Acquisition international July 2013 by AI Global Media

July 2013 /

IN THIS ISSUE/

REGIONAL FOCUS:

SHIP REGISTRATION:

Acquisition International’s comprehensive round up of regional activity around the world. A.I. Examines Ship Registration in a number of Flag States.

2013 Q2 REVIEW:

Acquisition International speaks to leading experts around the world to discuss their experiences of the second quarter of 2013.

THOMAS H. LEE

PARTNERS ACQUIRES

COMPUCOM — Thomas H. Lee Partners Co-President Scott Sperling and his partners Soren Oberg and Seth Lawry discuss THL’s recent acquisition of CompuCom Systems, Inc.. / 10

www. ACQUISITION-INTL .com

Cedar Strategic acquisition of Hua Cheng Group

— Dr Charlie In, Executive Chairman of Cedar Strategic Holdings Ltd, gives Acquisition International some insight into the company and its acquisition of leading Guizhou property player Hua Cheng Group. / 12

Pitfalls and Potential: Navigating Emerging Markets

— Acquisition International speaks to experts in emerging market investment and those who are based within the emerging markets themselves to discuss the pitfalls and potential of investing in various markets. / 28

DEAL FEED INTERNATIONAL “Your Daily M&A”

PROUDLY PARTNERS WITH

Deal Feed International, powered by Bureau Van Dijk, is the go-to resource for business professionals to keep up-to-date with the latest developments in the world of M&A. ACCESS UP TO 100 DAILY DEALS CATEGORISED BY REGION AND SECTOR // ADVANCED SEARCH OPTION TO HELP YOU FIND THE DEALS YOU ARE LOOKING FOR // DAILY AND WEEKLY NEWSLETTER INCLUDING TOP DEALS VISIT US NOW AT WWW.DEALFEED-INTL.COM

CONTENTS:

July 2013

Editors Comment Welcome to the July issue of Acquisition International. This month we’re excited to announce the launch of our brand new service. Deal Feed International, powered by Bureau van Dijk, is the go-to resource for business professionals to keep up-to-date with the latest developments in M&A. To learn more, please visit www.dealfeed-intl.com

CONTENTS — July 2013

We’re also delighted to announce the winners of our 2013 M&A Awards, celebrating excellence and commemorating the achievements and hard-work of all those involved in seeing a deal through to completion. To find out exactly who to turn to for M&A services and to gain insight into the working practices of the best of the best, please visit the AI website (www.acquisition-intl.com) where you can access the winner’s supplement. This issue’s cover stories discuss two remarkable deals: Thomas H. Lee Partners’ acquisition of CompuCom Systems, Inc; and Cedar Strategic Holdings Ltd’s acquisition of Trechance Holdings Limited. Thomas H. Lee Partners Co-President Scott Sperling and his partners Soren Oberg and Seth Lawry discuss the CompuCom deal on page 10; and Dr Charlie In, Executive Chairman of Cedar Strategic Holdings Ltd, gives us some insight into the acquisition of Trechance Holdings Limited on page 12. In our comprehensive Regional Focus section, we cast our eye around the globe and investigate key issues in a variety of regions. This month’s section starts on page 14 and includes: an investigation into the lengths the Isle of Man has gone to in order to reaffirm its commitment to international responsibility and cooperation; a discussion about the future for Germany’s economy; and an examination of Zimbabwe as a destination for international investment. This issue’s wide-ranging features also include our second quarterly review of 2013 (page 69), a detailed look at the pitfalls and potential of investing in emerging markets (page 28), and an examination of ship registration in various flag states (page 38). Enjoy the issue, Phil Grainger, Editor phil.grainger@acquisition-intl.com

How to get in touch AI welcomes news and views from it’s readers. Correspondence should be sent to; Address/ Acquisition International, Blakenhall Park, Barton under Needwood, Burton on Trent, DE13 8AJ. Tel/ 0844 809 4788 Email/ reception@acquisition-intl.com Website/ www.acquisition-intl.com Find us on/

ON THE COVER – THOMAS H. LEE PARTNERS ACQUIRES COMPUCOM /10 Thomas H. Lee Partners Co-President Scott Sperling and his partners Soren Oberg and Seth Lawry discuss THL’s recent acquisition of CompuCom Systems, Inc. NEWS: /04

The Latest News Stories From Around The World.

SECTOR TALK: /6 Powered by Zephyr/ Bureau van Dijk

ON THE COVER: /12 Cedar Strategic acquisition of Hua Cheng Group.

Q2 REVIEW: /69 Acquisition International’s First Quarterly Review of 2013.

DEAL DIARY: /78 @acquisition-int

ACQUISITION INTERNATIONAL

Introduced by Zephyr/ Bureau van Dijk.

5/ Appointments 14/ Regional Focus 24/ Zimbabwe: An Attractive Location for Foreign Investment 26/ Compliant and Competitive – the Isle of Man 28/ Pitfalls and Potential: Navigating Emerging Markets 31/ International Trade 32/ A Step by Step Guide to Forming Companies 37/ Corporate Immigration: Issues and Challenges in the Current Economy 38/ Ship Registration 44/ The Importance of Anti-Corruption Due Diligence in Corporate Transactions 46/ The Cross-Border M&A Specialist 47/ Management Due Diligence 48/ Reducing M&A Risk through Improved Due Diligence 50/ The Importance of Anti-Corruption Due Diligence in Corporate Transactions 52/ Bridging the Gap 54/ Dispute Resolution 55/ Securing Third Party Litigation Funding 56/ Exploring the Captive Insurance Industry 58/ Pensions Issues in M&A Transactions 58/ Profiting from Defined Benefit Pensions 60/ Insolvency 61/ Corporate Governance as a Strategic Tool 62/ Implementing an Effective Anti-Money Laundering System 62/ Managing Collective Redundancies 63/ Joint Ventures and Strategic Alliances 64/ Private Panamanian Funds – An Overview 65/ The (not so) Unified European Patent Court 66/ Introducing the Licensed Access Scheme 68/ Copyright Infringement and Protection

July 2013 /

NEWS:

from around the world

Cable and private equity leaders meet in Warsaw to assess surge in deal activity Senior executives from cable operators and private equity firms are gathering in Warsaw for the TMT Finance & Investment Central and Eastern Europe Conference on September 25, to discuss the surge in new deals across the region. Industry experts are predicting a sharp rise in mergers and acquisition activity in the telecoms and media space across Europe for the rest of the year, as mobile operators scramble to acquire fixed TV, cable and broadband assets across the region. Central and Eastern Europe is especially active and the TMT Finance conference in Warsaw features over 40 speakers representing key players. The Cable Strategy Round Table – Delivering content and Leveraging the network will feature Tomasz Zurañski, President and CEO of Polish cable operator Vectra alongside speakers from Resource Partners, which owns Batco, Latvia’s leading cable operator, Warburg Pincus and Mid Europa which own assets across the region.

“European cable assets will become a battleground for mobile operators looking to add TV, media and broadband bundles to consumers, and private equity groups who continue to be actively monitoring investment opportunities across the region,” one banker said. “There are a handful of assets in Poland and the surrounding countries which could be in play later this year, as well as a sustained need for consolidation in several key sectors and geographies.” “European cable deals are a hot topic, with several assets on the block, and strong demand boosting valuations,” said Ben Nice, News Editor, TMT Finance. “Regional quad play SBB Telemach of Serbia, Bosnia and Slovenia is currently in a live process and attracting plenty of interest with valuation talk in the region of E900m – or around 8-9 x EBITDA.”

The TMT Finance & Investment Central Eastern Europe 2013 Conference will feature a series of leadership panel discussions, keynotes and network sessions including: Telecom Strategy Round Table; Cable Strategy Round Table; The M&A Panel; Regulation Round Table; Broadband Infrastructure Panel; Financing Telecoms; and The Future of TMT – as well as 5 Visionary Keynote Speeches and 5 Hours of Networking. Other speakers include Netia; Telekom Austria; MCI Management; Barclays Capital; EMSA Capital; Google; Telenor Hungary; Raiffeisen Bank International; Deutsche Bank; Dentons; EBRD; Arthur D. Little; Neostratus; Credit Agricole CIB; Akira Partners; Bank Pekao S.A; Societe Generale; Analysys Mason; and Rothschild. For more information go to www.tmtfinance.com/cee

S&P Capital IQ identifies SMEs as driving force in German and Austrian M&A growth M&A activity in Germany and Austria grew by almost 14% from 2010 to 2012, a report from S&P Capital IQ has revealed. An analysis of trends in data between 2004 and 2012 by the provider of multi-asset class research, data and analytics has shown that M&A transaction volumes in Germany and Austria have bounced back from their post financial crisis slump, driven by activity in the SME arena (where an acquired firm has total annual revenue less than EUR100m). The data indicates that the number of deals involving small and medium-sized enterprises (SMEs) increased year-on-year from 179 deals in 2009 to 290 deals in 2012. By contrast, this growth was not reflected in the total transaction volume for non-SMEs. Overall, German and Austrian M&A volume compare favourably to Western Europe as a whole, which saw activity contract by 30% over same period (2010 – 2012). However, the broader M&A market

/ July 2013

in Germany and Austria still has a way to go before returning to pre-crisis levels of activity. This is a trend that can also be seen in corresponding data from UK and France and is consistent with the prevailing uncertainty around the EU economic outlook. Looking at the data from an investor’s perspective, 37% (106) of the 290 deals involving German or Austrian SMEs that took place in 2012 were crossborder and 184 were domestic deals. “The data also shows a stronger growth rate of domestic versus cross-border deals over the last four years,” says Vickesh Mistry, Senior Modeling Specialist at S&P Capital IQ. “This could suggest that closeness to market dynamics fosters more confidence in domestic SMEs. Furthermore, our multiples data also suggests that domestic firms are more efficient at capturing undervalued assets, whilst cross-border acquirers are seemingly willing to pay a premium.”

“Interestingly 5% of cross-border deals involved buyers from Russia, India and China in 2012 - the second highest share in the last 9 years,” highlights Mistry. “This reflects a recent trend of Emerging Market investors acquiring assets in order to deliver brand value and intellectual property to satisfy the demands of the growing middle classes”. The rationale for cross-border M&A activity is supported by S&P Capital IQ’s data which indicates that investors seem willing to pay a premium for greater market presence within one of the key segments of the German ‘Export Machine’. From an industry angle the Capital Goods sector is revealed by the data to be an extremely attractive asset group, based on the total number of deals completed over the period of study (2004-2012). This is consistent with the overall economic profile of both Germany and Austria being net exporter nations on a global scale relative to other non-commodity based countries.

ACQUISITION INTERNATIONAL

APPOINTMENTS:

from around the world

Investec continues expansion of Growth & Acquisition Finance team with origination hire businesses to help support their growth through innovative and flexible Integrated Debt/Asset Based Lending (ABL) financing structures. Paul joins Investec from Lloyds Banking Group plc (“Lloyds”), where he has worked since 2004. From 2009, Paul was a member of the Acquisition Finance Unit, most recently as an Associate Director in the originations team, where he was responsible for the provision of leveraged bank debt for private equity backed transactions in the UK mid-market and carried out new deal sourcing, sponsor coverage and execution. Prior to this, he worked in a variety of roles within Lloyds, including the Corporate Bank Mid Markets team, Retail Banking Product Management and Operations.

Investec Specialist Bank (“Investec”) has announced the further expansion of its Growth & Acquisition Finance team, with the appointment of Paul Rablen. In his new role, Paul will focus on deal origination and execution, working directly with mid-market

Paul’s appointment brings further strength and depth in delivering Integrated Debt/ABL structures. Recently completed Integrated Debt/ABL deals include a £110 million facility to Paragon Print & Packaging Group and a £20 million facility to support the management buyout of B.M.Polyco Ltd.

Gary Edwards, Investec Growth & Acquisition Finance, said: “We are delighted to welcome Paul to Investec. Our Integrated Debt/ABL offering provides revolving debt to fund the working capital needs that come from growth in addition to amortising cash flow term loans to support acquisitions and investment. Innovation in debt structures is vital to fund ambitious mid-market companies and support shareholders in their wealth creation or wealth realisation stories. Paul’s knowledge and experience in origination will make an important and valuable contribution to our continued and successful growth.” Paul Rablen said: “I am delighted to be joining what is a strong, highly regarded and growing team at Investec. The approach is genuinely innovative and nimble with a real focus on solutions – getting close to management to really understand the business and shaping the approach accordingly. I very much look forward to contributing to the team in supporting market leading private equity firms and driven management teams alike.”

Anne Mannix joins Averta Employment Lawyers to head up London office Former DLA Piper employment partner, Anne Mannix, has joined Averta employment lawyers as the director of its new London office in Devonshire Street, which will offer employment law advice to directors, senior executives and professionals. On leaving DLA Piper in 2003 Mannix went on to become head of employment at BGC Partners/Cantor Fitzgerald. Latterly she has been an employment partner at a niche practice in London, having previously worked at the Practical Law Company as employment law editor. David Sykes, partner at Averta Employment Lawyers says: “Anne’s extensive experience fits perfectly with Averta. We have always represented clients from London, but having a senior lawyer of Anne’s calibre on the spot will mean we can provide an even more responsive service.”

From Averta’s London office, Mannix will use her experience working in the city to help senior employees and LLP members with complex work issues. She will also advise small to medium sized companies who need her particular expertise and smaller law firms who do not have the ability to advise on some employment law issues. Mannix has considerable experience gained in the financial services sector, advising companies, LLPs and senior individuals. She has handled a variety of high value termination claims, including bonus and discrimination issues, and is particularly sensitive to the financial regulatory considerations of a termination. Mannix commented: “I think my expertise in employment law issues affecting senior individuals will be a big asset to Averta’s London

clients. I am looking forward to working with partners, Alan Jones and David Sykes to further develop the business by offering clients a ‘second to none’ service.” For some years Mannix has also assisted as legal adviser at her local Citizen’s Advice Bureau, and has worked on a pro-bono basis on a number of tribunal cases. Additionally she is a trustee of two local charities in West London. Mannix has used her expertise to present seminars and webinars, and provide practical training sessions on a number of employment law topics. She is also a member of the Employment Law Association and the Discrimination Law Association.

VCI Legal hires a new Director Leading Vietnamese national law firm, VCI Legal recently made a notable hire for its Banking & Finance and Corporate practices with the joining of the former Head of the Legal Department of SeABank, Son Van Nguyen, as Director, Banking and Corporate practices, Ho Chi Minh Office. Son obtained a L.L.M. and a PhD from the University of Queensland and Monash University, Australia in 2002 and 2007 and worked for Philips Fox (now Allens Arthur and Robinson) and Indochina Legal

/ July 2013

Vietnam. Son, who previously worked as an in house counsel at VIB, has vast experience in both the corporate and the financial services sector. VCI Legal’s Managing Partner Tuan Phung said: “Son’s move is aimed at strengthening the firm’s corporate and Banking and Finance practices. “I am very pleased Son has joined the team. He has a perfect understanding on how international practices should apply in Vietnam and has a proven

track record of successfully handling complex corporate and banking legal matters.” The hire marks the latest in a number of key steps taken by VCI Legal to bolster its ranks, including the recent recruitment of APEX partner Kent Wong from Korea, as Head of Banking and Capital Markets, Ho Chi Minh City and Duong Thanh as the Head of Dispute Resolution

ACQUISITION INTERNATIONAL

SECTOR TALK:

Energy, Environmental and Cleantech

l The first half of 2013 shows a positive result for the energy, environmental and cleantech sector, with deal values topping those of H2 2012, in spite of a drop in volumes. In total, 249 transactions worth an aggregate USD 20,569 million occurred between January and the end of June. 2012 reached a rather subdued end for companies in the energy, environmental and cleantech industry, as M&A activity failed to sustain promising results achieved in the first half of the year, according to data from Zephyr, the M&A database published by Bureau van Dijk. After recording an 85 per cent increase to USD 24,329 million in terms of value in H1 2012, dealmaking in the sector subsequently plummeted to USD 14,261 million between July and December. This was even more frustrating given that it followed two consecutive periods of growth (H1 2011: USD 11,949 million, H2 2011: USD 13,172 million). However, things may be looking up; the first half of this year has given investors cause for optimism, although the positive value result came against a drop in volume, which actually reached its lowest level since H2 2007, with just 249 transactions. This could signify investors’ willingness to plough larger amounts into fewer deals in the hope of aiding a recovery. But given the pattern witnessed in 2012, when H1’s positive result was not carried through to the latter part of the year, it remains to be seen if the result will prove sustainable in the long term. One deal in particular contributed significantly to the upturn in the opening half of 2013. In late May MidAmerican Energy Holdings Company, a subsidiary of Berkshire Hathaway, agreed to buy Las Vegas-based fossil fuel electricity producer NV Energy for around USD 10,000 million. This transaction alone accounted for 49 per cent of all investment in the sector in H1 and was actually primarily responsible for the increase in overall value. All the

other 248 deals combined were valued at just USD 10,569 million, which would have represented an extremely disappointing result for the sector and its worst showing since H1 2006. Therefore, it is perhaps unsurprising that the second placed deal by value lagged some way behind, coming in at just USD 2,430 million. This took the form of electricity producer Guangxi Guiguan Electric Power picking up an 85 per cent share of Chinese hydropower manufacturer Longtan. Voimapiha’s USD 771 million purchase of a 26 per cent stake in Sweden-based Kraftgården placed third. Companies based in North America accounted for more than half of the USD 20,569 million invested in the energy, environmental and cleantech sectors in the first half of 2013. The region’s companies received USD 12,424 million over the six months, trumping its nearest rival by USD 9,093 million. The Far East and Central Asia came in second with USD 3,331 million, while Western Europe followed with USD 2,717 million. Again, North America’s result is largely due to the NV Energy deal, which enabled the region to record a 69 per cent climb on the USD 8,590 million invested across the whole of 2012, although four deals from the region made the top 10 by value. However, it fared less well in terms of volume, with Western Europe coming out on top with 100 deals, followed by the Far East and Central Asia with 60 and North America trailing in third with 46. These regions have generally placed in the top three in recent years, but their positions have fluctuated regularly.

Number and Aggregate Value (mil USD) of Energy, Environmental and Cleantech Deals Globally: 2006 - 2013 YTD (as at 30 June 2013) Period

Number of deals

Aggregate deal value (mil USD)

H1 2006 H2 2006 H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013

166 206 214 242 276 302 318 382 355 357 339 282 275 311 249

7,383 12,220 16,575 19,631 13,204 22,597 29,506 32,610 12,983 14,346 11,949 13,172 24,329 14,261 20,569

Aggregate Value (mil USD) of Energy, Environmental and Cleantech Deals by Region: 2006 - 2013 YTD (as at 30 June 2013) Deal Yearly Value (Announced Date) World region (target)

2006

2007

2008

2009

2010

2011

2012

2013 YTD

North America Far East and Central Asia Western Europe South and Central America Eastern Europe Oceania Africa Middle East

9,392 935 6,832 135 123 1,446 21 0

10,174 5,137 14,771 2,465 311 1,460 63 463

4,997 3,794 24,534 160 1,663 550 0 15

7,128 24,373 27,588 1,766 194 898 46 35

6,553 8,254 9,587 1,185 434 1,232 28 40

5,151 4,376 11,627 2,699 34 811 77 6

8,590 17,191 10,316 1,770 422 248 0 14

12,424 3,331 2,717 1,564 400 87 3 0

Breakdown of Energy, Environmental and Cleantech Deals by Region: 2006 - 2013 YTD (as at 30 June 2013) World region (target)

2006

2007

2008

2009

2010

2011

2012

2013 YTD

North America Far East and Central Asia Western Europe South and Central America Eastern Europe Oceania Africa Middle East

50% 5% 36% 1% 1% 7% 0% 0%

29% 15% 42% 7% 1% 4% 0% 2%

14% 11% 69% 0% 5% 1% 0% 0%

11% 39% 45% 4% 0% 1% 0% 0%

24% 30% 35% 4% 2% 5% 0% 0%

21% 18% 47% 11% 0% 3% 0% 0%

22% 45% 27% 5% 1% 1% 0% 0%

61% 16% 13% 8% 2% 0% 0% 0%

/ July 2013

ACQUISITION INTERNATIONAL

SECTOR TALK:

Number and Aggregate Value (Mil USD) of Energy, Environmental and Cleantech Deals Globally by Deal Type: 2013 to date (as at 30 June 2013) Values All deal structures

Number of deals

Aggregate deal value (mil USD)

Acquisition Minority stake Institutional buy-out Management buy-out Demerger

146 95 8 1 1

16,118 3,964 492 0 0

Breakdown of Number and Aggregate Value (Mil USD) of Energy, Environmental and Cleantech Deals Globally by Deal Type: 2013 to date (as at 30 June 2013) Deal Type

Number of deals

Aggregate deal value

Acquisition Minority stake Institutional buy-out Management buy-out Demerger

58% 38% 2% 1% 1%

78% 19% 3% 0% 0%

Number and Aggregate Value (mil USD) of Energy, Environmental and Cleantech Deals by Sector: 2013 YTD (as at 30 June 2013) Values Target Sector

Number Aggregate deal value of deals (mil USD)

Utilities Banking, Insurance & Financial Services Transport, Freight, Storage & Travel Services Wholesaling Mining & Extraction Personal, Leisure & Business Services Industrial, Electric & Electronic Machinery Chemicals, Petroleum, Rubber & Plastic Construction Metals & Metal Products Computer, IT and Internet services Public Administration, Education, Health Social Services Wood, Furniture & Paper Manufacturing Communications Retailing Food & Tobacco Manufacturing

235 15 5 20 8 18 14 11 3 4 2 1 1 1 1 1

20,531 2,497 989 637 410 211 103 20 11 9 7 4 2 2 0 0

The majority of the transactions in the energy, environmental and cleantech sector in H1 2013 were spread across two deal types. Acquisitions accounted for deals worth USD 16,118 million, followed by minority stakes with USD 3,964 million. These two have also accounted for most deals since 2006, with acquisitions valued at USD 172,762 million in the eight-year period, followed by minority stakes with USD 78,015 million. However, institutional buyouts have also had a notable presence, with USD 22,220 million invested across 150 deals since 2006 and USD 492 million across eight deals this year alone. With regard to segments which have attracted attention within the energy, environmental and cleantech industry, one stands head and shoulders above the rest. Utilities have proven to be very popular with investors, both in the year to date and as far back as 2006. Between January and June it was targeted in 235 transactions worth a combined USD 20,531 million. By value, this places it well ahead of the banking, insurance and financial services market, which was targeted in 15 deals worth USD 2,497 million. The transport, freight, storage and travel services market came third with USD 989 million. Others which notched up notable investment included wholesaling (USD 637 million) and mining & extraction (USD 410 million). Utilities also topped the field for deals between 2006 and the present day, notching up 3,869 transactions worth USD 251,964 million. The segmentâ&#x20AC;&#x2122;s success can be expected due to the high concentration of electricity generation and distribution deals in the Top 10. In conclusion, the energy, environmental and cleantech industryâ&#x20AC;&#x2122;s positive showing gives cause for hope that the sector can continue to improve over the coming months and years. However, it is also worth remembering that although investment appears to be on the increase, the majority of this funding is attributable to a single deal which boosted value. As such it remains hard to predict how things will pan out in the future.

Breakdown of Number and Aggregate Value (mil USD) of Energy, Environmental and Cleantech Deals by Sector: 2013 YTD (as at 30 June 2013) Target Sector

Number of deals

Aggregate deal value (mil USD)

69% 4% 2% 6% 2% 5% 4% 3% 2% 3%

81% 9% 4% 3% 2% 1% 0% 0% 0% 0%

ACQUISITION INTERNATIONAL

July 2013 /

SECTOR SPOTLIGHT:

Thomas H. Lee Partners Acquires CompuCom

THOMAS H. LEE PARTNERS ACQUIRES COMPUCOM

-----------------------------------------------------------------------Thomas H. Lee Partners Co-President Scott Sperling and his partners Soren Oberg and Seth Lawry discuss THL’s recent acquisition of CompuCom Systems, Inc. -----------------------------------------------------------------------In April, Boston based private equity firm Thomas H. Lee Partners, L.P. (“THL”) announced that it had reached an agreement to buy CompuCom Systems, Inc., a leading IT services and solutions specialist. The acquisition represents the latest investment from THL’s Business & Financial Services sector. THL Co-President Scott Sperling and his partners Soren Oberg and Seth Lawry recently discussed the CompuCom transaction and why THL is interested in this space. “THL has a long history of investing in business processing and managed IT services firms, including our 2010 investment in Systems Maintenance Services, a provider of managed IT maintenance services to corporations for hardware infrastructure, and our 2004 investment in Fidelity National Information Services, a provider of banking and payments technologies,” said Mr. Sperling. The CompuCom transaction was co-led by Soren Oberg, a managing director from THL’s Business & Financial Services vertical and Seth Lawry, a managing director from THL’s Media & Information Services vertical. “We believe that CompuCom, which specializes in full lifecycle infrastructure services from assessment, design, procurement and integration through program deployment and management services of complete enterprise IT infrastructures, is our next successful investment in a sector that has been receiving significant attention from other acquirers,” said Mr. Oberg. “More broadly, we believe we have the experience and know-how to make a difference working with companies in this sector – a sector that is poised for growth as companies look for opportunities to enhance their business efficiencies, particularly with respect to IT,” continued Mr. Oberg. “As technology continues to evolve quickly, organizational compliance requirements are becoming an expensive burden due to the rise of mobile devices and cloud computing;

10 / July 2013

and end-user computing services require integration of an increasing number of components. CompuCom has demonstrated that it has the tools and human capital to help companies to navigate these challenges.” Mr. Lawry added, “CompuCom has established itself as a clear leader in providing cost-effective IT service management and solutions and is well known for its exemplary customer service. We believe the company is well-positioned to capture additional market share in its traditional areas of strength as it deepens its expansion into new services towers. We look forward to partnering with the talented CompuCom management team to further grow the business and to continue building value.” CompuCom, headquartered in Dallas, Texas, has an impressive list of clients, including some of the most recognised Fortune 100 and 500 businesses, and has had more than 20 years of profitable growth with $2.3 billion of gross revenue in 2012. Some of its recent clients include Walgreens, US Bank, Citi, Home Depot, Shell, Cigna, Microsoft, Walmart, Sunoco, Hamilton Health and PSEG Services Corporation. Prior to reaching an agreement in April, THL had been in touch with the company and their executives for almost 18 months. The firm was interested in CompuCom based on its general experience in the IT space and specifically through its involvement with its portfolio company Systems Maintenance Services. THL believes that this is a sector that has sustained growth potential, and talks between the two sides accelerated at the beginning of 2013. “The only change for CompuCom post-transaction is its ownership,” stated Mr. Oberg. “As it relates to our strong customer focus – “it is business as usual.” That being said, we will continue to invest in new service offerings that should enhance our existing relationships with customers and help convert new target customers.” Aside from the financial results, which obviously play an important part in how THL evaluates the success of any company and its strategy, the firm’s ambition is to emerge as the leader in the mobile device management market, which

is a natural extension of its end-user computer (EUC) market position. Mr. Oberg elaborated, “CompuCom is already an established leader in EUC services for traditional distributed computing technologies, such as desktops, network infrastructure and servers; our goal is to increase our market share in the rapidly growing sector of end-user mobile computing, which includes mobile devices, tablet computers and e-book readers.” THL, founded in Boston, Massachusetts in 1974, is one of the world’s most experienced private equity firms. THL strives to build great companies of lasting value and generate superior investment returns. The firm invests in growth-oriented global businesses, headquartered principally in North America, within three broad sectors: Consumer & Healthcare, Media & Information Services and Business & Financial Services. THL’s teams partner with portfolio company management in each of these segments to identify and implement business process improvements that accelerate sustainable revenue and profitable growth. Since its founding, THL has raised approximately $20 billion of equity capital, and invested in more than 100 businesses with an aggregate purchase price of more than $150 billion.

