nd district

+36.1.336.1706

2nd district

116 sqm – 4 rooms, széHer street

200 sqm – 6 rooms, endrődi street

545 sqm – 7 rooms, PestHidegkút

In a green area, this well divided, duplex apartment benefits of panorama over the János Hill, peaceful living room, 28 sqm of terrace, private garden and garage.

Beautiful panorama over the Buda Hills, this three storey, very spacious and bright, well divided, garden facing, luxury apartment benefits of 3 bathrooms, sauna and two parking spaces.

Close to French School, this panoramic, luxury detached house has 1376 sqm of lot, huge terrace, balcony, solar panel and private gas heating, beautiful garden, swimming pool and garage.

89.900.000 HUF

205.000.000 HUF

389.000.000 HUF

+36.1.376.6080

+36.1.376.6080

+36.1.376.6080

Hungary Must Learn From Tragedy, or pay a Higher Cost Later It was an eerie, somewhat sinister feeling standing near parliament towards sunset on the Tuesday evening before publication of this issue. For on the surface of the Danube, normally the aquatic equivalent of a dodgem car business doing well, there were no boats, or more accurately, no moving boats.

Granted, Torstein Hagen, Viking’s chairman, issued a statement expressing his condolences to the families of victims, It was, of course, in the aftermath of the and promising to “cooperate fully” with tragedy six days previously, when a multithe ongoing investigations – but this was deck cruise ship collided with the Hableány six days after the fatal collision.

(Mermaid) near Margaret Bridge, sinking A full week on, the Viking webpages the far smaller pleasure boat in seconds. make no mention of the chairman’s The Hableány was carrying 33 Korean letter or the sinking, although the Sigyn tourists and two crew. (“Faithfulness” in old Norse) remains At the time of writing, with 14 victims’ advertised for 11-day trips on the bodies found and only seven passengers Bucharest to Budapest line at GBP 2,095 rescued on the night of the accident, hopes (USD 2,660) a head. for any further survivors are non-existent.

As someone who, in a former life in One assumes the absence of active the rail industry, had some experience vessels on Tuesday was a police move, with disasters in the focus of public designed to assist recovery of the attention, your correspondent knows submerged wreck of the Hableány. that one result is that every John and Certainly, to the north of parliament, a Mary has opinions as to what should be floating crane was anchored, presumably done, even if, usually, neither has any in preparation for a lifting operation. specialist knowledge of how, for example, About time too, say critics of how the to examine a boat on the bed of a river in authorities have managed the emergency. full flood.

Starting with the first report to the police – But Hungary has set itself up as a which came ten minutes after the sinking superlative, and safe, tourist destination. not from anyone in authority, but from a Those tourists also need reliable passenger on another boat – to the fact regulatory bodies, infrastructure that the wreck, likely still holding corpses and services to prevent things going of those on board, remains on the Danube wrong, and with the ability to right bed a week after the collision. them quickly when they do. That takes Nor does it reflect well on official investment, human resources and disaster bodies that the first rescue money, which will produce no boat on the scene was that of an direct returns.

NGO volunteer group going by the That investment might include tighter cumbersome title (on their English – and enforced - regulations on riverboat website page) of “Water Rescue Services traffic. This would cause losses to some: of Hungary and Volunteer Firefighter but another Hableány tragedy would be Services”. Cumbersome in name, but fast far more costly to all. in action, it would seem.

The Bottom Line is a monthly column Politician’s Choice written by Kester Eddy, a long-standing In view of this, the statement by Interior and well respected Budapest-based Minister Sándor Pinter that the rescue business and economic journalist, who service performance was “exemplary” would has written for the Financial Times seem perhaps, a politician’s choice of words. and many regional publications. The Viking, the U.K.-based luxury cruise opinions expressed in the column are ship company and owner of the Sigyn – not necessarily those of the Budapest the other ship involved in the collision, Business Journal. To comment on this does not come out of the affair with column, or on anything else in the BBJ, colors flying either. email the editor at robin.marshall@bbj.hu KESTER EDDY

3rd district

3rd district

3rd district

51 sqm – 2 rooms, rómaiFürdő

100 sqm – 3 rooms, rómaiFürdő

87 sqm – 3 rooms, rómaiFürdő

In a quiet and green area, close to the Danube, this sunny and spacious, well divided, street facing apartment in good condition has separate rooms and balcony.

This quiet, sunny and spacious apartment in good condition has separate bedrooms, living room, balcony, private gas heating and 50 sqm of private garden.

This new built, 2 storey semi-detached house has living room with open kitchen, 2 separate rooms, big terrace, private garden and parking space. Handover in summer 2019.

32.400.000 HUF

49.900.000 HUF

58.900.000 HUF

+36.70.669.5350

+36.70.669.5350

+36.70.669.5350

5th district

5th district

29 sqm – 1 room, nyáry Pál street

53 sqm – 2 rooms, akadémia street

101 sqm – 4 rooms, kossUtH lajos str.

In the centre of the city, on the corner of the pedestrian shopping street, Váci Street, this quiet apartment in good condition is situated within a well maintained condominium.

Close to the Danube and the Hungarian Academy of Sciences, this completely renovated, street facing, furnished apartment is situated within a nice period building.

View over the Astoria, this high floor apartment has separate rooms, two bathrooms and private gas heating. It is situated within a period building with elevator. Currently it works as a hostel.

33.500.000 HUF

55.900.000 HUF

260.000 eUr

+36.70.414.7759

6th district

+36.70.414.7759

6th district

5th district

+36.1.351.0446

11th district

36 sqm – 2 rooms, rózsa street

76 sqm – 2 rooms, király street

49 sqm – 2 rooms, szerémi street

Close to the Andrássy Boulevard, in a beautiful, renovated period building with elevator, this very bright, high floor apartment benefits of separate rooms, sleeping gallery and private gas heating.

In a renovated period building with elevator, this bright, spacious, street facing apartment in good condition has private gas heating and it is located close to the Teréz Circuit.

This street facing apartment in good condition has two separate rooms and balcony. It is situated within a new built building with elevator.

Garage possibility for rent.

40.500.000 HUF

52.900.000 HUF

41.900.000 HUF

+36.1.351.0446

11th district

+36.1.351.0446

11th district

+36.70.337.2319

13th district

185 sqm – 5 rooms, Bertalan lajos str.

277 sqm – 8 rooms, PéterHegyi sloPe

90 sqm – 4 rooms, katona józseF street

This well divided, bright, spacious and cosy apartment, that needs renovation, benefits of 5 separate rooms. It is situated within a building with elevator and common garden.

Panorama over the Buda Hills, this four storey, eco-friendly house benefits of wellness and fitness areas, swimming pool, garage and elevator.

This very spacious, street facing apartment, that needs renovation, benefits of separate rooms and balcony and it is situated within a Bauhaus style building with elevator.

104.900.000 HUF

460.000.000 HUF

58.900.000 HUF

+36.70.337.2319

+36.70.337.2319

+36.70.414.7759

grUPPo t.F.m. kFt. 1068 BUdaPest, király U. 102. each agency independently owned and operated. • these offers are valid, till the apartments are sold. • these information do not constitute a contractual element.

2

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Budapest Business Journal | June 7 – June 20, 2019

Business | 9

Asset Classes: Investment in Luxury Goods

As we can see, art is composed of several sectors that do not react in the same way.

Therefore, potential art investors need to remember that, for example, the old masters sector does not have the same return/risk profile as the contemporary sector.

Why do you buy art? (Art collectors) Artprice, the world leader in databases of prices and indices for works of art, 3% calculates indices based on changes in auction volumes. It indicates that the global art market showed better returns than the U.S. stock market until the end of 2015 and only underperformed in subsequent years; however, the 32% contemporary segment of the art market showed comparable results to S&P500 returns throughout the period, despite the longest bull market in Wall Street history.

Investment purpose Art also has the benefit of a low 65% Collecting purpose correlation with stock markets, offering Luxury goods or collectibles suitable for the potential for hedging and portfolio Collecting purpose investment might include fine art, stamps, diversification (correlation factors are but with an investment view coins, wine, old cars and other collectibles -0.035, 0.102 and 0.135 between the Mei and are typically characterized as highMoses All Art Index and S&P500 for the Source: Deloitte Luxembourg & ArtTactic Art & Finance Report 2017 risk, illiquid, and unregulated investments, last 50, 25 and 10 years respectively, with high transactions costs. according to Adriano Picinati di Torcello in It typically takes a large entry ticket to “Why should art be considered as an asset purchase a single quality collectible item, This article will focus primarily on The point here is that for every piece of class?”). However, potential art investors let alone to create a diversified portfolio. the art market (paintings, drawings, art that experiences spectacular returns, should also bear in mind that there are no However, despite the aforementioned sculptures, etc.), the largest portion of there are perhaps hundreds or thousands of dividends or interest payments! discouraging characteristics, there are also the collectibles market; similar analysis pieces of art that experience unspectacular The decision to invest in art is a highly quite a few positive features: could also be applied to other groups of or even negative returns. Knowledge is key. personal decision, depending on one’s collectible assets, such as fine wines, rare personal situation and objectives. One great Unique Value • A hedge against inflation and currency watches, old cars, and stamps. investor, Larry Fink, the CEO of BlackRock, Art is a heterogeneous product: every devaluation The world is full of examples of the world’s largest investment management work of art is unique. Assessing the value • Low correlation with other financial exemplary returns on art. For instance, in corporation called contemporary art one of of a given artwork is difficult and usually assets, hence helps to diversify portfolio July of 1992, an artwork of Jean-Michel the “greatest stores of wealth internationally includes a subjective component. Every • It can bring aesthetic pleasure to its Basquiat, a prominent contemporary today”, according to a CNBC piece called work of art may have both an investment owners, not just financial returns American artist, was purchased for USD “Art and real estate are the new gold, says value and a highly personal aesthetic value. Blackrock CEO”.

• Some very attractive returns have 122,000. After 21 years in private hands, Art is seldom purchased for investment been achieved, usually by highly the same masterpiece sold for USD 29.3 purposes only (according to the survey knowledgeable investors within a million, bringing an impressive 28.43% Disclaimer: This article is intended above, only in 3% of cases); in the majority specialized field. annual return. for informational purposes only, and of cases (65% of respondents) there is both should not be relied upon for investment an investment and collecting perspective: advice. It is very important to do your Tracking art industry performance and own investigation and analysis before determining trends requires huge arrays making any investments based on your own Sotheby’s Mei Moses Indices: 2016-2018 (% Growth) of auction sale statistics and is a difficult personal circumstances. task. There are several indices designed to measure art market performance. Some of them are based on repeat sales, which 12.8% Les Nemethy is CEO of Eurocompares changes in sale prices of the Phoenix (www.europhoenix. same artwork at specific points in time, com), a Central European and some of them track changes in auction corporate finance firm, author 11.2% volumes for selected artists. of Business Exit Planning (www.

10.8% One of the most well-known and businessexitplanningbook.com) recognized art index families is the and a former president Overall Impressionist Post-war Sotheby’s Mei Moses Indices, which uses art market & modern art & contemporary art of the American Chamber data on more than 60,000 repeat auction of Commerce in Hungary. sales over time (e.g. where the same object Source: www.sothebys.com/en/the-sothebys-mei-moses-indices is sold on multiple occasions):

In this sixth and final article in a series on asset classes, Sergey Glekov and Les Nemethy examine luxury goods as an alternative investment asset class.

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1054 Budapest, Hercegprímás u. 11. info@madoffbar.com madoffbar.com MADOFF_OroszBarbi_hirdetes_252x77mm_04v.indd 1

2019. 05. 08. 13:57

10 | 2

Business

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

Company ///news Sennebogen to Build HUF 10 bln Factory Termelés-Logistic-Centrum Kft. (TLC), which makes steel parts for the material handling equipment manufactured

by German parent Sennebogen, is

investing HUF 10 billion in a 29,000 sqm factory in Litér (112 km southwest of Budapest), near Lake Balaton, Minister of Foreign Affairs and Trade Péter Szijjártó announced, portfolio.hu reported. The government is supporting the investment, which will create 80 workplaces, with a

A Kika store in Budapest.

Photo: Adriana Iacob/ Shutterstock.com

Noerr Advises on Sale of Kika’s CEE Business International law firm Noerr, together with Vienna-based Austrian law office Arnold, have advised SignaRetail on the sale of Kika’s Eastern European business to XXXLutz, Noerr told the Budapest Business Journal.

The parties signed the contracts on the sale of the 22 stores in Czech Republic, Hungary, Romania and Slovakia on April 26. The transaction included both the operational retail business with more than 1,500 employees and the 22 properties.

Founded by Austrian entrepreneur René Benko, the SIGNA Group is a privately managed, European holding company focusing on the real estate, retail and media sector.

The company is one of Europe’s leading real estate investors with a portfolio of unique assets in prime locations valued at more than EUR 14 billion, and a further EUR 8 bln in assets under development. With approximately 45,000 employees and over EUR 7,5 billion in sales - of which approx. EUR 750 million are

HUF 1.27 bln grant, Szijjártó said.

The factory is expected to be finished by the summer of 2020. TLC managing director Michael Seiferling said capacity is being expanded to fill a growing stock of orders. Sennebogen decided to expand in Hungary because of the good infrastructure and transport, the investor-friendly environment and the state grant money, he added.

Sennebogen has operated in Hungary for more than 20 years and is satisfied with the skills of the local labor force, Seiferling said. TLC expects to set up its own training center in Litér in 2021.

generated online alone - it operates well-known trading companies Noerr’s CEE team advising on the transaction was led by partners Zoltán Nádasdy (Budapest), Gabriel Popa (Bucharest), Barbara Kusak (Prague), Jörg K. Menzer (CEE managing partner) and Ákos Bajorfi (senior associate, Budapest). It also included: Edina Schweizer (partner, Budapest), Ludek Chvosta (counsel, Prague), Martin Tupek (counsel, Bratislava) and associates, Eszter Hegedűs, Szilvia Andriska and Tímea Tompa (Budapest); Adrian Georgescu-Banc and Oana Piticas (Bucharest); Michal Janicek and Stepanka Havlikova (Prague); Tomas Zaborsky and Martin Baraniak (Bratislava).

Menzer described the deal as “a truly complex cross-border transaction, which required teamwork geographically and also multi-disciplinary skills from all our advisors. This is evidence of Noerr becoming a regional M&A force on multi-jurisdictional matters.”

XXXLutz was represented by CHSH on the purchase and by Wolf Theiss on the merger clearance process, Noerr said.

For much more Hungarian legal news, see the Special Report in this issue of the BBJ.

Zwack to pay HUF 1,300/ Share Dividend Hungarian liqueurs and spirits manufacturer Zwack announced that it will hold its annual meeting on June 26, portfolio.hu reported. According to the published AGM agenda, shareholders will vote on dividends, and the election of new members to the board of directors.

The company propose to pay a combined total of HUF 2.64 billion in dividends to its shareholders, HUF 1,300 per share based on the last fiscal year. If approved, dividend payment will start on July 24. The general meeting also plans to elect Kresimir Crnjevic as member of the board, replacing Kalina Plamenova Tsanova as of June 26.

Tungsram Books HUF 4.7 bln Loss During First 9 Months Hungary’s Tungsram group had HUF 4.7 billion after-tax loss during the first incomplete year of its operation, state news wire MTI reported.

Between April 2018 and December 2018 net revenues reached HUF 65.25 bln, 92.9% from exports, in line with the plans of Tungsram’s management. CFO István Tóth said significant expenses had been expected during the first months because of the separation from GE and the investments made. In a management buyout, Tungsram last year took over the operation of 22 subsidiaries from GE in 23 countries, invested in new segments and product developments and expanded production capacity at its plant in Kisvárda (337 km northeast of Budapest) to become a supplier for GE Aviation.

Deputy CEO Gábor Boncz said the company foresees rising revenues and an expanding market share in 2019.

Initial investments could show returns in 2020. The business is still focusing on the lightning segment providing 50% of company turnover as this has proved a winning strategy, he added. Tungsram group employs more than 4,000 workers, and operates five plants in Hungary.

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AutoWallis Lays out ‘Ambitious’ Plans up to 2024 Automotive service provider, AutoWallis has recently presented its long-term strategy in which it set the ambitious goal of becoming a major mobility service provider in the Central and Eastern European region by 2029.