Company: Thomas H. Lee Partners, L.P. Names: Scott Sperling, Soren Oberg, Seth Lawry Web: www.thl.com Address: 100 Federal Street, Boston, MA 02110 Telephone: +1 617-227-1050

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Cedar Strategic acquisition of Hua Cheng Group

CEDAR STRATEGIC ACQUISITION OF HUA CHENG GROUP Commenting on the challenges faced as part of the deal, Dr In stated that China is essentially a vast market that operates differently from Singapore. In particular, a Tier-3 city like Guiyang lacks the usual infrastructure found in the likes of their developed counterparts, e.g. Shanghai and Beijing. “Due diligence had to be done; we took time to understand Guizhou as a province, its history, the local business culture and the owners of Hua Cheng Group before making an offer,” he elaborated. “In addition, we wanted to be answerable to our shareholders in Singapore and deploy the Group’s cash responsibly – appointing Jones Lang LaSalle to evaluate the realisable net asset value of Hua Cheng Group to ensure that a fair deal was reached by both sides. “Meanwhile, it is business as usual at our Singapore office and properties and thereby, our clients. But, because this is a substantial acquisition that will result in the reverse takeover of the Hua Cheng Group, this is expected to affect our shareholders, whom we are seeking approval for the proposed acquisition of Trechance Holdings Limited.” -----------------------------------------------------------------------Dr Charlie In, Executive Chairman of Cedar Strategic Holdings Ltd, gives Acquisition International some insight into the company and its acquisition of leading Guizhou property player Hua Cheng Group. -----------------------------------------------------------------------Listed on the Catalist board of the Singapore Exchange Securities Trading Limited, Cedar Strategic Holdings Ltd. (“CSH” or the “Group”) was incorporated in Singapore on 17 October 1980. CSH currently owns Yess Le Green Pte. Ltd (“YLG”) and West Themes Pte. Ltd (“WT”), two companies in the Singapore real estate industry principally engaged in the business of asset management. YLG and WT specialise in the enhancement of assets, refurbishment and leasing of commercial properties in Singapore. YLG also operates a student hostel on one of its properties. In addition, CSH also holds a 25% economic interest in a piece of land in Kaiyang County, Guizhou Province in the People’s Republic of China (the “PRC”). The Group is primarily focused on growing its property interests regionally, in particular, in the PRC, where the Group has entered into a conditional sale and purchase agreement as of 22 May 2013 to acquire Trechance Holdings Limited and its subsidiaries (collectively, the “Hua Cheng Group”). Hua Cheng Group is a major real estate player based in Guizhou Province, with a track record of over 20 years in the development of residential and commercial properties.

players. We will leverage on our investment strengths and network of contacts to focus on the right niches that will support the growth of our real estate business.” Discussing the acquisition of the Hua Cheng Group, Dr In stated that it is in line with the Group’s ambitions to grow its footprint in the real estate sector in the region, especially its interests in China. “Despite China’s present moderating growth, the country continues to present long-term opportunities, particularly in growing Tier-3 cities like Guiyang City in Guizhou Province, where the Hua Cheng Group is based,” he observed. “The acquisition of Trechance and thereby Hua Cheng Group, bolsters and complements the Group’s current property portfolio, allowing CSH to participate in earnings accretive real estate opportunities in Guizhou in the near term and eventually, we hope this will extend to other cities in the PRC.”

“Apart from our ongoing activities in the PRC, we hope to expand into the niche provision of eldercare, student hostels and childcare facilities in Singapore as well as neighbouring countries,” explained Dr In. “With Singapore’s aging population and several established educational institutions, we believe that there will be continuing demand for such facilities and services.

A leading property player in Guizhou Province, the Hua Cheng Group has completed over twelve property developments to date, and is one of the major property developers based in the province. For the financial year ended 31 December 2012 (“FY2012”), Hua Cheng Group recorded unaudited consolidated revenue of approximately RMB103.5 million and a consolidated profit after tax of approximately RMB43.4 million. Properties held for investment under Hua Cheng Group generated rental income of RMB85.0 million in FY2012. The Hua Cheng Group has an estimated gross floor area (“GFA”) of over 4.9 million square metres (“sqm”) for development in its land bank, which consists of properties under development and/ or held for future development.

“The regional real estate sector is a huge and varied industry, which continues to present vast opportunities for real estate

The acquisition of Trechance was formalised and announced in May 2013, with completion targeted for year-end 2013.

/ July 2013

Completing the proposed acquisition of Trechance Holdings Limited is one of Cedar Strategic Holding’s main foci for 2013. Dr In highlighted that there are potential synergies to be had from the integration and management of the Group’s new portfolio, which is expected to provide stable revenue streams going forward. The completion of the transaction would result in the reverse takeover of Hua Cheng Group, which will give the Group ownership of an estimated gross floor area of over 4.9 million square metres in its land bank, including properties under development and/or held for future development. “As it stands, we currently hold a 25% economic interest in a piece of land in Kaiyang County in Guizhou Province, which is owned by the Hua Cheng Group,” said Dr In. “The intention is to build bungalow units on the land in Kaiyang, which has been designated as a tourist belt by the local government. We can expect more of such high-end residential projects in the pipeline following the completion of the reverse takeover. “We hold an optimistic long-term view on the development of Guizhou’s economy and believe this bodes well for the future of CSH,” he concluded.

Company: Cedar Strategic Holdings Ltd. Name: Dr Charlie In Email: enquiries@cedarstrategic.com Web: www.cedarstrategic.com Address: 133 New Bridge Road, #15-06 Chinatown Point, Singapore 059413 Telephone: +65 6236 2986

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Regional focus

REGIONAL FOCUS

l Acquisition International’s comprehensive round up of regional activity around the world. This month’s section includes: an investigation into the lengths The Isle of Man has gone to in order to reaffirm its commitment to international responsibility and cooperation; a discussion about the future for Germany’s economy; and an examination of Zimbabwe as a destination for international investment.

Finland: an Attractive Location for Foreign Investment l Finland has proven to be one of Europe’s success stories, largely thanks to country’s on-going ability to attract foreign direct investment following the sustained success in 2009. Acquisition International speaks to Maria Flygare and Pekka Ylikoski, Attorneys and Partners at Justitum Attorneys at Law, to discuss the firm and its expertise with international clients. Justitum Attorneys at Law is an experienced law firm and provides services for both companies and private persons in a personal and reliable manner. The firm acts on our clients’ behalf in their cases in courts and provide other legal consultancy. The firm specialises in trials, dispute resolutions and alternative solutions, such as arbitration. It advises companies in all legal matters as well as in all administrative issues of the company when needed and further assist the client with business-related questions. “Our expertise and experience undoubtedly separates us from other law firms,” said Mr Ylikoski. “In addition, due to the size of our firm we can approach our clients’ cases in a more personal and hands-on manner than bigger firms.”

Clients can benefit from Mr Ylikoski’s vast experience as a trial attorney and litigator. Ms Flygare is specialised in dealing with international clients and she speaks fluent Spanish, which enables her to serve clients also in Spanish. Ms Flygare stated that the Finnish business environment is definitely becoming more international every day, with law firms receiving more assignments from foreign clients in other jurisdictions. She commented: “We are pleased to be able to assist international clients in matters concerning Finnish jurisprudence. We actively follow both Finnish and global investment markets and our staff has up-to-date knowledge on the markets’ recent developments.”

Company: Justitum Attorneys at Law Web: www.justitum.fi Address: Bulevardi 12 A 5krs., 00120 Helsinki, Finland Telephone: +358 10 2311500 Name: Maria Flygare Email: maria.flygare@justitum.fi Name: Pekka Ylikoski Email: pekka.ylikoski@justitum.fi

Jurisprudentia is a niche law firm specialized in international business law with special regard to commercial, contract law and international transactions, litigation and arbitration. Jurisprudentia also focuses on Finnish-Italian business relationships with a special regard to business law. Jurisprudentia is a licensed law firm member of the Finnish Bar Association. Since 2007, Jurisprudentia delivers successful legal business solutions. The success of Jurisprudentia is based upon a consolidated experience in business law accompanied by a business friendly drive, ensuring a timely and efficient handling of the assignments pursuing to obtain the right solution of the case. Main services: M&A; Company law, corporate restructuring and various shareholders’ issues; contract drafting, negotiation and analysis; international transactions and various commercial issues; Intellectual Property Law; Commercial law and distribution law; Labor law; Agency and distribution law, OEM and turnkey concepts, litigation and arbitration; consultancies on regulatory matters; advice in various legal aspects. Asianajotoimisto Jurisprudentia Oy - Temppelikatu 4A - 00100 Helsinki Tel. +358 9 428 17000 / Fax. +358 9 494 113 / Mobile +358 40 5783647

www.jurisprudentia.fi 14

/ July 2013

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Regional focus

A Brighter Future for Germany’s Economy l Currently ranked third in the world for business sophistication, Germany is an attractive location for foreign investment. Even with the slowdown in economic growth in Europe, Germany is inching closer to becoming one of the top 10 economies in the world. Acquisition International speaks to leading firms in the region to learn more. -----------------------------------------------------------------------Dr. Steffen Görres, specialised lawyer for labour law, focuses on advising companies and executive managers in all aspects of individual and collective labour law at Bryan Cave LLP, an international law firm with more than 1,100 lawyers and consulting professionals and 29 offices in America, Asia, the UK and Europe, including a Frankfurt and a Hamburg office in Germany. -----------------------------------------------------------------------Post contractual non-compete agreements under German law The demographic change leads to a lack of skilled workforce in Germany. Companies doing business in Germany will therefore become more interested in hindering employees from competing. Post contractual non-compete agreements are often being used for this purpose. However, employers have to be aware that the legal situation in Germany differs significantly from other countries. General requirements Pursuant to the German Commercial Code (HGB) it is permissible to enter into post contractual non-compete agreements with employees. However, under German law such agreements must comply with strict framework conditions, such as: • Written form; • A legitimate interest of the employer, esp. regarding the temporal, geographical and factual scope;

• • •

The simple desire to prohibit employees from competing with the employer is not legitimate; A restricted period of max. two years; The agreement must contain an obligation by the employer to pay compensation for the duration of the covenant amounting to at least 50% of the last contractual remuneration and benefits.

Agreements which have not been entered into in writing as well as agreements which do not provide for a compensation to the employee make the non-compete agreement null and void. Besides agreements can only be non-binding for the employee. In this case the employer is not able to base a claim on the agreement and the employee can choose either to compete or to adhere to the non-compete clause and claim compensation as set out in the agreement. In the following cases agreements are non-binding for employees: • The compensation is too low, • The employer does not have a legitimate interest for being protected, • The agreement is targeted to unreasonably limit the employee’s professional advancement. Alternative approach Alternatively employers can agree upon longer notice

periods. Though the employer has to pay full salary during the notice period this can be attractive, because during the notice period employees must not compete with their employer and an explicit definition of the temporal, geographical and factual scope is not required. Conclusion Post contractual non-compete agreements can be one way to protect employers in Germany from losing its skilled workforce to competitors tomorrow. However, it has to be kept in mind that such agreements have to be tailor-made.

Company: Bryan Cave LLP Name: Dr. Steffen Görres Email: steffen.goerres@bryancave.com Web: www.bryancave.com Telephone: +49 (0)40 303316 128

Mergers and acquisitions in Germany: What it is all about!

-----------------------------------------------------------------------Florian Roche is a Partner at Roche, von Westernhagen & Ehresmann. ------------------------------------------------------------------------

You want to invest in a company in Germany? What are you looking at? IP assets including patents and trademarks play an important role. It is of major interest to ensure that there are no risks involved in regard to these rights. Performing a due diligence is strongly recommended. You should in particular pay attention to the ownership of the IP rights in question and to the validity of these

ACQUISITION INTERNATIONAL

rights. Claims of employees under German employee inventor law have to be regarded. For example employee inventions, which have been made before October 2009 are treated completely different under German law than inventions made after that date. It often occurs that older patents are acquired by third parties without checking the ownership of rights. There have been many court cases in Germany where ownership issues came up as a ticking bomb for the buyer. The patent attorneys of our patent law firm are prepared to advise you in this regard and in all questions of intellectual property.

Company: Roche, von Westernhagen & Ehresmann Name: Florian Roche Email: roche@rvwe.de Web: www.rvwe.de Address: Friedrich-Engels-Allee 430-432, D - 42283 Wuppertal, Germany Telephone: +49 (0) 202 25 90 60

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SECTOR SPOTLIGHT: Regional focus

-----------------------------------------------------------------------Emiley Vollmer is the President of IBA Global Pty Ltd. -----------------------------------------------------------------------IBA global is an international company that promotes the education of businesses, people, and organizations around the globe. The principle driving force behind IBA global is the notion that by sharing knowledge with one another, businesses flourish. Moreover, being part of a professional network in order to connect like-minded individuals and organizations together leads to the creation of possibilities. IBA educates and assists small to medium sized enterprises (SME’s) in expanding operations to formerly unknown territories by providing the necessary knowledge, tools, strategic partners and services.

Sharing knowledge stands central in this endeavor, and can be achieved by utilizing the ever growing global network of IBA global. The future of international business, and future prosperity will largely be created by SME’s who do business globally, as these SME’s expand to other territories, they bring opportunity for a higher standard of living for those involved. The more business is conducted, the more people are able to participate in the creation of prosperity, and as such employment and expansion can lead to the reduction of poverty worldwide. For people to prosper they need to be lifted out of poverty, given more opportunities, and educated. This can be achieved when economic activity increases, and knowledge is shared around the globe.

Company: IBA Global Pty Ltd Name: Emiley Vollmer Email: emiley@iba-global.com Web: www.iba-global.com Address: Luisenstr. 39, D 75223 Niefern, Germany Telephone: +49 (0) 171 8921 256

The Specialisation of the Oil & Gas Industry in Brazil

Company: André Teixeira & Associados Name: Marcio Seixas Email: marcio.seixas@at.adv.br Web: www.at.adv.br Address: Av. Rio Branco no. 89 / Sala 702 - Centro - Rio de Janeiro, RJ - CEP 20040-004, Brazil Telephone: +55 (21) 2203-0330

Driving Investment in Ghana

Company: Skills Sharing Consult Name: Sandy Kojo-Andah Email: info@shareskills.net Web: www.shareskills.net Address: Number 3 Tesa Road Adjirigano, East-Legon, Accra, Ghana Telephone: +233 (0) 20433-9581

/ July 2013

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Regional focus

Gibraltar: Defying Global Trends l When choosing an offshore location it’s hard to look beyond self-sufficient Gibraltar; an economy largely based on financial services, shipping, online gaming and tourism, it is increasingly recognised as a well-regulated finance centre within the European Union. Acquisition International speaks to experts in the region to learn how Gibraltar distinguishes itself from other locations. -----------------------------------------------------------------------Mark Lamb is Head of International Services at Chantrey Vellacott DFK LLP in London and Managing Director of Chantrey Vellacott DFK (Gibraltar) Ltd. Adrian Hyde is a Partner in Business Recovery (insolvency practitioner and a solicitor); Debbie Clarke is Head of CV Capital LLP (the corporate finance arm of Chantrey Vellacott DFK LLP); Tony Steinthal is an International Tax Partner; and Anna Matveeva is an Audit Manager. ------------------------------------------------------------------------

Chantrey Vellacott DFK is a long established provider of accounting, taxation and related advisory services. Our roots go back to 1788. Chantrey Vellacott DFK has had a presence through its offices in Gibraltar, for nearly 20 years. Chantrey Vellacott DFK (Gibraltar) Limited is regulated to provide: • Audit • Taxation • Consultancy In addition, through the wider resource base in London, the company is able to provide additional services to businesses in Gibraltar including: • Insolvency and business recovery services • Corporate Finance • Internal Audit Gibraltar offers a competitive low tax rate within the EU, political independence and good sector links with the Government via The Gibraltar Finance Centre Council. In addition, Gibraltar offers regulatory supervision, investor protection and all service providers within the same jurisdiction.

With the new ECOFIN-compliant corporation tax having been in place for over two years, there are many tax planning opportunities for international groups. The 10% corporate tax rate provides a very competitive tax rate within the EU. This, together with the fact that there is no tax on dividends or royalties, no VAT and no capital gains tax makes Gibraltar a very favourable jurisdiction to do business in. One of the main challenges facing corporate clients is the full acceptance of EU law, such as the Parent Subsidiary Directive, by EU countries transacting with Gibraltar. Local anti-avoidance rules can prevent the Parent Subsidiary Directive applying with Gibraltar. We always provide our clients with a bespoke service to fit their particular circumstances, addressing any jurisdictional constraints. Chantrey Vellacott DFK was appointed a joint liquidator of Marrache & Co (an international firm with offices in Gibraltar, London, Spain, Portugal, Luxembourg and Czech Republic). This high profile, international appointment provides us the opportunity to work closely with the FSC to minimise the disruption to this otherwise healthy financial market. It is further evidence of Chantrey Vellacott DFK’s expertise in advising on substantial international matters and also demonstrates our ability to take on these high profile cases with a team of specialists in accountancy, business recovery and the law. Gibraltar has entered a new era as an internationally competitive onshore European finance centre, having left

behind its tax haven status. A great deal has been achieved over the last few years in putting Gibraltar on the financial map and improving the perception of the jurisdiction, with sector success in funds, insurance and gaming. In 2011 Gibraltar moved from a tax haven status to an ECOFIN white listed, EU compliant, competitive onshore European finance centre. This has brought with it the start of some interesting tax planning opportunities for international groups, with the future of Gibraltar as a leading offshore destination growing from strength to strength.

Company: Chantrey Vellacott DFK (Gibraltar) Limited Name: Mark Lamb Email: mlamb@cvdfk.com Web: www.cvdfk.com Address: 85/87 Main Street, Gibraltar Telephone: +350 200 79719 Mobile: +44 7967 727501 London address: Chantrey Vellacott DFK LLP, Russell Square House, 10/12 Russell Square, London WC1B 5LF

Top 10 Reasons for Choosing Gibraltar for M&A Deal Structuring l Eran Shay, an Associate Director at Deloitte Limite, Gibraltar, highlights the key factors that make the country an ideal location for M&A deal structuring. 1.

-----------------------------------------------------------------------Eran Shay is an Associate Director at Deloitte Limited, Gibraltar. -----------------------------------------------------------------------One of the key challenges in structuring a cross-border M&A deal is to ensure that tax liabilities and costs will be minimised for the acquiring company. Traditionally BVI, Luxembourg, Cayman and Dutch Antilles “Special Purpose Companies” (SPCs) have been used for this purpose. Gibraltar features some unique attributes that makes it a perfect holding structure through which M&A transactions can be carried out. The top 10 reasons for using a Gibraltar SPC for cross-border M&A structuring include:

ACQUISITION INTERNATIONAL

English speaking jurisdiction applying English Common Law 2. Gibraltar is within the EU, and has transposed EU M&A Directives and Parent Subsidiary Directive 3. Being a small jurisdiction, regulators and government officials are easily accessible 4. No tax on dividends received from Target by Gibraltar SPC (BidCo) and no withholding tax on dividends paid by Gibraltar BidCo to Buyer 5. There is no capital gains tax in Gibraltar 6. No stamp duty, capital duty or other similar taxes in connection with transactions involving shares of the Gibraltar SPC 7. No VAT, so significant savings can be achieved by appointing local professional services firms 8. Territorial tax system with 10% corporate tax rate 9. Close-knit business community fostering cooperation between professional service providers to maximise time efficiency for transaction 10. Central European Time Zone and easily accessible location within Europe Gibraltar also boasts a buoyant domestic M&A market; its diversified economy includes the dynamic online gaming sector (recently featuring a EUR 2.5 billion transaction), the

thriving financial services sector with banks and insurance companies being particularly active on the M&A front; the Real Estate sector, characterised by chronic excess demand over supply (especially in commercial property); the shipping sector which has recently caught the eye of foreign private equity houses, and retail/tourism sector characterised by some long established family owned businesses. Whether you are contemplating an M&A or interested in diversifying your portfolio to new frontiers, make sure Gibraltar features on your radar.

Company: Deloitte Limited Name: Eran Shay Email: eshay@deloitte.gi Web: www.deloitte.gi Address: Merchant House, 22/24 John Mackintosh Square, Gibraltar Telephone: +350 200 41200

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SECTOR SPOTLIGHT: Regional focus

Foreign Direct Investment – in and out of Greece l Michael Tsibris, Managing Partner at Souriadakis Tsibris, discusses Greece’s approach to FDI and the country’s recent initiatives to facilitate investment. Souriadakis Tsibris is an Athens based law firm, active in the area of corporate and business law and litigation, including M&As, banking, insurance and investment regulation, intellectual property, labour law and tax. The firm represents numerous foreign clients, both on an ad-hoc advice basis and also continuously supporting the Greek ventures or affairs of major multinationals in diverse business sectors, such as insurance and investment, pharmaceuticals and cosmetics, food and beverages and leisure and others.

“Rules liberalising the operation of business and the status of new investment are continuously implemented. A particularly optimistic privatisation program is also under way providing significant opportunities. Taking into account the improvements in budget conditions and overall public debt dynamics, it can be said that investment conditions are improving and Greece is now a significantly more friendly investment destination, thus improving its relative position in the global arena.”

Mr Tsibris acknowledged that it is no secret that for many years following the boom of the 1960s and early 1970s Greece was not a success story as far as foreign investment was concerned. In fact it regularly appeared in the bottom places in relevant rankings, including World Bank and other similar ones. He stated that this obviously had much to do with the developments of the last years that came to be known as ‘the Greek crisis’. He mainly attributes the situation to an unfriendly business climate, arcane tax rules and an imposing bureaucracy, and noted that a trend of deinvestment from the country ensued.

There have been various recent initiatives in Greece to facilitate investment at all levels. According to Mr Tsibris, the more important are: • Law 3894/2010 on Strategic Investments, which created a ‘fast track’ procedure for investment of a significant size, deemed important for the overall economy; • Law 3908/2011, which details the procedure for granting tax and other incentives for new investments, organised also based on regional criteria; • Law 4146/2013 on creating a friendly environment for the development of strategic and other private investment, which increased the scope of the fast track procedure.

“However, with the modernisation and recovery program that is under way during the last two years, which addresses not only public finances, but also all structural problems of the economy, things have started to change,” he continued. “Greece is once again on the radar screen of international investors and the flow of capital has slowly started again.

He noted that that there are many other rules of a sectoral nature, providing various incentives and otherwise facilitating investment in tourism, transport, agriculture and other areas.

“Also, a special unit has been created, “Invest in Greece SA”, whose purpose is to provide all necessary support to new investment ventures,” he explained. “Above all, Greece is a free economy with a freely convertible currency and benefiting from the legal framework of the European Union, as well as numerous bilateral investment treaties.” In conclusion, Mr Tsibris stated that there should be a significant increase from previous low levels of FDI into Greece in the next 12 months, particularly taking into account the privatisation program under way.

Company: Souriadakis Tsibris Name: Michael Tsibris Email: mtsibris@souriadakistsibris.gr Web: www.souriadakistsibris.gr Address: 6 Kriezotou Street, Athens 10671 Greece Telephone: + 30 210 3626888

India: Experienced, Growing and Welcoming Investment l Amongst the successful BRIC nations, India has been recognised for many years as a location for foreign investment; supported by a wealth of experience it sets an excellent example to emerging economies. Despite recent challenges, the forthcoming year is expected to take a positive turn and overall economic growth is expected to achieve 6.4%. Following several quarters of decline, the export industry returned to growth at the start of 2013 and has a bright future ahead.

OTHER EXPERTS IN THIS AREA

Company: Anant Mandgi & Associates Name: Anant Mandgi Email: anantmandgi@live.com Web: www.anantmandgi.com Telephone: +91 9448356712

Acquisition International speaks with Savi Hebbur, a Partner at Linklaters, to discuss current investment opportunities and the pull factors that are bringing foreign direct investment into the region. According to Mr Hebbur, the overall business environment in India is a “mixed bag” with many companies, both Indian and foreign, often adopting a wait and watch approach. This includes companies with strong balance sheets who are evaluating investment opportunities but continue to take a cautious view due to market and regulatory uncertainty. “Among the sectors, infrastructure seems particularly troubled due to both regulatory delays as well as financing being tight,” said Mr Hebbur. “Further, some of the formerly aggressive players are now overleveraged and are looking to deleverage through partial or complete sell down of assets and not committing to large new projects.” Mr Hebbur stated that the general sentiment in India in the last 18-24 months has been on the negative side. He attributed this to a number of events, including tax issues (retrospective amendment on the Vodafone case); limited progress on foreign investment liberalisation (insurance, retail, brownfield healthcare); licensing issues (telecoms, mining); and project delays. “Even sectors where there have been efforts at liberalisation in an attempt to push for growth such as defence, retail and

/ July 2013

airlines have not delivered on their full potential or deals have stalled since the regulatory conditions and uncertainty are still high barriers.” However, he noted that there have been some green shoots visible in the last few months with renewed focus policy changes and the belief that the worst may be over, though there is a residual concern around the forthcoming federal elections and its ability to draw political focus away from the economy. “While investors with a short or medium term investment horizon are reluctant to make high-value investment decisions (with some even exiting the market), investors/ companies who take a long term 20 to 30 year view are still enthusiastic about India and more willing to take advantage of investment opportunities,” he continued. “A further development is that the business environment in India is now being seen by many investors as being more regionalised with certain regions being perceived as being more conducive for business and investment. This development will see certain regions benefiting disproportionately over a longer term horizon and will also

likely see the emergence of competition among regions within India. “We expect 2013 to continue to be challenging both in terms of the economy and deal flow. However, we are hopeful that this will give impetus to taking some tough decisions which will benefit the economy in the longer term,” he concluded.