ZSÓFIA VÉGH

Although it is of great importance to Hungary, it is not always easy today to be a market player on the automotive market. The industry has had its fair share of bad news that tarnished its reputation, manufacturers have been presented with strict regulations and the future is quite blurred, to put it mildly.

Not all players are hit equally, though.

With large volumes of illiquid assets, and also under the obligation of creating more sustainable cars, manufacturers are bearing the brunt of the changes.

Next in the value-chain are service providers. Here, there is less concentrated

Zsolt Müllner, head of the board of directors, CEO Gábor Ormosy, and Gábor Székely, chief investment officer of AutoWallis Nyrt. it counts on the continued need for service shops and dealerships, regardless of whether electric, petrol or diesel power trains will be dominant in the vehicle use habits of the future.

Of its four companies, three – Wallis Automotive Europe (WAE), Wallis Motor Duna (WMD) and Wallis Motor Pest (WMP) – actually deal with sales of cars and car parts. They are also the ones that contribute most to the group revenues.

“A more ambitious company Most Robust is better at attracting WAE is the most robust: it accounted capital. Whether it is able for more than half (57%) of the group’s overall results last year. With three to meet the goals we will outlets in Budapest, WMP and WMD were only see when reports are responsible for 41% of group turnover last year: the dealerships sell mostly BMW and starting to come.”

Mini models, and many of their customers capital, which makes these companies more flexible and able to adapt to changes, Gábor Ormossy, CEO of AutoWallis told his audience at a conference last month.

The CEO touched on how the structure of the industry will change, including the impact of technological innovations on consumer behavior and car ownership; issues constantly discussed by the industry. He also talked about how AutoWallis, whose shares were listed on the Budapest Stock Exchange in February, and whose long-term strategy has now been aired, is planning to tackle these challenges.

The keyword here is diversification.

Having recognized how the emphasis from sales and ownership is shifting towards services, the company is planning to strengthen these pillars in the future.

Nevertheless, facilities such auto repair shops and bricks and mortar car saloons will still be needed to service physical infrastructure, Ormossy noted. Therefore,

come from abroad.

Wallis Autókölcsönző Kft., a franchise partner of international chain SIXT, added 3% to the collective turnover in 2017. Half of its traffic comes from Budapest Ferenc Liszt International Airport, according to an analysis by KBC Equitas.

So what about the future? By 2024, the group counts on more than doubling its HUF 65.5 billion revenue from last year without the effect of acquisitions, hoping to achieve HUF 142 bln, primarily via organic growth. It means to rely on the development of the existing branches, increasing their efficiency, as well as the real estate development and integration necessary for expansion.

When it factors in acquisitions it plans a nearly threefold increase to HUF 187 bln.

In addition, it counts on the contribution in kind of the Wallis Group’s automotive investments (Wallis Kerepesi, Autolicit.hu, JóAutók.hu, DriveNow) into AutoWallis. Acquisitions are also on the table: the group will primarily target premium and multiple-brand domestic and regional dealerships in

Central and Eastern Europe and in the Balkan region, vehicle parts and accessories dealers, fleet management and/or financing firms, as well as innovative service providers.

All this could increase the earnings before interest, tax, depreciation and amortization even more: EBITDA could nearly be

quadrupled to

HUF 7.9 bln

due to the organic growth, while it could present a 4.5-fold increase to HUF 9.5 bln, with acquisitions.

The Analyst’s Assessment “It is positive that AutoWallis sees the future as a more integrated automotive service provider offering a fairly wide range of services from car rental to

These ambitious goals must be financed, of course. AutoWallis says it is planning to reinvest part of the earnings resulting from its operations, but also to issue bonds and raise share capital (in which it counts on the participation of institutional investors), and possibly a public offering. The acquisitions could take place via contribution in kind by a closed capital increase, or even the repayment of the dividend received by the main owner of AutoWallis, Wallis Asset Management, in the form of a capital increase, the company says.

ridesharing,” Norbert Cinkotai, head of research and content at KBC Securities told the Budapest Business Journal .

That the future plans laid out by the company are not too detailed is not a problem according to the expert. “There are so many changes taking place in the industry that devising a strategy that goes much into details may not be useful,” he explains.

The goals defined are certainly ambitious, according to the analyst. They are not unattainable, but there have been a few examples of companies entering the stock exchanges and setting some nice goals they never achieved, Cinkotai says.

“With its history and its strong basis, AutoWallis is better placed in this sense, and a more ambitious company is better at attracting capital. Whether it is able to meet the goals we will only see when reports are starting to come,” Cinkotai adds.

12 | 2

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Budapest Business Journal | June 7 – June 20, 2019

Real Estate Sector Rules Moderating M&A Sector in 2018, Says EY 19 cases only, with five transactions being above the USD 100 mln threshold.

The real estate sector was once again the most attractive for FDI in 2018. A total of

Although the mergers and acquisitions market appeared to be moderating in 2018, the number of foreign investors grew compared to the preceding years.

The most attractive sectors for foreign direct investment were the real estate and technology industries, EY’s annual M&A index reveals.

27

deals

Ferenc Nagy

CHRISTIAN KESZTHELYI

Last year a total of 107 M&A deals were signed, boosting the market to an estimated value of USD 3.35 billion.

The number of deals in 2018 was down by 20% compared to the preceding ADVERTISEMENT

year, which led to the shrinking of the estimated market value from 2017’s USD 4.02 bln, data from the EY M&A Barometer survey shows.

The estimated value of transactions of less than USD 100 million reached USD 17.8 mln in 2018. However, the value of the deals was published in total in

were announced for the sector, equaling the number of deals a year earlier. The IT and technology sectors followed close to the real estate industry with 15 deals, respectively.

“Despite a favorable economic environment, the local transaction market has been affected by the insecure sentiment of geopolitics,” says Ferenc Nagy, M&A Manager at EY. “With the exception of the real estate market, we have experienced the slowing of merger and acquisitions processes,” Nagy says. He added that it appears that both vendors and buyers seem to be on hold to see how the environment changes before deciding on deals.

More Foreign Investors

Although almost half of the mergers and acquisitions in Hungary had Hungarian businesses as buyers, two out of the three biggest deals were carried out by foreign

businesses. Furthermore, the ratio of foreign investors

grew to

40%

from the preceding year’s 28%. The number of Hungarian firms executing M&A deals abroad also grew, albeit marginally, up to 13 from the 12 of 2017.

The biggest deal in Hungary saw market leading pet food manufacturer Partner in Pet Food Group purchased by private equity firm Cinven for USD 607 mln.

“Beyond the number of deals, the number of strategic investors went up significantly in 2018. This year, we expect the ratio of financial investors to grow, due to the recently increased activity of venture capital funds,” Nagy adds.

By Comparison...

To put the 2018 data into some context, in 2017, the value of the M&A market rose 150% to USD 4 bln. The number of mergers and acquisitions increased by 21% to 133, as compared to 2016.

Although International law firm Allen & Overy’s “Global Trends in Private M&A” report showed that M&A activity worldwide was still vibrant during 2017 – even if slightly less so compared to 2016 levels –, the Central and Eastern Europe region saw a downward trend, however, with the decline particularly pronounced in Hungary, albeit set against a high bar in 2016.

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Budapest Business Journal | June 7 – June 20, 2019

Business | 13

Automotive: People, Suppliers and Technology The minister of foreign affairs and trade called on the auto industry to continue to help in the education of its future workforce at the annual automotive conference organized by the Hungarian Investment Promotion Agency.

BBJ STAFF

Speaking at the May 29 conference in the Kempinski Hotel Corvinus Budapest, Péter Szijjártó told the audience of 200 invited delegates: “Since 2010, the sector has played a key role in both job creation and the economy’s dimensional transition, and is retaining its priority position during the course of newer transitional processes, in the era of high added value technologies.”

Stressing the importance of a trained workforce, the minister cited the example of a cooperation center run by Audi and the Széchenyi István University in Győr that is soon to open, and asked manufacturers to continue contributing to the education model with their ideas and suggestions.

Szijjártó said the importance of the Hungarian automotive industry to Hungary’s economy is clearly indicated by the fact that the sector’s production value has increased from an annual HUF 3.6 trillion (around EUR 11 billion) in 2010

to

HUF 8.5 tln

(EUR 26 bln) in 2018; during the first quarter of this year, the figure was already approaching HUF 2.5 tln (EUR 7.6 bln).

“In addition to the large automotive industry manufacturers producing vehicles in Hungary, 15 out of the world’s 20 largest automotive industry suppliers and three of the five Far Eastern giant corporations with an interest in electromobility have already appeared in Hungary,” the minister pointed out.

He said electric vehicles would be one of the most important development opportunities of the Hungarian automotive industry, along with the rapid development of self-driving technologies and the digital infrastructure to support it, noting that Hungary’s progress in the latter regard remains well ahead of the EU’s digitalization schedule.

Szijjártó also trailed the government’s then soon-to-be-unveiled Economy Protection Action Plan, which he said

László Urbán, deputy managing director of Magyar Suzuki Corporation, said infrastructure, education, and links between academia and industry all remain key.

“Esztergom [where Suzuki is based] is close to Budapest [around 50 km], but it is not all. I think the most important thing is that whatever or however we call the education – dual education, vocational education, traineeship – we have to get companies and education closer to each other. We are trying. We have with Budapest Technical University already a more than 20 year cooperation agreement, and we are also fighting to have an IT

Andreas Tschiesner, head of automotive and assembly Europe at McKinsey, delivers his keynote presentation on leading automotive industry intelligence and global and regional trends. Photo: HIPA. would encourage a long-term, high rate of economic growth that was “at least 2% higher than the EU average”. He said the latest measures would support the private sector through further reductions in both tax and bureaucracy, the modernization of vocational training and the expansion of the dual training system.

“In addition, the automotive industry will also be assisted through the expansion of the budget available to suppliers,” the minister added.

Real Significance

HIPA president Róbert Ésik said he believed the real significance of the automotive industry lies in the fact that it provides more opportunities for Hungarian companies to link to international value chains than any other sector.

“For this reason, the agency has performed a survey of the companies operating here to help understand manufacturer plans and strategies. The data is also helping decision-makers adjust funding and incentive measures to the requirements of those involved,” he explained.

This survey was a first for HIPA, and as previously reported in the Budapest Business Journal (see our Automotive Special Report in the May 24 issue), the survey is representative of the industry.

According its foreword, during April and May of this year

Hiring Problems

Not surprisingly, given the ever tighter labor market, a significant proportion (61%) of manufacturers expect to encounter difficulties in hiring trained staff. Despite that, some 59% are planning to increase their workforce within the next 12 months, 18% of which plan to employ a further 101 or more staff (2% plan more than 500 hires).

Permanently unfilled vacancies exist in manufacturing in the

case of

62%

of the survey participants, while approximately 30% of the respondents emphasized that more effort is needed to fill vacancies in quality assurance and logistics.

Although the investment and job creation numbers within automotive have been impressive in recent years, the conference was not self-congratulatory in tone. In a round table discussion on “The Future of the Automotive Industry”, Ésik, who was acting as moderator, asked the six representatives of the manufacturers with a presence in Hungary (Audi, BMW, JaguarLand Rover, Mercedes-Benz, Opel and Suzuki) what the country could do better.

“The agency has performed a survey of the companies operating here to help understand manufacturer plans and strategies. The data is also helping decisionmakers adjust funding and incentive measures to the requirements of those involved.” faculty of Pázmány Péter [Catholic] University in Esztergom.” He said the company had not been successful thus far, but would continue to lobby for it.

The roundtable was followed by a keynote presentation by Andreas Tschiesner, head of automotive and assembly Europe at McKinsey, the American worldwide management consulting firm, on “Leading Automotive Industry Intelligence and the Latest Global and Regional Automotive Trends, Advanced Mobility and Digital Solutions”. Three breakout workshops then covered the key themes of the conference: Technology and Innovation; HR and Education; and Suppliers.

Additional reporting by MTI.

representatives of

49

automotive companies completed the survey.

“Subsequent interviews were focused on issues such as the Hungarian business environment, market and technology trends, investment opportunities, relationships between OEMs [original equipment manufacturers], and HR related matters,” it says.

Some two-thirds of the companies polled regard robotization as the most important challenge of the upcoming years with relation to their operations in Hungary, while 82% said they are planning to expand their production capacities and 63% their logistics capabilities over the next two years.

Péter Szijjártó, Minister of Foreign Affairs and Foreign Affairs, speaking at the HIPA Automotive Conference at the Kempinski Hotel Corvinus in Budapest on May 29. Photo: HIPA.

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Business

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Budapest Business Journal | June 7 – June 20, 2019

Gas Imports: A Matter of Choices (or Not) Speaking at a regional energy forum in Belgrade recently, Minister of Foreign Affairs and Trade Péter Szijjártó made some contradictory statements regarding the future of the gas import in Hungary. gas and thus the opportunity for Moscow to exert political pressure.

BALÁZS BARABÁS

Next year several uncertainties may arise in the region, he said. Starting with 2020, it will be uncertain if Central Europe will receive gas from Russia via Ukraine, therefore new solutions and new transport routes must be searched. But Hungary is prepared for the new energy security challenges, Szijjártó added.

But with so many uncertainties, how can any country be prepared?

For now, one thing is sure: Hungary has an agreement with Russia for gas supply in 2020. What comes after that is hard to predict.

In Belgrade, Szijjártó briefly also referred to “the economic decision of an American and an Austrian company regarding the extraction of gas found in Romania”. This decision has long been delayed and if this will not happen, Hungary “will have no other choice but to concentrate on constructing a gas transport route in the south, where Russian gas will be imported to the region via Turkey, Bulgaria and Serbia”.

Although he did not specifically name the pipeline he referred to, Turkish Stream, as it is known, has very important geopolitical significance.

Hungary is highly dependent on gas imports. In the 1980s and early 1990s, the transport infrastructure only connected with Russia, which meant that the one option for Hungary was to purchase gas from its giant near neighbor.

This was a very convenient negotiating position for Moscow, and it used it accordingly: the last long-term gas import agreement between Hungary and Russia lasted for

Catch 22

The easiest means of achieving this would be to transport liquified natural gas to a purpose built terminal in Croatia, from which European countries could cover their internal market needs. But there is a Catch 22 situation here: Croatia will only launch the terminal if European countries commit to buying gas from it, while Hungary says it would be more expensive compared to the current Russian import prices.

Some sort of a compromise arose in April this year, with minister Szijjártó stating that Hungary would purchase a

25% share

in the Croatian LNG terminal, adding that “acquiring a share in the ownership of an LNG terminal is a strategic issue, but Hungary does not accept the linking of the two”, that is, the commitment to purchase gas in exchange for a share in the terminal.

However, the reluctance of Hungary in this matter is not seen well by the United States, a fact that has been communicated both during meetings between Secretary of Energy Rick Perry and Szijjártó, and during the official visit of Secretary of State Mike Pompeo to Budapest earlier this year.

There is also another issue, the extraction of gas in Romania, more exactly from beneath the Black Sea. The gas reserves here are huge, but extracting it is expensive and the returns are long-term.

Two companies are eyeing this project, America’s ExxonMobil and Rompetrol, owned by OMV (Austria).

Romania is in a much better position than Hungary, as it is able to cover 90% of its consumption from internal production. That means much of the gas extracted from the Black Sea reserves could be exported. All seemed ready for launch until November last year, when the then leader of the ruling PSD (Social-Democrats) party, Liviu Dragnea, presented a new law, dubbed the Offshore Bill, which would significantly reduce the profits of the companies extracting the gas.

That brought the project to a halt. This was bad news for Hungary, since Szijjártó had triumphantly announced back in February a “historic step forward for Hungary’s energy security”, in a deal reached with Romania. The parties agreed that Hungary would import 4.4 billion cubic meters of the gas extracted by ExxonMobil and OMV, starting in 2020, provided that the technical conditions were in place.

But those technical conditions are currently stalled and there is no sign that this will change soon, while the Hungarian government is growing impatient.

Environmental Change

“ExxonMobil can change the European energy supply. But the American company has to decide now about the investment. If this will not happen by September, than I will be forced to sign a new long-term agreement with Russia,” Szijjártó said recently.

Exxon reacted rapidly, saying that such a decision would require “competitive and stable fiscal terms

[...] for the duration of our concession agreement”. The reference to the Offshore Bill was obvious, which meant that everyone was expecting a change in the approach to this issue from the Romanian government.