Company: Linklaters Name: Savi Hebbur Email: savi.hebbur@linklaters.com Web: www.linklaters.com Address: One Silk Street, London, UK, EC2Y 8HQ Telephone: +442074563388

ACQUISITION INTERNATIONAL

DEEP & FAR

Attorneys-at-Law 13th F1., No. 27, Sec. 3, Chung San N. Rd. Taipei 104, Taiwan, R.O.C. Tel: +886-2-2585-6688 Fax: +886-2-25989900/25978989 email@deepnfar.com.tw Deep & Far was founded in 1992 and is one of the largest law firms in this country. The firm is presently focused on the practice in separate or in combination of all aspects of intellectual property rights (IPRs) including patents, trademarks, copyrights, trade secrets, unfair competition, and/or licensing, counseling, litigation and/or transaction thereof. Since this firm edges itself into the IPRs field, the firm quickly comes to fame. As an illustration, this firm often is one of the largest sources from which foreign filing orders originate. The fascinating rise of this firm begins from the founder of Deep & Far attorneys-at-law, C. F. Tsai, who is the one first patent practitioner in this country who both has technological and law backgrounds and is qualified as a local attorney-at-law. The patent attorneys and patent engineers in this firm normally hold outstanding and advanced degrees and are generally graduated from the top five universities in this country and/or the university in the US. Our prominent staffs are dedicated to provide the best quality service in IPRs. As a proof, about one half of top 100 incorporations in this country have experiences of seeking patented their techniques, but more than one fifth of the top 100 incorporations are/were clients of this firm. Furthermore, Hi-Tech companies in the science-based industrial park located at Hsin Chu play an important role in booming the economy of this country. About one half of which have experiences in seeking patented their techniques, and out of more than 60% of the patent-experienced companies in that park have ever entrusted their IPR works to this firm. We have experienced in seeking IPR-protections for our clients in more than 100 territories all over the world. We have thousands of IPR-cases respectively prosecuted before official Patent Offices of major industrialized countries. This firm not only is the most competent in IPR-related matters in this country but also is very familiar with IPR-practices in major industrialized countries. As a matter of fact, this firm oftentimes tries and makes precedents of new claim-drafting styles. While we might have become wonderfully famed locally with remarkable appreciation and respects, we would like to extend our services for internationalized or quality service-requiring foreign conglomerated giants, corporations or individuals. We strongly believe that we will win more applause from clients all over the world.

www.deepnfar.com.tw

SECTOR SPOTLIGHT: Regional focus

Qatar: Continued Growth in 2013 l Qatar’s economy is undoubtedly performing well with GPD growing at a healthy 5% in 2012 and further expected to increase throughout 2013. Steve Troop, CEO of Barwa Bank, discusses Qatar’s flourishing business environment and its impressive growth. Barwa Bank is Qatar’s newest and fastest-growing bank. It is shari’ah-compliant and licensed and regulated by the Qatar Central Bank. With total equity of QAR 5.4 billion, Barwa Bank provides a full range of Shari’ahcompliant banking services including retail, corporate and commercial banking, private banking, real estate finance, structured finance, investments and asset management. Mr Troop stated that Qatar’s Business environment is flourishing with economic growth rates that much of the world can only dream about. He noted that very material governmental surpluses, generated principally through hydro-carbon sales, give Qatar the wherewithal to reinvest both domestically and overseas. “The opportunity in Qatar is self-evident - to play a role in what is a transformational period in the history of the nation as we now embark on the massive infrastructure and development projects laid out in the National Vision 2030 including the development of rail and road transport, the construction of stadiums and related services following Qatar’s successful bid to host the 2022 football World Cup,” said Mr Toop. “Qatar certainly offers an extremely dynamic business environment with a great deal of potential and opportunity: we intend to help facilitate SMEs as well as major corporates to realise those opportunities.” While the oil and gas sector still represents the majority of the country’s GDP growth, other areas are becoming

increasingly active. Mr Troop expects that, in the mediumterm, the focus will remain on massive infrastructure projects, including the development of rail and road transport, the construction of stadiums and related services following Qatar’s successful bid to host the 2022 football World Cup. “At the same time, Qatar’s National Vision 2030 sets out a road-map to a diversified, modern economy far less dependent upon hydrocarbon wealth,” he continued. “Areas of developing interest include tourism, hospitality, Qatar’s positioning as global events & conference destination, healthcare, financial services, selected manufacturing, regional financial services and knowledge-based activities.” According to Mr Troop, Qatar can attract more foreign investment by enabling the private sector to play an essential role in achieving sustainable development. This can be achieved through training and support for entrepreneurs, a precondition for enabling the private sector to carry out its required role, besides providing financial and non-financial support mechanisms that help incubate and grow small and medium-scale enterprises. “Qatar has already made good headway in developing a political and organizational climate that supports the business sector,” he observed. “But further steps to enhance competitiveness and attract investment will be needed in a dynamic and increasingly borderless international economy.”

Barwa Bank most certainly expects to see continuing growth in Qatar, particularly as many of the planned infrastructural plans move from the drawing board to implementation.

Good examples would be the commissioning of the construction of the ambitious Qatar Rail projects, the completion of the new airport and extensive work on upgrading Qatar’s highways. A broad-based prediction is that Qatar will continue to see strong and sustainable growth for many years to come, concluded Mr Troop.

Company: Barwa Bank Name: Steve Troop Email: s.troop@barwabank.com Web: www.barwabank.com Telephone: (+974) 4410 0888

South Africa: Leading the Way in Foreign Direct Investment l As growth in other economies has slowed with the on-going economic turbulence, investors have turned to their attentions to emerging markets and economies to provide them with higher return rates. The African global share of FDI grew from 3.2% in 2007 to 5.6% in 2012 and there is growing interest and activity from International and domestic PE houses and fund managers looking to capitalise on these growth opportunities. Noor Kapdi, Managing Partner of KapdiTwala Law Firm in association with Dentons, gives Acquisition International some insight into South Africa’s economic climate and opportunities for investors. KapdiTwala is a law firm specialising in corporate and commercial law. The firm services a range of blue chip clients and recently entered into an association with Dentons, representing the first time that a black owned South African law firm enters into an association with a larger international law practice. “KapdiTwala offers sound business knowledge to support its legal offering, resulting in legal solutions that work in the business world,” said Mr Kapdi. “In addition, KapdiTwala has extensive knowledge of the local regulatory and political framework and is able to deliver legal services that address the local regulatory exigencies from a socio-political and economic perspective.”

access to the local markets has become a more realistic proposition than was the case one or two decades ago.” Mr Kapdi highlighted South Africa’s well-developed business and professional services sector and its stable and sophisticated banking system. He added that the Government’s extensive spend on attracting FDI, together with specific and focussed programmes in certain sectors, has enhanced its ability to attract investors.

Mr Kapdi explained that the difficult international economic climate has resulted in businesses seeking out untapped opportunities. He stated that Sub-Saharan Africa represents the largest untapped area in the world and the second fastest growing regional economy.

“Coupled with excellent educational institutions, motivated workforce and extensive lifestyle options, South Africa stands out as the premier investment destination in Africa.” South Africa is often seen as the gateway to Sub-Saharan Africa, particularly the Southern and Eastern regions of the continent. Mr Kapdi noted that recent hydrocarbon discoveries in Mozambique and elsewhere, in addition to excellent infrastructure, are likely to entrench this position.

“Given the deficiency in clear growth opportunities in traditional markets, Sub-Saharan Africa has become a prime target for FDI,” he observed. “In addition, socio-economic development has reached a point where

“South Africa is endowed with superb infrastructure and well-honed companies. With over 100 years of experience and advanced engineering and construction capabilities in extractive and mining industries, South

20 / July 2013

African companies are well-poised to take advantage of the extensive resources the continent offers. This is likely to lead to several acquisitions by foreign companies and related M&A activities, which will give them an immediate presence, a client portfolio and the ability to move into Africa,” he concluded.

Company: KapdiTwala Law Firm Name: Noor Kapdi Email: noor.kapdi@kapditwala.com Web: www.kapditwala.com Address: KapdiTwala Chambers, Ground Floor, 240 Main Road, Rondebosch, Cape Town AND Suite 7, Waterfall View, Waterfall Park, Bekker Road, Midrand, Johannesburg Telephone: +27-21-686 0740

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SECTOR SPOTLIGHT: Regional focus

Sri Lanka: Promoting Economic Growth in 2013 l Sri Lanka’s economy is set to strengthen over the coming years with growth of 6.8% predicted by the ADO for 2013 and further developing to an impressive 7.2% in 2014. The economy is flourishing making Sri Lanka an ideal location for foreign investment. The island’s rupee has strengthened nearby 1.2% against the dollar and Consumer prices climbed 9.8% in February from a year earlier, among the fastest rates in Asia. Dimantha Mathew, a Partner at C. Mathew & Co, examines Sri Lanka’s economic growth and highlights the most attractive investment possibilities. The speedy globalisation with the integration of markets has had an impact on most developing nations and caused a major shift in the economic landscape of Sri Lanka in 1977 when the economy was opened up. The three decade armed conflict no doubt caused a major economic strain on the island. This also saw many social conflicts that hindered many developments. As the civil war came to a close there was great pressure exerted on the island to raise economic development and move forward. The main avenue that economic development has taken place is through infrastructure development. In terms of the private sector, Sri Lanka has seen quite a few economic growth patterns in the past. In the year of 2013, acquisition of assets appears to have taken the fast track. Large players such as Hemas Holdings for example are looking at growth through acquisitions and mergers for which they recently recruited a consultant. Such companies are looking at accelerated growth. In the past, there was no trend where companies sough to expand through acquisition, but as is apparent now, this seems a very viable and profitable stream to venture into.

Why do companies seek to acquire assets? This is due to the initial time lag that a new start up would take. Rather than investing on start-up ventures, acquiring a small business that is already up and running can be thought of as the best way forward for most. Big players in the field are now looking toward accelerated growth since there are many smaller players now on the field that could be acquired. What is trending now is that companies want to acquire and grow. Such an appetite for growth, especially through acquisition, was not seen in the past. A famous avenue for investors to pursue is the stock market. Since most information is in the public domain regarding these stocks, it is relatively effortless to acquire to these assets. Information freely available would naturally mean that these would sell for a higher investment cost. Apart from this, the insurgence of the tourism industry has seen the trend that Dimantha Mathew (Partner, C. Mathew & Co. - www.cmathew.com) has stated; “Foreigners are attracted to the tourism sector which has taken off at a rapid pace. However with restrictions

to foreigners buying property in Sri Lanka, the investors are looking into leasing out property both with and without BOI consent. I believe that this trend will continue into the future”. More costly or not, acquisition is on the fast lane, and more and more companies in Sri Lanka seem to be getting on board.

Company: C. Matthew & Co. Name: Dimantha Mathew Email: dimantha@cmathew.com Web: www.cmathew.com Address: 172 Hulftsdorp Street Colombo – 12, Sri Lanka Telephone: +94 11 3135440

Vietnam: Attracting International Investment in 2013 l Vietnam is enjoying a period of economic success, the most recent indication of which being the huge rise in Asia on the Benchmark Index - marking a 27-month high. However, the success of Vietnam cannot be determined purely by its own performance, for example the current dependence on China demonstrates the wider issues that the country faces. Stephen Gaskill, Partner, Advisory Services, at PwC Vietnam, discusses the challenges facing the country and its potential for investors. PwC Vietnam is a full service professional accounting firm offering assurance, tax, legal and advisory services. Mr Gaskill stated that the business environment in Vietnam remains challenging in many industries, as it is in the rest of the world. He noted that the banking and real estate industries are probably facing the greatest challenges. “The former faces increasing competition and extremely high levels of non-performing loans in the local banks forcing a major restructuring of the industry,” he elaborated. “The latter is struggling to overcome the bubble that burst 2/3 years ago. Currently there is limited credit growth in the banking industry due to banks reluctance to take risks and hence extend loans whilst high interest rates and buyer sentiment has depressed demand for new houses and apartments. “Despite these challenges many companies, especially those in consumer goods related sectors, are still experiencing growth and the general feeling appears to be that the worst is behind Vietnam and that growth will start to accelerate from 2014. GDP continues to grow, albeit at a relatively slow 5% this year.” According to Mr Gaskill, Vietnam has always held huge potential for investors due to its demographics and need for foreign investment in infrastructure, technology and knowhow. He stated that it is an investor friendly environment in general and many areas of the economy are under served or remain somewhat untapped.

22 / July 2013

“Investors need to do their research thoroughly before entering Vietnam however since the country remains challenging from a regulatory environment once an investor starts operating here and the costs of operating are often higher than investors expect,” he observed. “In addition, the market in terms of consumer preferences and behaviour is quite different from the rest of South East Asia and varies significantly across the various regions - the north being very different from the south for example.”

Mr Gaskill predicts that growth in Vietnam will continue at relatively modest rates of approximately 5%, however he anticipates acceleration in 2013 as interest rates are no at much lower levels and the banks are starting to lend more freely. “The middle class in Vietnam will continue to grow and is becoming increasingly affluent and this will drive on-going growth in domestic demand provided confidence recovers,” he concluded.

In order to ensure that Vietnam maintains growth, the government has taken steps to lower interest rates and is moving to resolve some of the issues in the banking sector through mergers and the launch of the AMC. In addition, Mr Gaskill stated that the country remains very open to foreign investment knowing that it is a key driver of growth. “Taxes are also being lowered both in terms of corporate and personal income tax rates whilst there are moves to amend certain unfavourable regulations,” he explained. “In addition, the government is looking to encourage more investment in infrastructure through public-private partnership initiatives although this is still at very early stages. More can be done to remove red tape and make it easier for companies to do business. It is likely that Vietnam will continue to move forward with these initiatives, albeit at a slow pace which sometimes involves three steps forward and two back.”

Company: PricewaterhouseCoopers (Vietnam) Limited Name: Jamie Meacham Email: jamie.meacham@vn.pwc.com Web: vn.pwc.com Address: 4th Floor, Saigon Tower, 29 Le Duan Street, District 1, Ho Chi Minh City, Vietnam Telephone: +84-8-38230796, ext. 1621 Mobile: +84 (0) 906 894 928

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Regional focus

The New Rising Stars: Zambia l For so long now the world’s leading entrepreneurs and business professionals have turned to the BRIC nations in order to take advantage of overseas growth. However, with countries such as Brazil, Russia, India and China no longer necessarily providing the best investment opportunities, many are turning to the ‘rising stars’ of the emerging world, such as Zambia. With the country’s combination of rich natural resources and political stability, Zambia is attracting large investing partners with China being the most recent. Maureen K. Mwanawasa, Managing Partner of Levy Mwanawasa and Co. Legal Practitioners, describes the firm and its expertise. to our dedicated focus on commercial matters. We are committed to the principle of providing high quality, efficient and competitive legal services to our clients in both the public and private sector.”

Levy Mwanawasa and Co. Legal Practitioners is a specialist law firm focusing on meeting the corporate and commercial legal requirements of national and international clients. The firm is managed by Dr. Maureen K. Mwanawasa, the Former First Lady. “Our specialisation is to ensure depth of service for the benefit of our clients,” said Ms Mwanawasa. “This emphasis means that we are able to provide advisory services that reflect the latest legal trends and developments. In addition, we are able to respond promptly to clients’ requests due

Levy Mwanawasa and Co. Legal Practitioners assists international corporations and domestic entities establish a presence and develop a range of business operations in Zambia. The firm also finds innovative ways to help clients’ deal with the complexities of transacting in Zambia’s business environment which can be overly regulated and bureaucratic in certain sectors. Recognising Zambia’s participation in the regional and global economy, the firm also offers services in international trade and investment law. The firm provides legal services which include: banking & finance; corporate & commercial; international trade and investment; tax; employment; property & conveyancing; and intellectual property. “Our philosophy is to work closely with clients to ensure that our services go beyond meeting legal requirements and extend to exceeding client expectations,” continued Ms Mwanawasa. “We play a facilitative and empowering role

by providing clients with a solution driven service. Our partners hold business administration degrees and have commercial experience. Therefore, we are able to relate and apply our legal advice to your operation, adding value to your business. In fulfilling our goals the firm aims to attract and train talented associates while placing great emphasis on dedication and skill. Our unique approach to legal practice results in tangible client outputs.”

Levy Mwanawasa and Co. Legal Practitioners Company: Levy Mwanawasa and Co. Legal Practitioners Name: Maureen K. Mwanawasa Email: levymwanawasa&co@coppernet.co.zm Address: 3RD Floor Mukuba Pension House, Dedani Kimathi Road, P.O. Box 38810, Lusaka – Zambia Telephone: +260 211 238151

The New Rising Stars: Peru

Company: Hacker Young Name: Carlos Sandoval Aliaga Email: c.sandoval@uhyperu.net Web: www.uhyenperu.com Address: Calle Cura Muñecas 181 San Isidro, Lima, Peru Telephone: +511 712 4343

ACQUISITION INTERNATIONAL

July 2013 /

SECTOR SPOTLIGHT: Regional focus

Zimbabwe: An Attractive Location for Foreign Investment l Zimbabwe is one of many countries that have benefited greatly from international investors; the country’s economy is progressing well and is currently ranked amongst Africa’s top 10 performing economies. The African Economic Outlook report produced by AFDB has recently estimated GPD growth of 5% in 2013. However, as with any country, there are still challenges to be faced. Acquisition International speaks to key players in the region to learn more. -----------------------------------------------------------------------Alwyn Pichanick is the Senior Partner of Wintertons. -----------------------------------------------------------------------Mr Pichanick described the current business environment as “suffering from lack of confidence arising from speculation as to what will be the outcome of a general election which is to be held on the 31st July 2013”. “The uncertainty regarding the election and speculation as to which party will form the next Government has resulted in many transactions being placed on hold pending the holding of the election,” he commented. Mr Pichanick stated that Zimbabwe is a country rich in minerals and noted that there are well established gold, platinum and diamond mines. “Zimbabwe is also one of the largest producers of tobacco in the world and is a large scale exporter of that commodity,” he observed. “The present industrial base in Zimbabwe is ripe for expansion for investors with expertise and capital to develop the base which exists but which at the present time is hampered by a requirement for sophisticated and up-to-date machinery, capital and expertise.

“The development of the agricultural sector is hampered by legislation in terms of which the Government can acquire agricultural land from experienced farmers for distribution to new farmers who lack the necessary capital and expertise to develop the properties allocated to them. In addition, the Government has not provided compensation to farmers who have been the subject of acquisition and international agreements relating to compensation have not been complied with by the Government.” According to Mr Pichanick, Zimbabwe needs to capitalise on its potential by creating opportunities to boost exports, as it currently has a trade deficit arising from greater imports than exports. He stated that industrialists and entities involved in the commercial arena in Zimbabwe realise that this problem can only be resolved by encouraging foreign investment. “The major challenges which Zimbabwe faces at the present time are how to increase financial liquidity in the economy which can be achieved only by securing investment from outside the country,” he explained. “The greatest concern is that Zimbabwe is importing substantially more than it is exporting and that situation needs to be reversed”.

In conclusion, Mr Pichanick acknowledged that it is difficult to predict how the county’s economy will progress in the next twelve months; however he believes that “if stability can be restored in the economy by the formation of stable Government there is a great potential for the expansion of the economy in all sectors”.

Company: Wintertons Email: admin@wintertons.co.zw Web: www.wintertonslegal.com Address: Beverley Court, 11 Selous Avenue, Harare, Zimbabwe Telephone: +263-4-250113 up to 250129

conducive to attaining satisfactory return on investment. The recent challenge has been the Indigenization laws, which prescribe that no less than 51% ownership of all economically engaged enterprises must be held by indigenous Zimbabweans. Foreign investors are invariably willing to have indigenous co-investors, but not to an extent that the non-indigenous investor may only be possessed of a minority stake in the enterprise.

-----------------------------------------------------------------------Philip Givemore Nyakutombwa is Managing Counsel and Senior Partner at Nyakutombwa|Mugabe Legal Counsel. -----------------------------------------------------------------------Nyakutombwa|Mugabe Legal Counsel (NMLC) is a commercial law firm established in June 2012. We pride ourselves in being Counsel in eight practice areas which are, Corporate Counsel, Recovery Counsel, Property Counsel, Mining Counsel, Energy Counsel, ICT Counsel, and Empowerment Counsel. The partners are Philip Givemore Nyakutombwa and Tafadzwa Ralph Mugabe who boast of combined/cumulative sixteen years professional experience in practice. They are supported by a team of young and energetic qualified legal research counsels most of whom have had the privilege to study abroad. This gives the firm a competitive advantage as it draws experience from different jurisdictions. NMLC strives to offer its services at competitive and affordable rates. Zimbabwe’s economy has been on a growth trajectory following the introduction of the multi-currency regime in 2009. The past 4 years have seen a steady increase in foreign direct investments in the country and companies which had halted production have over the years resumed

24 / July 2013

operations. This portrays the attractive nature of Zimbabwe for investment and growing confidence that investors have in the business environment and legal framework in Zimbabwe. The greatest opportunities for investors in Zimbabwe currently lie in the mining sector. Like other mineral rich African countries, Zimbabwe has vast mineral resources. NMLC’s practice areas disclose the attractive investment opportunities. The mining sector has grown over the years and now more than ever the mining Counsel is at its busiest with a huge number of investment opportunities in the field. The ICT sector has rapidly transformed the socio-economic and political landscape with the result that opportunities abound in the e-commerce, software development, telecoms and internet service providers. While the indigenization policy has received its fair share of criticism, sight must not be lost of the opportunities created for the new investor who has been given an opportunity to enter previously dominated areas. At the moment Zimbabwe’s biggest challenge is the fact that it is perceived as a country with no investment security and that its governance and legislative environment is not

To capitalise on its potential to offer more opportunities in the capital markets, Zimbabwe has started improving on the perception held in the global community. Visible efforts have been made for investors to feel there is investment security and there is a conducive policy and legislative environment. Likewise efforts continue towards certainty of the Indigenization policy and in some respects the government has conceded to the need for value in exchange for equity. It goes without saying that Zimbabwe is poised for rapid growth and the upcoming elections will invariably affect investment attitudes for a short while but growth is a clear prediction for Zimbabwe’s economy in the next 12 months.

Company: Nyakutombwa| Mugabe Legal Counsel Name: Philip G. Nyakutombwa Email: philip@nmlc.co.zw Web: www.nmlc.co.zw Address: 12 Glenara Avenue South, Eastlea, Harare, Zimbabwe Telephone: +263 772 889 458/ 775 554 408

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Regional focus

“My advice is that any value investor who is looking for huge returns should look into investing in Zimbabwe now before it’s too late,” he enthused. “Nissi-Lloyds Capital has been providing information and advice about investment opportunities across all sectors in Zimbabwe to various investors and anyone interested can reach out to us.” Mr Adebayo noted that Zimbabwe is putting necessary reforms in place to ensure more blue chip companies are listed on the stock exchange in order to increase the exchange capitalisation and create more opportunities for foreign investors interested in the equity market. “Foreign investors have been very active since the beginning of the year and have reaped good returns from the Zimbabwe stock exchange,” he observed. “The exchange is one of the best performing exchanges globally this year.

-----------------------------------------------------------------------Wale Adebayo is the CEO of Nissi-Lloyds Capital & Investments LLC. -----------------------------------------------------------------------Nissi-Lloyds Capital and Investments LLC is a leading independent financial services firm, incorporated to carry out the business of Financial Advisory Services, Derivatives Advisory, Capital Markets, Physical Commodities Trading, Private Equity as well as Global Markets Trading in Sovereign Bonds, Options and FX. The firm has offices in Dubai, Nigeria and Zimbabwe and does business across sub-Saharan Africa. Mr Adebayo described Zimbabwe as “the best kept investment destination secret in Africa”. Nissi Lloyds is actively involved in mining as well as trading in precious metals and minerals in Zimbabwe. The firm has successfully engaged foreign investors interested in these sectors.

“People are looking at the political situation from outside Zimbabwe without really understanding the real situation on the ground,” he observed. “Business is going on as usual.” without any political interference as long as you abide by the country law which is the same in all countries.”

“I am optimistic that Zimbabwe will experience an exponential growth across all sectors in the next 12 months,” he concluded. So confident is this assertion that he has engaged foreign investors in a bid to raise 10 million USD to invest in Zimbabwe.

According to Mr Adebayo, Zimbabwe’s key pull factor for foreign investors is the value of her assets. He stated that most other countries’ asset prices are overvalued, but assets across all sectors are reasonably priced in Zimbabwe. “This provides real value for investors,” he continued. “The doors are open for investors to come and invest in Zimbabwe. All they have to do is ensure that they comply with the law of the country.” Mr Adebayo believes there are opportunities for investors across all sectors in Zimbabwe, specifically highlighting: mining; agriculture; equities markets; fast moving consumer goods (FMCG); real estate; and the financial sector.

Company: Nissi-Lloyds Capital & Investments LLC Name: Wale Adebayo Email: wale.adebayo@nissilloydscapital.com Web: www.nissilloydscapital.com Telephone: +2348131008084, +263735594916, +263778731827

Zimbabwe: The New Income Tax Bill l Marvellous Tapera, a Manager, Taxation Services, at Deloitte & Touche in Zimbabwe, gives Acquisition International some insight into the country’s new tax system. automatically a resident of Zimbabwe, but can only be liable to tax in Zimbabwe if he/she is present in Zimbabwe at any time during the tax year. The second rule is based on the aspect of physical presence in Zimbabwe. It applies to nationals or citizens of other countries. A natural person is a resident of Zimbabwe if he/she is present in Zimbabwe for one or more periods amounting in aggregate to 183 days or more in any 12 month period that ends during the year of assessment.