But the Romanian government has itself suffered a major setback. PSD experienced a dramatic defeat in May’s European Parliamentary elections and the next day,

May

27,

the High Court announced an appeal decision in a corruption case against the PSD’s Dragnea, which resulted in his immediate imprisonment. This, combined with the election defeat, has impacted the party heavily and it is unlikely that it will deal with the Offshore Bill any time soon.

So, it seems unlikely that Hungary will import gas from the LNG terminal in Croatia, because it is unwilling to, and from Romania, because it cannot. In this case Hungary will probably strike a new long-term deal with Russia to import gas via Turkish Stream, as Szijjártó indicated in Belgrade.

However, this would represent a major conflict of interests with the United States (which Budapest has tried very hard to avoid so far).

When Szijjártó met Perry last November, the State Department issued a statement stressing “the importance of Central Europe diversifying its energy import sources to avoid overreliance on any single country. Secretary Perry also emphasized the United States’ opposition to both the Nord Stream II and the multi-line Turkish Stream natural gas pipelines – both of which would extend and deepen Russia’s energy dominance in the region – and the desire to continue to strengthen the U.S.-Hungary relationship.”

20 years

and terminated in 2015.

Meanwhile, new pipelines were built, which could provide an alternative to the Russian import. This has significantly improved Hungary’s negotiation position, with Budapest now able to secure short-term, annual import agreements with Russia, which the Hungarian government has been successfully pursuing since 2015.

It was not just new pipelines that were constructed, however; new players also entered the international gas market, notably the United States.

Washington has two main goals on the gas market: on one hand, to sell its shale gas surplus and on the other, to reduce the dependence (“overreliance”, in U.S. diplomatic terminology) of European countries of Russian

Minister of Foreign Affairs and Trade Péter Szijjártó (center left) and PSD party leader Liviu Dragnea (opposite) in face-to-face talks in February 2018. Photo: Ministry of Foreign Affairs and Trade

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Budapest Business Journal | June 7 – June 20, 2019

Special Effects Int’l Acquires Company, Launches new Division Event production company Special Effects International has announced the acquisition of Mobil Audio and Light Kft., a 20-year-old sound, lighting and staging production company, and the creation of a new Touring & Live Entertainment business unit as a result of the transaction.

Zoltán Szmodits (left) and Zsolt Kassai.

BENCE GAÁL

The new business unit’s goal is to provide high-quality technical solutions for festivals, roadshows and concerts internationally, the company tells the Budapest Business Journal. With the addition of the new unit, Special Effects now has six standalone divisions.

Both the acquisition and the establishment of the new business unit is part of the company’s long-term strategy, and have been preceded by several other acquisitions and a comprehensive organizational restructuring over the last few years.

One such acquisition was that of the Dubai-based Kraftwerk Design & Production agency last year, allowing Special Effects to expand its market presence in Europe, United States, and Asia, to the Arabic markets.

“Mobil Audio and Light has been our partner since its establishment,” says Zsolt Kassai, general manager of Special Effects International.

“Our colleagues have built a rapport over the last two decades that will help the quick integration of the team of

20 full-time

employees and lay a solid foundation for future growth.”

Large-scale

As was the case with the Kraftwerk transaction, the management will not change; the new business unit will be headed by Zoltán Szmodits, the former owner of Mobil Audio and Light Kft. The Touring & Live Entertainment division will be able to provide services for large-scale

concerts as well as outdoor events to the highest standards, Special Effects says.

Since its establishment in 1999, Mobil Audio and Light has provided services to numerous high-profile events such as a joint involving UEFA (the Union of European Football Associations, European soccer’s governing body) and MLSZ (the Hungarian Football Federation) press conference at the Ministry of Interior, and even the Sziget Festival.

“Special Effects provides a stable base for a prosperous operation in every aspect,” Szmodits says.

“Its international clientele and extensive business experience will guarantee further market expansion and professional advancement. Leaving the daily duties of company management behind, despite managing bigger resources than before, I can focus again on customer relations and innovations to assure the progress of the department and Special Effects,” he adds.

Based in Hungary but with offices in Dubai, Germany, Hong Kong, the United Kingdom and the United States, Special Effects now has 37 years of experience, is present at more than

2,800 events

per year, and has approximately 120 employees.

Its lineup of business divisions is now: Creative Event Design, Event Production, Exhibition & Installation, Hotel AV Services, International Events and Touring & Live Entertainment.

Special Effects is a member of the AV Alliance and Congress Rental Network, as well as a three-time winner of the network’s Member of the Year Award, and a holder of the alliance’s Best Selling Performance Award.

Business | 15

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Budapest Business Journal | June 7 – June 20, 2019

Special Report Legal Market

What are the challenges facing Hungary’s law firms, and how are they responding to the evolving market?

Depersonalization Could Aide Hard-to-implement GDPR

20

A Partnership 30 Years in the Making

21

More Tasks, Fewer Resources Impact Corporate Law’

25

Award-winning Law Firms Shine in Budapest

30

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Budapest Business Journal | June 7 – June 20, 2019

Special Report | 17

Legal Market Talk: Latest Trends and New Technologies The Budapest Business Journal assembled a legal panel from some of the leading law firms in Hungary to ascertain how they see the local legal market.

ROBIN MARSHALL

BBJ: What are the latest trends on the Hungarian/Budapest legal market?

CMS: For quite a few years, there has been market talk about a coming downturn, which may or may not happen. We may experience only a slight slowdown or something more serious.

We just don’t know. We have started to experience a range of restructuring and litigation matters, which may be connected, but I can also imagine that they are unrelated.

Dentons: There is a lot of M&A activity in the technology, energy, infrastructure, automotive and hospitality sectors, and the real estate market is still very attractive for investors. In the energy sector, renewable (especially solar) projects kept our lawyers busy in the past year, and we expect this trend to continue into 2019. The new Civil Procedure Act had an impact on our dispute resolution practice, which required us to place greater emphasis on the preparatory stage of disputes.

Advising on GDPR-related matters has also become a real strength of the Budapest office in the past year. Legal competition is also increasing; more law firms and service providers compete for the business of a finite number of clients.

With the entry of the Big Four accounting firms into the legal market, law firms must improve the scope of their services in the field of business consultancy.

DLA Piper: Client demands have increased rapidly and have become more complex and sophisticated over the past few years. The legal market is quite busy; clients with complex, “bet-the-company” type of matters are not so sensitive to fees, but less complex matters require a higher level of efficiency. At the same time, more clients no longer need legal, business or tax solutions, but a one-stop-shop approach; an interdisciplinary solution.

The Big Four were the first to deliver such a solution, but established law firms are moving in this direction as well. We are building on our strengths.

Eversheds: Regional cooperation between local law offices is becoming more important. Cross-border transactions and commercial cooperation between different subsidiaries of multinational companies requires a “glocal” approach.

Kinstellar: Although the value of Hungarian M&A fell 17% year-on-year to an estimated USD 3.35 billion in 2018, we experience an upturn in our M&A mandates. There is a particularly strong performance in real estate, banking and energy sector. Hungary’s renewable energy and commercial, retail and office spaces seem to be attracting significant investment, and we expect numerous

projects planned or underway in these sectors. While demand for law firm services grows, the market for law firm services is being transformed. Competitive

Erika Papp challenges make us question our previous assumptions and strategies, and re-examine traditional business models to suit future challenges and tomorrow’s legal marketplace, to explore and exploit new business opportunities.

Noerr: A new wave of consolidation can be detected following a series of mergers in the international business law firms’ segment. Domestic, or purely national law firms without any major international affiliation are often successful in the government sector, but some still lag in terms of brand recognition. Many of the international business law firms maintain leading positions in the strategically most important sectors and service areas, including financial services, real estate, technology and digital business, and in general, when it comes to cross-border and multi-jurisdictional transactions. In terms of volume of work, real estate and corporate M&A mandates represent the bulk of work for international law firms, together with litigation, regulatory and compliance. The recent rush to deal with GDPR has given huge volumes of work for most law firms.

Szecskay: From a regulatory viewpoint, the new Act on the Legal Profession introduced in 2018 has kept the Hungarian Bar Association very busy. In particular, the HBA has had to redraft and also introduce new bylaws in certain areas.

From January 2020, lawyers practicing in Hungary will also need to participate in continuing education, as mandated

by EU law. This has already begun to generate a lot of work for the profession, as an accreditation system needs to be set

up and official legal education providers established. For nearly 8,000 lawyers in Budapest, this is a huge work, while for smaller, regional bar associations, it will be a challenge to provide a workable set of accessible education opportunities for their lawyers. In any event, as a profession, we understand the need to ensure the quality of the work that our lawyers provide, in line with other more developed parts of the world.

BBJ: How are client demands/ expectations changing?

CMS: Since many of our clients are responsible for not only local, but also regional markets, we often receive requests for full-service legal advice involving several countries. Clients expect these kinds of mandates to have a single point of contact, someone to coordinate and oversee the work of numerous lawyers in multiple countries. To do this requires high-level legal project management abilities and plenty of resources both locally and regionally from our end.

Dentons: Clients want reliable partners that offer flexible solutions. We offer a wide range of solutions that are not specifically grounded in traditional legal work, including Nextlaw Labs and the Nextlaw Referral Network, which offers members and their clients the benefits of traditional referral networks without the conflicts of the “pay-to-play” system.

Clients also increasingly need help with complex cross-border transactions. In recent years, in addition to Hungary, we advised clients on investment projects across the CEE region (Poland, Romania, Serbia and Turkey), as well as in the Nordic and Baltic regions, focusing on the real estate market and regulated

István Réczicza markets such as energy, infrastructure, telecommunications and competition law.

Eversheds: Clients require ever more proactivity than in the past, they often want their lawyers to be involved in their daily work. Whenever it is required, we strive to take part in their decision-making processes, in order to ensure that legal aspects are taken into consideration when focusing on the business goals. Clients more often require value added services, such as training, often in webinar form.

Kinstellar: The experience is that clients expect dynamic reactions and more flexible solutions, which results in expanding the scope of the services in order to provide practical legal solutions. Many legal problems are business problems with a

Ágnes Szent-Ivány legal element, which requires multiple skills, not just legal ones. Law firms tend to hire associates with economics, communication, mediation, research, data science and a variety of other expertise depending on which works best to achieve the client’s objectives. Skills beyond law are rapidly becoming core to legal service delivery creating “one-stop shopping” for legal services.

Noerr: Good clients are demanding clients, by definition, and high expectations from their lawyers reflect a degree of trust based on mutual confidence. This also means that the changes we experience in the business environment and in the everyday life around us have an immediate bearing upon the judgement of clients about their lawyers. Responsiveness, technologysavvy, better informed and having a deep-seated knowledge rooted in the practical implications of the ever-changing regulatory and legislative environments are a must these days.

Szecskay: Clients are interested in solutions; therefore, they definitely want us to get to the point as quickly and as efficiently as possible. They are no longer interested in long, complex memos, only easily digestible solutions. Reasonable clients will always appreciate that, although we can get to the point quickly, it may have taken us several hours of work to produce the end result.

We understand the expectations of our clients if they in turn understand that lots of work may be needed for us to reach their expectations. This enhances our mutual understanding and cooperation.

BBJ: Governing party Fidesz was suspended from the European People’s Party in part over rule of law issues.

Is this ever raised as a concern by international clients? Is reputational damage a professional concern?

Kinstellar: There have been a very few occasions when concerns have been raised by potential investors, but it was Continued on page 18 ► ► ►

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Special Report

Continued from page 17 ► ► ► mainly due to the lack of information about the details and the legal consequences of certain decisions of the government. We did not experience any substantial downturn in our business due to this effect.

Edina Schweizer Szecskay: No to both, but on a wider scale, the European Commission Article 7 procedure launched against Hungary has been more of a general concern mentioned by various people we have come across.

BBJ: Are there any areas where you would like to see legal changes in Hungary?

CMS: There are preparations for a new insolvency code, which I would very much like to see in Hungary. This is something that has been planned for several years. Since our current insolvency code is very old (dating from 1991), Hungary’s economy deserves something modern and competitive. Also, new insolvency legislation has been passed on the European level. So Hungary’s new insolvency code and the new EU level legislation will, I hope, introduce a modern insolvency regulation in Hungary that will help both debtors and creditors save troubled companies, or – if it is not possible to save a company – ensure a fair and fast insolvency process.

Dentons: A particular area where we regularly see uncertainty is the installation of photovoltaic power stations and related equipment. In the absence of specific and unambiguous regulations, the various authorities have different approaches to, for example, propertyrelated issues. In particular, it is unclear whether such structures become integral parts of the underlying land or can be legally separated from the land, a question that is crucial in determining whether the landowner can be different from the owner of the structures. These uncertainties cause difficulties in the preparation of such projects, including financing, taxation, and the drafting of relevant agreements between investors, land owners, banks, operators and other parties. We are convinced that legal regulations that take the interests of the stakeholders into consideration, or at least uniform and clear official guidance, would facilitate the realization of such projects.

This would also benefit the Hungarian economy as a whole.

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Budapest Business Journal | June 7 – June 20, 2019

DLA: The reform of the Insolvency Act is worth mentioning, especially in terms of enabling institutions to better preserve active, valuable companies or financial assets during bankruptcy or liquidation proceedings. Based on the model of the U.K.’s pre-packaged insolvency solutions, it could serve the interests of Hungarian enterprises very well in the long-term.

Kinstellar: The Act CXXXII of 1997 which regulates branch offices and commercial representative offices should be replaced or totally reworked.

Twenty years have passed since the entry of this Act into force; the lack of comprehensiveness and the increasing number of branches, especially in the banking and insurance sector, create legal uncertainty and needs an evolving legal framework when applying the law. There are quite a few issues where regulation is missing or is not following the market trends and/or practicalities would demand otherwise. One to start with is definitely the issue of how to operate in the legal business: the legal profession remains one of the last where practicing lawyers are still required to operate with unlimited liability. This is absolutely not marketstandard; most Western and also Eastern countries have already established a form of operations with limited liability, this is definitely something the legislation should follow.

Szecskay: I think a lot of people would like to see the reinstatement of the democratic checks and balances that have been systematically removed over the last few years.

András Szecskay BBJ: Do clients see benefits from digitization and new technologies in the legal market today, or is this still something for the future?

CMS: We have been using innovative legal technologies for years and we are always looking for ways to develop and employ more of them. We use AI and automated tools to gather, process and analyze a huge amount of data.

This technology helps us accelerate the analysis and review of documents, massively streamlining and speeding up due diligence and disclosure exercises.

In practice, this saves our clients time and money. In the past, the review of 750,000 documents could take up two weeks. With the help of our legal technology, it takes only two hours.

András Posztl Dentons: Accelerating digital transformation requires constant changes in the practice of law, and such trends can clearly be observed also in the Hungarian legal market.

Dentons was one of the first to recognize the need for technological innovation to ensure that the legal profession also keeps pace with the technological developments of other industries. Dentons was the first law firm to have its own technology development company; Nextlaw Labs was created in 2015 in order to explore opportunities for the use of AI and new communication technologies for improving client services, as well as to find more effective and practical responses to the legal issues raised by our clients worldwide.

DLA Piper: Emerging legal technology solutions, especially smart contracting, developments around blockchain, AI-based technologies and auto-filling documents are becoming significant assets in our work. Law firms with advanced legal technologies at hand are at an advantage because they can greatly enhance efficiency, especially in high-volume cases.

Eversheds: Within some years, stateof-the-art technology and AI will have an important effect on the local legal market as well, but it is not the case yet nowadays, tough it has started in Hungary. As part of global law firm, the AI platforms used in the United Kingdom are available for us, but there are still language barriers.

Recently, we have seen IT solutions developed locally that may support legal work within law firms or at clients.

Noerr: Most businesses are aware of the dramatic changes brought about by the digital revolution. Some sectors are affected more immediately than others. The reason why digitization is such a central issue for law firms is

Legal Panel

because lawyers themselves are forced to introduce changes to improve their service delivery practices on the one hand; and also, they need to understand the challenges of digitization facing their clients, in particular in the manufacturing and financial services, for example. The real challenge is to understand when “future” becomes “present” and how to get prepared for the consequences of digitization.

Szecskay: I think the Hungarian market still has some way to go in this regard, but of course we are always open to embrace these things in due course.

Kinstellar: The application of complex law technologies is still very rare.

Advisors, of course, use many solutions to simplify operations, but these are usually simple practice management software, supporting billing, accounting, searching for legislation, etc. If we mean software that uses algorithms and is capable of “paralegal style work”, we can think of only a few examples, mainly applied by big law firms and other advisors. In Kinstellar, we believe that this technology, often referred to as “law tech”, will have a very important role in the future. In practice these technologies aim to

Csilla Andrékó simplify work such as document review, searching for precedents and relevant legislation, drafting basic documents, etc.

Our forensic audit team, for example, is supported by document review software, helping it go through incredible amounts of correspondence, and narrow down the hits for manual review. This is cost effective for our clients, also more compliant with privacy rules, and our colleagues will have more capacity to asses issues which are more relevant. We don’t see this as a threat to our market; this is a great opportunity to open up capacity to new areas.

• Edina Schweizer, partner, CEE head of banking and finance, • Csilla Andrékó, managing partner, Noerr & Partners Law Office Andrékó Kinstellar Law Firm • András Szecskay, managing • Erika Papp, managing partner, partner, Szecskay Attorneys CMS Budapest at Law • András Posztl, country managing • Ágnes Szent-Ivány, partner,DLA Piper Hungary managing partner, Sándor Szegedi Szent-Ivány Komáromi • István Réczicza, managing Eversheds Sutherland partner, Dentons

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Budapest Business Journal | June 7 – June 20, 2019

PROMOTIONAL FEATURE

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Special Report | 19

Celebrating 50 Years of Intellectual Property Protection

ZSÓFIA VÉGH

BBJ: The roots of this law firm, which celebrates its 50th anniversary this year, is intellectual property law. In what ways does this area of law differ from others?

Katalin Szamosi: The basis of the cooperation is that, on one hand, intellectual property must be protected – there are legal ways to do that, including patent, trade mark applications, identification of IP – and then comes enforcement of rights. Without having protection, no legal action can be taken against unlawful use of those rights.

The founders of the firm recognized the benefits of patent attorneys and lawyers working together, as during the creation of protection, which is mainly a technical task, legal considerations must be incorporated as well so that in the future rights could be used and protected properly.

The protection of intellectual property requires much more creativity and interaction than corporate law, where lawyers are tied by the strict legislative environment.

What makes this type of law different and more challenging than other fields is that it needs a more complex approach and a more versatile knowledge. We need to be familiar with the market, clients expect us to offer advice on how to, say, enforce best license fees. It also requires a business mindset. We need to be able to understand the essence of the work, be it a machine or a piece of writing, and find out what is innovative about it. I believe this is a very nice field of law where by no means one has to deal with routine tasks.

Photo by vegeldaniel.com

Boasting clients such as Ernő Rubik, Hungarian law firm SBGK has earned its reputation as the intellectual property law firm in Hungary. With SBGK celebrating its 50th anniversary this year, the Budapest Business Journal talked to the managing partner of the firm, Katalin Szamosi, about the past and the present.

Dr. Katalin Szamosi, managing partner.

BBJ: Established law firms tend to have this image of being highly hierarchic and traditional. Is it true for SBGK, or have you moved away from this structure?

KS: We are a traditional law firm in terms of structure. There is hierarchy in the way one can get ahead from junior associate to senior partnership; all new colleagues

“The protection of intellectual property requires much more creativity and interaction than corporate law, where lawyers are tied by the strict legislative environment.

What makes this type of law different and more challenging than other fields is that it needs a more complex approach and a more versatile knowledge.” are presented these options when they join the firm. We train almost exclusively all our successors so that the knowledge we provide them with would contribute to the prestige of this law firm. This also means that the knowledge necessary for this area of law can only be acquired through practice, by consulting with clients and studying cases. There is some basic training at university but most of it is picked up on the job. In fact, many of our current competitors were trained by us, when they worked for this law firm.

BBJ: Does this traditional approach apply to the way you handle clients as well?

KS: Client handling policies have changed a great deal since I was an associate. Back then it was the head of the firm who met with clients. Today, we work in teams and clients get to meet with all members of the team. We also involve young associates/lawyers in the process and they can communicate with the clients as well. We have recognized that young members of startups prefer to be in touch with someone that speaks the same language and our young colleagues get in tune with them easily.

BBJ: You also have some longstanding relationship with famous clients such as Ernő Rubik. What kind of work does a cooperation with a client like him entail?

KS: When an invention as big as this outgrows its creator, the use of rights is coordinated through international networks, and us lawyers get detached from the creator. Of course, I know him in person, but today we work for Rubik’s Brand Ltd. Our job is to ensure the protection of rights on a daily basis.

BBJ: How has the composition of your clients changed over the years?

KS: Being a private law firm during socialist times, which dealt with IP and had a foreign currency account, was a rarity. As a result, our firm covered most foreign assignments. This was a huge achievement and created trust in foreign clients: with no competitors it was a golden age for IP lawyers. Even when the economic structure changed, we could maintain this position as international law firms that entered the Hungarian market later focused more on company law. More recently, we have many Hungarian clients, either subsidies

of multinational firms interested in our competition or IP law experience, or Hungarian enterprises that have grown substantially in the past years.

A less positive experience is that Hungarian inventors have not been as active lately as they used to be; there are not too many patent applications. This is, in part, the result of neglecting the need for innovation. Small enterprises, which need financing the most, may see some improvement as the government is now committed to support them. Individual inventors have been replaced by startups, but tend to involve capital at a fairly early stage, which leads to investors setting the directions of protection applications, often taking place abroad.

BBJ: Have you been able to shape or contribute to the legislation process for IP? KS: Being in the “frontline”, we are the first to hear about the issues of the market. But we can only get involved in the process through professional organizations for IP. It is these bodies through which we can impact the legislation process or share our thoughts and experience.

These organizations often invite law firms to form an opinion about a new law in the making and in my experience they tend to listen to our suggestions.

sbgk.hu/en

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Budapest Business Journal | June 7 – June 20, 2019

Depersonalization Could Aide Hard-to-implement GDPR One year on from the introduction of EU-wide GDPR regulations, the Budapest Business Journal asks local legal experts how implementation has fared, and what might be next.

CHRISTIAN KESZTHELYI

The European Union decided to establish its new European privacy framework, which came into force on May 25, 2018 because lawmakers in the bloc felt that the protective landscape was fragmented, and caused confusion to organizations and individuals alike.

According to many, the EU’s General Data Protection Regulation reform is the toughest data protection law in the world.

While a set of principles safeguarding the personal data of individuals had been sorely needed for several years before GDPR came along, currently it appears that the year-old code is posing an incredible documentation burden on businesses and is hard to implement.

Businesses are still facing serious challenges in meeting GDPR guidelines for deleting personal data stored without legal basis. In order to counter such a documentation burden, Deloitte says that the depersonalization of data may come up as an alternative, although the Big Four consultancy says it is important to develop an appropriate strategy to balance business interests with regulatory compliance.

Based on its market experience, Deloitte says that technical and feasibility problems make it difficult to follow GDPR in relation to the introduction and operation of data security controls.

Beyond GDPR, however, the legal offices of companies seem to be in need to optimize their operating models to keep up with the changes spurred by the legislative environment and digitalization, EY said based on a recent survey conducted with the involvement of 1,000+ legal managers.

For more on this, see page 25.

Greatest Challenge

Despite being a complex set of legal guidelines in its own right, thus far it appears that the biggest challenge related to GDPR remains the deletion of unauthorized personal data stored in the digital systems of companies, as well as the depersonalization of test and development environments.

Complying with the GDPR, companies must prevent the accidental loss, alteration, distribution or unauthorized

access to customers’ personal data by any third parties. Therefore, applying so-called depersonalization tools can help companies anonymize the personal data they do hold on their clients or customers.

The primary purpose of data depersonalization is to encrypt data in a manner that even by using additional

“GDPR clearly requires companies to delete personal data, which should be taken into account when designing and developing systems based on ‘privacy by design’ and ‘privacy by default’.” information, third parties are unable to tell which personal data refers to a specific natural person: in other words, the relationship between the data and the person is definitively removed.

Deloitte says that domestic and international freight firms already have depersonalization tools; however, for much simpler processes own applications and software can be established. However, before a company decides to go for such solutions, they are highly advised to seek counselling, Deloitte cautions.

“GDPR clearly requires companies to delete personal data, which should

be taken into account when designing and developing systems based on ‘privacy by design’ and ‘privacy by default’,” said Zoltán Szöllősi, senior manager of risk advisory services at Deloitte.

Szöllősi says that depersonalization may be an alternative solution, which is not equivalent to deletion, but leads to a similar result if the relationship between the data and the natural person is definitively eliminated.

Careful Concept

“This requires a proper depersonalization concept and its implementation, which must be preceded by thorough assessment and planning so that the data controller avoids the risks arising from the procedure,” the senior manager adds.

Nevertheless, equipping a company with a depersonalization system is no quick fix; it is a lengthy and costly process that can involve several years of development and the investment of tens of millions of forints in a complex IT environment, according to calculations by Deloitte.

Essentially, if such transformed data is transferred from one database to another, the receiving database must be equipped with the means of transformation to be able to pair personal data with the respective individuals.

“Therefore, in complex business environments, development of such [depersonalization] tech solutions must be carried out in a way that data flows through the entire infrastructure, ensuring that the process does not pose a risk to daily data processing or the functioning of systems,” said Gergő Barta, IT project manager at Deloitte.

“Another important aspect of depersonalization is to make valuable

data assets unrecognizable only to the extent that they meet legal requirements, but at the same time remain suitable for later use, such as

“Another important aspect of depersonalization is to make valuable data assets unrecognizable only to the extent that they meet legal requirements, but at the same time remain suitable for later use, such as for producing business reports and statistics. It is not easy to find the right balance between business interests and legal compliance, so it is also important to design and apply the depersonalization strategy properly.” for producing business reports and statistics,” he explains.

“It is not easy to find the right balance between business interests and legal compliance, so it is also important to design and apply the depersonalization strategy properly,” Barta warns.

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Budapest Business Journal | June 7 – June 20, 2019

PRESENTED CONTENT

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A Partnership 30 Years in the Making As CMS Budapest celebrates 30 years in business in Hungary, the Budapest Business Journal spoke to some of the senior leadership at the law firm – managing partner Erika Papp, partner (also office founder and managing partner until last year) Gabriella Ormai, and CEE managing director Dóra Petrányi – about how the firm has evolved in Hungary and the region, and what the future might hold.

ROBIN MARSHALL

BBJ: How has the law firm changed in the past 30 years?

Gabriella Ormai: First of all we’ve got a little bit bigger: we started out as a twoperson law firm to become the biggest in Hungary with more than 75 lawyers, plus over 60 staff members. As we grew bigger, we’ve also added more and more specialist areas to our legal offering, like employment, IP, finance, compliance or competition, just to mention a few and we invested a lot to understand the sectors our clients operate in, be it automotive, energy or TMT.

GO: That we have clients who have been with us for 30 years now.

But I’m also very proud to see every year, when the BBJ publishes the fresh rankings of legal directories, that no other law firm in Hungary has as many Band 1 rankings as we have. We built up the biggest and one of the best law firms in Hungary, yet we managed to remain a very friendly, open, down-to-earth firm, a company where people like to come to work every day.

BBJ: How do you think the markets might change over the next 30 years?

How do you think lawyers will operate?

Erika Papp: We will have more technologies to aid our work. We already use cutting-edge software, which is helping us to do our job faster, be more punctual and more transparent and this will only accelerate in the upcoming years.

Technology and machines will replace a significant part of the work that is now done by flesh and blood people, but I still think it is a positive trend, if we know how to reshuffle our capacities and expertise.

For instance, we will be able to focus more on the big picture, that is advising our clients at a strategic level, taking into consideration their business goals and the particularities of the sector they operate in, which our clients already see as a great added value.

BBJ: Erika, you became managing partner last May; how was your year?

EP: My first year as a managing partner of CMS Budapest has been smooth and great fun. First of all, the Hungarian economy has been doing very well and our firm has produced excellent financials. All practice groups have been busy and we have had a great year in terms of being involved in highprofile legal transactions. Apart from our financial performance, I am also thankful to my partners and the staff of CMS Budapest, who have worked hard and have given me a tremendous amount of support. We operate in a shared leadership, and each of my partners has taken on responsibility and done heavy lifting on my behalf in one way or another.

Our office is very much integrated into the Central and Eastern European

Special Report | 21 CMS network and into the wider CMS community. As a new office managing partner in the CMS family, I have had the benefit of tapping into a network of highly experienced and skilled managing partners in the region, with whom I can talk to at any time of the day to ask for advice and tips.

My own practice group, the banking and finance team, had a fantastic year in 2018, mainly due to the strong Hungarian lending market. I am lucky to have a great team of specialized banking lawyers who made sure that in

“The world is constantly changing around us and the legal profession also has to keep up with it, as new technological developments pose new legal questions that we have to answer.

Digitalization, for instance, brought a big wave of change.” the first year of my term as managing partner, I could devote the time to learn managing the office on top of providing advice to clients.

Obviously, this first year consisted of a lot of learning and long hours of work. But I have taken over the management of the office at the best possible moment. There are great opportunities in store for both Hungary and Europe, and it is an exciting time to be a lawyer and to be leading CMS Budapest into the future.

BBJ: How have the markets changed?

Presumably there are now areas of law that did not even exist back in 1989?

Dóra Petrányi: The world is constantly changing around us and the legal profession also has to keep up with it, as new technological developments pose new legal questions that we have to answer.

Digitalization, for instance, brought a big wave of change and TMT [Technology, Media and Telecommunications] became a particularly important sector at CMS, as digitalization affects all companies, even if they are not operating in the TMT sector. But on a smaller time scale, we have just celebrated the first birthday of GDPR on May 25, a very important legal development which came into existence only recently.

BBJ: What areas of law are particularly important to the firm today, both in Hungary and CEE? DP: I cannot mention one particular area of law, rather digitalization, which is most of the time at the intersection of multiple areas of law. For us, right now, the hot topics are definitely cybersecurity and AI, both in Hungary and regionally. Just in the past year for instance, more than 100 cyber incidents were recorded, affecting 18 CEE countries, so it is a very real and, most of all, costly issue.

BBJ: Looking back over the long history of the firm in Hungary, what are you most proud of?

Erika Papp (center) and the partners of CMS Budapest.

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Budapest Business Journal | June 7 – June 20, 2019

Annual Reunion of Harvard Controversies Around Law School Association the New Copyright Directive Comes to Budapest INSIDE VIEW

Zsófia Lendvai

Head of IP Group HEGYMEGI-BARAKONYI AND PARTNER BAKER MCKENZIE ATTORNEYS-AT-LAW

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After long debate, the EU’s new and controversial Copyright Directive was recently adopted by the Parliament and the Council of the European Union.

The directive is part of a wider EU copyright reform for the internet age, as part of its plans to create a digital single market.

The directive aims to re-set the balance of current protections in favor of the rights holders. The two most controversial provisions are Article 15 and 17 (formerly Articles 11 and 13), which have been the subject of much debate and campaigning.

Article 15: Ancillary Copyright of Press Publishers Article 15 introduces a new ancillary (or “neighboring”) copyright for EU-established press publishers, separate from the copyright in individual articles. Under Article 15, displaying anything other than “snippets,” namely “individual words” or “very short extracts” of content to users via online platforms and other news aggregators will require a license. Article 15 has therefore been referred to as a “link tax”, “news tax” or “publishers’ right”. Its aim is to generate income for (European) press publishers.

Campaigners against its introduction argued that it will limit freedom of expression and access to information.

Some also fear an increase in the prevalence of “fake news”.

It is left to the national legislation whether it will allow press publishers to waive their rights in press publications or whether this right will be introduced as a compulsory provision. We have already seen the result of either solution in practice where this right had been already introduced. In Germany, the press publishers waived their rights.

In Spain, where it was introduced as a compulsory right, the biggest news aggregator, Google News, shut down its services 24 hours after the law entered into force. As a consequence, the turnover of news portals dropped

by an average of 30%. So far, neither of these options has served the purpose for which this right was introduced.