-----------------------------------------------------------------------Marvellous Tapera is a Manager, Taxation Services, at Deloitte & Touche in Zimbabwe. -----------------------------------------------------------------------On 30 November 2013 the government of Zimbabwe gazzetted a bill that gave birth to the Income Tax Bill (Chapter 23; 13). The bill seeks to replace the Income Tax Act (chapter 23.06) and the Capital Gains Tax Act (Chapter 23.01). The critical change proposed by the Income Tax Bill is a shift from a source to a residence tax system to align the Zimbabwe tax system to the international best practices. The new tax system is embedded with rules for determining the residence status of persons. In the case of natural person the residence status is determined in two ways: The first test is based on one’s fixed place of abode and presence in Zimbabwe at any time during the year of assessment. A national or a citizen of Zimbabwe is

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Company and branch of a foreign company will be resident of Zimbabwe if: • incorporated or registered, or required to be incorporated or registered, under the Companies Act [Chapter 24:03]; or • has its effective management and control exercised in Zimbabwe at any time during the year of assessment; or • undertakes the majority of its operations in Zimbabwe during the year of assessment A trust is treated as a resident of Zimbabwe if it was established in Zimbabwe or if at any time in the year of assessment a trustee was a resident person or if the trust management and control was exercised in Zimbabwe at any time during the year of assessment. The residence status of trustees is comparable to those of a natural person. Residents will be taxable on their worldwide sources of income, non-residents will be taxable on their Zimbabwean sourced income, whilst expatriates will be taxable on Zimbabwe sourced income and foreign sourced income

which is required to be remitted to Zimbabwe in terms of exchange control regulations The bill also proposes to treat capital gains from immovable and marketable securities, and the disposal of movable and intangible property used primarily in the production of income, as gains and losses for income tax purposes. A business would only be allowed to deduct only expenditure or losses incurred in the production of income, while those incurred for the purpose of trade will no longer be deducted. The bill has passed the second reading with amendments and is now awaiting third reading. It appears it will become law effective from 1 January 2014.

Company: Deloitte & Touche Name: Marvellous Tapera Email: mtapera@deloitte.co.zw Web: www.deloitte.co.zw Address: Kenilworth Gardens, 1 Kenilworth Road, Highlands, P O Box 267, Harare, Zimbabwe Telephone: +263 (0) 4 746247 54

July 2013 /

SECTOR SPOTLIGHT: Regional focus

Compliant and Competitive – the Isle of Man l The Isle of Man, a leader in the field of tax co-operation has gone to vast lengths to reaffirm its commitment to international responsibility and cooperation. The agenda of tax co-operation and transparency is more dominant in the international business community than ever before, but some forget that it is an agenda that the Isle of Man has been working to for many years. The Isle of Man is the only part of Britain to have escaped recession and has enjoyed unbroken economic growth for a quarter of a century; the average weekly earnings are £661, compared with £444 for the UK. Beyond a successful finance centre, the Island has a diversified economic base, a wealth of experience in key industries and activities, and importantly the physical space in which to expand real business activity. It is an open, transparent, compliant location that knows its place in the world and in the future. Leading experts from the Isle of Man give Acquisition International their views on the country and its commitment to tax co-operation and transparency.

-----------------------------------------------------------------------Steve McCafferty is an associate director of IQE Limited, a fiduciary service provider with offices in the Isle of Man and Mauritius. Steve gives us an oversight of the services offered by IQE, the benefits of the Isle of Man and his insights on the current market activity. -----------------------------------------------------------------------The Jurisdiction The Isle of Man leads the way in global tax transparency and has a long standing commitment to international responsibility, co-operation and regulation, which sets the island apart from many jurisdictions. The island has an enviable reputation for its political and diverse financial stability and is seen as the premier jurisdiction for international business. The Company IQE is licensed by the Isle of Man Financial Supervision Commission and works closely with professional advisers to form and administer structures that cover a wide range of activities such as land and property development, consultancy services and investment holding. We also boast a strong track record in successfully forming and managing companies that are listed or quoted on recognised stock exchanges.

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Our Services As an established and respected international fiduciary services company, we have access to external sources of specialised expertise to complement the range of services we offer. These include:

Due to our valued and experienced relationships within the property arena, we often have first sight of real estate opportunities under private treaty, ranging from commercial and residential developments, to central “trophy assets” in prestigious locations.

• • • • • • • •

Company, Trust and Estate Administration Wealth Ownership Structures Family Office Services Intellectual Property i-Gaming and e-Commerce Support Capital Markets Philanthropy Real Estate

The Market Real estate has long been a source of business for the Isle of Man corporate services industry and whilst markets remain difficult we are involved in a number of development projects and IQE see this continuing to grow through the rest of 2013 and into 2014. The Isle of Man’s proximity to the vibrant London market, familiarity with UK requirements and the added advantage of an efficient and central Customs & Excise office make it the jurisdiction of choice for the property industry.

Company: IQE Limited Name: Steve McCafferty Email: smccafferty@iqe.im Web: www.iqe.im Address: IQE Limited, 14 Athol Street, Douglas, Isle of Man, IM1 1JA Telephone: +44 (0) 7624 490561

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Regional focus

-----------------------------------------------------------------------Paul Swindale is the Director of Döhle Corporate Trust and Services Limited. ------------------------------------------------------------------------

Mr Swindale described the current business environment in the Isle of Man as “positively challenging!” He noted that islands like the Isle of Man are under increased pressure from the world’s major powers in relation to transparency and share of information. “The Isle of Man has approached this situation positively and embraced the process, which as a service provider with an Isle of Man presence we are very happy to be part of,” he enthused. “A culture of success has been seen in the Isle of Man economy for a significant number of years. The government are a strong combination of entrepreneurial behaviours, backed up with strong intellect and robust risk management which is evidenced by continued economic growth during a difficult time in the world’s economy. Linked to the government approach, the island has a very strong private sector which is hard working, professional and diverse in skill set, all of which links to the Island’s strap line of “where you can”.”

-----------------------------------------------------------------------James Quinn is a Senior Advocate at Quinn Legal. -----------------------------------------------------------------------The Isle of Man today is an island that is highly regarded internationally, and we don’t say that for ourselves. Proud to hold a Triple ‘A’ sovereign rating from Moody’s and a AA+ rating from Standard & Poor’s, it has also been recognised by the IMF as a well-regulated offshore Finance Centre of excellence. But these standards and external accolades are in relative terms recent features for the island. The Isle of Man boasts the oldest continuous Parliament in the world, founded way back in 979 AD, and it currently enjoys a buoyant economic environment that can boast continual economic prosperity through the ongoing global “Credit Crunch” that has slowed many nations, and derailed some. It has achieved this transformation in a generation and is focused and determined that it will not let go of its progress. So how has it managed to make these major strides forward, and how will it deliver the next generation’s results? When times were more challenging the IOM Government understood that it needed to either adapt or accept the situation they were in. Adaptation was the name of the game and they implemented a change in the tax and regulatory environment that enabled the development of the islands financial industry. New businesses, mainly Banks, Life companies and corporate/fiduciary service providers, began

ACQUISITION INTERNATIONAL

In Mr Swindale’s view, the island’s pursuit of the tax cooperation and transparency agenda has been “head on”. He stated that the island sees this agenda as a natural progression in the world’s economy and that it has been embraced at both government and private sector level. The island is working closely with the world’s governing bodies and the UK government in respect of tax disclosure, and has reacted positively to FATCA.

“There is no running away from the fact we are in a tough economic cycle, however both as a government and as a high quality service provider in a strong jurisdiction, I am happy to look out over the Irish Sea from our offices knowing we have a good future ahead of us.”

“We continue to work with the G8 in order to be fit for purpose in the world we now live in and hold our head high,” he continued. “I strongly believe most providers like ourselves are in many ways looking forward to the outcome of the many agreements we are in the process of signing as we have little to fear from the results. “Once due process is complete, I am confident our climate and practices will continue to be deemed fit for purpose and place us in a good position for on-going prosperity.” In conclusion, Mr Swindale predicts that “cautious optimism will reign” in the Isle of Man for the next 12 months.

to grow and the Isle of Man swiftly became known for other things besides motorcycle racing, cats with no tails and kippers. Businesses and people, attracted initially to the Isle of Man with promises of low tax, stable government and good regulation, have found that there is more to this island than they expected. More recently still, out of the finance sector has grown shipping, aircraft, eGaming, and the Space industries. With the Queen as our head of state and being a territory that is a Crown Dependency of the UK, it would be impossible for the Island to deny the importance of the links with the UK. Suffice it to say however that it is the distinction from the UK that gives us our edge internationally, and the Manx Government recognises this balance and continues to proactively manage the “gap”. To back up an environment that sets itself out to promote new business, business growth and an entrepreneurial spirit, the government has laid down a range of incentives for businesses, be they capital funding allowances/and or tax concessions delivered with the aim of attracting the inward investment that the island seeks. Add to that the range of service focussed professionals already in situ, all seeking to support and foster new and growing business, this all makes the Island a destination that all businesses should consider when they are thinking about any capital expenditure behind their own growth initiatives.

Company: Döhle Corporate and Trust Services Limited Name: Paul Swindale Email: pswindale@doehlecorporatetrust.com Web: www.doehlecorporatetrust.com Address: Fort Anne, Douglas, Isle of Man, IM1 5PD, British Isles Telephone: +44 1624 649735

Quinn Legal, as a law firm, encapsulates this approach, focusing not only on the specific needs of our client but also, working as a team utilising our broader skill set and the connections that we have developed. We do not solely focus on our clients matters but seek to add value with the connections and introductions that we can make and deliver. After all, no one legal issue is like another and, with a broader vision for what is possible, we aim to open up new opportunities for our clients. We aim to grow alongside our clients in a mutual relationship developed on the back of transparency and trust.

Company: Quinn Legal Name: James Quinn Email: james@quinnlegal.im Web: www.quinnlegal.im Address: 30 Ridgeway Street, Douglas, Isle of Man, IM1 1EL Telephone: +44 1624 665522

July 2013 /

SECTOR SPOTLIGHT:

Pitfalls and Potential: Navigating Emerging Markets

PITFALLS AND POTENTIAL Navigating Emerging Markets

l The market outcomes of 2012 maintained confidence in the long-term economic progress of emerging economies. Spurred on by international stimulus projects, investments, M&A and funds looking to raise new capital, 2012 was a good year. Whilst some are beginning to fear the ‘sudden stop’ of western investment, especially as stimulus plans reach the end of their lifespan; 2013 is actually predicted to deliver even more, particularly in the 3rd and 4th quarters. According to a survey by the EMPEA, three-quarters of pension funds, asset managers and other sources of private equity funding are looking to increase their exposure to emerging markets in the next two years. Doing business, buying, selling and raising funds in these economies is not without its complications but with broad exposure to emerging markets being necessary for sustained real returns on capital, there is a huge demand for help in navigating the area. Acquisition International speaks to experts in emerging market investment and those who are based within the emerging markets themselves to discuss the pitfalls and potential of investing in various markets. -----------------------------------------------------------------------Mohamed Idwan (‘Kiki’) Ganie is the Managing Partner of Lubis Ganie Surowidjojo (LGS). -----------------------------------------------------------------------Dr Ganie has more than 30 years of legal experience, and specialises in commercial transactions and commercial litigation, including alternative dispute resolution and has acted as an expert in a number court and arbitration proceedings. His expertise covers general corporate/company law, banking law, finance, bankruptcy and restructuring, mining, investment, acquisitions, infrastructure projects/ project finance, antitrust, and shipping/aviation, with a particular focus on corporate governance and compliance. LGS was founded in 1985 by Timbul Thomas Lubis, Dr Ganie and Arief Tarunakarya Surowidjojo. Since then, LGS has grown into the largest corporate transactions and corporate litigation firm in Indonesia. LGS has also obtained Lloyd’s Register Quality Assurance certifications of ISO 90901:2008 for Quality Management systems and ISO 14001:2004 for Environmental Management systems to ensure the quality of all aspects of the firm’s operations and services. “One of our unique selling points is the combination of our long-standing commercial law practice and our premier litigation department that has extensive experience in dealing with commercial disputes in the context of arbitration and alternative dispute resolution as well as litigation in the Indonesian courts,” said Dr Ganie. “This allows our corporate transaction departments to benefit from such litigation experience, and from their own compliance work, to ensure that any transactions handled -----------------------------------------------------------------------Milan Radović is the General Manager and CEO of Nova Banka AD Banja Luka, Republika Srpska - Bosnia and Herzegovina. -----------------------------------------------------------------------Nova Banka AD Banja Luka has operated in Bosnia and Herzegovina since 1999 as one of the first private banks. According to Mr Radović, successful investment in emerging markets requires local contacts as well as local talented and experienced managers. This is primarily due to the fact that diligence requires knowledge of the reputation of sellers and local quirks in governance and transparency. “That means that the manager should be able to recognise the level of transparency, good governance, scale of market share, profitability or growth levels and valuation levels,” he commented. Mr Radović stated that the main legal requirements are determined by the level of developments in BiH and are favourable for investors, especially foreign investors. He added that there are many tax incentives for foreign investment in Republika Srpska. “Foreign investors are exempt from tax on the import of fixed assets, which constitutes an investment by foreign investors,” he explained. “Foreign persons can open bank accounts, and can make the transfer of funds abroad without any restrictions. Foreign persons have the same rights as citizens of Republika Srpska with regard to investing or investing in the economic sector defined by positive law in this area.”

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by the firm are carried out with a view to the potential for future disputes and any existing risks.” When investing in emerging markets, Dr Ganie believes it is important to be mindful, and adequately plan for, at time opaque legislation and an excessive bureaucracy that operates much slower than regulated and often acts in an arbitrary manner. He advised that the transactions and relationships should also be structured with a view of ensuring enforcement, and having a workable plan for dispute resolution. “In dealing with the Indonesian bureaucracy it is important to note that corrupt practices have adapted and transformed in recent times, with a shift to rent-seeking behaviour rather than payment for obtaining an advantage,” he observed. “This in turn makes business operations more susceptible to disruption unless the bureaucracy is navigated with a view of potential risks and a realistic view of timelines. This requires companies, particularly those who are subject to extraterritorial anti-corruption legislation, to take a much longer-term strategic view rather than merely having a reactive approach.” According to Dr Ganie, Indonesia’s substantial population, whose prosperity is steadily increasing, and ample natural resources have proven to be an attractive business environment for both foreign and domestic investment. At a time of turmoil in more developed markets, he stated that Indonesia presents a potentially more appealing proposition than some of its peers – an economy driven by growing

Government of Republika Srpska continually issues treasury bills and bonds. Mr Radović noted that these investments are currently in the focus of investors on the Banja Luka Stock Exchange. Treasury bills with maturity of 6 months have a yield of 3.80 to 3.95% per annum and the treasury bills with maturity of 12 months have a yield of 4.20%. “Based on this, the Government made all the issues in the total amount of 90 million BAM (45 million EUR). The most important buyers are banks in Republika Srpska,” he observed. “There is a great interest of investors in treasury bills and bonds. In the short-term period the same can be, relatively easily, bought and then sold for good profits and significant amounts. These instruments are guaranteed by the Republika Srpska’s Government and for banks they are riskfree instruments held for trading. “Bonds, based on internal debt, have a yield of approximately 6.75% per annum for the period of 7 years. Others bonds have yield of 8-18% per annum depending on the period (maximum is 15 years). Buyers of bonds are investments funds, banks, insurance companies and foreign investors. Also, shares of Telecom Srpska (TLKM-R-A) which pays dividend twice a year (annual dividend is approximately 10%) are attractive for investors.” Mr Radović does not expect any significant changes in 2013, adding that the BiH economy is expected to achieve a modest growth of 0.9% this year.

domestic demand rather than exports, with a domestic resource base, and a market that is growing organically rather than due to, and arguably in spite of, government policies. “Combined with substantial market opportunities presented by a wide range of sectors that have yet to be developed, including even basics such as agriculture, there is ample room for continued business growth in the years and decades to come,” he concluded.

Company: Lubis Ganie Surowidjojo Name: Dr Mohamed Idwan (‘Kiki’) Ganie Email: ganie@lgslaw.co.id Web: www.lgsonline.com Address: Menara Imperium 30th Floor, Jl. H. R. Rasuna Said Kav. 1 Kuningan, Jakarta 12980, Indonesia Telephone: +62 21 831-5005, 831-5025

“It should be noted that BiH has not yet used the key competitive advantages that could generate a much stronger economic growth at rates at the period before the global financial crisis of 2009 (average growth rate in the period 2001–2008 is 5% yoy). The political turmoil still hitchhike significant investment process related to infrastructure and energy sector, worth several billion Euros, while the privatization process is also stopped. Bearing in mind that these strategic activities primarily depend on the political consensus and stability, a significant shift in the investment cycle, which is still not the base scenario for BiH in 2013,” he concluded.

Company: Nova Banka AD Banja Luka Name: Milan Radović, M. Sc. (Econ.) Email: milan.radovic@novabanka.com Web: www.novabanka.com Address: Kralja Alfonsa XIII 37/A, Banja Luka, Republika Srpska/Bosnia and Herzegovina Telephone: +387 51 333 300

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Pitfalls and Potential: Navigating Emerging Markets

OTHER EXPERTS IN THIS AREA

Company: SAI ERSTE Asset Management SA Romania Name: Dragos Neacsu Email: dragos.neacsu@erste-am.ro Web: www.erste-am.ro Address: Bucharest, 14 Uruguay Street, District 1, Romania Telephone: +40 372 269 999

Company: Walker Kontos Name: Michael Kontos Email: mkontos@walkerkontos.com Web: www.walkerkontos.com Address: Hakika House, Bishops Road, P.O. Box 60680, Nairobi, 00200 – City Square, Kenya Telephone: +254 20 2713023-6

-----------------------------------------------------------------------Mykola Stetsenko is the Managing Partner of Avellum Partners. -----------------------------------------------------------------------Avellum Partners is a full service Ukrainian law firm covering capital markets, competition, corporate, disputes, energy and natural resources, finance, real estate, and tax and customs. The firm was founded in 2009 with an initial focus on the corporate finance area, which still remains a core and key strength of Avellum Partners. “We are dedicated to delivering the highest possible level of services to our clients,” said Mr Stetsenko. “We focus on closing complicated high-profile transactions successfully and promptly while maintaining high professional standards.” Mr Stetsenko believes that, generally, investing in emerging markets does not differ much to investing in more mature markets. However, he stated that it requires double attention to details from the investor, strong understanding of the local culture and legal practices, and even greater reliance on experienced lawyers and very careful choice of local partners. Discussing the legal requirements that affect investors in Ukraine, Mr Stetsenko noted that the country’s legislation is actively developing and improving. He advised investors in Ukraine to bear the intricacies of local currency control legislation and banking regulations in mind. “As a ‘continental law’ jurisdiction, Ukraine relies heavily on laws and regulations, rather than court precedents,” he explained. “Ukrainian courts tend to apply law more literally (formalistically) without taking into account the legislative intent.” In Ukraine, any sizable acquisition is structured under English law. In addition, it is often structured offshore to optimise taxation and completely eliminate the impact of the

ACQUISITION INTERNATIONAL

Ukrainian judiciary. However, he warned that a foreign buyer should be aware that Ukrainian mandatory rules will apply when buying Ukrainian shares. For instance, a Ukrainian securities broker may be required for the acquisition of shares and the settlement may have to be structured via investment bank accounts in Ukraine and settled through a Ukrainian stock exchange. “It goes without saying that legal due diligence is necessary before signing the deal,” continued Mr Stetsenko. “In our practice, we have come across a few problems, which are common to almost any business group. “Corporate law violations – you will certainly find them in any transaction. This is due to the past history of growth of most groups by way of acquiring new companies. It is very rare for assets to be purchased in Ukraine, because of taxes and loss of permits and licenses. Share acquisitions would often breach pre-emptive rights of other shareholders or lack spousal consents. Sometimes unpaid shares are sold, which is prohibited under Ukrainian law.”

while a three year contract is definitely long term. Apart from sophisticated office leases, a commercial contract would rarely contain notice periods for termination of more than one month. “Regulatory issues are quite common among manufacturing and FMCG companies, but so far the level of fines and penalties imposed for regulatory violations is relatively low and the enforcement of ordinances of regulatory authorities is of limited efficiency.” Mr Stetsenko highlighted that, as a general trend, Ukraine is gradually bringing its legislation in line with the EU standards. In addition, the country intends to further liberalise its currency control and land ownership legislation. “The level of M&A activity will be moderate in 2013 with Ukrainian investors dominating the buy-side, while foreign investors continuing to exit. However, we expect this trend to reverse in late 2014 and in 2015,” he concluded.

Mr Stetsenko stated that past real estate acquisitions are rarely without any procedural violations. He noted that Ukrainian law treats land and buildings as separate objects. Thus, title to land and buildings located on it may belong to different owners, while registration of their title is reflected in different public registers. “Ukrainian land law was actively changing in the last few years, while the construction legislation has undergone at least three major reviews in the last 10 years,” he elaborated. “These legislative changes contributed greatly to varying practice and numerous inconsistencies in the procedure for the sale of land and construction permitting. “The majority of commercial contracts in Ukraine are short-term. A contract for one year is considered quite long,

Company: Avellum Partners Name: Mykola Stetsenko Email: mstetsenko@avellum.com Web: www.avellum.com Address: Leonardo Business Center, 19-21, B. Khmelnytskoho Str., 01030, Kyiv, Ukraine Telephone: +38 044 220 0335

July 2013 /

SECTOR SPOTLIGHT:

Pitfalls and Potential: Navigating Emerging Markets -----------------------------------------------------------------------Rolf Lindsay is a Partner with Walkers in the Cayman Islands and Nicholas Pattman is an Associate with the firm. Both are members of Walkers’ Global Latin America Group. ------------------------------------------------------------------------

A recent study conducted by the Emerging Markets Private Equity Association and Ernst & Young underlines the continued attraction of Latin America as an investment market, the region capturing over 20% of emerging market private equity investments in 2012. The economic growth of many Latin American countries, the purchasing power of an expanding middles class and much-needed infrastructure improvements have been well documented, as have the potential returns for foreign investors seeking to capitalise on this investment rich environment. Amidst stagnant and uncertain global markets, private equity houses seeking to diversify their portfolios are encouraged by the new growth and potential for higher returns, and this ensures that the focus on Latin America will continue for some time to come. However, investments into the region are not without challenges and the importance to managers of understanding the very unique aspects of the market, the need for careful implementation of entry and exit plans and ongoing monitoring of investments are as acute as ever. Those challenges do include the usual risks associated with the emerging markets: burdensome tax and regulatory environments, complex and uncertain legal systems and concerns about corporate governance and transparency abound. In addition, the relative infancy of the private equity market and the integral role that Latin America now plays in the global economy has brought its own particular considerations.

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At the entry level, as capital pours into the region and competition amongst managers, both international and local, increases there are concerns that some countries such as Brazil have now become overcapitalised. Because entry valuations for larger companies and buyouts in certain sectors are now considered too expensive by first time investors, investors in search of growth and margin are increasingly shifting their focus to Peru, Chile, Colombia and Mexico. When it comes time to exit, and despite the impressive deal flow across the region, a survey conducted by LAVCA (Latin American Private Equity & Venture Capital Association) in 2012 found that limited partners currently invested in Latin American still view their exit options as one of the weakest points of the region. The secondary sales market has yet to really develop in Latin America and in many countries IPOs are still not really a viable exit option due to the immaturity of their capital markets. So too, adverse adjustments to the new found political and economic stability in the region need to be monitored. Argentina’s expropriation of Repsol’s stake in YP, and Brazil’s now dropped criminal case and ongoing civil suit against Chevro demonstrate how a country’s investor friendly perception can shift. The Brazilian government continues to struggle with inflation, and the prospect of a credit downgrade highlights the macroeconomic problems and volatility that persist in the region. Appreciating the need for the efficient deployment of capital in order to maximise tight margins and understanding that investors require efficient and predictable exit routes for their deployed capital are cornerstones to attracting capital in a competitive environment. We have seen Latin America take some

important strides in that regard. Increasingly openness to investment by capital raised in the international financial centres like Cayman and the BVI, is a proven route to ensuring that local economies and investors alike make the most efficient use of the capital available to them and is to be encouraged. That, coupled with predictable laws on the treatment of capital and tax, and internal capital markets that are positively and transparently regulated, will ensure the permanent success of the most recent Brazilian private equity renaissance, with all of the benefits that this will bring for the region as a whole.

Company: Walkers Web: www.walkersglobal.com Name: Rolf Lindsay Email: rolf.lindsay@walkersglobal.com Telephone: +1 345 914 6307 Name: Nicholas Pattman Email: nicholas.pattman@walkersglobal.com Telephone: +1 345 814 4677

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

International Trade: Mitigating the Risks & Maximising the Opportunities of Trading Globally

INTERNATIONAL TRADE Mitigating the Risks & Maximising the Opportunities of Trading Globally

l Managing global trade has never been easy. Today’s economic landscape puts trade professionals under enormous pressure to reduce costs and increase efficiencies in an environment of growing complexity and risk. Government actions increasingly affect companies involved in the global trade of goods and services. Whether they’re negotiating multilateral, regional or bilateral trade agreements, or revising laws and regulations, the involvement of governments frequently has a direct and profound impact on the rules governing international trade. While the ultimate goal may be a more liberalised trading system, the immediate result is likely to be a multitude of rules, procedures and exceptions leading to an even more difficult business environment. To succeed in this complex global marketplace, organisations need a trusted partner with hands-on experience who can help them use trade agreements strategically while providing effective advice and proven solutions for the complicated compliance issues these agreements create. Businesses trading or looking to trade across borders are wise to consult experienced professionals who can assist in increasing efficiency, reducing costs and improving risk management in global trade. Acquisition International investigates the key issues with commentary from leading experts. Beijing / China

-----------------------------------------------------------------------Xiaochen Wu, an attorney admitted in China and New York, is a Partner of Hylands Law Firm, Beijing, China. -----------------------------------------------------------------------Hylands Law Firm is one of the largest law firms in China with offices in Beijing, Shanghai, Nanjing, Guangzhou and Hong Kong. Mr Wu highlighted the following complexities related to trading globally: The WTO negotiation stagnation: “The trading globally is watching the WTO negotiation, the Doha round negotiation may go into dead end which may affect the “trade flows as smoothly, predictably and freely as possible”(citing from the WTO website homepage).” FTA negotiations: “Countries might be more interested in the Free Trade Area (FTA) negotiations, such as ChinaJapan-Korea FTA, US leading TPP negotiation, and US-EU FTA negotiation.” “Fair Trade/Trade protection methods/Trade defence instruments: Globally, the countries are opting to adopt more trade remedy measures which affect the trade significantly. The recent EU antidumping and countervailing duty on China’s solar products involves more than USD 20 billion exports from China to EU.”

ACQUISITION INTERNATIONAL

IPR protection: “IPR protection continues to be one of the key issues in international trade, those high-tech companies which have tremendous in-out flow in the world market shall deal with this issue country by country.” Currency fluctuation: “The recent Japanese Yen depreciation annoys lots of exporting countries, such as China. You see, the government involvement in trade, currency, or any regulation may affect the trade substantially.”

services to China’s trade related regulation drafting and implementing. “Therefore, we can provide China trade regulation understanding in very in-depth thought and furthermore, we even can provide the prospective impacts analysis for what regulation might be amended and what new regulation might be introduced,” he concluded.