Article 17: Content Upload Filters and Requirements to License or Prevent Illegal Materials Equally controversial is Article 17, which states that certain service providers are engaged in “an act of communication to the public” in respect of user-generated content containing copyright-protected material. Article 17 contains operative provisions aimed to solve the so-called “value gap” and breaks new ground by establishing primary liability for “online content-sharing service providers” (OCSSPs). Rights holders have argued that it is essential for these services to seek licenses and for rights holders to be fairly remunerated for any use of their works online. Article 17 also establishes a copyright-specific, safe harbor regime, where OCSSPs can still escape liability insofar as they satisfy the specific set of obligations set out in Article 17(4).

Overall, Article 17 results in an obligation for those platforms to monitor usergenerated content, which is at least arguably contrary to Article 15 of the E-Commerce Directive and established CJEU case law. Critics fear that Article 17 will require the use of upload filters and could lead to an over-blocking of legitimate content.

Outlook Platforms will now be looking carefully at any changes that will need to be made to their business models in order to protect their revenues. The most significant changes for the platforms will be the requirement to obtain licenses and have content protection measures in place.

One of the challenges that right holders of small countries such as Hungary face is whether it will still be worthwhile for the platforms to invest in such measures given the limited profit which can be achieved from their content.

Not all EU member states are equally supportive of the directive. Some countries, such as Sweden and Poland, have already indicated that they do not agree with the direction of the changes.

The directive will require national implementation, and such varying acceptance could lead to a kaleidoscope of digital copyright regimes.

Once the directive is published in the Official Journal of the EU, member states will have 24 months to transpose the new rules into their national legislation. If published within the next few weeks, the changes would, therefore, be effective from June 2021.

www.bakermckenzie.com/en/locations/emea/hungary

For the first time in its history, the Harvard Law School Association of Europe held its annual reunion in Budapest.

Salvo Arena, president of the Harvard Law School Association of Europe (center) with U.S. Embassy Chargé d’Affaires David Kostelancik (left) and Dr. Andrea Jádi Németh.

ANDREA JÁDI NÉMETH

The program for this 54th reunion was an extraordinary success; it attracted over 150 high level Harvard alumni from around the globe, including Paraguay, India, China, Australia, Venezuela, the United States and most European countries. Hungary has never hosted so many outstanding scholars, successful businessmen and legal practitioner graduates of Harvard University.

Justice István Stumpf and the Chargé d’Affaires at the Embassy of the United States, David Kostelancik welcomed the guests at the opening reception in the headquarters of the Hungarian Academy of Sciences.

The large Harvard delegation then left Budapest behind to set off on a half-day trip to the Danube Bend and spent lunch with Dénes Kemény, former coach of the Hungarian water polo team that won multiple god medals at Olympics, World and European Championships. Kemény’s speech on leadership and team building got the Harvard alumni on their feet and received standing ovation.

In the evening, the guests celebrated their profession at the Museum of Fine Arts with László Trócsányi, Hungary’s Minister of Justice, who spoke about the moral values and high ethical standards of legal practice and shared his robust vision of Europe for the 21st century.

The dinner was full of artistic highlights. The guests were amazed by the performance of the Virtuosos star prodigy cellist, the 15-year-old Aleksander Simic, who will soon debut in Carnegie Hall, New York. Thereafter, world-famous soprano Andrea Rost sang some of the most beautiful opera arias she is renowned for and was greeted with a stirring round of applause.

Academic Sessions

The Harvard annual reunions are always organized around high-level academic sessions that took place this year in the Parliament with László Palkovics, Minister for Innovation and Technology, and Harvard law professor Christopher Bavitz sharing the floor.

Their presentations centered around the most topical issues of innovation, digitalization, AI, algorithm bias, state policies and educational challenges.

In another first, Harvard University, together with the Budapest Bar Association and with the support of five leading law firms, opened its academic program for more than

30 young

Hungarian attorneys.

The long weekend was closed with a gala dinner featuring the 100 Members Gypsy Orchestra and the celebrity guest of honor, actress and producer Andrea Osvárt.

The annual reunion was an exceptional occasion for local and international members of the Harvard community to connect, to share experiences, to build bridges for stronger ties and to discover our beautiful capital in a truly memorable way.

Dr. Andrea Jádi Németh, LL.M is managing partner of law firm bpv Jádi Németh and president of the Hungarian Harvard Club. The Harvard reunion was organized and co-chaired by Jádi Németh and Salvo Arena, president of HLSAE; both are members of the board of the global Harvard Law School Association.

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Budapest Business Journal | June 7 – June 20, 2019

INSIDE VIEW

‘Land Safely’ With Your PV Investment in Hungary László Kenyeres

Partner

Associate

WOLF THEISS BUDAPEST

WOLF THEISS BUDAPEST

The sudden boom in solar PV investments in Hungary raises a series of legal questions.

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Kinga Máté

Based on publicly available data of the Hungarian Energy Authority and MAVIR, as of 2016 the overall PV capacity requested amounted to 2,500 MW. The first solar projects under the feed-intariff system were put into operation before the end of 2017 with a total capacity of 22 MW. Currently, the total installed PV capacity is around 432,8 MW. As the second wave of solar power plants are now in the construction phase, administrative practice and case-law is also expanding. However, when discussing investments in new technologies, for instance solar PV, contradictions may occur in the interpretation and application of national laws and regulations.

Due to the lack of unanimous agreement over some legal aspects, technological booms are necessarily accompanied by less comprehensive changes in the legal environment. In this context, interpretation and practice related to the legal classification of solar PV plants and the question of ownership or land use rights over the interim period of the construction (as well as other use of such land) are two of the most topical issues from the point of view of investors and authorities.

Risks Related to Land Use According to the data of the Hungarian Central Statistical Office, 78% of Hungary’s territory (i.e. 7.29 million hectares) is considered agricultural land: 59% is arable, 26.6% forest, 11% grassland and 3% is classified in other classes.

Despite local disparities, it is clear that most of the land available for PV investments is considered either high or good-quality agricultural land.

However, it is important to underline that, pursuant to Hungarian laws on agricultural land and its transactions, it is strictly forbidden for companies to acquire ownership or obtain other rights over such land, whatever its quality.

In exceptional cases, agricultural land, mainly with lower quality, may be used for other purposes. Power generation, hence the deployment of solar systems is deemed as non-agricultural activity.

Nonetheless, investors are still entitled to receive a permit from the competent

authority to use such land for other legitimate purposes; enabling them to prepare the land for the construction and operation of a solar PV power plant.

As a final step, after construction and before the contractual settling of the ownership on the land, the reclassification of the land to non-agricultural use must be registered by the land registry office.

Within the interim period, preparatory works by the investor create a situation where collaboration between the actual land owners and PV investors is indispensable in order to avoid unnecessary disputes with the authorities and business partners. Land owners are expected to tolerate any necessary interference, land use and construction works on their lands, while investors compensate those efforts by paying a special fee fixed in the pre-contracts.

Legal Classification of PV Power Plants Another aspect that may arise when launching solar PV investments is the special classification of the plants from the point of view of civil law and any related sectoral law. European examples, such as the laws of the Netherlands or Italy, show similarities with the Hungarian law by considering PV power plants as immovable property despite being easily dismantled. According to existing Hungarian sectoral legislation, special technical solutions – for instance solar PV power plants – shall be treated as special structures. Despite their permanent and immovable nature, PV power plants may not be registered as independent properties in the land registry.

In conclusion, there are certain land related risks to watch out for when planning PV investments. When making costly investments at a given site with beneficial geographical characteristics such as high annual sunshine hours, risks related to the lack of ownership of the land may be reduced by careful planning and comprehensive contractual solutions.

The government seems to have realized these discrepancies and has issued a decision requesting the competent Ministry of Agriculture and the Ministry for Innovation and Technology to revise the relevant regulation.

www.wolftheiss.com

Legal///briefs Government Shelves Plan for Administrative Courts Hungary’s government has unexpectedly announced it will “postpone indefinitely” plans to introduce a system of courts that have the authority to make rulings in matters of public administration, Gergely Gulyás, the head of the Prime Minister’s Office, said at a regular press briefing on May 30, index.hu reported. Gulyás said the introduction of the administrative courts had been placed in the cross hairs of an international debate questioning judiciary independence in Hungary.

Although the government considers doubts over the independence of the courts baseless and believes the legislation is in line with European standards, it will propose postponing the introduction of the system until this debate is closed, he added. The administrative courts were due to start operating on January 1, 2020 under legislation approved by Parliament in December 2018. Gulyás said the government will submit a motion to lawmakers postponing the rollout, index.hu added.

Novonex Fined HUF 31 mln for ad Claims Hungary’s Competition Office (GVH) said it had fined Novonex for making unfounded claims in advertisements for its vitamin C product “Novo C plus”, business online daily vg.hu reported. Novonex said “liposomal technology allows excellent utilization of vitamin C in the body” and called the product a “revolutionary breakthrough in absorption of vitamin C”, both unsubstantiated claims prohibited

by European Union law. GVH fined Novonex as well as a number of publishers who ran ads for the dietary supplement a combined HUF 31 million.

Interactive Crime and Accident Map The Hungarian Police force has launched an interactive, online crime and accident map on terkep.police.hu, news portal portfolio.hu reported. Developed as part of the so-called inNOVA scheme, the project was financed by HUF 5.148 billion in EU grant money. The map empowers both law enforcement and citizens to better understand crime and accidents in a certain location. Visitors can browse between crime or accident types and zoom on a certain location, road section and settlement almost with street-level accuracy. Statistics are uploaded to the site regularly and will be 30 days in arrears, portfolio.hu said.

MNB Prohibits U.K.’s Goldsten Limited From Unlicensed Activity The National Bank of Hungary (MNB) said it banned U.K.-based Goldsten Limited with immediate effect from collecting deposits or other repayable

financial assets without a license, news portal origo.hu reported. The company has promised its clients unrealistically high yields and a guarantee on principal.

The MNB has launched the investigation to establish whether the company collects deposits or other financial assets on a business basis, something that requires a permission from the MNB under the law. The MNB has also filed a criminal complaint on the matter.

Goldsten Limited has no license to perform such activities in Hungary. The MNB already issued a warning earlier to consumers on the matter, origo.hu said.

Police Launches Hungary Can’t Curb Farm Sales to EU Foreigners, ECJ Says Hungarian restrictions on farmland investors from other European Union nations violate basic rights enshrined in EU law, the bloc’s top court said, Bloomberg reported. “Hungary has failed to fulfill its obligations” under the bloc’s rules, the European Court of Justice ruled. The European Commission sued Hungary in 2017, arguing that the nation had adopted rules that unlawfully restricted the rights of foreign investors in agricultural land, and deprived them of the value of their investment. The Hungarian law “terminated so-called “usufruct rights” (contracts giving the right to use a property and to profit from it) held by investors in Hungary,” the EC said in 2016, when it decided to sue the country. According to the Commission, the original contracts were subject to a 20-year transitional period, meaning that the contracts were expected to end on January 1, 2033. The new law cut this period, meaning the investors’ contracts were terminated on May 1, 2014, without compensation.

“The deprivation of property” under the contested Hungarian rules “cannot be justified on the ground that it is in the public interest,” the ECJ said. “Nor are any arrangements in place whereby fair compensation is paid in good time,” Bloomberg wrote.

ECJ Launches Hearings Into Migration Quota Case Hearings in the infringement cases against Czech Republic, Poland and Hungary have been started at the European Court of Justice (ECJ). The European Commission is asking the court to confirm that the three countries failed to meet requirements regarding the temporary program of dividing asylum applicants located in Italy and Greece according to assigned union quota following the 2015 migrant crisis.

Commission representative Zuzana Malůšková said a judgment in favor of the EC would confirm the principles of the rule of law in the European Union. The three countries say they did not meet the quota requirements because of the need to maintain order and security in their countries, according to Radio Praha.

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Budapest Business Journal | June 7 – June 20, 2019

Special Report | 25

More Tasks, Fewer Resources Risk Benefits to Using Impact Corporate Law INSIDE VIEW

Transactional Insurance in M&A Transactions Dr. Ákos Mátés-Lányi Counsel, Head of M&A and Transactions

Time and Budget Pressure

BENCE GAÁL

The research reveals that in the next two years, about 82% of companies are planning to cut their legal expenditure, despite the fact that the overwhelming majority of respondents (87%) claimed that the management’s needs for legal information has increased over the past five years.

Some 5% said they want to reduce costs by more than 20%, while 37% wish to reduce it by 11-20%,

and

40%

planning to lower expenditures by 1-10%.

On average, executives in Europe want to cut spending by 9%.

“The legal departments, including those in Hungary, have to prepare companies for significant changes such as the paradigm shift caused by GDPR, the internationally implemented anti-tax-evasion plan (BEPS), the phase-out of the interbank lending rate (IBOR), or even American tax reform, not to mention the potential outcomes of Brexit,” noted Iván Sefer, managing partner of EY Hungary’s law office.

EY says that the area of corporate law is further complicated by the fact that companies are challenged in terms of internal resources. Approximately three out of five executives, some 59%, think that their company is struggling to attract and retain the appropriate experts and talents.

In addition, nearly two-thirds (64%) of respondents believe that decision-makers at their company are more likely to invest in much needed innovative technological developments in other departments, such as HR, IT, or even finance.

The digital development of law departments is hindered most by factors such as time pressures related to ongoing business-as-usual matters (36%) and budget constraints (32%), followed by lack of management skill or interest (28%), according to the respondents.

The research also sheds light on the issue of not spending resources wisely. On average, companies spend 27% of total hours on conducting routine compliance and low-value tasks across the legal function.

“In order to meet the requirements set regarding extra tasks and decreasing expenses, the leaders of companies must intensively integrate the law departments into the digital development of their businesses,” argues Sefer.

“For sustainable growth, decisionmakers ought to focus on incorporating external advisors, hiring qualified workforce, as well as keeping and further developing their talented colleagues.”

A large number of companies are already using or considering to use of external help. The survey shows that while an average of 33% of businesses are already outsourcing a number of legal function processes, including legal entity management and compliance,

about

41%

would consider doing so in the future.

There are also shifts in procurement models, as businesses are starting to give increased consideration to alternative legal service providers and legal process outsourcers.

The trend is particularly strong among smaller companies, as 60% with a headcount less than 1,000 say they are considering ALSPs and legal process outsourcers.

Iván Sefer

Noerr and Partners Law Firm

I’ve been a transactional lawyer for 13 years, and the first time I encountered transactional insurance was in 2011. Until that point in time, the concept was only known to me based on mostly academic books, which depicted a rather skeptical picture of the instrument as a whole.

However, when I dug into the details, I realized that transactional insurance is, indeed, very useful and believed firmly at that time that it would have a significant impact on the M&A industry.

Nevertheless, when I am talking to brokers and underwriters, we usually agree that the real breakthrough is still to be waited for. Transactional parties still have concerns about the timing perspective and the costs of putting transactional insurance in place and they prefer the traditional methods instead (e.g. involvement of a guarantor).

We must emphasize that taking out transactional insurance results in additional protection for both parties.

Warranties are often heavily discussed and form one of the most contentious parts of the transaction where emotions frequently come to the surface. The tension is explainable, if factual matters are overlooked during the disclosure process that could lead to a claim of potential warranty.

The practice of underwriters has changed a lot in the past couple of years, since they moved their standards to the market’s requirements. The overall period to put transactional insurance in place has dropped to two-to-three weeks, during which period the underwriter needs to understand the transaction, the nature of the negotiations regarding the warranties and the thoroughness of the disclosure and due diligence exercise.

As to the pricing, Gergely Juhász, a liability insurance specialist, adds:

“The pricing of transactional insurance has also changed advantageously; this usually represents 1-2% of the limit of liability placed on a transaction, but it is lower still in the case of real estate transactions (approximately 0.75%). Special risks can also be covered, but in this case the pricing is higher at 2-5%.”

Critics argue that transactional insurance will not offer complete protection against all costs that may be involved in bringing a claim under the policy and there are a number of exclusions which should be investigated carefully. Typically, insurance policies do not include: bribery and corruption; certain environmental issues; certain regulatory issues; and financial warranties. However, positive developments have already been seen and can also be expected in this respect.

Hopefully, the above thoughts will intrigue interest on the side of M&A specialists, brokers and underwriters and a real discussion can start about the future trends of the transactional insurance.