Market or non-market economy: “In certain countries which may be deemed as non-market economies, the government controlled or state controlled bodies’ behaviours in the global market may affect the business.” Dispute settlement: “The WTO dispute settlement body, the different jurisdiction court or arbitration venue continues complexities for countries and private parties if disputes arise.” Mr Wu worked for China’s Ministry of Commerce for five years and has a profound understanding of China’s trade regulation. He is one the key people to draft China’s Foreign Trade Law and Antidumping and Countervailing Regulation. Currently, he is China’s government’s Doha Round Rules Negotiation legal adviser and is frequently invited by the Ministries to provide consulting

Company: Hylands Law Firm Name: Xiaochen Wu Email: wuxiaochen@hylandslaw.com Web: www.hylandslaw.com Address: 5A1, 5F, East Wing, Hanwei Plaza, No. 7, Guanghua Road, Chaoyang District, Beijing 100004, China Telephone: 86-10-52019988, 86-13901356170

July 2013 /

SECTOR SPOTLIGHT:

A Step-by-Step Guide to Forming Companies

A STEP-BY-STEP GUIDE TO FORMING COMPANIES l As international boundaries have become less important, foreign investment flows in all directions; whether it’s on home soil or on the other side of the world, those with money to invest have a world of choice within which to capitalise on an investment. Importantly, in order to maximise the return on such opportunities, investors have to not only understand the market but understand how to trade in that environment once the initial investment has been made. This requires expertise in the initial formation process and beyond. Acquisition International speaks to leading experts to discuss the company formation process in a variety of locations.

OTHER EXPERTS IN THIS AREA

Company: RUSSELL BEDFORD CHILE Name: Miguel Pavez B. Email: mpavez@russellbedford.cl Web: www.russellbedford.cl Address: Calle Rosal 331, piso 4, Santiago Centro, Santiago, Chile Telephone: +56 22 633 0133

minimum two directors; (ii) minimum two shareholders and a maximum of 50 shareholders and (iii) minimum paid up capital of INR 100,000. The Indian Government has simplified the process of incorporation of the Company and has made all filings online. The steps for incorporation of a Private Limited Company are as follows: 1. Step 1: The proposed Directors of the Company have to apply and obtain a Director’s Identification Number (DIN) by filing the requisite documents in Form DIN1 with the Ministry of Company Affairs (MCA). One of the Directors must obtain a Digital Signature for signing the forms.

-----------------------------------------------------------------------Dr Vinod Surana is a Partner and CEO at Surana & Surana International Attorneys. -----------------------------------------------------------------------Limited Liability Company (Company) is the most preferred form of investment vehicle in India. There are two basic types of Companies under the Indian Companies Act, 1956; viz., Private Limited Company and Public Limited Company. The important legal features of Company form of entity are: separate legal entity, limited liability, perpetual succession and transfer of shares.

Foreigners investment into India mostly through Private Limited Company. The basic requirements for incorporation of a Private Limited Company are (i)

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2. Step 2: After DIN has been obtained, Name of the company (preferably three options) has to be chosen and one of the Directors (who has obtained the digital signature) has to file a Form 1A with MCA for seeking the availability of the name by giving various other details such as the proposed Promoters, Authorised Capital, the state in India in which the proposed Company would be registered, proposed directors, etc. There are detailed guidelines for selecting a name for a Company. After the scrutiny of the Form 1A, MCA would confirm name availability from one of the names provided in the said Form 1A. 3. Step 3: After the confirmation of the name availability, the Memorandum of Association (MoA) (the constitution of the Company) and Articles of Association (AoA) (the bye laws of the Company), have to be drafted and finalized along with the address of the registered office of the Company. 4. Step 4: After the MoA and AoA have been finalised, the Company has to file the Forms 1, 18 and 32 with the MCA along with the requisite documents.

5. Final Step: On successful scrutiny of the Forms and the documents, MCA shall issue the Certificate of Incorporation. On receipt of the Certificate of Incorporation, the company is officially incorporated and can commence its operations. Dedicated to providing quick relief to clients since 1971, Surana & Surana International Attorneys is ranked as the “first choice” for legal advice in South India by clients, Govt. of India and leading International as well as national publications like the Asia Pacific 500, International Financial Law Review, Chambers and Partners, Legal Business, Business Today, Industrial Herald, Industrial Economist etc. The firm has won several recognitions worldwide for competence, integrity, industry knowledge, quick turn-around, practical commercial-legal solutions, research, affordability, domestic & global network of associate law firms and contribution to social development.

Company: Surana & Surana International Attorneys Name: Dr Vinod Surana Email: vs@lawindia.com Web: www.lawindia.com Address: 61-63, Dr. Radhakrishnan Salai, Chennai (formerly Madras) - 600 004. India Telephone: +91-44-2812 0000

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

A Step-by-Step Guide to Forming Companies Counsel and Consultant for the World Bank, IFC, and several international organisations of credit, financing and investment, etc.,” said Mr Abdoullah. Mr Abdoullah stated that the establishment of a business in Mauritania is not very complicated; however it is subject to certain formalities:

“On the other hand, some companies, rightly, complain of the tax base that is not often made on the basis of specific standards,” he continued. “Hence the need for banks to play their role as a vector of the economy (and compliance with regulations and reduce taxes for the plate too much tax kills tax).”

•

Mr Abdoullah noted that the legislation governing the field of business is of good quality and has been made taking into account the evolution of business. However, there is a problem in terms of the training of those who are responsible for applying these texts.

• •

Development of various statues and constitutions (PV general assembly, minutes of meetings of the Board of Directors, etc); Authentication of documents by Notary; Any articles for the Commercial Register which allows the opening of a bank account.

Aside from the simplicity of the procedures for starting a business, Mr Abdoullah also highlighted the attractive Investment Code in Mauritania.

-----------------------------------------------------------------------Mine O. Abdoullah, Lawyer, is the Leader of the Cabinet “Etude Maître Mine O. Abdoullah”. ------------------------------------------------------------------------

Etude Maître Mine O. Abdoullah is grouped in a structure consisting of three lawyers and a trainee lawyer, a tax specialist (former Director of Taxes) and several assistants, trained lawyers. For cases treated abroad or requiring the intervention of a foreign jurisdiction, the firm maintains collaborative relationships with foreign Cabinets of international renown. “In addition to several mining companies in general and oil in particular, our firm has worked as Legal

Mexico City / Mexico

“The business litigation is very limited due to a lack of business outside of the mining areas in which, in case of conflict, international arbitration has jurisdiction,” he commented. “That said, the mining code is very advantageous for companies (tax benefits). “Our firm has worked hard – alone or in collaboration with foreign Cabinets – in counselling and legal assistance to companies in the mining sector in particular. And that has not changed very significantly in recent years.” Mr Abdoullah stated that access to bank credit is very limited, stating that the banks are unprofessional and do not take many risks and that the BCM (Central Bank) does not apply its oversight role to them.

Prior to incorporating a new entity in Mexico it is necessary to analyse tax, labour, social security, foreign investment, foreign trade agreements, antitrust, required authorizations, industrial and intellectual property matters and other related areas that will provide to the new entity the opportunity to achieve its optimum performance from the beginning of its operations. Although laws and regulations in Mexico have been amended to follow international trends and currently provide better protection and legal assurance for foreign investors, there are still areas where improvement is required.

-----------------------------------------------------------------------Estela Rodriguez Botello is a Partner at Legarreta Y Asociados, S.C.. -----------------------------------------------------------------------Setting up a company in Mexico has become easier and faster than it was in the past, it is now possible to incorporate an entity online, and even to choose the notary public that will formalize the articles of incorporation and by-laws during the process. Although the process of incorporation has been simplified, legal advice is still required to determine the applicable legal framework and the best scenario. Among other things, it is necessary to consider the type of entity that should be organized taking into account the nature of the business that will be performed.

ACQUISITION INTERNATIONAL

To encourage investment, and therefore companies, Mr Abdoullah believes that a one-stop shop should be put in place to allow a company to complete all the formalities (tax registration, social, etc.) within a short space of time. He also believes that a Court of Arbitration should be created for the resolution of disputes between private companies, as the state justice is slow.

Etude Maître Mine O. Abdoullah Company: Etude Maître Mine O. Abdoullah Name: Mine O. Abdoullah Email: cabmine@yahoo.fr Address: BP. 3807 – Av. G. A. Nasser Immeuble BMCI No.203 Telephone: +222 45 255954

I would strongly suggest to consult from the beginning, and prior to the incorporation of a new entity experts in corporate, industrial and intellectual property, tax and labour law to analyse the best structure for the new entity. In addition to involving lawyers prior to the incorporation process, the participation of an accounting firm is also advisable.

Foreign investment has been deregulated to allow higher percentages of investment, and the Mexican government is doing an important effort to allow foreign participation in strategic areas such as the telecommunications, oil and gas industries. energies, beauty, fashion, real estate, tourism, etc.

The location of the new company’s headquarters is also a very important decision. Although almost every company will at least have an office in Mexico city considering that it is the seat of the federal government and its importance from various standpoints, including the number of its population and the economic activity, Mexico offers great opportunities in various states. Therefore a good analysis should be performed prior to the incorporation process to determine the best location of the new entity and/or its subsidiaries.

Mexico offers to foreign investors the opportunity to develop their business in every area, services, manufacturing, farming, telecommunications, oil, gas, tourism, real estate, financial services, construction, etc.

Finally, Mexico is one of the countries worldwide that has entered into most foreign trade agreements making the Mexican market highly attractive for the manufacture and export of almost all types of products.

For the first meeting with legal counsel, I would suggest to have a clear definition as to the scope of the activities that the company will perform in Mexico, determine whether the company will be managed by a sole director or by a board of directors, consider whether there are any benefits in the country of origin from using a special type of entity, v.gr., a corporation vs a limited liability corporation; think about who should be the partners or shareholders and whether they will be individuals or entities. In Mexico, it is still required to have at least two founders for any type of entity. It is also important to analyse whether the company will always be privately held or whether it is expecting to become public within a short time, in order to choose the best form of company.

Company: Legarreta Y Asociados, S.C. Name: Estela Rodriguez Botello Email: estela@legarreta.com.mx Web: www.legarreta.com.mx Address: Av. Picacho Ajusco #130 Desp. 503, Col. Jardines en La Montaña, México, D.F. Telephone: +52 (55) 56 31 18 12

July 2013 /

SECTOR SPOTLIGHT:

A Step-by-Step Guide to Forming Companies skilled, multilingual and flexible work force, its favourable tax regulations for businesses, its stable political climate and its high standard of living make the Netherlands the ideal place to start a business. Establishing a business The most common business entity in the Netherlands is the ‘Besloten Vennootschap met beperkte aansprakelijkheid’ (“B.V.”: private company with limited liability). The key aspect of the B.V. is that shareholders are only liable for their share in the company. Managing directors are in principle not liable for debts of the company. However they could be liable if serious negligence can be proven. A B.V. is established by a deed of incorporation and registration at the Chamber of Commerce. For this procedure, a Dutch civil law notary must be involved who can be provided by Russell Advocaten. This entity can already be incorporated with a share capital of only € 0.01. Unlike some other jurisdictions, Dutch law allows foreign directors to take a seat on the management board and no restrictions are made for establishing foreign companies in the Netherlands. This underlines once more that the Dutch market is open to foreign investments.

Amsterdam / The Netherlands -----------------------------------------------------------------------Reinier W.L. Russell is the Managing Partner of Russell Advocaten. -----------------------------------------------------------------------Introduction The Netherlands is a perfect business location for (foreign) entrepreneurs. The country has excellent logistics, a welldeveloped technological infrastructure and is the gateway to densely populated Western and Central Europe. Its highly

Vasco da Gama bridge in Lisbon, Portugal

Other options for doing business As an alternative to the incorporation of a B.V., foreign entrepreneurs can appoint a distributor, an agent, a franchisee or they can establish a branch office in the Netherlands. A branch office can also be established as a foreign entity, but it needs to be registered with the Dutch Chamber of Commerce. Other important issues Foreign employers in the Netherlands must be aware that Dutch labour law protects the interests of employees. There are, among others, provisions regarding holidays, minimum wages, working hours and the employment of disabled employees. Russell Advocaten is highly experienced in

Subsequently the company shall be subject to registration both with the tax authorities and with the Commercial Registry. As an alternative to the standard procedures, the Portuguese Government instituted a special procedure – “empresa na hora” (readymade company) – which enables the incorporation of a company in a matter of hours. In this case, however, one must chose a name from a previously approved list and standard articles of association. Private Limited Companies (Sociedades por Quotas) and Joint Stock Companies (Sociedades Anónimas) are the most common types of companies in Portugal. A Sociedades por Quotas has its share capital divided into “quotas”, which are not materialised in certificates, being the quota holders identified in the Commercial Registry. There are currently no minimum initial share capital requirements for this type of company. The share capital amount is freely established by the shareholders.

-----------------------------------------------------------------------Tiago Ferreira de Lemos is one of the founding partners of the Portuguese firm Plen and is the head of the banking and finance area of the firm and co-head of the commercial law practice area. -----------------------------------------------------------------------Mr de Lemos explained that the first step when setting up a company in Portugal is to register a name with the Portuguese Registo Nacional de Pessoas Colectivas. The name may not be confusable with any other previously registered name. The next step is the incorporation of the company by way of the execution of the private instrument of incorporation by the shareholder(s) or by whosoever represents them, which comprises the signature of the company’s articles of association and the corresponding subscription of the share capital.

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rendering legal advice on labour law issues, particularly for foreign companies. Moreover, foreign entrepreneurs might want to lease business accommodation in the Netherlands. Generally, the lease period is five years with an option to renew the lease for another term of five years. However, leasing premises is governed by detailed legislation that goes beyond the scope of this article. Therefore, we advise foreign entrepreneurs who would like to lease property in the Netherlands to contact us. If a foreign entrepreneur decides not to lease accommodation in the Netherlands, a trust office could provide the (fiscally) required postal address. Russell Advocaten cooperates with several high quality trust offices. Concluding remarks The Netherlands is an appealing place to conduct business. At Russell Advocaten, we have highly skilled specialists to assist you in successfully entering the Dutch market and we render legal support to your day-to-day business operations.

Company: Russell Advocaten B.V. Name: Reinier W.L. Russell Email: r.russell@russell.nl Web: www.russell.nl Address: P.O. Box 87400, 1080 JK Amsterdam, The Netherlands Telephone: +31 20 301 55 55

The minimum share capital is €50,000 and all shares must have the same nominal value, which may not be less than 1 cent of an euro. This type of company may not be incorporated by less than five shareholders (however, the law allows a company to incorporate a wholly owned Sociedades Anónima). Shares may be nominative, to the bearer (registered or not) or book-entry shares. Directors do not have to be shareholders, but they must be individuals. If a corporate body is appointed, it must appoint to an individual to perform the office in his own name. The directors are appointed in the instrument of incorporation or by election at the general or initial meeting. Supervision of Sociedades Anónimas must at least be awarded to an internal auditing board (consisting of three or five members) or, alternatively, to a sole statutory auditor. The sole auditor or one member of the audit board must be a Portuguese official chartered auditor (Revisor oficial de contas) or a firm of official chartered auditors.

Quota companies are managed and represented by one or more directors. These must be individuals with full legal capacity and may be chosen from non-shareholders of the company. The directors may be appointed in the instrument of incorporation, elected subsequently by decision of the general meeting or in any other manner foreseen in the articles of association. These companies are not subject to mandatory supervision by any audit board or by any sole auditor, except in cases where, during two consecutive years, certain financial/ dimension thresholds are exceeded. In addition to the general requirements and features for the setting up of any type of commercial company, Sociedades Anónimas must satisfy other requirements before they can be definitively established.

Company: Plen – Sociedade de Advogados, RL Name: Tiago Ferreira de Lemos Email: tiago.lemos@plen.pt Web: www.plen.pt Address: Av. António Augusto de Aguiar, n.º 24 - 7.º Esq., 1050-016 Lisbon, Portugal Telephone: + 351 21 351 35 80

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

A Step-by-Step Guide to Forming Companies “We are always promoting the use of St. Vincent and the Grenadines (SVG) as a jurisdiction of choice,” said Mrs DeFreitas. Discussing the company formation process in SVG, Ms DeFreitas explained that upon receipt of the required information from its clients, including the customary due diligence, the firm proceeds to reserve the desired name for the entity and then submits the necessary documents to the firm’s Registrar (i.e. Articles of Incorporation). The process takes as little as 48 hours or two business days to complete. It commences with the confirmation of the desired name of the corporation and ends with the receipt of documents from the Registrar confirming that a new entity is in existence. According to Ms DeFreitas, the regulation in SVG assists business growth as the jurisdiction remains one of the most attractive in the world in terms of low cost. The jurisdiction grants international business companies the option to elect whether or not to pay taxes in the jurisdiction and there is flexibility in terms of the structure of an entity, i.e. IBC, Hybrid, Segregated Cell.

The Series LLC permits a single limited liability company to own multiple subsidiary LLC’s, each of which owns a single asset business. This LLC can establish a “Series” or units under the same LLC umbrella. Each Series, company or unit has a separate purpose and those members have different rights, powers, privileges and duties. “The Series LLC offers greater benefits to a new investor such as tax flexibility, choice of investment structure, versatility or less exposure to legal liability,” continued Mrs DeFreitas. “In sum, it is a combination of SVG’s low cost of doing business vis-à-vis other jurisdictions, an on-going drive to enhance its offerings whilst maintaining the highest international standards from a legislative and regulatory standpoint that will render this jurisdiction one to be seriously considered by any international investor in the short term and beyond. “Look out for great things to come from St. Vincent and the Grenadines,” she concluded.

In recent times, two areas attracting considerable interest from international investors are Hybrid entities and Series LLC’s.

-----------------------------------------------------------------------Merma DeFreitas is the Managing Director of Wilfred Services Ltd., Registered Agent and Trustee in St. Vincent and the Grenadines (SVG). -----------------------------------------------------------------------Since 1997, Wilfred Services Ltd. has been a Registered Agent and Trustee in St. Vincent and the Grenadines (SVG) servicing clients worldwide. The firm has maintained a philosophy that a multi-jurisdictional international financial service solution is the best one for any client given the dynamic environment in which it operates.

Milan / Italy

A hybrid corporate vehicle is a company that is limited by guarantee but also has a share capital. Such a company is normally structured with at least two classes of members – shareholding members and guarantee/beneficiary members. “Shareholding members may own ordinary voting shares, preference shares, or both,” explained Mrs DeFreitas. “Conversely, Guarantee members undertake to contribute to the debts of the company up to certain specified maximum amount in the event of its liquidation. Therefore, a guarantee member holds an obligation as opposed to a shareholding member who holds a stake in the company.”

Mr Saottini stated that the incorporation of a company (or a Representative Office or a Branch) in Italy is quite simple. “Once agreed the articles of the Memorandum of Association with the Client and collected all relevant information, an Italian Public Notary files the Incorporation deed and submits the same electronically to the Italian Companies Register,” he explained. “In one week the company is incorporated and able to do business in Italy.” Mr Saottini noted that employment costs in Italy are among the highest in Europe, adding that an employer needs to face a cost for an employee more than double the net salary of the employee itself. “This, added to the very poor flexibility of our employment laws, is making the unemployment rate very high,” he commented.

-----------------------------------------------------------------------Riccardo Saottini is the Managing Partner at Batini Colombo Saottini (BCS). -----------------------------------------------------------------------BCS has seen consistent organic growth since it was founded in 2000. The firm has grown from two to around 30 professionals and from 10 to more than 150 clients. The international practice has developed in the last five years and the firm now assists clients from more than 40 countries around the world.

ACQUISITION INTERNATIONAL

“Banks and financial institutions are getting more and more strict in conceding credit to enterprises: after a period of poor surveillance on client’s real figures, now if an entrepreneur does not have personal assets to be given as a guarantee, it is very hard to obtain financing and cash. Taxes are another serious issue in Italy; companies and entrepreneurs are now facing a real tax rate of more than 68%: this doesn’t attract new investments, on the contrary is making domestic businesses search for cheaper jurisdictions where to relocate their businesses.” In order to improve the formation process and the business environment in general, Mr Saottini believes that it is necessary to enforce serious measures to attract investments from abroad. He stated that Italy has several sectors that could see huge improvements, including: fashion, tourism and food. He highlighted the country’s excellent companies, working internationally that have

Company: Wilfred Services Ltd. Name: Merma DeFreitas Email: info@wilfredinterantionalservices.com Web: www.wilfredinternationalservices.com Address: Suite 305, Griffith Corporate Centre, Box 1510, Kingstown, St. Vincent and the Grenadines Telephone: +784 456 2970

relocated their production abroad, where salaries and raw materials, as well as facilities, are cheaper. “Our governors have to look deeper into those excellences and support local producers,” he opined. “At the same time consistent cost-saving politics and cuts have to be made in institutions: salaries and benefits are too high, public expense is too high (without a corresponding high level of service received by citizens), duplications in roles and personnel, as well as absenteeism are plagues that have to be immediately removed if we want to see our country grow. “There are still many things that domestic enterprises, and particularly young entrepreneurs, can do in our country and abroad, as well as foreign enterprises in Italy, but they have to forget any excessive state aid: they have to focus on their business, doing better every day, and keep trusting in what they do. And we are here to help them to accomplish their mission,” he concluded.

Company: Batini Colombo Saottini Chartered Accountants, Attorneys at Law, HR Consultants Name: Riccardo Saottini Email: riccardo.saottini@studio-bcs.com Web: www.studio-bcs.com Address: Via Alfredo Tornaghi, 59, 20062 Cassano d’Adda, Milan, Italy Telephone: +39 (0) 363 36 02 54

July 2013 /

SECTOR SPOTLIGHT:

A Step-by-Step Guide to Forming Companies River Limmat. Zurich, Switzerland

The steps to incorporate a Swiss company are as follows: 1. Provision of compliance information; 2. Name check; 3. Opening of a capital deposit account with a Swiss bank; 4. Payment of the share capital of CHF 20,000 (GmbH) or CHF 100,000 (AG) into the capital deposit account; 5. Act of incorporation at the notary; 6. Registration at the trade register; 7. Registration of VAT, trademarks, opening operational bank accounts, etc. In Ms van Gelderen’s experience, the above process can be completed in two to three weeks. “In general Switzerland offers a very solid legal framework for the set-up of companies,” she observed. “Swiss companies are globally accepted as separate legal entities and offer legal protection for the assets it holds.”

-----------------------------------------------------------------------Fréderique A. van Gelderen is an international structuring advisor for the H&P Trust Group. -----------------------------------------------------------------------H&P Trust Group was founded in 2006 by professionals who recognised the need of private clients and wealthy families for a dedicated corporate and fiduciary services provider.

Ms van Gelderen stated that a Swiss company is relatively easy to set up, however the company only legally exists as per the moment it is registered with the Cantonal Trade Register. She noted that some Registers can do this within a day, while others can take 5 to 10 days depending on the time of the year.

-----------------------------------------------------------------------Declan Mordaunt is a Partner at PricewaterhouseCoopers – Qatar LLC. ------------------------------------------------------------------------

PwC was established in the State of Qatar in 1981. PwC has a registered company in the Qatar Financial Centre, PricewaterhouseCoopers – Qatar LLC. The firm is recognised as one of the leading providers of quality business advisory services in the country. PwC has served many organisations in the public and private sector and assisted many foreign clients in establishing businesses in Qatar. PwC’s Qatar tax and legal practice can provide assistance with: • Inbound structuring; • Tax compliance; • Tax management and accounting services; • Immigration services; • International taxation; • Transfer pricing; and • Entity formation services. Under the Foreign Investment Law, foreign investors may invest in most sectors of the Qatari economy on the condition that they register a legal presence in Qatar, and if a company is incorporated, at least 51% of its shares are owned by a Qatari partner (i.e. a Qatari national). Branches and Limited Liability Companies (“LLCs”) are the most common business structures used by foreign enterprises intending to conduct business in Qatar. The establishment of a wholly owned branch by a foreign entity requires ministerial approval and usually requires the award of a contract with a governmental or quasigovernmental entity. A branch usually exists only for the duration of the associated project or contract.

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“Also Switzerland has signed a large number of tax treaties and therefore offers a highly interesting platform for international structuring. Further, the domestic tax laws are most competitive compared to other European countries.” “Switzerland has proven to be a safe haven for investors. It lies central in Europe, offers a solid legal system, a welleducated work force, accessible authorities, a very good banking system, an excellent tax regime, and in many cantons special incentives are available to attract new investors. The name ‘Switzerland’ is still the synonym for quality.” Ms van Gelderen highlighted a number of issues that should be kept in mind when setting up a company in Switzerland. Firstly, a Swiss company always needs a Swiss resident director. Directors have to be persons, they

An LLC is normally a more appropriate structure for a business model envisaging activity over a number of years and contracts. In Qatar it is not possible to buy “off the shelf” companies. An LLC usually requires the participation of Qatari nationals, with the foreign shareholding restricted to 49% unless specifically approved. It is permissible to share profits in a different ratio. Ministerial approval for up to 100% foreign investment in companies engaged in specific sectors is given on a discretionary basis. There are also “special zones” in Qatar in which a foreign investor can operate provided they fulfil certain criteria. The Qatar Financial Centre (“QFC”) is mainly aimed at organisations operating in the financial services sector. QFC entities can conduct business internationally and can be 100% foreign owned. The Qatar Science and Technology Park (“QSTP”) is a location for entities engaged in research and development activities. Entities must be physically located in the QSTP and can only engage in activities specified in their licence. They can have 100% foreign ownership and can apply for a full exemption from corporate income taxes and can import goods and services free of customs duties in respect of their licensed activities.

cannot be companies. A director of a Swiss company can be held personally liable for the obligations of the company. Another factor is the very high quality standard of Swiss banks. This means that any ultimate beneficial owner of a new accountholder needs to present themselves in person to the bank before the bank account can be opened. Finally, she noted that Swiss withholding tax is set at a rate of 35%. “In most treaties this is lowered substantially (in many treaties even to 0%), however the Swiss tax authorities look very well into the substance of a structure,” she explained. “The mere interposing of a Swiss company may not always work from a withholding tax angle.” “Switzerland offers great opportunities for international holding companies, trade companies, IP companies, and other operational companies and has proven to be a sustainable jurisdiction in the centre of Europe offering a solid platform for entrepreneurs looking to grow and preserve their business,” she concluded.

Company: H&P Trust Holdings AG Name: Fréderique A. van Gelderen Email: frederique.vangelderen@henleytrust.com Web: www.henleytrust.com Address: Poststrasse 6, 6300 Zug, Switzerland Telephone: +41417296363

b. Commercial Registration c. Trade Licence and Signage Licence 4. Register at the Immigration Department of the Ministry of Interior in order to be able to sponsor employees in Qatar. It typically takes 4 to 8 weeks to obtain the ministerial approval required for a branch, provided all the required documents have been submitted to the Ministry of Business and Trade. The timescale to establish an LLC is similar provided the foreign investor can promptly find and agree terms with an appropriate Qatari partner. An attentive and experienced advisor can help to expedite the process and ensure there are no unforeseen difficulties. At PwC we regularly liaise with our clients throughout the process and typically meet with government departments and officials at various stages to ensure that the set up progresses as quickly and smoothly as possible.