The information contained in the article is for informational purposes only and should not be considered legal advice, legal statement or interpretation.

www.noerr.com

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The legal departments of companies need to optimize their operational model in order to meet the needs of the management and to keep up with changes in the regulatory and digital environment, according to Big Four advisory company EY’s survey of 1,058 legal executives globally.

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www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

Top-ranked law firms BELOW IS THE LIST OF LAW FIRMS WITH INTERNATIONAL AFFILIATIONS OPERATING IN HUNGARY THAT HAVE BEEN RECOMMENDED IN THE MOST AREAS OF LEGAL ACTIVITIES IN 2019 (IN TOP CATEGORIES OF VARIOUS RANKING BODIES, E.G. BAND 1 WITH CHAMBERS EUROPE AND CHAMBERS GLOBAL AND TIER 1 WITH LEGAL 500 AND IFLR 1000).

CHAMBERS GLOBAL 2019 BAND 1

CHAMBERS EUROPE 2019 BAND 1

LEGAL 500 2019 TIER 1

IFLR 1000 2019 TIER 1

TOTAL NUMBER OF RECOMMENDATIONS

3

5

9

3

20

1

3

5

3

12

1

3

4

2

10

1

3

4

1

9

–

2

7

–

9

1

2

3

2

8

1

2

3

–

6

–

–

3

3

6

1

2

2

–

5

–

1

2

1

4

–

1

2

–

3

CMS

DENTONS

DLA PIPER HUNGARY

HEGYMEGI-BARAKONYI AND PARTNER BAKER MCKENZIE ATTORNEYS-AT-LAW

LAKATOS KÖVES AND PARTNERS

ANDRÉKÓ KINSTELLAR

OPPENHEIM SIEGLER BIRD & BIRD ÜGYVÉDI IRODA

SZECSKAY ATTORNEYS AT LAW

LENGYEL ALLEN & OVERY NAGY & TRÓCSÁNYI

Special Report | 27

3

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

Top-ranked law firms CHAMBERS GLOBAL 2019 BAND 1

CHAMBERS EUROPE 2019 BAND 1

LEGAL 500 2019 TIER 1

IFLR 1000 2019 TIER 1

TOTAL NUMBER OF RECOMMENDATIONS

–

1

1

1

3

–

1

1

–

2

–

1

1

–

2

–

–

1

–

1

–

–

1

–

1

–

–

1

–

1

VÁMOSI-NAGY ERNST & YOUNG LAW OFFICE

–

–

1

–

1

VJT & PARTNERS

–

–

1

–

1

WOLF THEISS BUDAPEST

JALSOVSZKY SBGK ATTORNEYS AT LAW

DANUBIA LEGAL

FORGÓ, DAMJANOVIC & PARTNERS KAPOLYI LAW FIRM

CHAMBERS GLOBAL 2019 LEGAL ACTIVITIES

BAND 1

BAND 2

BAND 3

BAND 4

BANKING & FINANCE

Andrékó Kinstellar CMS DLA Piper Hungary

Dentons Lakatos Köves & Partners Lengyel Allen & Overy

Wolf Theiss Budapest Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda

HP Legal Hajdu & Partner Law Office Szecskay Attorneys at Law

CORPORATE/M&A

CMS Dentons Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law

Andrékó Kinstellar DLA Piper Hungary Lakatos Köves & Partners Lengyel Allen & Overy

Wolf Theiss Budapest Oppenheim Siegler Bird & Bird Ügyvédi Iroda

Forgó, Damjanovic & Partners Schoenherr Hetényi Attorneys at Law Szabó Kelemen & Partners Attorneys Szecskay Attorneys at Law VJT & Partners

DISPUTE RESOLUTION

CMS Oppenheim Szecskay Attorneys at Law

DLA Piper Hungary Nagy és Trócsányi

Dentons Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Lakatos Köves & Partners

28 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

CHAMBERS EUROPE 2019 LEGAL ACTIVITIES

BAND 1

BAND 2

BAND 3

Banking & Finance

Andrékó Kinstellar CMS DLA Piper Hungary

Dentons Lakatos Köves & Partners Lengyel Allen & Overy

Gárdos, Füredi, Mosonyi, Tomori Siegler Bird & Bird Ügyvédi Iroda

Capital markets

Lengyel Allen & Overy

Andrékó Kinstellar DLA Piper Hungary Gárdos, Füredi, Mosonyi, Tomori Lakatos Köves & Partners Siegler Bird & Bird Ügyvédi Iroda

Kapolyi Law Firm

Competition / Antitrust

Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Oppenheim

CMS Dentons Lengyel Allen & Overy

Andrékó Kinstellar CHSH Dezső & Partners DLA Piper Hungary Lakatos Köves & Partners Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Corporate / M&A

CMS Dentons DLA Piper Hungary

Andrékó Kinstellar Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Lakatos Köves & Partners

Wolf Theiss Budapest Lengyel Allen & Overy Oppenheim Siegler Bird & Bird Ügyvédi Iroda

Dispute resolution

CMS Nagy & Trócsányi Oppenheim Szecskay Attorneys at Law

DLA Piper Hungary

Dentons Gárdos, Füredi, Mosonyi, Tomori Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Lakatos Köves & Partners

Employment

Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law

CMS DLA Piper Hungary Pál és Kozma Ügyvédi Iroda Szecskay Attorneys at Law VJT & Partners

CLV Partners Dentons Oppenheim Szabó Kelemen & Partners

Intellectual property

SBGK Attorneys at Law Szecskay Attorneys at Law

CMS Danubia Legal Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Oppenheim Sár & Partners Siegler Bird & Bird Ügyvédi Iroda

Life sciences

Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law

CMS Szecskay Attorneys at Law

Projects and energy

Andrékó Kinstellar Wolf Theiss Budapest

Budapest Law Firm No. 5000 CMS Oppenheim

Dentons DLA Piper Hungary Lakatos Köves & Partners Szabó Kelemen & Partners

Real estate

CMS Dentons Lakatos Köves & Partners

DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law

Andrékó Kinstellar CHSH Dezső & Partners Jalsovszky Siegler Bird & Bird Ügyvédi Iroda Szécsényi and Partners

Tax

DLA Piper Hungary Jalsovszky

CMS Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Vámosi-Nagy Ernst & Young Law Office

Wolf Theiss Budapest Nagy & Trócsányi

TMT

CMS Dentons Lakatos Köves & Partners

DLA Piper Hungary VJT & Partners

Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Lengyel Allen & Overy Szecskay Attorneys at Law

IFLR 10 0 0 2019 TIER 1

TIER 2

TIER 3

Banking and Finance

Andrékó Kinstellar CMS Dentons DLA Piper Hungary Siegler Bird & Bird Ügyvédi Iroda

Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Lakatos Köves and Partners Lengyel Allen & Overy

Wolf Theiss Budapest Gárdos Füredi Mosonyi Tomori HP Legal Hajdu & Partners Nagy & Trócsányi Oppenheim Partos & Noblet / Hogan Lovells Szecskay Attorneys at Law Vámosi-Nagy Ernst & Young Law Office

Corporate and M&A

CMS Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda

Andrékó Kinstellar Lakatos Köves and Partners Szecskay Attorneys at Law

Wolf Theiss Budapest Jeantet-d’Ornano Lengyel Allen & Overy Nagy & Trócsányi Oppenheim

Project development

Andrékó Kinstellar CMS Dentons Wolf Theiss Budapest

Budapest Law Firm No. 5000 DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Lakatos Köves and Partners Oppenheim Siegler Bird & Bird Ügyvédi Iroda

Lengyel Allen & Overy Siegler Bird & Bird Ügyvédi Iroda

Andrékó Kinstellar Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Lakatos Köves and Partners

Capital markets

3

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

Special Report | 29

LEGAL 50 0 2019 LEGAL ACTIVITIES

TIER 1

TIER 2

TIER 3

CHSH Dezső & Partners Wolf Theiss Budapest Gárdos, Füredi, Mosonyi, Tomori Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Deloitte Legal Szarvas, Erdös and Partners Law Firm Forgó, Damjanovic & Partners HBK Partneres Attorneys at Law HP Legal | Hajdu & Partners Jalsovszky Nagy & Trócsányi Noerr Oppenheim Partos & Noblet / Hogan Lovells Szabó Kelemen & Partners Attorneys Vámosi-Nagy Ernst & Young Law Office Wilkinson European Community Jurist Office/Squire Patton Boggs (US) LLP

Banking & Finance and Capital markets

Andrékó Kinstellar CMS Dentons DLA Piper Hungary Kapolyi Law Firm Lakatos, Köves and Partners Lengyel Allen & Overy Siegler Bird & Bird Ügyvédi Iroda

Competition

Andrékó Kinstellar CMS Dentons Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Lakatos, Köves and Partners Lengyel Allen & Overy Oppenheim

CHSH Dezső & Partners DLA Piper Hungary Schoenherr Hetényi Attorneys at Law Szecskay Attorneys at Law

Forgó, Damjanovic & Partners Klart Szabó Legal Partos & Noblet / Hogan Lovells Réti, Várszegi and Partners PwC Legal Siegler Bird & Bird Ügyvédi Iroda Szabó Kelemen & Partners Attorneys VJT & Partners Wilkinson European Community Jurist Office/Squire Patton Boggs (US) LLP

Commercial, Corporate & M&A

CMS Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Lakatos, Köves and Partners Siegler Bird & Bird Ügyvédi Iroda

Andrékó Kinstellar Wolf Theiss Budapest Forgó, Damjanovic & Partners Lengyel Allen & Overy Oppenheim Szabó Kelemen & Partners Attorneys Szecskay Attorneys at Law VJT & Partners

Deloitte Legal Erdos and Partners Law Firm Jalsovszky Kapolyi Law Firm Nagy & Trócsányi Partos & Noblet / Hogan Lovells Schoenherr Hetényi Attorneys at Law Wilkinson European Community Jurist Office/Squire Patton Boggs (US) LLP

CMS Lakatos, Köves and Partners Nagy & Trócsányi Oppenheim Szecskay Attorneys at Law

Dentons DLA Piper Hungary Wolf Theiss Budapest Forgó, Damjanovic & Partners Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda VJT & Partners Wilkinson European Community Jurist Office/Squire Patton Boggs (US) LLP

CHSH Dezső & Partners Gárdos, Füredi, Mosonyi, Tomori Lengyel Allen & Overy Lohn Law Firm Partos & Noblet / Hogan Lovells Réti, Várszegi and Partners PwC Legal Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Szabó Kelemen & Partners Attorneys

Employment

CMS Forgó, Damjanovic & Partners Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law VJT & Partners

Andrékó Kinstellar CLV Partners - Csabai & Partners Law Firm Dentons DLA Piper Hungary Wolf Theiss Budapest KCG Partners Law Firm Szecskay Attorneys at Law

bpv JÁDI NÉMETH Attorneys at Law bnt attorneys in CEE Kinga Zempléni Law Firm Lakatos, Köves and Partners Noerr Oppenheim Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Schoenherr Hetényi Attorneys at Law Siegler Bird & Bird Ügyvédi Iroda Szabó Kelemen & Partners Attorneys TaylorWessing Hungary Vámosi-Nagy Ernst & Young Law Office

Intellectual property

Danubia Legal Oppenheim SBGK Attorneys at Law Szecskay Attorneys at Law

CMS Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Lakatos, Köves and Partners Siegler Bird & Bird Ügyvédi Iroda

Dentons DLA Piper Hungary Forgó, Damjanovic & Partners

Projects and energy

Andrékó Kinstellar CMS Dentons DLA Piper Hungary Wolf Theiss Budapest Lakatos, Köves and Partners Siegler Bird & Bird Ügyvédi Iroda

CHSH Dezső & Partners Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Oppenheim

Forgó, Damjanovic & Partners HP Legal | Hajdu & Partners KCG Partners Law Firm Réti, Várszegi and Partners PwC Legal Szabó Kelemen & Partners Attorneys Szecskay Attorneys at Law

CMS Dentons Lakatos, Köves and Partners

DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Oppenheim Siegler Bird & Bird Ügyvédi Iroda

Andrékó Kinstellar CHSH Dezső & Partners Deloitte Legal Erdos and Partners Law Firm Kapolyi Law Firm KCG Partners Law Firm Noerr Partos & Noblet / Hogan Lovells Schoenherr Hetényi Attorneys at Law Szabó Kelemen & Partners Attorneys Szecskay Attorneys at Law

Technology, Media, Telecommunications

CMS Lakatos, Köves and Partners

Dentons DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Siegler Bird & Bird Ügyvédi Iroda VJT & Partners

Andrékó Kinstellar bpv Jádi Németh Attorneys at Law Danubia Legal Wolf Theiss Budapest Forgó, Damjanovic & Partners Lengyel Allen & Overy Partos & Noblet / Hogan Lovells Sándor Szegedi Szent-Ivány Komáromi Eversheds Sutherland Szecskay Attorneys at Law

Tax

CMS DLA Piper Hungary Hegymegi-Barakonyi and Partner Baker McKenzie Attorneys-at-Law Jalsovszky Nagy & Trócsányi Vámosi-Nagy Ernst & Young Law Office

bpv Jádi Németh Attorneys at Law Deloitte Legal Erdos and Partners Law Firm Wolf Theiss Budapest KCG Partners Law Firm Lakatos, Köves and Partners Réti, Antall & Partners PwC Legal Szecskay Attorneys at Law

Dispute resolution

Real estate & construction

30 | 3

Special Report

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

Award-winning Law Firms Shine in Budapest The Budapest legal market has long been considered highly competitive.

One of the ways that is revealed is through the scores of the various rankings agencies (see our best of the best charts on pages 26-29) as well as numerous business awards.

The Budapest Business Journal asked leading law firms to share their recent successes with us.

BBJ STAFF

Magnificent Seven

International law firm CMS won in seven categories, including CEE Deal of the Year, at the 2018 CEE Legal Matters Deal of the Year Awards held in Budapest on March 28.

In recognition of its work across multiple CMS offices and jurisdictions, the firm was awarded for advising on: Advent International’s EUR 1.9 billion acquisition of Zentiva (awarded CEE as well as Czech Republic Deal of the Year); OTP Bank Group on its EUR 600 million acquisition of Société Générale subsidiaries SG Expressbank Group, Sogelife Insurance Company, and SG Banka Albania; Vodafone’s EUR 18.4 bln acquisition of Liberty Global’s Operations in Germany, Hungary, Czech Republic and Romania; EBRD and private equity firms AB Invalda INVL and Horizon Capital on the acquisition of a stake in of Moldova Agroindbank, the largest commercial bank in Moldova.

The privatization of Belgrade’s Nikola Tesla International Airport; and The ArcelorMittal Zenica, City of Zenica, KPA Unicon Oy and Finnfund joint venture to implement a new CHP plant in Bosnia.

CMS Partners Graham Conlon and Éva Talmácsi were present to receive the awards. “We are proud and honored that the lawyers who vote on the various

submissions recognized the value and complexity of the deals we were able to bring to completion in 2018. We appreciate the opportunity to celebrate our good year with our peers throughout the region, and we thank CEE Legal Matters for hosting this fantastic annual event,” Conlon commented.

National Law Firm of the Year

Dentons received the National Law Firm of the Year Award for Hungary for the fourth consecutive year at the IFLR European Awards, held in April at the Grosvenor House in London. The award, conferred annually by International Financial Law Review, recognizes the firm’s work on major projects and transactions in Hungary and across the CEE/SEE region over the past 12 months.

Dentons has a team of more than 50 legal professionals in Budapest, and has been involved in major deals such as the acquisition of majority stakes in the Mammut Shopping Center and in TMX Mobile Solution, and a high profile insolvency proceeding for a global private equity firm.

“Being named the ‘National Law Firm of the Year’ for the fourth consecutive year is a testament to the skill, ingenuity, quality and vision of our Budapest team, and our capability to deliver in significant transactions across the country as well as the entire CEE/SEE region. By delivering innovative quality service and professional excellence to our clients, we continue to reinforce our strong reputation as a market leader in Hungary,” said István Réczicza, Hungary managing partner at Dentons.

European Law Firm of the Year

Noerr was named “European Law Firm of the Year” in March at London’s Grosvenor House at The Lawyer European Awards 2019. According to The Lawyer, the judges praised Noerr’s all-round performance as representing a beacon of progressive management and a strong culture of service delivery.

Prizes and Rankings

Oppenheim founder Klára Oppenheim has been honored with the most prestigious award given by the Budapest Bar Association: the Eötvös prize. The prize is named for Károly Eötvös, a prominent Hungarian attorney in the 19th and early 20th century, was presented at the Budapest Bar Association’s annual assembly in April.

The company said it was also proud to have received “great rankings” for almost all of its practices in Legal 500’s latest in-depth, comprehensive analysis of law firms in Europe, Middle East and Africa

“We are proud and honored that the lawyers who vote on the various submissions recognized the value and complexity of the deals we were able to bring to completion.” for 2019, released in April. It received first tier ranking in three fields: competition; dispute resolution; and intellectual property. Banking/finance, commercial/ corporate/M&A, employment, projects/ energy and real estate practices were also highly ranked. In addition, five of Oppenheim’s partners were included in the elite “Leading individuals” list: Mihály Barcza, Iván Bartal, Tamás Éless, Gábor Fejes and Zoltán Marosi.

Independent rating agency Chambers and Partners released its “Global” ranking results in February. Oppenheim said particular praise should go to the dispute resolution practice group, which received Band 1 ranking, while head Tamás Éless was praised for being a “deep legal thinker” who “delves into industry knowledge surrounding a matter.”

The 2019 survey of the International Financial Law Review (IFLR) recognized Oppenheim in three categories

(Banking and Finance, M&A and Project Development). In addition, partners, Mihály Barcza and Gergely Légrádi were named as “highly regarded” in their respective fields.

World Trademark Review, meanwhile, has recognized Oppenheim as one of the leading trademark practices in Hungary, saying the team lead by Áron László is a “full-service powerhouse” and that Oppenheim “has a reservoir of business savvy in its ranks”.

Deal of the Year

At the CEE Legal Matters Deal of the Year awards gala held in Budapest on March 28, Szecskay Attorneys At Law won the Deal of the Year Award for Montenegro for PPF’s acquisition of Telenor’s telecommunications assets in the CEE region in 2018 for EUR 2.8 bln on an enterprise value basis. The deal was shortlisted for the “CEE Legal Matters Deal of the Year Award” in several country categories since it covered Hungary, Serbia, Montenegro and Bulgaria.

According to Szecskay, lead counsel for the buy side was White&Case, which coordinated the independent local law firms Karanovic & Partners in Serbia and Montenegro, DGKV in Bulgaria and Szecskay in Hungary, which was the jurisdiction with the main target companies.

The sale side lead counsel was Latham&Watkins, assisted by Schoenherr in the CEE jurisdictions. Allen & Overy, BDK Advokati, and Boyanov & Co. advised Societe Generale, as agent, and a syndicate of banks on a EUR 3.05 bln credit facility provided to PPF Group for the acquisition.

Szecskay advised PPF Group on Hungarian law issues in connection with the financing of the acquisition.

“This shows that independent law firms with a strong international network can serve the clients’ interests efficiently, seamlessly and successfully,” a spokesperson for the firm told the BBJ. Now in its second year, the CEE Legal Matters Deal of the Year Awards are exclusively peer-selected, with partners from across international and domestic law firms in all relevant jurisdictions being involved in selecting the shortlist and voting for the winners.

Special Report | 31

3

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

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(1) 488-5200 budapest@dentons.com

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Cerha Hempel Spiegelfeld Hlawati Rechtsanwälte GmbH Vienna 1921

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hegymegi-baRakonyi és táRsa bakeR & mCkenzie Ügyvédi iRoda 8

www.bakermckenzie.com/en/ locations/emea/hungary

27

19

9

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11 2000

Csilla andrékó 1054 Budapest, Széchenyi rakpart 3.

(1) 428-4400 budapest@kinstellar.com

78 1987

zoltán hegymegi-barakonyi 1051 Budapest, Dorottya utca 6.

(1) 302-3330 budapest.reception@ bakermckenzie.com

Ÿ

andrás szecskay 1055 Budapest, Kossuth Lajos tér 16–17.

(1) 472-3000 info@szecskay.com

szeCskay attoRneys at laW www.szecskay.com

9

26

4

16

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EuroJuris, Legalink, Legus, TerraLex, World Service Group, Dorda Brugger Jordis-Best Friends, Biolegis, INBLF, State Capital Group

1992

Ÿ –

szabó, kelemen és táRsai Ügyvédi iRoda 10

www.sz-k-t.hu

25

7

4

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Corporate restructuring and insolvency, energy, gaming and betting, IT, telecommunications and e-commerce, mediation

Andersen Global San Francisco 2013

139 1996

tamás szabó 1024 Budapest, Lövőház utca 39.

(1) 288-8200 tamas.szabo@sz-k-t.hu

✓

–

Noerr LLP Munich 1950

16 1990

zoltán nádasdy, Jörg k. menzer 1011 Budapest, Fő utca 14–18.

(1) 224-0900 recepcio@noerr.com

✓

Data protection, sports

Bird & Bird LLP London 1846

29 2008

peter knight, david dederick 1027 Budapest, Kapás utca 6–12.

(1) 301-8900 budapest@twobirds.com

–

Lex Mundi / Yingke International Houston, USA / China 1989/2001

600/66 1991

péter berethalmi 1126 Budapest, Ugocsa utca 4/B (1) 487-8700 budapest_office@nt.hu

Public policy, privacy

Lexing Paris 1978

30 2011

miklós orbán 1036 Budapest, Perc utca 6.

(1) 769-1163 office@opl.hu

–

noerr & táRsai iRoda www.noerr.com

22

11

4

5

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–

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siegleR biRd & biRd Ügyvédi iRoda www.twobirds.com

21

12

8

6

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nagy & tRóCsányi Ügyvédi iRoda 13

14

www.nt.hu

oRbán & peRlaki Ügyvédi táRsulás www.opl.hu

20

18

7

16

9

2

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eu

employment

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CoRpoRate / m&a

dispute Resolution

intelleCtual pRopeRty

publiC pRoCuRement

life sCienCes

–

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no. of offiCes WoRldWide yeaR hungaRian offiCe established

Competition

✓

www.schoenherr.eu 14

top loCal exeCutive addRess phone email

14 2008

kinga hetényi 1133 Budapest, Váci út 76.

(1) 870-0700 office.hungary@schoenherr.eu

Ÿ

katalin szamosi 1062 Budapest, Andrássy út 113.

(1) 461-1000 mailbox@sbgk.hu

75 2010

iván sefer 1132 Budapest, Váci út 20.

(1) 451-8100 law@hu.ey.com

Ÿ Ÿ

153 2009

Gábor erdős 1068 Budapest, Dózsa György út 84/C (1) 428-6800 deloitteinhungary@ deloittece.com

name of assoCiate non-hungaRian laW fiRm oR CoopeRation netWoRk WoRld hQ yeaR established

eneRgy

✓

sChönheRR hetényi Ügyvédi iRoda

otheR

banking and finanCe

3

tax

9

Real estate

no. of paRtneRs of hungaRian offiCe on may 1, 2019

18

CommeRCial

no. of tRainees in hungaRy on may 1, 2019

legal speCiality aReas

no. of attoRneys With liCense to pRaCtise in hungaRy on may 1, 2019

Rank

Company Website

Special Report | 33

3

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

Compliance and Schönherr Rechtsanwälte white-collar crime, GmbH insolvency and Vienna restucturing, 1950 insurance, regulatory

sbgk Ügyvédi iRoda http://sbgk.hu

15

15

16

vámosi-nagy eRnst & young Ügyvédi iRoda www.eylaw.hu

deloitte legal erDős és Társai Ügyvédi iRoda

17

7

12

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–

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–

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–

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Data protection

AIPEX Munich 2010

17

17

2

–

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–

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–

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–

–

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–

–

–

–

Data protection, public procurement

Ernst & Young Law GmbH, Stuttgart Germany 2002

16

10

2

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–

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–

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Tax litigation, data privacy, legal and financial protection of private wealth

15

2

7

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–

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–

–

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–

–

–

Insurance law

ADVOC London 1990

94 1992

istván gárdos 1056 Budapest, Váci utca 81.

(1) 327-7560 postmaster@gmtlegal.hu

14

6

4

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–

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–

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–

–

International Lawyers Network Westwood, USA 1988

91 2005

pál Jalsovszky 1124 Budapest, Csörsz utca 41.

(1) 889-2800 office@jalsovszky.com

✓

Immigration, data protection, regulatory compliance, administrative law

Eversheds Sutherland London, Atlanta 1988 (UK), 1924 (US)

67 1987/1999

ágnes szent-ivány 1026 Budapest, Pasaréti út 59.

(1) 394-3121 office@ eversheds-sutherland.hu

www.deloittelegal.hu

17

gáRdos mosonyi tomoRi Ügyvédi iRoda www.gmtlegal.hu

1969

Deloitte Legal

Jalsovszky

www.jalsovszky.com 18

sándoR szegedi szent-ivány komáRomi eveRsheds sutheRland 18

www.eversheds-sutherland.hu

14

4

8

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Powered by excellence The global lawyers with the local connections Today’s business world is increasingly complex, with rapidly changing laws and regulations.

Eversheds Sutherland is a full service international law practice that will help you to meet these challenges and give you the answers that allow you to prosper.

If you need legal assistance in Hungary, contact us:

SÁNDOR SZEGEDI SZENT-IVÁNY KOMÁROMI EVERSHEDS SUTHERLAND Attorneys at Law T: +36 1 394 3121 office@eversheds-sutherland.hu H-1026 Budapest, Pasaréti út 59. © Eversheds Sutherland 2019. All rights reserved.

eversheds-sutherland.hu

www.bpss.hu

13

3

9

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–

–

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–

top loCal exeCutive addRess phone email

–

Norton Rose Fulbright LLP London 1794

More than 50 1989

eszter dávid 1013 Budapest, Pauler utca 11.

(1) 354-4300 office@bpss.hu

8 2000

andrea Jádi németh 1051 Budapest, Szent István tér 11.

(1) 429-4000 budapest@bpv-jadi.com

51 2006

lászló partos Jnr. 1051 Budapest, Vörösmarty tér 7/8.

(1) 505-4480 office@hoganlovellls.co.hu

10 2003

norbert varga, Rainer tom 1143 Budapest, Stefánia út 101–103.

(1) 413-3400 info.hu@bnt.eu

93 1997

Chrysta bán, péter s. szabó 1051 Budapest, József nádor tér 5–6.

(1) 266-3522 office@bansszabo.hu

Ÿ Ÿ

Ÿ

2014

levente antal szabó 1011 Budapest, Corvin tér 10.

(1) 796-3600 info@klartlegal.eu

170 1990

andrás moldován 1051 Budapest, Dorottya utca 1.

(1) 328-6010 info@moldovan.hu

otheR

life sCienCes

publiC pRoCuRement

intelleCtual pRopeRty

dispute Resolution

CoRpoRate / m&a

enviRonment pRoteCtion

tmC

employment

eu

Competition

eneRgy

banking and finanCe

tax

Real estate

CommeRCial

no. of paRtneRs of hungaRian offiCe on may 1, 2019

legal speCiality aReas

no. of offiCes WoRldWide yeaR hungaRian offiCe established

bpss Ügyvédi iRoda / buRai-kováCs, peRlaki, stanka, szikla és táRsai Ügyvédi iRoda

no. of tRainees in hungaRy on may 1, 2019

Company Website

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

name of assoCiate non-hungaRian laW fiRm oR CoopeRation netWoRk WoRld hQ yeaR established

19

Special Report no. of attoRneys With liCense to pRaCtise in hungaRy on may 1, 2019

Rank

34 | 3

bpv Jádi németh Ügyvédi iRoda www.bpv-jadi.com

19

19

paRtos & noblet in Co-opeRation With hogan lovells inteRnational llp

13

4

2

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bpv LEGAL, bpv HÜGEL, bpv BRAUN PARTNERS, bpv GRIGORESCU & STEFANICA Vienna, Brussels, Prague, Bratislava, Bucharest 2007

13

6

3

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–

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Capital markets, data protection, compliance

Hogan Lovells International LLP London, Washington 1899/1904

✓

Data processing & privacy, compliance, pharma, insolvency and restructuring

bnt – –

IBLC (International Business Law Consortium) Salzburg 1998

www.hoganlovells.com

20

bnt Ügyvédi iRoda

20

bán, s. szabó & paRtneRs Ügyvédi iRoda

12

1

7

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21

klaRt legal Ügyvédi táRsulás

11

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3

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Data protection

www.bnt.eu

www.bansszabo.hu

www.klartlegal.hu

12

3

7

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–

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IBA (International Bar Association)

moldován és táRsai Ügyvédi iRoda www.moldovan.hu

11

21

21

sáRközy Rödl & paRtneR Ügyvédi iRoda, Rödl & paRtneR Ügyvédi táRsulás www.roedl.de

11

3

2

2

2

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–

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Mackrell International Woking, UK 1987

–

Compliance, data protection, IT, greenfield investments, corporate acquisition

Rödl & Partner GbR Wirtschaftsprüfer, Steuerberater, Rechtsanwälte Nuremberg 1977

111 1992

sándor sárközy, stefan sieferer 1062 Budapest, Andrássy út 121.

(1) 814-9880 budapest@roedl.com

–

Capital market

European Law Firm Eindhoven, the Netherlands 1989

29 1998

József kapolyi 1051 Budapest, József nádor tér 5–6.

(1) 267-3975 info@kapolyi.com

✓

Pharmaceutical law, data protection and privacy, cyber security

Conference Bleue Brussels 1996

21 2007

kornélia nagy-koppány 1053 Budapest, Károlyi utca 9.

(1) 302-9050 knplaw@knplaw.com

kapolyi Ügyvédi iRoda www.kapolyi.com

10

22

7

2

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knp laW nagy koppany vaRga and paRtneRs www.knplaw.com 22

10

6

4

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name of assoCiate non-hungaRian laW fiRm oR CoopeRation netWoRk WoRld hQ yeaR established

no. of offiCes WoRldWide yeaR hungaRian offiCe established

–

Conybeare Solicitors, Gowling WLG, Berwin Leighton Paisner London 1997/2016/2001

1/18/14 2008

lászló hajdu 1013 Budapest, Pauler utca 11.

(1) 799-8230 office@hplegal.eu

IBA (International Bar Association), AllyLaw –

Ÿ

eszter kamocsay-berta 1054 Budapest, Széchenyi rakpart 8.

(1) 301-3130 reception@kcgpartners.com

15 2010

gergely bán, márton karika 1117 Budapest, Alíz utca 1. building A (1) 501-5360 budapest@actlegal-bk.com

✓

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–

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otheR

attila fest 1054 Budapest, Báthory utca 8.

(1) 791-7060 office@festandpartner.hu

life sCienCes

18 2014

publiC pRoCuRement

LUTHER Rechtsanwaltsgesellschaft mbH Cologne 1992

intelleCtual pRopeRty

✓

Aviation law, data protection, compliance, consumer protection

dispute Resolution

alice dessewffy 1126 Budapest, Nagy Jenő utca 12.

(1) 413-3340 budapest@ceeattorneys.com

CoRpoRate / m&a

11 1992

enviRonment pRoteCtion

CEE Attorneys Prague 2015

tmC

–

Mining law, renewable energy law, state subsidies, higher education law, clusters, data protection law

employment

Gábor Bebők 1011 Budapest, Szilágyi Dezső tér 1.

(1) 799-8330 admin@hunlaw.hu

eu

7 2005

Competition

PONTES – 2005

eneRgy

Private equity, venture capital

banking and finanCe

3

tax

3

Real estate

no. of paRtneRs of hungaRian offiCe on may 1, 2019

10

top loCal exeCutive addRess phone email

CommeRCial

no. of tRainees in hungaRy on may 1, 2019

legal speCiality aReas

no. of attoRneys With liCense to pRaCtise in hungaRy on may 1, 2019

Rank

Company Website

Special Report | 35

3

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

pontes budapest Ügyvédi iRoda www.ponteslegal.eu

22

23

desseWffy & dávid valamint táRsaik Cee attoRneys Ügyvédi iRoda táRsulásként ddsb Ügyvédi táRsulás a Cee attoRneys nemzetközi hálózatában

9

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2

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www.ceeattorneys.com

fest és táRsa Ügyvédi iRoda www.festandpartner.hu

9

23

23

hp legal | haJdu & paRtneRs | laW fiRm www.hplegal.eu

9

3

2

2

2

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–

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kCg paRtneRs Ügyvédi táRsulás www.kcgpartners.com

9

23

7

4

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–

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–

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Projects, construction

Ÿ

2014

act legal | bán & kaRika www.actlegal-bk.com 24

8

5

2

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–

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–

–

Data protection, compliance

act legal Germany 2017

–

Construction law, immigration law, sport law, data protection law, insolvency law

International Advisory Experts Durham, UK 2015

900 2015

loránd barkassy-grünfeld 1126 Budapest, Tartsay Vilmos utca 14.