Process of setting up a branch or LLC The process of setting up a branch or LLC is similar and consists of the following stages: 1. Prepare legal documentation (e.g. Power of Attorney, Articles of Association and legalisation of other documents originating outside Qatar). 2. Deposit the legally required capital at a bank and obtain letter/certificate from such bank evidencing the deposit of the capital (for LLC only). 3. Obtain required licences and consents: a. Qatar Chamber of Commerce Membership

Company: PricewaterhouseCoopers – Qatar LLC Name: Declan Mordaunt Email: declan.mordaunt@qa.pwc.com Web: www.qa.pwc.com Address: Tornado Tower, 41st Floor, Doha, State of Qatar | PO Box 6689 Telephone: +974 44192801

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Corporate Immigration: Issues and Challenges in the Current Economy

CORPORATE IMMIGRATION

Issues and Challenges in the Current Economy l Relocating across international boundaries is extremely common in today’s increasingly global economy. Many businesses prefer to look further afield than their base country in finding quality personnel and many operate from various globalised locations to better service their customers. As such employers now face a growing number of administrative regulations, national policies and international treaties governing foreign workers. Not only do immigration regulations differ from country to country, but also the management of international assignees is extremely complex and time-consuming. Business executives are advised to seek the support from committed and experienced professionals who can offer expert guidance on immigration issues and policy. It is important to gain advice from the right people in order to remain informed and updated with current procedures and processes across all jurisdictions in question. Acquisition International speaks to a selection of corporate immigration experts to discuss the current key issues.

OTHER EXPERTS IN THIS AREA UNIQUE Consultancy & Management Services Company: UNIQUE Consultancy & Management Services Name: Mohammed Shakeel Siddiqui Email: unique_okc@yahoo.ca Telephone: +971 2 6268880

-----------------------------------------------------------------------Joanne Kinslor is a Principal Solicitor at Kinslor Price Lawyers. -----------------------------------------------------------------------Kinslor Prince Lawyers is a specialist immigration law firm. Its Principals are two of Australia’s leading experts on immigration law with combined experience of thirty years practice. They have been accredited by the Law Society of New South Wales as immigration specialists and recognised by their peers as among Australia’s finest immigration lawyers through inclusion in Best Lawyers – Australia. Kinslor Prince Lawyers practices in all areas of Australian immigration law and at all levels – from applications before the Department of Immigration and Citizenship to court appeals. “Our experience is coupled with a detailed knowledge of the complex legislative provisions operating in this area,”

ACQUISITION INTERNATIONAL

Company: Weber & Co Name: Ewald Oberhammer Email: e.oberhammer@weber.co.at Web: www.weber.co.at Address: 1010 Wien, Rathausplatz 4, Austria Telephone: +43 1 427 2000

said Ms Kinslor. “Both of our Principals teach immigration law at Australian universities. We are also highly involved with political developments and advocacy through the Law Council of Australia.”

“We look not only to our client’s immediate needs, but also to what action they can take to strategically position themselves for the future. We have the knowledge to advise upon the implications of decisions beyond the immediate context, which is critical for future planning and risk management. The scope of our knowledge and expertise also enables us to find solutions outside the box.” Ms Kinslor noted that the Australian economy has continued to demonstrate resilience over the last 12 months and that the country’s unemployment rate has remained relatively low. She added that sponsorship of skilled workers has increased and has become a focus of attention for the Australian Government in the lead up to the federal election in September this year. “Regulatory change has been proposed and we are positioning our clients to address the anticipated changes by evidencing the benefits of skilled migrants to the Australian economy. In November 2012 Australia introduced a significant investor visa with relaxed residence requirements. Given the historical low level of business migrants and the active support shown by Australian State and Territory Governments for this new visa it is proving a popular option for business executives. It provides flexible residence requirements particularly well suited to those involved with international business operations. ” she concluded.

Ms Kinslor stated that corporate immigration advisers need to be responsive to client needs, have an up-to-date knowledge of this rapidly changing area of law and an understanding of trends likely to impact upon their clients. “Our Principals deal directly with each of our clients,” she continued. “This means that our experts are personally engaged with clients, have a detailed knowledge of their clients’ situations and are responsive to developments as they arise. The breadth of our experience and expertise enables us to take a strategic approach to addressing client needs with a view both to the present and the future.

Company: Kinslor Prince Lawyers Name: Joanne Kinslor Email: joanne@kplaw.com.au Web: www.kplaw.com.au Address: Suite 102, Level 1, 155 King Street, Sydney NSW 2000 Telephone: 61 (0)2 9223 4242

July 2013 /

SECTOR SPOTLIGHT: Ship Registration

SHIP REGISTRATION l International law stipulates that every merchant ship has to be registered in a specific country; registration gives the ship a nationality and allows it to travel internationally. Each ship is bound to the law of its flag state, which makes selecting a flag a complex process; there seems to be an ever increasing number of flags available and the best choice is becoming increasingly difficult for owners to make. Acquisition International examines ship registration in a number of flag states, introduced by Quentin Bargate, a Senior Partner at Bargate Murray. needed are forms Reg 1 (Application to Register), Reg 3 (Appointment of an Authorised officer), Reg 4 (Declaration of Ownership) and Reg 15 (Declaration of Pleasure Vessel). “There are other requirements depending upon the history of the vessel and its ownership structure which we can advise on,” added Mr Bargate. “At Bargate Murray we have significant experience in dealing with the principal registries and applications for registration.” Responsibilities of the flag state Mr Bargate explained that, in the simplest terms, a vessel’s flag indicates the vessel’s nationality and a flag state has responsibility for all vessels on its register. He stated that choosing the right flag for a yacht is therefore essential, as this defines the primary set of rules under which the yacht will operate, including the administration or government of the chosen flag state.

The firm In 2004, Mr Bargate set up his own law firm – Quentin Bargate & Co – which became Bargate Murray in 2006 when he was joined by ship finance lawyer Andrew Murray. Mr Bargate heads the firm’s Superyacht and Aviation group and the firm’s litigation and dispute resolution practice. “Over the course of nearly a decade, Bargate Murray has developed into a leading commercial and litigation firm with a specialised Superyacht and Aviation department that provides cutting edge advice to owners and managers of superyachts and aviation clients,” said Mr Bargate. “Our Superyacht and Aviation departments have all the strengths and expertise of a City law firm but the flexibility of a smaller practice. Our partners work directly on your matters rather than supervising them from afar and our boutique size ensures a more flexible approach to billing. In short, our client care is second to none.” “Our established network within the Superyacht industry ensures that clients receive not only practical informed, legal advice but also that they have a host of other services at their disposal. We enjoy an excellent relationship with the primary yacht flag registries. This enables us to offer up-to-date views on registry interpretation of legislation that affects our clients.” Whilst Bargate Murray consists of English lawyers and its “local” regulatory authority is the Maritime and Coastguard Agency of the United Kingdom, the firm works closely with a number of other flag states throughout the world, including the Cayman Islands, The Isle of Man and Malta. The firm’s recommendation of flag will always be tailored to its client’s specific requirements, however, many of its current clients have opted to flag their yachts in the Cayman Islands. The Cayman Islands “As a Red Ensign jurisdiction, Cayman enjoys a worldclass reputation for ensuring its yachts meet all relevant regulatory standards applied by most Port State Control authorities,” explained Mr Bargate. “This is further evidenced by Cayman’s position on the Paris MOU ‘White List’ which ranks the world’s best performing flags from a Port State Control perspective.”

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Mr Bargate described The Maritime Authority of the Cayman Islands (MACI) as both user-friendly and yacht-friendly. He stated that the staff are helpful and well-versed in dealing with the requirements that are particular to large yachts, rather than for example, commercial tonnage. “We have excellent contacts at MACI and the other registries, which means that we can be of real assistance to our clients in relation to registration requirements, surveys, safe manning requirements and many other important aspects of yacht and ship ownership,” he continued. “Recently, I was invited to join the Cayman Island Ship Advisory Council yacht committee, attending the CISAC conference in Fort Lauderdale, USA in June.” “Of course there are other excellent flags, and our team work actively with other external advisers to ensure a tailored service for our clients.” Cost and requirements for registration The cost of registrations and the application procedure differs for each flag state. In the Cayman Islands, the fee for registering a yacht under construction is approximately US$300 and for a completed vessel of 1500 gross tonnes or more the average fee is US$600. “If the owner of the yacht is not a Cayman Islands resident or Cayman Islands company, a local representative person resident in the Cayman Islands must be appointed,” continued Mr Bargate. “A representative person’s fees are usually in the region of US$1300 and we have colleagues in the Cayman Islands who offer such services. There is also tonnage tax which is calculated on the basis of the tonnage of the vessel.” The key documents required for Cayman Islands registration are CISR Forms 856 and 855. Mr Bargate explained that the latter of these forms is used to appoint a legal advisor to act as an Authorised Person to act on the owner’s behalf during and after the registration process, which owners find particularly helpful. In the Isle of Man, the fee for registration is £160 with an annual fee of £115 payable. If the vessel is to be registered as a pleasure yacht in the Isle of Man, the key documents

“This means a vessel will be subject to the laws and regulations of the flag state, including the vessel’s title, ownership, safety and welfare of the crew – to name a few,” he elaborated. “Under the Maritime Labour Convention 2006, flag states have wide ranging responsibilities and can themselves be penalised for a vessel’s non-compliance.” Manning guidelines The principal requirements for manning, qualifications and training on UK ships are found in the Merchant Shipping Act 1995. The act provides that the sections relating to manning apply to every UK ship, as well as to foreign vessels carrying passengers between places in the UK or on excursions from and to the same location in the UK. “The Merchant Shipping Regulations require that sufficient manning levels are maintained to ensure safe and efficient operation at all times – safety being a primary concern,” said Mr Bargate. “Factors to be taken into consideration include the frequency of port calls, cruising areas, vessel size and type. It is the owner/operator’s responsibility to ensure that the yacht is adequately manned and that the crew have the relevant certification and experience relevant to the yacht’s size, type and operation.” Looking ahead “Accurately predicting ship registration numbers in any one year is difficult, and depends on a range of factors – including social, cultural and innovation patterns. However, at Bargate Murray we are seeing a continued demand for our services which we take to be a positive indicator of things to come,” concluded Mr Bargate.

Company: Bargate Murray Solicitors Name: Quentin Bargate Email: Quentin@bargatemurray.com Web: www.bargatemurray.com Address: 5th Floor, 20-22 Curtain Road, London, EC2A 3NF Telephone: +44 (0) 20 7375 1393

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Ship Registration

-----------------------------------------------------------------------David Payne is the Managing Director of AMS Financial Services Limited. ------------------------------------------------------------------------

The British Virgin Islands (“BVI”) while also dubbed the “Sailing Capital of the World” also carries the distinction as a leading reputable offshore financial services centre. As a Category 1 Red Ensign jurisdiction, the BVI can register Mega Yachts up to 30,000 gross tonnage and general cargo ships of unlimited tonnage. The success of the BVI as a jurisdiction has predominantly been as a result of its flexible legislation, and political and social stability which has been the hallmark of the BVI being the first choice for the discerning high net worth individual and persons seeking legitimate structuring of their assets through a trusted and proven brand (BVI). Couple the benefits of the jurisdiction with value-added services such as Category One Shipping and Aircraft registry and you have a winning combination. Marine Mortgage, international recognition of vessel’s nationality and other proprietary interests are some reasons why persons may require AMS Financial Group’s services

ACQUISITION INTERNATIONAL

in registering their vessel. Vessels flying the Flag are entitled to British Diplomatic/Consular support and Royal Navy Protection while also gaining access to the range of technical expertise of the UK Maritime and Coastguard Agency. AMS Financial Group has a team of efficient and professional personnel who can assist with the registration and continued administration of the vessel. The name of the vessel must be submitted for approval. A marine surveyor from an approved classification society or one appointed or authorized by the Registrar of Ships must survey the yacht and prepare a Certificate of Survey/ Tonnage Certificate accordingly. Typically, a BVI Business Company (“BVIBC”) is incorporated for vessel registration, due to requirements that the proposed owner is required to be qualified to own a vessel registered in the BVI. The Certificate of Incorporation, good standing status, together with proof of title to the yacht (i.e. Bill of Sale or Transfer, Builder’s Certificate or other evidence of ownership) must be submitted along with the executed Application form. There is one particular document known as “Appointment

of Authorised Officer” that requires the form to be executed by the owner identifying and naming a local individual (AMS personnel) who will execute the application for registration on the owner’s behalf. An “Undertaking to Act as Representative Person” must be executed by the person appointed as such by the owner of the vessel. Upon the successful submission of the Vessel application to the Registrar of Ships, an Official Number is assigned to the vessel, and the Carving & Marking Note (“C&MN”) is issued to the applicant. The C&MN is processed within 24 hours and reflects the vessel’s name, Port of Registry (of which there are three “Road Harbour”, “Gorda Sound” and “White Bay”), official number and registered tonnage, all of which are required to be placed on the yacht as per the Virgin Islands Shipping Registry (“VISR”) requirements. An approved marine surveyor or the owner (depending on the vessel size) is required to complete and sign the C&MN certifying that the yacht has been marked and carved accordingly. It should be noted that the C&MN should also be accompanied with photographs reflecting the carving and marking on the vessel, after which the Registry of Shipping will provide the Certificate of British Registry otherwise known as the Blue Book.

Company: AMS Financial Services Limited Name: David Payne Email: david.payne@amsfinancial.com Web: www.amsfinancial.com Address: Sea Meadow House, PO Box 116, Road Town, Tortola, British Virgin Islands Telephone: +284 852 2835

July 2013 /

SECTOR SPOTLIGHT: Ship Registration

this value-added service eliminates the need for engaging three different auditors. “Moreover, through the use of the Registry’s web-based Seafarers Electronic Application System (SEA System), registered filing agents and ship owners can electronically apply for Liberian seafarer documents,” he continued. “Liberia’s award-winning SEA System results in significant savings for clients in processing and courier costs.” The Registry’s Administration also provides vessel plan approval services for Ship Security, Ballast Water Management, Ship Board Oil Pollution Emergency, Garbage Management, Shipboard Marine Pollution Emergency, Ship-to-Ship Operations and Volatile Organic Compound (VOC) Management. Liberia has also pioneered a sophisticated “Advance Notice of Arrival Program” (ANOA) to screen advance notice of ship arrivals as part of a detention prevention plan to help maintain its independent ranking among the safest and most efficient ship registries in the world. “Prior to arrival for every vessel, the Administration uses an innovative risk analysis tool to calculate whether a vessel may be a high target for PSC boarding,” explained Mr Bergeron. “Subjective risk criteria cover both the ship and the company, drawing on PSC deficiency and detention histories. If there are concerns that a vessel may not be in compliance, the Administration has several proactive support services that will be implemented.” Liberia is also the only Flag State to offer Electronic Certificates. Vessel certificates are issued with the Liberian Administration’s Tracking Identification Number (TID) to enable port state officials and other parties to verify the authenticity of the relevant certificate or official document using the verification tool available on the Registry’s website.

Liberia -----------------------------------------------------------------------Scott Bergeron is the CEO of LISCR, LLC – a member company of YCF Maritime. -----------------------------------------------------------------------History of Liberia’s Maritime Program The Liberian Registry was established in 1948 by former U.S. Secretary of State Edward Stettinius who was also an instrumental figure in forming the United Nations. In 1959, Liberia became a founding member of the International Maritime Organisation and has worked diligently to promote maritime safety, security and environmental protection. “For more than 65 years, Liberia has been committed to providing safe shipping,” said Mr Bergeron. “Since its inception, the Liberian Registry has been operated from the United States. In fact, the U.S. structure and principles governing the Administration of the Liberian Registry are embedded into Liberian law. Pursuant to these statutes, the Registry must be principally operated from the U.S. and managed by international maritime professionals for the benefit of the people of Liberia. “The strong U.S. – Liberia alliance provides the Registry with the ability to participate in the international arena with key industry institutions. A key to Liberia’s success is the employment of industry experts, not bureaucratic regulators.” The Liberian Registry is administered by the Liberian International Ship and Corporate Registry (LISCR, LLC), a private U.S. owned and globally operated member company of YCF Maritime and the YCF Group. LISCR is internationally recognised for its professionalism and commitment to reduce redundant workflow procedures in order to increase efficiency.

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The Liberian Registry’s distinguishing features The Liberian Registry is the second largest ship registry and recognised as the world’s largest quality registry with approximately 4,000 vessels aggregating 135 million gross tons; this represents nearly 13% of the world’s ocean-going fleet. It has a long-established track record of combining the highest standard for vessels and crews with the highest standards of responsive service to owners. The Liberian Registry provides 24-hour customer support to its shipowners and managers through its full-service regional offices located in the major maritime centres of the world. According to Mr Bergeron, the most notable advantages of the Liberian Registry include a set of unique tools which allow greater operational flexibility for shipowners in comparison to other Flag States. He stated that shipowners find that Liberia’s exclusive services, available through the Registry’s global network, save them time, money and personnel resources. “Liberia provides full verification and certification services for compliance with the Maritime Labour Convention (MLC, 2006), including approval of shipowners’ Declaration of Maritime Labour Compliance Part II and vessel certification,” he explained. “The Registry also offers highly competitive block fee arrangements with fleet discounts to ensure value for service. The Registry provides in-house training for operators and recruitment services, workshops and gap analysis to assist shipowners and operators; this process will expedite verification of the company’s measures for compliance.” Liberia is also the only Flag State to provide shipowners the option of its unique “Harmonised Audit Program”, which combines vessel certification for the Annual Flag State Inspection, International Safety Management (ISM), International Ship and Port Security (ISPS) and Maritime Labour Convention (MLC, 2006). Mr Bergeron stated that

“Liberia is also one of the few open ship registries with an independent association of shipowners, known as the Liberian Shipowners’ Council, a member of the International Chamber of Shipping,” added Mr Bergeron. Predictions for 2013 As the world fleet expands and Liberia’s market share in Greece, Germany and Japan has increased, the fleet has achieved a healthy balance which now includes a large share of bulkers and container ships. “The Registry has recently opened offices in Singapore, Seoul, Shanghai and Rio de Janerio,” Mr Bergeron commented. “We are also experiencing strong growth in Greece, Hong Kong, Japan and Taiwan. We expect to see continued growth in our traditional shipping markets, and we are pleased with the continuous developments and growth in the Far East, generally, and Japan in particular. “Liberia is committed to building further on its impressive growth with the addition of still more quality tonnage operated by responsible owners. No other fleet in the world is growing as fast while maintaining its preeminent reputation for quality and safety with recognised independent industry arbiters,” he concluded.

Company: LISCR, LLC Name: Scott Bergeron, CEO Web: www.liscr.com Email: info@liscr.com Address: HEADQUARTERS, LISCR, LLC, 8619 Westwood Center Drive, Suite 300, Vienna, Virginia, 22182 USA Telephone: +1 703 790 3434

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Ship Registration

Luxembourg -----------------------------------------------------------------------Scott Bergeron is the CEO of EuroFlag Services S.à.r.L. (EFS) – a member company of YCF Maritime. -----------------------------------------------------------------------Background on Luxembourg According to Mr Bergeron, Luxembourg is a logical choice for a European ship registry. He stated that the Grand Duchy offers privileged access to international trade with its ideal location at the heart of Europe and under 300 kilometres from the strategic ports of Rotterdam, Antwerp and Zeebrugge. “Ninety per cent of the EU’s external trade, and 40 per cent of its domestic trade, is carried by sea,” he commented. “In recognition of this fact, Luxembourg has assembled a network of skills and services around a maritime axis. It is home to a wide variety of enterprises which participate directly or indirectly in the organisation and execution of sea transportation, while excellent road, rail and inland waterway connections (including the Moselle-Rhine link) ensure efficient access to Europe’s leading ports.” The European Commission has encouraged the creation and development of maritime clusters, and emphasised that the maritime economy has an impact beyond coastal regions. Mr Bergeron noted that this has resulted in the need for connections with centres in regions distant from the coast to be established. He added that the supporting activities from which the maritime community benefits from in Luxembourg include logistics services, legal and economic advisory services, and banking expertise. “The innovative nature of the Luxembourg market has produced a world first in the shape of an open-ended ship investment fund,” he continued. “Since 1991, an impressive fleet of oceangoing vessels has been operating under Luxembourg’s Red Lion flag – a sure sign of quality. “Thanks to a strong political will to diversify the economy and an overall favourable business climate, Luxembourg has become an attractive location for shipping businesses. Meanwhile, a broad range of companies active in the maritime industry are already established in Luxembourg. Services range from shipping to dredging, yachting and ship management, consulting, legal, insurance, classification, logistics and finance.” Introducing EuroFlag Services and the Luxembourg Ship Registry In December 2012, YCF Maritime, the parent organisation of the Liberian International Ship & Corporate Registry (LISCR) launched EuroFlag Services (EFS), a company established in Luxembourg for the purpose of offering bareboat charter registration under the Luxembourg Ship Registry. Mr Bergeron explained that EuroFlag Services was founded in response to requests by YCF’s clients in Germany to provide an efficient alternative for ship registration within Europe. “EFS was founded on – and will operate in accordance with – the same principles of excellence and superior customer focus as its sister company, LISCR,” he stated. “EFS provides shipowners with a unique one-stop-shop service for ship registration. With a global network operating on a 24/365 basis, extensive experience in maritime administration, principles of excellence and superior customer focus, and a staff of shipping industry professionals from across the world, EFS is the unparalleled choice for shipowners’ EU flag needs.”

YCF Maritime and EuroFlag Services distinguishing features YCF Maritime is a member company of the YCF Group, whose administration of both LISCR and EFS is characterised by its

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ability to provide services through its global team of regional offices located in the major maritime centres of the world. It is also supported by a worldwide network of more than 300 nautical inspectors and auditors. “YCF Maritime’s personnel are committed to providing clients with convenient, reliable and first-class customer service, 24 hours a day, seven days a week,” said Mr Bergeron. “Moreover, YCF is structured to provide shipowners with timely and reliable service through its strong local presence in shipowning centres, combined with its global network of professionals.” EuroFlag Services is a Luxembourg-resident company. Licensed as an Accredited Shipping Company, as required under the Luxembourg Maritime Act, it provides an efficient alternative for ship registration within Europe. EFS was established to carry out comprehensive ship registration and management services specifically for shipowners seeking to register vessels with the Luxembourg Ship Registry. Mr Bergeron explained: “This strategic decision is based on the Luxembourg flag’s exceptional reputation throughout Europe and the rest of the world and its established history of more than 20 years, its proven maritime regulations, and its willingness to allow EFS the necessary means to succeed in meeting the demands of the international shipping community.”

Key registration procedures and requirements Mr Bergeron stated that applying for vessel registration or bareboat charter registration in Luxembourg is an efficient process. “EFS staff will organise the entire registration process, including registration of new construction and existing vessels, processing of name changes, change of bareboat charterers or registered owners as well as transfer of registry and termination,” he explained. Eligibility for registration requires majority ownership by a European company. Vessels must also be classed by one of the following Classification Societies: American Bureau of Shipping (ABS), Bureau Veritas (BV), Det Norske Veritas (DNV), Germanischer Lloyd (GL), Nippon Kaiji Kyokai (NKK), Lloyd’s Register of Shipping (LR), or Registro Italiano Navale (RINA). “EFS will also process applications for the Radio License and can coordinate the activation of Inmarsat terminals,” he concluded.

EuroFlag Services

The benefits of registration in Luxembourg In addition to the exclusive ship registration and management services provided by EFS, Mr Bergeron highlighted the following traditional advantages which make Luxembourg a desirable EU flag choice for shipowners: • • • • • • •

White-listed Flag; Established history of more than 20 years; Exceptional world-wide reputation; ISO 9001: 2000 Certified; Committed to highest standards of safety, environmental protection, and crew welfare; Respected maritime administration and active IMO participant; and Professional Maritime Experts with an understanding for the shipowners’ needs.

Name: Scott Bergeron, CEO Company: EuroFlag Services SàRL Web: www.EuroFlag.eu Email: EFS@YCFMaritime.com Address: 9B Boulevard Prince Henri, 4th Floor, L-1724 Luxembourg Telephone: +352 27858804 Company: EuroFlag Services GmbH Web: www.YCFMaritime.com Email: info@YCFMaritime.com Address: Hohe Bleichen 11, 20354 Hamburg, GERMANY Telephone: +49 40 3500 4660

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SECTOR SPOTLIGHT: Ship Registration

-----------------------------------------------------------------------Laura D. Harris is a Senior Associate, Ship Finance, at Lennox Paton. ------------------------------------------------------------------------

Lennox Paton was founded in Nassau, The Bahamas in 1986 and is a leading offshore commercial law firm with offices in The Bahamas, the British Virgin Islands, and London. It has an international practice with clients from the UK, Europe, South America (particularly from Brazil), Asia, Australia and the U.S. It was the first Bahamian law firm ever to expand outside The Bahamas. The Bahamas Maritime Authority (the “BMA”) is a semi-autonomous statutory corporation that was formed in 1995 to administer the Bahamas Ship Register (the “Bahamas Register”). The Bahamas Shipowners Association was inaugurated in London on 11th July 1997 to promote the interests of Bahamian registered ship owners and to assist with dialogue between the BMA and the ship owners. As of 1st July 2011, no Registration Fees are payable for ships joining the Bahamas Register. The annual registration fee for Ships of 2,000 net tons or less is $2,552 and for Ships greater than 2,000 net tons but less than 5,000 net tons is $2,155 plus $0.20 per ton. “To commence the registration process, a ship owner must complete and submit to the Registrar of Ships an Application to Register form (R102), a Registration of Managing Owner form (R104) and copies of the current class certificates for the ship,”

-----------------------------------------------------------------------Joel R. Medina is a Partner at Icaza, Gonzalez-Ruiz & Aleman. ------------------------------------------------------------------------

Icaza, Gonzalez-Ruiz & Aleman has offered a wide range of legal services related to ship registration and mortgages under the laws of the Republic of Panama to the international maritime community since 1920. The firm has also provided legal assistance for admiralty matters before the Maritime Court of Panama since 1982, the year in which it was established. According to Mr Medina, the key benefit of ship registration in Panama is the country’s sovereign and independent system recognised by the international maritime community since 1925, which is presently the largest world registry in tonnage and number of vessels. He noted that any ship owner, whether a natural or juridical person, and irrespective of its nationality or domicile, may register its vessels under the Panamanian flag. Another key benefit relates to taxation. “The revenues derived from the international maritime commerce of merchant ships registered under the Panamanian flag are not subject to income tax in Panama, and said ships only have to pay taxes and fees on its tonnage under a system of highly competitive tariffs,” explained Mr Medina.

explained Ms Harris. “The Registrar of Ships will review the application and confirm that the ship is suitable for provisional registration. A full list of registration forms is available for download at www.bahamasmaritime.com. “The Seafarers and Manning Department is responsible for ensuring that all seafarers on board Bahamas registered ships are certified in accordance with the requirements of the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1978. A Safe Manning Document is issued to every ship/unit to confirm their compliance with manning requirements of Section 184 of the Bahamas Merchant Shipping Act for the vessel to be sufficiently and efficiently manned.” Commenting on the key advantages of the Bahamas Register, Ms Harris noted that the country is a maritime nation with a long shipping tradition. She stated that it is highly respected with an excellent reputation for quality, and is one of the largest ship registries in the world with over 55 million gross tons. There are BMA offices in Nassau, London, New York and Hong Kong, and agencies in Tokyo, Greece and Germany. The registry has strong representation at the IMO and ILO. Ms Harris highlighted the registry’s diverse cross section of ship types and fleet ownership, as well as its young fleet. She noted that it has one of the finest

a minimum of 30,000 and a maximum of 100,000 gross tons, are granted to economic groups that wish to register three or more vessels. The final factor highlighted by Mr Medina is reduced fees for yachts. There is a fixed charge for yacht owners that wish to register their vessels in the Panamanian Merchant Marine. For yachts whose owner is a foreign corporation, the official fee will be US$1,500.00 and for yachts owned by Panamanian corporations, the official fee will be US$1,000.00. “All vessels sailing the country’s flag must comply with the requirements and most important International Conventions and Codes, established by the International Maritime Organisation (IMO), such as the rules of the IMO for the Safety of Life at Sea (SOLAS), the International Convention for the Prevention of Marine Pollution from ships (MARPOL), regulations from ISM Code and IPS Code, among others,” said Mr Medina.

Panama’s labour force is an additional attractive feature. Ship owners may hire personnel of any nationality under labour laws that have been adapted to the international practices and costumes of navigation at sea. The Republic of Panama ratified the Maritime Labor Convention, 2006 (MLC, 2006) related to work conditions on board ships.

Also, Panama flagged vessels have to comply with the International Convention on Standards of Training Certification and Watchkeeping for Seafarers, 1978, as amended (STCW 78) and its inserted code.

Discounts from 25% to 60% in registration taxes and fees, depending on the gross tonnage of vessels that have

Ships over 20 years old are subject to a special inspection before being granted a statutory certificate of registry.

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records for port state inspections and that it has a low risk status with the Paris MOU. She added that it has the “highest standards for the safety of life, maritime security and protection of the marine environment”, and that it is an ‘open registry’, meaning that “a foreign owner may be the owner of a ship regardless of nationality or place of incorporation”. Further benefits include the absence of taxes on the operation or income of a Bahamian registered ship or any capital gain tax on its sale in The Bahamas. “The Mortgage is a one page statutory form and the BMA has a user friendly procedure for the registration, transfer and discharge of mortgages,” said Ms Harris. Finally, she noted the new yacht registry.

Company: Lennox Paton Name: Laura D. Harris Email: lharris@lennoxpaton.com Web: www.lennoxpaton.com Address: 3 Bayside Executive Park, West Bay Street & Blake Road, P.O. Box N-4875, Nassau, The Bahamas Telephone: +242 502 5000

All Panamanian ships engaged in international trade are subject to an Annual Safety Inspection (ASI) which determines whether or not the vessel complies with safety or life at sea and marine pollution prevention requirements as prescribed by international and national laws and regulations. “The annual safety inspection (ASI) also verifies the existing living hygienic and working conditions of the crew in accordance with the International Labour Organisation’s Conventions ratified by Panama,” continued Mr Medina. “In addition, the Certificates of Minimum Safe Manning and Certificates of Competency complying with the STCW Convention are issued. “According to official information, from January to May 2013, the ship registry increased by 1.5% compared to 2012. We are very confident that during the following months such increase will be steady,” he concluded.

Company: Icaza, Gonzalez-Ruiz & Aleman Name: Joel R. Medina Email: maritimeservices@icazalaw.com Web: www.icazalaw.com Address: Aquilino de la Guardia St., #8, IGRA Building, P.O. Box 0823-02435, Panama, Rep. of Panama Telephone: +507 205 6000

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

The Importance of Anti-Corruption Due Diligence in Corporate Transactions

THE IMPORTANCE OF ANTICORRUPTION DUE DILIGENCE IN CORPORATE TRANSACTIONS l Anti-corruption and anti-bribery issues continue to present significant risks in acquisition and investment transactions as regulators across the globe demonstrate robust enforcement in this area, a trend which is expected to continue. In such an environment, international organisations, particularly those operating in high-risk countries and industry sectors, must ensure that their anti-bribery and corruption compliance programs are comprehensive and effective. Indeed, failure to identify a significant corruption risk at a target company not only opens the possibility of regulatory risks, it can undermine the core value of the transaction. It is therefore of the utmost importance that management teams seeking to embark on a corporation transaction obtain the advice and expertise of those with the experience and regulatory knowledge of all applicable regions to ensure the purchaser is not at risk. Acquisition International speaks to a panel of experts to discuss the key issues. -----------------------------------------------------------------------Toby Duthie is a co-founder of Forensic Risk Alliance and head of the London office. -----------------------------------------------------------------------Corporations implementing anti-bribery and corruption (ABC) compliance programs are aware that while ABC legislation is broadly similar across many jurisdictions, the level of government enforcement varies from jurisdiction to jurisdiction. The US is by far the global enforcement leader: it frequently prosecutes non-US individuals and corporates. In view of the aggressive global reach of the US regulators and prosecutors, as well as dramatically increased cross-border cooperation, jurisdictional arbitrage is ill-advised and ineffective. As noted by David Lorello, a partner at the law firm Covington & Burling who specializes in international anti-corruption matters, “There is nowhere to hide from the risk of anti-bribery enforcement. Countries around the world are further implementing and enforcing anti-bribery laws similar to the FCPA, and there are also important collateral consequences arising from corrupt practices that can surface in many jurisdictions, including competitor or shareholder lawsuits and debarment from projects funded by governments or international financial institutions such as the World Bank.” In addition to implementing a robust and thoroughly tested compliance program – essential to ensure early detection of ABC issues and prompt remediation – corporations are appreciating the need to conduct ABC-specific due diligence. Unlike the typical materiality-driven M&A-related due diligence, ABC due diligence is risk-based and transactionfocused, and necessitates a clear understanding of the -----------------------------------------------------------------------Jane Ellis is the Principal of Assertia Pty Ltd. -----------------------------------------------------------------------Assertia works with companies to review, strengthen or even transform their corporate culture with a view to ensuring there is ongoing compliance with relevant regulatory obligations, particularly in the areas of anti-corruption and competition, to ensure long term commercial, financial, social and environmental sustainability. Ms Ellis is a former competition partner of Ashurst Australia (formerly Blake Dawson), part of a global law firm. In addition to competition law, she has advised businesses extensively on their due diligence requirements, among other things, under the extra-territorial laws of the Australian Criminal Code Act 1995, as well as what is required under the US Foreign Corrupt Practices Act, the UK Bribery Act and other comparable anti-bribery laws and the potential application of each to companies and their operations. She has been an active member of the Australian Chapter of Transparency International since 1996 and a board member 2001-2004 and 2007 to present. Ms Ellis explained that the key considerations when implementing all compliance programs, including antibribery and compliance programs, are the commitment of the board and executive managers, the robustness of the company’s risk or gap assessment of its operations, the extent and frequency of the program’s implementation and on-going monitoring and enforcement of that program.

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nature of the underlying business and jurisdictions where it operates. A “one size fits all” approach will seldom be effective. Engaging a specialist firm with ABC risk assessment expertise in designing and testing compliance programs is a sound investment for corporations looking to the longer term. Companies are increasingly mindful of exposure to ABC risk through acquisition and partnership, as well as through misconduct by counterparties – respectively known as ‘successor’ and ‘vicarious’ liability. Such liability can have significant impact in terms of investigative and penalty costs, as well as the indirect costs to the business: reduced marketability of tainted assets, access to and cost of capital, reputational damage, and loss of management time. At its essence, good compliance underpins value and reduces capital costs. Companies with strong compliance can pursue higher risk and higher reward opportunities. The opposite is equally true. Corporations with poor ABC controls expose themselves to regulatory action, reputational damage, and other unwelcome collateral consequences. In our experience, a strong controls environment forms part of the overall culture and manifests itself through the corporate DNA. This takes up-front investment, but good compliance is undeniably good for business. Toby Duthie is one of FRA’s co-founders and heads its London office and was instrumental in the development of FRA’s service in the anti-corruption and white-collar defence arena. With experience in cases involving government She stated that the extent of the anti-corruption due diligence that a company must undertake depends on the level of risk relevant to that transaction. “If a company proposes to buy a one-off supply of paper from a local supplier in a low risk country, anti-corruption due diligence is unlikely,” she elaborated. “If a company proposes to have a local agent in a high risk country obtain certain government approvals on behalf of the company, then very detailed anti-corruption due diligence of that agent is essential. If a company does not do this and the local agent ends up paying bribes to obtain those approvals, the company can be found to be criminally liable for that conduct.”

enforcement in the UK and the US, his expertise lies in internal and regulatory investigations, data protection and complex financial modelling, with particular experience in global, multi-jurisdictional cases. His experience spans a number of areas. He has worked on pre- and post-acquisition due diligence for a number of multinational corporations. He has provided damages modelling and prepared expert reports relating to a dispute involving the acquisition of a major financial institution. He has advised on trust fund and restitution work for the International Criminal Court, involving all aspects of document and evidence management, reparation processes, asset identification and seizure.

Company: Forensic Risk Alliance Name: Toby Duthie Email: tduthie@forensicrisk.com Web: www.forensicrisk.com Telephone: +44 (0)207 269 7837

Ms Ellis noted that Australia is only one of four OECD countries that has facilitation payments as a defence to extraterritorial anti-bribery laws (along with the United States, New Zealand and South Korea). The firm anticipates facilitation payments are unlikely to be retained in the longer term. In addition, “we anticipate a considerable increase in prosecutions in Australia and other OECD countries of both companies and individuals under the anti-bribery laws,” she concluded.

Assertia assists companies to identify those transactions that are likely to be high risk and on which more detailed due diligence is required and then works with those companies in conducting that due diligence. The firm aims to work with companies toward managing their exposure to unnecessary risk. “Assertia has assisted companies operating in a range of high risk countries such as Indonesia, India, China and the Democratic Republic of Congo,” continued Ms Ellis. “That work has ranged from overseeing investigations into alleged improper payments, to advising on the legality of certain payments, to advising on what compliance frameworks are required for companies to manage their risk to the extent possible.”

Company: Assertia Pty Ltd Name: Jane Ellis Email: jane.ellis@assertia.com.au Telephone: +61 401 586 561

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

The Importance of Anti-Corruption Due Diligence in Corporate Transactions

The SEC’s Novel Approaches to Resolving Recent FCPA Matters — A Sign of Things to Come? -----------------------------------------------------------------------Kevin J. Harnisch and Steven M. Witzel are Co-Heads of the Anti-Corruption Compliance and Enforcement Practice at Fried, Frank, Harris, Shriver & Jacobson LLP. James Kitching is a Partner with the firm, and Joshua D. Roth is a Litigation Associate. -----------------------------------------------------------------------In Spring 2013, the SEC resolved two Foreign Corrupt Practices Act (the “FCPA”) matters by utilizing approaches that are relatively novel in the FCPA context: (1) non-prosecution agreements (“NPA”); and (2) the administrative forum (rather than federal courts) for litigation. At a time when an increasing — but still small — number of potential defendants in FCPA matters are choosing to litigate, these approaches may create additional incentives for would-be litigants to settle. In April 2013, the SEC entered into an NPA with Ralph Lauren Corp. in connection with alleged FCPA violations by a subsidiary in Argentina, marking the first time that the SEC entered into an NPA in an FCPA matter. NPAs are written agreements in which the SEC agrees not to pursue an enforcement action against an entity if it agrees, among other things, to cooperate with the SEC and comply with express undertakings. If the entity violates the NPA, the SEC may then take enforcement action. In light of the SEC’s minimal guidance about the circumstances that might warrant an NPA, the SEC’s NPA with Ralph Lauren is instructive. The NPA underscores the important roles played by (1) prompt self-reporting (Ralph Lauren self-reported two weeks after discovering the alleged violations); (2) meaningful remedial measures (Ralph Lauren terminated its customs broker and ceased all retail operations in Argentina, and strengthened its anti-corruption compliance program); and (3) substantial cooperation (Ralph Lauren voluntarily produced documents and information to the SEC, including summaries

ACQUISITION INTERNATIONAL

of witness interviews). When confronted by possible FCPA violations, the prospect of being able to obtain an NPA may encourage individuals and entities to cooperate with the hope of avoiding an enforcement action. In May 2013, the DOJ and the SEC announced a $398 million settlement (the fourth highest FCPA settlement ever) with the oil and gas company Total S.A. The DOJ and SEC alleged that Total paid more than $60 million to an Iranian government official for oil and gas contracts. Rather than suing Total in federal court (which is the norm for FCPA matters), the SEC instituted a settled administrative proceeding. In light of the SEC’s new power under the Dodd-Frank Act to impose fines administratively, coupled with the SEC’s desire to avoid judicial scrutiny of settlements, the SEC may try to resolve an increasing number of FCPA matters administratively in the future. For various reasons (including limited discovery, the perception of a home court advantage, and a conflicted firstlevel appeal process where the commissioners who voted to institute the administrative proceeding review any appeals), many practitioners believe that the SEC has a better advantage litigating matters administratively rather than in the district courts. That perceived advantage may, depending on the facts and circumstances of the case, encourage some individuals and entities to consider settling rather than litigating. In addition, because administrative settlements are often viewed by the public as less severe than settlements reached in the district courts, would-be litigants may be more willing to settle administratively than they otherwise would. Of course, only time will tell how effectively the SEC will be able to use these tools to resolve FCPA matters. However, given that both of the settlements described above were reached shortly

after Mary Jo White was confirmed as the new Chairman of the SEC, it is a good bet that the SEC will use them again soon.

Company: Fried, Frank, Harris, Shriver & Jacobson LLP Web: www.friedfrank.com Name: Kevin J. Harnisch Email: kevin.harnisch@friedfrank.com Telephone: +1.202.639.7054 Name: Steven M. Witzel Email: steven.witzel@friedfrank.com Telephone: +1.212.859.8592 Name: James Kitching Email: james.kitching@friedfrank.com Telephone: +44.20.7972.6295

July 2013 /

SECTOR SPOTLIGHT:

The Cross-Border M&A Specialist

THE CROSS-BORDER M&A SPECIALIST l In spite of the on-going volatility across international markets, cross-border M&A transactions remain a crucial part of the global economy. A recent survey conducted by a Magic Circle firm found that 80% of large companies focussed their current growth strategy on developing core business; cross-border deals allow growth outside home markets and can help a business to take advantage, in many cases at lower prices, of new synergies. These deals are extremely challenging and careful management throughout all stages of the transaction is critical to their success. In preparation, many business owners look beyond their go-to solicitors and approach larger, more specialist law firms or M&A advisory firms. These experts can help to identify key areas of legal risk across multiple jurisdictions, they can negotiate global regulatory issues such as anti-trust and merger control, they can help the client to interact efficiently with the vendor (taking into account time, language and cultural barriers) and they can work effectively under current market pressures to execute the transaction in a timely fashion. But, completion is not the end; following on from any transaction it is important to consider the post-acquisition strategy and this need is highlighted even more in cross-border circumstances. Few firms are specialist in all stages of the process but many have a deep global network of talent that they can draw on, or are so experienced in the cross-border arena that they are well attuned to local variations in doing business. Acquisition International speaks George Zitter at FG Consulting to learn more about the firm and its services. Turnaround & Restructuring FG Consulting focuses on automotive restructuring assignments for international clients, proven successes in high-profile, complex automotive situations. We represent companies, private equity, and stakeholders in restructurings and turnarounds for industrial applications. Performance Improvement FG Consulting has a decade long experience in advising automotive and capital goods companies to critically, and thoroughly, analyse and implement strategies to drive performance improvement. We identify and implement margin improvement measures for underperforming divisions or Business units, in addition assessments and development strategies to drive down overhead expenses and maximise profit. Transitional Management FG Consulting is a catalyst to spearhead immediate change

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in difficult situations, restoring credibility to re-organisation while preserving, protecting and enhancing the enterprise value for the company. FG Consulting acts as interim management focused on the execution of working capital enhancement initiatives and profit improvement strategies. We consistently deliver immediate and meaningful results to companies and their stakeholders. FG Consulting fulfil CEO, COO, positions on an interim basis to help companies secure their viability by driving long-term positive change. Strategic Growth and long term support From start-ups for Greenfield sites to multiple plants, we especially advice automotive clients with international and local network capital of highly experienced professionals who are focused exclusively on their specific industry, who

have a broad network of relationships with key influencers, and who provide communications counsel based on in-depth industry knowledge and expertise.

FG Consulting Company: FG Consulting Name: George Zitter Email: gzitter@gmail.com Telephone: +52 12223568307

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

MANAGEMENT DUE DILIGENCE

Management Due Diligence

l The performance of the management team is a key factor for any business. Research has indicated that poor company performance is very often, if not always, attributable to management issues. Failure to assess the senior management team talent pool in a transaction can cause the value of the deal to be significantly under leveraged and allows major slowdowns in productivity during the transition. Thorough management due diligence provides a detailed assessment of the management team to establish their competence, credibility and capability, allowing decisions to be made to ensure the right people are in position to bring the acquisition to maximum profitability without losing valuable time and momentum. Annie Gray, a Founder of Highwire Consulting, explains the firm’s approach to management due diligence and how vital a process it can be.

Management Due Diligence has always been necessary – just ask any investor, who will confirm how critical the management team are to the success or otherwise of an acquisition. Many years ago, we asked our clients to calculate the cost of a wrong hire – with disruption costs, impact on business performance and the void between exiting one leader and appointing the replacement, they estimated one wrong person at senior levels could easily cost the business over £2 million. Small surprise then, that another client described Management Due Diligence as the “lowest cost, highest value”. It may however, be one of the least understood areas of due diligence, perhaps because the methods used to measure the current performance and future potential of people are less amenable to calculation than the hard data contained in financial reports. Here at Highwire, we have developed a process which draws on data from a variety of sources to ensure that our assessments are robust and reliant. As they say in the Financial Services ads, “past performance is not a predictor of future returns”, and so it is with business leaders. Knowing

ACQUISITION INTERNATIONAL

that a manager was successful in a previous role or company, or even in the company being acquired, does not guarantee success moving forward.

or even by building social relationships over time; effective Management Due Diligence is a mix of art and science, as is psychology. Highwire business psychologists are MDD experts.

Acquisition brings inevitable change – can the management team change too? As business psychologists, the team at Highwire are well placed to delve into the personality aspects which can have such an impact on business and leadership performance, but we also scrutinise many other critical variables, such as intellectual capability, emotional intelligence, learning agility and potential derailers. Managing a business can be a complex activity, and our measure of cognitive competence reflects this – we are not convinced of the value of multiple-choice reasoning tests, and understand why many executives find it patronising to be asked to take these tests. Instead we use a challenging on-screen problem solving exercise, which helps us establish just how much more stretch a particular individual has, and where their intellectual strengths and weaknesses lie. Selecting the best management team, and uncovering risks in existing teams, cannot be achieved by intuition alone,

Company: Highwire Consulting Name: Annie Gray Email: annie@highwireconsulting.co.uk Web: www.highwireconsulting.co.uk Address: 72 Richmond Hill, Richmond, Surrey, TW10 6RH, UK Telephone: +44 (0) 20 8332 6937

July 2013 /

SECTOR SPOTLIGHT:

Reducing M&A Risk through Improved Due Diligence

REDUCING M&A RISK THROUGH IMPROVED DUE DILIGENCE

l Creating value through acquisitions has proven to be a perilous strategy. Often, the seller knows more about the business and its markets than the buyer. This asymmetrical knowledge can cause the buyer to overpay and result in the destruction of large amounts of share-holder value. Getting a complete and accurate view of the financial, operational and cultural characteristics of an acquisition target isn’t easy, extensive due diligence is essential in minimising risk, in avoiding delays in getting the deal through to completion and in ensuring that the a fair purchase price is paid. In an ever-evolving and certainly challenging climate it is now more important than ever that complete and comprehensive due diligence is carried out in every corporate transaction. Research has proven companies can dramatically improve the success of their M&A by improving their approach to due diligence and looking to ensure that all forms of due diligence are considered when embarking on a corporate transaction whether it be financial, commercial, technical, environmental, investigative, legal, commercial etc. Acquisition International speaks to a variety of experts and key players to learn more about this vital aspect of M&A.

-----------------------------------------------------------------------Sarah Pirrie is Partner and Technical Director at Ambiente International LLP. -----------------------------------------------------------------------The recent credit crisis, legislative changes and movements towards responsible investment (www.unpri.org) and corporate social responsibility (CSR) have been key drivers in reducing risk profiles, improving environmental performance and promoting sustainability within all sectors. Traditional -----------------------------------------------------------------------Jim Hoffman is the author of the IT Due Diligence Guide. -----------------------------------------------------------------------Traditionally, M&A due diligence focused on financial and legal issues. IT due diligence was often an afterthought, even though many transactions would have benefitted from its inclusion in the process. A recent survey on ITDueDiligenceGuide.com of almost 200 M&A professionals shows that the situation is changing. IT due diligence is now a component of 88% of the transactions in which the survey respondents are involved. When one considers the extent to which technology drives almost every business today, the consistent need for IT due diligence isn’t surprising Even though 95% feel that IT due diligence is a valuable component of M&A and facilitates post-transaction integration, 23% of the time IT due diligence is performed

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environmental due diligence models and in particular the “tick box” approach have become obsolete, and more holistic environmental management services are emerging which operate from the pre-acquisition due diligence phase, through active management to final divestiture. Investors and debt providers are demanding increasingly stringent EDD mandates, requiring environmental advisors to provide more flexible and innovative services. By adopting a more fluid approach environmental due diligence can be tailored to the specific objectives and requirements of individual clients and deals, and quickly adapted throughout the transaction process as required. In addition, it is no longer enough to simply produce a commercial report outlining risks and liabilities, advisors must also be on hand to develop and facilitate pragmatic risk management solutions and go to greater lengths to provide comfort to all parties (be they investors, stakeholders, operators or even local regulators). Post transaction, and in response to new environmental legislation and investors giving increased priority to environmental issues in their investment decision making, greater pressure is being put on asset managers and operators to improve the environmental performance of their properties and businesses. The demand for post-acquisition environmental management services has risen rapidly in

by someone who is NOT a technology expert. Clearly there is an opportunity to provide additional resources to assist those due diligence teams without a dedicated IT professional available. IT due diligence can provide an immediate return on investment. 54% of those surveyed have experienced a transaction in which issues discovered during IT due diligence led to either a reduction of the purchase price or an outright cancellation of a planned acquisition. IT due diligence should focus on three main areas. Does the acquisition target possess the technology it claims to have? Was it developed via competent, legal and best practices? Can the technology of the business scale to support the expected increase in volume post-transaction? The IT Due Diligence Guide can help M&A professionals answer these overarching questions, even if a technology

the last 5 years and consultancies need to be able to assist with educating investors, asset / property managers and operators as well as implementing suitable environmental improvement and management strategies. The environmental due diligence process is not only improving but is increasingly becoming the first step in active environmental management, allowing investors, stakeholders and operators etc. to achieve the many benefits associated with demonstrable improvements in the environmental performance of their assets and operations.

Company: Ambiente International LLP Name: Sarah Pirrie Email: sarah.pirrie@ambientellp.com Web: www.ambientellp.com Telephone: 020-76212855

expert isn’t available. It lists the questions that have been shown over many acquisitions to best solicit the information needed to make an informed investment in a technology company. It also provides a detailed explanation of why each question is important and what the potential answers can tell you about your acquisition.

Name: Jim Hoffman Email: jhoffman@itduediligenceguide.com Web: www.itduediligenceguide.com

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SECTOR SPOTLIGHT:

Reducing M&A Risk through Improved Due Diligence It is clear why then, in a tough to predict deal-making world, M&A professionals are choosing to conduct their due diligence online, in a secure, fast and reliable, real-time environment. Surety, the mitigation of risk, and accessibility mean that dealmakers are increasingly turning to VDRs to facilitate their deals. About Merrill DataSite Merrill DataSite optimises the due diligence process by providing a highly efficient and secure method for sharing key business information between multiple parties. We provide unlimited access for users worldwide, as well as realtime activity reports, site-wide search at the document level, enhanced communications through the Q&A feature and superior project management service – all of which help reduce transaction time and expense. Our multilingual support staff is available from anywhere in the world, 24/7/365. -----------------------------------------------------------------------By Tim Smith, Industry Specialist, Merrill DataSite -----------------------------------------------------------------------When bringing a deal to market, M&A professionals have to consider a number of things and of increasing importance is the issue of mitigating risk through effective due diligence. In the past, dealmakers used inefficient paper data rooms to collate and disseminate their company information to all those involved in the deal-making process. Dealmakers had to factor in the cross-border costs of travelling to and from these physical data rooms and, of course, these costs are variable and difficult to budget for. The myriad of other problems with this form of data sharing are plain to see. In recent years, virtual data rooms (VDRs) have been widely used by dealmakers for due diligence purposes in place of the antiquated the paper data rooms. However, more recently, the rise in unsecured cloud-based solutions has confused the issue. Unlike a generic cloud-based storage solution a VDR is designed to support due diligence. Utilising a VDR typically reduces transaction times and deal expense while at the same time allowing multiple users to view all the information at the

touch of a button. People involved in a sell need to know exactly who is viewing their information. They need to know that rivals and competitors aren’t viewing their private information for nefarious purposes and the superior security of a VDR gives this them piece of mind. Cheaper, cloud-based solutions can’t offer this guarantee. Merrill Datasite is a leading market provider of VDRs to M&A professionals. Their senior Director, Merlin Piscitelli, had this to say about the advantages of VDR use in the due diligence process: “The point we try to make when advocating our virtual data room to dealmakers is the value of our product in mitigating risk. In the turbulent modern economic world, people prefer to use secure, virtual document hosting solutions such as ours to gain certainty in diligence. Advisers want to add real value through fine-tuning that can create a meaningful saving, post-acquisition, or enable the buyer to look at the business differently. DataSite allows everyone involved in a deal to view all the information in real-time and make informed decisions at speed, with all the documentation at their fingertips.”