(1) 210-0768 office@barkassygrunfeld.com

Data protection

Ius Laboris Global HR Lawyers Brussels 2001

125 2003

marianna Csabai 1126 Budapest, Tartsay Vilmos utca 3.

(1) 488-7008 info@clvpartners.com

–

The Harmonie Group Minneapolis, USA 1993

77 2000

zoltán forgó, gábor damjanovic 1123 Budapest, Alkotás utca 17–19.

(1) 214-0080 office@fdlaw.hu

baRkassy gRÜnfeld Ügyvédi iRoda www.barkassygrunfeld.com

8

24

25

Clv paRtneRs, Csabai és táRsai Ügyvédi iRoda

7

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2

2

2

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www.clvpartners.com

25

foRgó, damJanoviC és táRsai Ügyvédi iRoda www.fdlaw.hu

7

4

5

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–

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–

7

7

4

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–

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Hotel&leisure, solar projects, industrial property, zoning, data protection, sports and arbitration

World Link for Law Zurich 1989

80 2008

balázs lohn 1053 Budapest, Károlyi utca 12. Ybl-palota (1) 999-1233 info@lohn.hu

–

Data protection

TELFA (Trans European Law Firms Alliance) Brussels 1989

26 2002

ágnes balassa, tibor bihary 1026 Budapest, Pasaréti út 83.

(1) 391-4491 office@biharybalassa.hu

✓

Data protection, insolvency and restructuring

TaylorWessing LLP London 2002

33 1995

torsten braner 1051 Budapest, Dorottya utca 1.

(1) 327-0407 budapest@taylorwessing.com

–

ECTA, INTA, LES, EPLAW, MARQUES, AIPPI

Ÿ

Judit lantos, eszter szakács 1051 Budapest, Bajcsy-Zsilinszky út 16.

(1) 411-8875 office@danubialegal.hu

Food law

PHNR, Dr. Georg Braunegg, Marussich & Kölcsey-Rieden, Stros & Kusak

Ÿ

Roland kölcsey-Rieden 1053 Budapest, Károlyi utca 17.

(1) 279-3030 office@colaw.hu

9 2013

veronika till 1051 Budapest, Vörösmarty tér 4.

(1) 235-1090 office@peterkapartners.hu

otheR

✓

life sCienCes

✓

publiC pRoCuRement

–

intelleCtual pRopeRty

✓

dispute Resolution

✓

CoRpoRate / m&a

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enviRonment pRoteCtion

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tmC

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employment

✓

eu

–

Competition

✓

eneRgy

✓

banking and finanCe

1

zoltán lengyel 1075 Budapest, Madách Imre út 13–14.

(1) 483-2200 marketing_budapest@ allenovery.com

tax

3

44 1993

Real estate

7

Allen & Overy LLP London 1930

CommeRCial

name of assoCiate non-hungaRian laW fiRm oR CoopeRation netWoRk WoRld hQ yeaR established

www.allenovery.com

legal speCiality aReas no. of paRtneRs of hungaRian offiCe on may 1, 2019

25

lengyel allen & oveRy Ügyvédi iRoda

www.bbj.hu

Budapest Business Journal | June 7 – June 20, 2019

top loCal exeCutive addRess phone email

no. of attoRneys With liCense to pRaCtise in hungaRy on may 1, 2019

Company Website

no. of tRainees in hungaRy on may 1, 2019

Special Report

Rank

36 | 3

lohn Ügyvédi iRoda www.lohn.hu

25

bihaRy, balassa Ügyvédi iRoda

www.biharybalassa.hu

6

26

2

2

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–

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–

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bRaneR és táRsai Ügyvédi iRoda 26

www.taylorwessing.com

6

4

5

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–

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danubia legal www.danubia.hu

6

26

27

28

28

ColaW kölCsey-Rieden & táRsai Ügyvédi iRoda www.colaw.hu

peteRka & paRtneRs iRoda www.peterkapartners.com

salló Ügyvédi iRoda– paRtneR studio legale de Capoa

5

2

1

4

1

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Ÿ Ÿ

2

1

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4

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1

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–

Studio Legale de Capoa Bologna, Italy 1986

8 2000

krisztina salló 1055 Budapest, Honvéd utca 38. 4/7.

(1) 331-0311 sallo.decapoa@gmail.com

Warwick Legal International Network, Asean Legal Alliance Canterbury, UK / Singapore 2001 / Ÿ

54 / 11 1997

thomas a. squarra 1016 Budapest, Avar utca 8.

(1) 474-2080 info@squarra.hu

Ÿ

Csaba sár 1051 Budapest, Széchenyi István tér 7–8.

(1) 457-0550 office@sarandpartners.hu

28

sQuaRRa & paRtneRs Ügyvédi iRoda

4

1

3

✓

✓

–

✓

✓

–

✓

✓

–

–

✓

✓

✓

–

–

29

sáR & paRtneRs Ügyvédi táRsulás

3

4

3

✓

–

–

–

–

✓

✓

–

✓

–

–

✓

✓

–

–

Privacy law

Ÿ= would not disclose, NR = not ranked, NA = not applicable

2006

4

IT law and e-commerce, bankruptcy and insolvency law, debt management, construction law, gambling law

www.sarandpartners.hu

1998

Peterka & Partners advokátní kancelář s.r.o.

Prague 2000

www.decapoa.com/it/contact.php

www.squarra.hu

Ÿ Ÿ

IBA, INTA, ALAI

Ÿ Ÿ

2019

This list was compiled from responses to questionnaires received by May 31, 2019. and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14. or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu.

NOTES: (1) Dentons (formerly Salans) has been in Budapest since 2006.

4

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Budapest Business Journal | June 7 – June 20, 2019

Socialite

“One of the things we enjoy most is seeing punks, ravers, artists, and so on representing and appreciating each other’s subcultures. We also hope to create an environment that reflects that kind of world we want to live in: tolerant, accepting, safe, colorful, and inspiring.”

Bearing Fruit

Buda’s Kolorádó Festival: an Adventure Close to Home Now that summer’s almost upon us, my thoughts turn to festivals. Hungary has a surprising number to offer, from the megaevent that is Sziget to far smaller gatherings all over the country. This year, Kolorádó in the Buda hills, which happens between June 19-22, has caught my eye.

DAVID HOLZER

Thursday’s line-up is headlined by experimental electronic musician Yves Tumor. The American singersongwriter Kurt Vile and his band The Violators take care of Friday.

African Femi Kuti, son of the mighty Fela and a great performer in his own right, tops the bill on Saturday.

There are no events on the Sunday.

The rest of each day’s line-up is filled with acts from Hungary and all over the world you would really have to be a serious music fan to have heard of.

I certainly haven’t.

That doesn’t bother me at all. I like the idea of following my significant other “through secret paths between hidden venues in the forest”, as the Kolorádó website puts it, especially as Hungarian summers are usually hot and dry. In the United Kingdom, you’d probably be sucked into a morass of mud.

But I really love the idea of being able to go to a festival and be tucked up in a nice clean bed in Budapest by midnight or so. If, like me, you loathe camping and have no idea how to put up a tent, Kolorádó’s location is a major plus.

Femi Kuti I shouldn’t give the wrong impression of Kolorádó here. You can also stay in a yurt, a cool-looking cabin or the nearby Petneházy Hotel, which looks great.

Although the hotel is only

15

minutes

away from the festival site, there are shuttle buses for the truly indolent among us.

I got it into my head that Kolorádó acquired its name out of some kind of Hungarian love of the American Dream.

In this case, I thought what was being celebrated was a dream of hippy mecca Denver, Colorado.

Mythical State

The truth is more mundane. Some of the organizers – like-minded Hungarian restaurateurs, students, journalists, DJs and the like – were involved in a now defunct club called Kolor. The first Kolorádó festival evolved out of that, back in 2016.

Still, I like the idea that Kolorádó is a mythical state that appears in the Buda hills once every year. A hipster Brigadoon, if you will.

Gábor Manek Csete and János Vértes Benjámin, two of the founders and managers of Kolorádó, give me some background about the festival.

“We wanted to create a festival that catered to our local scene and was of the same quality as some of the festivals we love outside of Hungary,” they told me.

“We felt there was a need for it, both personally and in our community.

Although we can see now that we were right, it’s still a happy surprise each

year as more and more people show up, loving what we create. This is truly a labor of love, and we’re just happy and grateful that our audience is so receptive to our vision. We come out of each festival inspired and full of ideas for the following year.”

Funded by ticket sales, food and drink sold at the festival and the support of a handful of sponsors, Kolorádó’s mission is to “offer an exciting, eclectic, and diverse line-up that represents the international and growing local scenes.

Our audience is made up of people who have diverse interests and we love that Kolorádó is a place where everyone can come together and enjoy music from various genres,” they say.

This vision seems to be bearing fruit.

Csete and Bénjamin told me that “two of the things people love most about Kolorádó are the line-up and the atmosphere. They appreciate being able to come together each year and experience exciting world-class acts in a beautiful environment. We’re also happy to hear that many find the festival very inclusive. You can be who you are, see acts that may never have performed in Hungary and also get to know the artists and musicians of our local cultural scene.”

This is particularly appealing to those who are curious about the Hungarian music scene but don’t really know where to start. Or don’t fancy schlepping out to some club or bar on the off chance and end up watching something terrible.

Although Kolorádó is in its fourth year, it’s notoriously difficult to establish a festival with real longevity. For every Glastonbury, Lollapalooza or Sziget, there are countless festivals that have fallen by the wayside.

Csete and Bénjamin hope that Kolorádó will continue to grow and attract more people from neighboring countries and around the world. I’d think they’re in with a fighting chance.

Because, as they say, “We believe we have something really great here and want to share that with as many people as we can. At the same time, this is a local and community-focused festival, so we want to maintain that same special atmosphere that was born at the first Kolorádó and has only grown stronger each year. We always work hard to bring acts who will excite and inspire our audience and give our local artists the encouragement to stay dedicated to their creative pursuits.”

Find out more about Kolorádó at www.kolorado.hu or koloradofesztival on Facebook.

Lena Willikens at Kolorádó 2018.

38 | 4

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Budapest Business Journal | June 7 – June 20, 2019

PRESENTED CONTENT

Spend a Sunday by the Danube The Budapest Marriott Hotel’s renovated DNB Budapest restaurant boasts a novel “farm to table” concept and a design that was inspired by the Bauhaus style and cubist art.

Designers utilized brass, steel, granite, oak, white Carrara marble and leather to create a modern, yet warm and airy atmosphere. Marriott’s Sunday brunch has a track record of close to two decades and attracts a steady local clientele in addition to hotel guests and tourists strolling along the iconic Danube promenade. The buffetstyle brunch offers a mix of international and local dishes and a kid’s corner with such classics as spaghetti with tomato sauce or mini burgers. A new initiative at the DNB is a separated stand dedicated to the culinary delicacies of a particular country with the theme changing every month. The á la carte restaurant is also open during brunch, catering to guests with special dietary needs. If you visit in the summer, make sure to take a table on the spacious terrace and enjoy your brunch while taking in a stunning view of the Buda Castle or the ships gliding by on the Danube. The price of the Sunday brunch, available from noon to 3 p.m., is HUF 10,500, which includes unlimited food consumption and a selection of alcoholic and non-alcoholic beverages.

The Saturday Shopper’s lunch, much similar to next day’s brunch, offers a more limited selection of food, at a cost of HUF 5,000. Reservation is recommended. www.dnbbudapest.com ADVERTISEMENT

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Socialite | 39

Plácido Domingo Supporting Hungarian Virtuosos World famous tenor Plácido Domingo and Hungarian Minister of Human Capacities Miklós Kásler participated at a press conference marking the commitment to the continued discovery and nurturing of young classical musical talent, both inside and outside Hungary.

András Batta (left), Plácido Domingo and Mariann Peller.

ROBIN MARSHALL

Domingo has been involved in mentoring several prodigies discovered by the Virtuosos (Virtuosok) TV talent program, and supported by its associated Young Virtuosos Foundation.

“Since the very first broadcast of the Virtuosos television show I have been impressed by the talents discovered in Hungary,” Domingo told the audience. “The format creates a new and contemporary platform to reach new audiences”.

The event, held at the Pesti Vigadó on May 24, was also attended by Mariann Peller, who founded the Virtuosos concept less than five years ago, and András Batta, who is the jury head of the TV program, and also President of the Young Virtuosos Foundation. He acted as host for the press conference, and admitted to “suffering from stage fever”.

Among the guests were the ambassadors of Span and Mexico, Japanese mezzo soprano, Seia Lee, world-renowned Italian flautist, Andrea Griminelli, Colombian conductor Juan Antonio Cuéllar and Hungarian concert pianist Gergely Bogányi, evidence of the further mentoring support for Hungarian young talent from around the world. The musical stars were due to meet the Virtuosos later that evening.

As a symbol of the collaboration between the Ministry of Human Capacities, Virtuosos and Domingo, 20-year-old Hungarian talent Benedek Devich was presented with a double bass paid for by the California registered Plácido and Marta Domingo Foundation. The instrument was made by Hungarian craftsman Barnabás Rácz. The organizers of the event declined to put a value on the gift when asked by the Budapest Business Journal.

little,” Devich told the audience before trying out the instrument. His was not the only musical interlude, however; 14-year-old Soma Balázs-Piri, a recent winner in his age category, also played a piece on the piano.

Batta explained that it was a case of third time lucky for Balázs-Piri, as he had not gone past the audition stage on two previous occasions. The fact that he had coped with those disappointments had impressed the jury as much as his technical expertise, the foundation president said, adding that it was a “such a mature curve of development”.

Commenting on the continued support for the TV program and its foundation, founder Peller said: “To have Maestro Domingo, Lang Lang and other established classical music artists support the talented young people we have discovered over the last few years is a dream come true […] not only for the talented youngsters but also for the Virtuosos organization.”

Minister of Human Capacities Kásler said he was “grateful to be here, grateful to the Maestro”. He added that it is not enough to discover talents.

“They also need to be cared for, developed and helped and the Ministry of Human Capacities plays an important role in this. It is important for young people to be able to play in Hungary and to convey the values of Hungarian music abroad.

Our goal is to support Virtuosos and make it not only a bigger movement inside the country but also a successful concept internationally.”

In the Spotlight

In a short question and answer session after the press conference, Domingo was asked how he dealt with the travel and pressures of being in the spotlight for more than 50 years.

“Being a musician is a privilege, because there are so many different jobs you could do, but you work at just one,” he said, speaking in English. “Of course, it is difficult to reach a certain place [level], but once you do, you can make people happy. […] In the moment they [the people] forget their daily problems, the problems of the world; they are with you. It is a privilege to be a musician and make people happy.”

Musical Entertainment

“It is hard to explain in words this feeling, how happy I am, so I think I will play a

Soma Balázs-Piri

He added: “The phenomenal miracle of music is the complicity you have with the composer, the instrumentalists, the conductor. To go from one place to another

“Hungarian music is famous in all the world. I am really a romantic; I go for Liszt.

Ferenc was extraordinary, with unbelievable melodies.

It is music that reaches the heart. But Bartók was also amazing. Hungarian music is very famous all around the world, and you deserve it.” in the world is phenomenal for us, because we make people happy, and in making people happy, we are happier.”

He was also asked how well-known Hungarian music is, and to name his favorite Hungarian composer.

“Hungarian music is famous in all the world. I am really a romantic; I go for Liszt. Ferenc was extraordinary, with unbelievable melodies. It is music that reaches the heart. But Bartók was also amazing. Hungarian music is very famous all around the world, and you deserve it.”

In the audience was a Hungarian colleague Domingo said he has worked with for 30 years. “I sang Macbeth last night in Berlin and so my throat is a little sore today, as you can hear,” the master musician explained. “A little bit of wine will make it better. He [pointing to colleague] introduced me to the best word in Hungarian: ‘Egészségedre!’” Domingo said to delighted applause.