We work with M&A advisory, document warehousing, IPO and secondary offerings, asset purchases, venture capital due diligence, bio-tech licensing, commercial and corporate real estate ventures, bankruptcies, financial restructuring, preparing for exit strategies, and many other transactions that require extensive document sharing.

Company: Merrill DataSite Name: Merlin Piscitelli Email: info@datasite.com Web: www.datasite.com Telephone: +44 (0) 845 602 6916

its reputation and its formal and informal connections. These findings should be placed in the context of the overall risk of the country in question, in terms of political stability, corporate governance and transparency, and the independence and efficiency of the legal system. For example, a company may be posting double digit growth figures, but if its business is dependent on bribes to win contracts, payments to customs to ensure favorable import terms, or nefarious relationships with corrupt government officials, the sustainability of the business might come into question. Ideally, external intelligence gathering should be combined with a review of internal compliance procedures and the adequacy of their implementation, with a particular focus on relationships with third parties.

-----------------------------------------------------------------------Alison Taylor is a Regional Director of Corporate Investigations at Control Risks. -----------------------------------------------------------------------One of the most common and potentially costly errors made during M&A transactions is the tendency to treat due diligence efforts as a compliance-driven, box ticking exercise. In fact, in many instances, due diligence can be a critical intelligence gathering tool, providing key commercial and strategic insights. For acquisitions where the company has any kind of international footprint, it is no longer sufficient to focus due diligence only on legal and financial aspects of the transaction. For acquisitions where the company has any kind of international footprint, it is no longer sufficient to focus due diligence only on legal and financial aspects of the transaction. A confidential, intelligence-gathering exercise, focused on identifying hidden risks, can help ensure that the transaction is priced accurately, and also determine areas where risk mitigation is critical once the transaction

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is completed. This exercise should address key issues such as the sustainability of the current business model, the degree to which financial results are dependent on problematic political, criminal or commercial associations, hidden liabilities and pending litigation, and the targets’ relationships with regulators and with its suppliers, customers and distributors. In dozens of cases Control Risks handled over the past year, this kind of external intelligence gathering identified potential political troubles in many cases that might provide fatal to the enterprise in question; in some, it led suitors to double-down when the extent of the opportunity became fully clear. Gaining meaningful insight into these issues requires going beyond an internal review of the company’s accounts and contracts, and looking in detail at the company’s profile,

By conducting a detailed due diligence of this kind, buyers can ensure that they are aware of all undisclosed risks, can price the transaction appropriately, and put in place a clear mitigation plan for the post-acquisition phase. It can also hugely assist in communication with regulators, and limit successor liability, which has become a key theme of FCPA enforcement in recent years.

Company: Control Risks Name: Alison Taylor Email: alison.taylor@controlrisks.com Web: www.controlrisks.com Address: 535 Fifth Avenue, 17th Floor, New York, NY 10017 Telephone: + 1 (212) 792 6663

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SECTOR SPOTLIGHT:

Reducing M&A Risk through Improved Due Diligence transaction. Another important feature of our reputation is our pragmatic approach, combined with a very pro-active and customer-oriented handling of a mandate. Lately we have been involved in many challenging transactions. For example we assisted the acquisition of the German Kleffmann group – a globally leading provider of market research in the agricultural sector. Other recent mandates comprise of companies positioned in specific niche markets like frozen finger food and snack products, river cruises, discount fitness chain, nursing homes, special outpatient care, and various e-Commerce related companies.

-----------------------------------------------------------------------Dr Rainer Mayer is a founder and managing partner of maconda GmbH, Cologne -----------------------------------------------------------------------maconda is a German independent management advisor for commercial transaction services, value enhancement and corporate restructuring. Our sector focus is on consumer goods, service industries of almost any kind, retail and wholesale and various other products. Since its foundation, maconda accompanied more than 370 advisory projects and almost 200 company transactions, mainly in the range of 30 up to 500 million €. The team is specialised on commercial transaction services including target screenings, 100 days programmes as well as exit preparations. Key service of maconda are commercial due diligence analyses, where we are one of the most active and experienced providers in the German-speaking market. Since we often accompany cross-border transactions, we maintain a

multinational team and local cooperation partners in France, Benelux, Turkey and some Central and Eastern European countries. We see such local rooting as crucial for being able to provide reliable insights into regional markets, considering the diversity of regional demand, etc. For instance, due diligences with respect to CEE markets and increasingly often directly covering companies from this region have to address particular challenges: different business culture, difficult data collection process, a general lack of reliable market data, much more difficult interviews with market insiders. Therefore, involving local experts is essential for delivering a reliable analysis. Another part of our USP besides taking advantage of local knowledge is involving external sector experts with longstanding operational experience. They help our clients to address the most crucial aspects in an early stage of a

Speaking about the general M&A environment, especially the small and lower mid cap market up to, let’s say, 120mn € enterprise value is still quite vivid, whilst larger transactions that may be interesting became quite rare. Hence, an obviously still increasing number of private equity investors are competing for a lower or at least constant number of potential deals, with a number pulled after some time due to lacking consent on conditions. In addition, we see more plain family offices entering the market with often a low need to third party financing.

Company: maconda GmbH Name: Dr Rainer Mayer Email: r.mayer@maconda.de Web: www.maconda.de Address: Meister-Gerhard-Str. 8, 50674 Cologne, Germany Telephone: +49 221 56964 - 0

countries. Reputational risks are paramount in this line of business. As a result, before signing a deal, this client always asks us to conduct an integrity due diligence research into its prospective partner. To them, avoiding reputational risks is worth the costs”. Reversely, the costs of skipping risk prevention can be high. “We had the case of those private investors who had put loads of money into an Asian company, based on data provided by an intermediary who appeared to be a crook. If they had made the effort of conducting an initial integrity due diligence research, they would have quickly understood that the intermediary could not be trusted and the target firm was bogus”. Needless to say, media, Internet and database information is useful but never sufficient. Indeed, One Intelligence is convinced that inquiries with human sources generate the highest value added. Finding smart and collaborative ways to talk to interlocutors allows for fruitful information gathering to the benefit of clients.

-----------------------------------------------------------------------Yannick Poivey is the founder and managing director of One Intelligence LLC in Geneva, Switzerland. Prior to founding his own company in 2009, he worked for the US risk management firm Kroll, in Paris and Geneva. -----------------------------------------------------------------------One Intelligence delivers reputational and integrity due diligence research services in the context of international transactions, such as acquisitions or investments. The firm works both for international clients requesting some research in Switzerland, or Swiss-based clients who need information abroad. Subject of research include corporations as well as individuals.

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“Due to a stricter regulatory framework including FCPA rules, a growing number of organisations implement a first-level due diligence program that applies to third parties. However, we are happier with clients genuinely interested in the results of an in-depth integrity due diligence research, than with those who merely wish to “tick the box” for compliance purposes”. Indeed, in-depth integrity due diligence research is a key component of a sound approach to risk management. “We regularly work for a financial institution which grows through the acquisition of boutique firms in emerging

Company: One Intelligence LLC Name: Yannick Poivey Email: yp@oneintelligence.ch Web: www.oneintelligence.ch Address: Rue du Mont-Blanc 7, 1201 Geneva, Switzerland Telephone: +41 22 566 2800

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Bridging the Gap

BRIDGING THE GAP

l Bridging finance has grown in popularity in the business world; helping to free up capital at times when it is needed, commercial bridging loans can now be used for a variety of business purposes. Gone are the days when it was the expensive option; the rise in specialist lenders and healthy competition has led to a reduction in rates and further, with the introduction of new regulation, the industry has never been so transparent. According to the ASTL, bridging and short term loans written in Q1 2013 were up 1.4% compared to the same quarter the previous year; there was also an increase of over 4.6% in total loan books. Benson Hersch, CEO of the ASTL stated that “the figures reveal the on-going need for bridging finance has not decreased”. He also said that despite pressure by the government and promises by mainstream banks to lend more, short term loans are filling the gaps in many instances. Acquisition International discusses the benefits of bridging finance with leading firms in the commercial finance industry.

-----------------------------------------------------------------------Nadeem Akhtar is a Partner at Silk Route Legal. -----------------------------------------------------------------------Silk Route Legal is a boutique law firm based in City of London specialising in corporate, finance, banking and finance, company & commercial law, commercial property, planning, commercial litigation, employment and immigration. “We are different to the normal City firms in that we work on an agreed fee basis rather than the traditional hourly rate,” said Mr Akhtar. “In respect of bridging finance work, we act for borrowers rather than the lenders. However we work closely with brokers’ and lenders’ legal teams to ensure a smooth and quick transaction.” Mr Akhtar attributes bridging finance’s increasing popularity to a lack of funding available from the traditional lenders, ie: banks etc. He stated that the main benefit of bridging finance is the speed of the transaction. Bridging finance can be borrowed against property assets – commercial property, residential property, land and developments. The finance is typically secured against

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property and land, and if necessary personal guarantees are given where the borrower is a company. Mr Akhtar noted that financing can normally be arranged very quickly; however the speed depends on the valuation and the borrower’s personal circumstances. He believes that it is extremely important to have an exit strategy in place.

neither legal team wants to stop the transaction. However both legal teams need to ensure all the ‘T’s are crossed and the ‘I’s are dotted. “If the main banks continue not to lend or withdraw lending facilities, then bridging finance will continue to thrive,” he concluded.

“Without having an exit plan in place we would not recommend our client’s taking out bridging finance as it could end up being a very costly experience,” he elaborated. “I think it is important for the broker, lender and legal teams to work closely together so as to give a realistic answer to the borrower,” he continued. “Yes bridging finance is normally a quick transaction but there are always legal hoops that need to be jumped”. “We like to work with all parties concerned in the transaction to ensure a smooth and successful transaction – after all the lender wants to lend and the borrower is ready to borrow – what everyone forgets is the middle, i.e. the legal teams;

Company: Silk Route Legal Name: Nadeem Akhtar Email: nadeem@silkroutelegal.com Web: www.silkroutelegal.com Address: 15 Old Bailey, London, EC4M 7EF, UK Telephone: +44 203 178 6565

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Bridging the Gap

finance agreement. He advised that bridging finance should only ever be considered as a short term solution with an agreed exit strategy identified. “Bridgebank Capital recognises that due to the complex nature of bridging finance, a ‘tick box’ approach cannot be applied to the application process. Bridgebank Capital considers each and every case on its own commercial merit rather than creating a credit score risk profile, and even with some adverse or poor credit, loans may still be available,” added Mr Goodman. Based on the industry activity carried out during the first half of 2013, the company does not anticipate any significant changes in the bridging finance sector during the second half of the year.

-----------------------------------------------------------------------Laurence H Goodman FCA is the Group Managing Director at Bridgebank Capital. -----------------------------------------------------------------------Bridgebank Capital is one of the UK’s leading bridging finance lenders, focused on providing effective short term finance solutions tailored to the requirements of borrowers. The company offers a comprehensive ‘one stop’ solution for borrowers short term finance requirements in terms of size, property type and location. “The senior management and underwriting teams at Bridgebank Capital are probably the most experienced and respected in the sector and consist of some of the most knowledgeable and commercial professionals within the finance and property industries,” said Mr Goodman. “This extensive knowledge base enables us to structure and financially engineer bridging finance agreements in line with borrower requirements, and provides the highest level of service and deliverability.”

Mr Goodman explained that bridging loans finance the front end high risk part of a property project, in a space not met by traditional institutional banks. “Bridging is a flexible short term financing solution that is tailored to meet both acquisition and development or value enhancement requirements that enables borrowers to carry out property projects in the knowledge that the bridging loan is providing the capital required to ultimately secure a property sale or a re-mortgage if the property is to be held as a long term investment,” he elaborated. Bridgebank Capital provides bridging finance against residential, semi-commercial and commercial properties. The company can complete bridging finance advances within a matter of days. Mr Goodman stated that a defined and achievable exit strategy is an imperative element of a successful bridging

“We do however envisage that bridging finance will continue to act as a key short term finance solution throughout 2014 and will be a sector that continues to be utilised as an essential tool for property entrepreneurs,” concluded Mr Goodman.

Company: Bridgebank Capital Name: Laurence H Goodman, FCA Email: office@bridgebankcapital.co.uk Web: www.bridgebankcapital.co.uk Address: 1 Riverview, The Embankment, Vale Road, Heaton Mersey, Cheshire, SK4 3GN Telephone: +44 (0) 808 222 22 11

as litigation in the Indonesian courts,” said Dr Ganie. “This allows our corporate transaction departments to benefit from such litigation experience to ensure that any transactions handled by the firm are carried out with a view to the potential for future disputes, enforcement options, and any existing risks.” Dr Ganie stated that timing is key in many transactions, and having access to bridge financing to smooth over the timing of payments, receipts, and the availability of more permanent financing is often key to ensuring that a transaction can be executed successfully. “There appears to be substantial flexibility to secure bridge financing, with almost any timing requirements being possible to accommodate. Of course subject to variation of costs and terms, and in particular the security being provided – with individual or parent/affiliated company guarantees being a popular option,” he concluded.

-----------------------------------------------------------------------Mohamed Idwan (‘Kiki’) Ganie is the Managing Partner of Lubis Ganie Surowidjojo (LGS). -----------------------------------------------------------------------Dr Ganie graduated from the Faculty of Law of the University of Indonesia and holds a PhD in Law from the University of Hamburg. Dr. Ganie is a Chairman of the Association of Indonesian Anti-Trust Lawyers, a member of the Regional Panel of the Singapore International Arbitration Centre (SIAC), and a fellow (FSIarb) of the Singapore Institute of Arbitrators. Dr Ganie has more than 30 years of legal experience, and specializes in commercial transactions and commercial

ACQUISITION INTERNATIONAL

litigation, including alternative dispute resolution and has acted as an expert in a number court and arbitration proceedings. His expertise covers general corporate/company law, banking law, finance, bankruptcy and restructuring, mining, investment, acquisitions, infrastructure projects/ project finance, antitrust, and shipping/aviation, with a particular focus on corporate governance and compliance. “One of our unique selling points is the combination of our long-standing commercial law practice and our premier litigation department that has extensive experience in dealing with commercial disputes in the context of arbitration and alternative dispute resolution as well

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SECTOR SPOTLIGHT: Dispute Resolution

DISPUTE RESOLUTION

l Business disputes are likely to arise from time to time and can present a time consuming, often costly and unwelcomed matter to deal with especially if not handled properly. Aviation is one of the world’s most highly regulated industries and the plethora of such regulations, if not understood and properly dealt with, can have a dramatic effect on those working within the industry. Property law can be extremely complex and often disputes come with a hefty price tag; the right legal team will have the appropriate experience and will help the client to resolve disputes in the quickest and most cost effective manner. Acquisition International speaks to Ravi Nath, the Managing Partner of RNClegal / Rajinder Narain & Co., to learn about the firm’s expertise in aviation industry disputes; and Pamela L. Westhoff, a Partner at Sheppard Mullin Richter & Hampton LLP, to discuss some of the issues behind commercial property disputes. -----------------------------------------------------------------------Mr Nath has 24 years of experience in aviation related laws, including aircraft equipment and facility financing, regulatory, repossession and litigation. -----------------------------------------------------------------------Mr Nath was the Chair of the Aviation Committee of the International Bar Association and is the Editor/Author of various books and papers on aviation laws. He regularly advises on major aviation transactions and issues. Clients include the major manufacturers, leading banks and financial institutions, lessors and export credit agencies, such as: Boeing; Airbus; Embraer; Bombardier; Dassault; US Ex-Im; COFACE; ECGD; Euler Hermes; Citibank; JPMorgan Chase; ABN Amro; Standard Chartered; Macquarie; Deutsche Bank; BNP Paribas; GECAS; ILFC; HKAC; Aircastle; Avolon; Airlease and Aercap. Mr Nath’s practice includes Government regulations, companies, cross-border financing and securitisation. -----------------------------------------------------------------------With more than 25 years of experience, Pamela L. Westhoff handles a wide range of real estate transactions, focusing on commercial purchase and sale transactions, commercial and retail leasing on behalf of landlords and tenants, representation of corporations in real property matters and data center and technology leasing and licensing. -----------------------------------------------------------------------Sheppard, Mullin, Richter & Hampton LLP represents a wide variety of clients in real estate purchase and sale disputes. The firm’s attorneys have successfully and cost effectively resolved a variety of conflicts pertaining to a broad cross section of real property interests. Sheppard Mullin’s track record of success in purchase and sale claims, along with deep, firmwide expertise in real estate and construction litigation, have exposed the attorneys to virtually every aspect of disputes that arise in the course of real property purchase or sale transactions. The attorneys have assisted clients in resolving a multiplicity of claims relating to real estate purchases and sales and leases. Complementing the firm’s long-standing expertise in commercial and residential real estate transactions, Sheppard Mullin regularly represents its clients in negotiating, mediating, arbitrating, litigating and trying nearly every kind of real property related dispute. Sheppard Mullin represents clients in disputes related to purchase and sale, breach of lease, unlawful detainer, title, quiet title litigation, express and prescriptive easements, judicial and nonjudicial foreclosure, partnership disputes, zoning, residential subdivision, exactions, impact fees and other conditions of development approval, soil subsidence, flood damage, construction and architectural issues, eminent domain, unconstitutional taking and property interference claims, historic landmark and preservation, as well as the

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During the last ten years he has advised on transactions in excess of US$15 billion. The Legal 500 stated: “Ravi Nath’s esteemed reputation as an aviation expert puts clear blue water between Rajinder Narain & Co. and its rivals…”

Education: B.Com.(Hons.), LL.B., Intl. & Comp. Laws (King’s College London) PIL (Harvard). Work experience at: Sinclair Roche & Temperley, London. Personal: Lives in New Delhi along with family.

Mr Nath is a frequent speaker at various conferences. He serves on the Legal Advisory Panel of Aviation Working Group. The Bar Association of India has conferred its highest honour on Mr Nath. He was invited along with India’s Finance Minister, Mr P Chidambaram and Mr Nariman, President Bar Association to be a co-author on a book relating to legal aspects of Doing Business in India. He is a Partner at one of India’s oldest legal firm. Two of the firm’s partners were Chief Justices of the Delhi High Court and one a President of The High Court Bar Association. Mr Nath was the President of the Inter Pacific Bar Association in 2004.

National Environmental Protection Act (NEPA) and the California Environmental Quality Act (CEQA) compliance and defending environmental and land use approvals. The real estate litigators also represent owners and developers before state and federal resource agencies, air quality districts, water quality agencies, the California Coastal Commission, local city and county governing boards, planning and building departments, rent control authorities and other public agencies. What are the key skills required of professionals when dealing with commercial property disputes? Our role as real estate counsel is to provide efficient and effective representation that enables our clients to close their deals quickly with a full understanding of the risks they may be undertaking. Current market focuses make this truer than ever – we must move as quickly as our clients need to move to seize opportunities. We need to be fully versed with the latest legal requirements, so we can advise our clients “on the fly” and not get bogged down in analysis. Because of the depth of our experience in the representation of real property owners, developers, pension fund advisors, insurance companies, banks, asset based lenders and other financial institutions, our lawyers bring practical, concrete and cost effective advice in connection with any type of issue facing our clients. Do you have any predictions relating to commercial property disputes for the next 12 months? The uncertainty posed by global economic forces can be viewed as a positive for real estate. As financial markets are increasingly plagued by uncertainty, many investors see real

Firm: RNClegal /Rajinder Narain & Co. Name: Ravi Nath, Esq. Email: ravi.nath@rnclegal.com Web: www.rnclegal.com

estate as a “safer” alternative to stocks and bonds. We are starting to see our institutional investor clients increase their real estate investment allocation, and this is in part the result of the thought that while we can’t control what happens in Europe, we can better control what happens in local real estate, especially in coastal areas where people want to live and work. The legal industry is definitely changing dramatically, and this is all the more evident in real estate. As our clients are under constant pressure to evaluate deals more quickly and find ways to add value, lawyers need to be a partner in this effort. Our challenge as lawyers is to understand what our clients are seeking to accomplish and to support that effort as cost effectively as we possibly can. This means leaner staffing, implementation of creative billing structures and increased business training for real estate lawyers.

Company: Sheppard Mullin Richter & Hampton LLP Name: Pamela L. Westhoff Email: pwesthoff@sheppardmullin.com Web: www.sheppardmullin.com Address: 333 South Hope Street, Forty-Third Floor, Los Angeles, CA 90071, USA Telephone: +1 213 617 4254

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Securing Third Party Litigation Funding

SECURING THIRD PARTY LITIGATION FUNDING l SMEs that are confronted with potential commercial litigation claims against larger corporations have traditionally faced difficult financial decisions. The prospect of incurring substantial litigation costs can, for the budget-conscious, deter even the most worthy claims. Third party litigation funding has emerged as an ever more viable alternative to traditional funding through internal cash flows. This method of funding is supported by outside investors, typically a hedge fund or special purpose litigation fund which seeks out commercial litigants who have substantial claims, but who are unable to make the financial investment required. Acquisition International speaks to Marius Nasta, Chief Executive of Redress Solutions LLP, to shed some light on how third party litigation funding works.

-----------------------------------------------------------------------Redress is one of the leading UK based litigation funders and a member of the Association of Litigation Funders of England and Wales. -----------------------------------------------------------------------The third party litigation funding industry continues to experience strong growth. The so-called “Jackson reforms” (inspired by a study carried out by Lord Justice Jackson) were implemented in April 2013 and have introduced significant changes in the English courts. Two changes have had a major effect on the funding of cases. Claimants are able to use Conditional Fee Agreements or CFA with their solicitors. Under a CFA, the solicitor gets nothing if the case is lost and his normal fee together with a Success Fee bonus if the case is won. Prior to the reforms, a claimant using a CFA could not only claim back the normal costs but also could pass the cost of the success fee to the losing defendant. The Jackson reforms require claimants using CFAs to pay the success fee out of their own winnings. A similar change was made to the recoverability of the premium on After the Event or ATE insurance policies. An ATE policy is a policy of insurance under which a party to the litigation insures against the risk of losing his case and

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having to pay the opponent’s costs. Prior to April 2013, a claimant could litigate with the benefit of an ATE policy and, if he won the action, make the defendant reimburse the premium on the ATE insurance policy, which the claimant chose to take without consulting him. Under the new regime, the premium on the ATE cover is payable by the claimant. The net effect of both these changes is that the claimant now has to bear the financial consequences of the decisions that he made as to the conduct of the litigation. Thus, even if the claimant is successful, he will have to pay the solicitor’s success fee and the ATE premium out of his own winnings. Since claimants now have to carry part of their costs they are increasingly looking at other ways to spend that money to achieve costs savings and convenience. Some are adopting the third party funding route. Reputable funders such as Redress pay for the entire cost of the litigation (and provide an indemnity for the opponent’s costs if the case is lost) for a fee calculated as a percentage of the winnings. If the case is lost, the claimant pays nothing and the funder writes off all the costs spent on the case. This offers claimants the considerable advantage of not having any cash outlays while the case is on-going and knowing from the outset the percentage of their winnings which they will be giving up if

the case is successful. Of course, the claimant also knows that he will not have to pay anything if the case is lost. As can be seen, the new regime points to an even more compelling case for the third party litigation funding solution and the rise in funded claims which Redress is experiencing is a clear sign of that.

Company: Redress Solutions LLP Name: Marius Nasta LL.M Email: mnasta@redresssolutions.co.uk Web: www.redresssolutions.co.uk Address: 62 Grosvenor Street, London W1K 3JF, UK Telephone: +44 (0)20 7499 4301

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SECTOR SPOTLIGHT:

Exploring the Captive Insurance Industry

EXPLORING THE CAPTIVE INSURANCE INDUSTRY l Generally speaking, the captive insurance industry is enjoying a period of growth as the number of regions, firms and individuals with captive ambitions has increased. The number of jurisdictions with captive legislation on their books has grown, as have the total number of captives, and the levels of premiums written. It comes as no surprise that demand has increased; after all captive insurance companies provide a variety of financial and business benefits for many multinational enterprises wanting to insure risks. Many Fortune 500 companies own captive insurance firms – both on and offshore. The number of licensed jurisdictions is expanding so there are many choices when it comes to selecting a domicile; previously offshore centres had greater freedoms and for many were considered more attractive, however thanks to regulatory adaptions, onshore locations now also have greater flexibility so the playing field is much more level. This feature aims to thoroughly examine current industry issues and opportunities and we invite the leading providers of captive services (including captive managers, solicitors, accountants, actuaries, asset managers, and other organisations) to draw on your expertise and provide critical advice. Acquisition International looks at the solutions, opportunities and expertise available in various locations.

-----------------------------------------------------------------------Brenda Pickering is a Senior Account Manager and Designated Representative at USA Risk Group (BVI), Inc. Captive Insurance Manager. -----------------------------------------------------------------------In Ms Pickering’s opinion, there has been significant growth in the captive market globally because more states have jumped on the “band wagon” to implement legislation to attract this type of business. “Because of this, captives have become more mainstream and are not seen as much of an exotic solution,” she observed. “More recently there seems to a be a lot of interest in the use of the 831(b) captive, writing no more than $1.2 million in annual premium and being able to elect to be taxed on investment income only.” Ms Pickering feels that the BVI regulators are now keener on meeting the clients’ needs and are, therefore, working toward changes to improve the flexibility in the regulation which governs captives. When these come into effect, she said, “the jurisdiction will only get stronger.” “BVI has always maintained its integrity as a strong and robust jurisdiction of choice for captives,” she elaborated. “This can be seen with various tax information exchange agreements signed in recent years, new legislation and the various anti-money laundering and counter-terrorist financing regulations it has in place.” Captives have become a fundamental component of many companies’ risk management strategy over the years. Ms Pickering attributes this to a variety of reasons, including the

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fact that it can give structure to what was previously seen as a slush fund or bank account to cover costs associated with risk-based expenditures. “By having structure, there is also accountability within an organisation and this allows senior management to harvest a risk adverse culture,” she continued. “Other benefits include the ability to tailor coverage or provide coverage to risks that are not normally available in the traditional market and to access to the reinsurance market.” In Ms Pickering’s opinion, the captive industry has definitely rebounded since the global financial crisis. She noted that, as expected, capital was at a premium during the height of the crisis and therefore formations were few and far between. The firm is now seeing an increased interest in captives and the formation figures are starting to reflect this renewed interest.

“There are fewer and fewer reasons why someone has to do business in a particular time zone or physical location. Business is fluid and the ability to pick and choose the domiciles you want to establish your captive in has never been greater,” she concluded. Pickering believes for captives the BVI offers the best advantages, which include strong international regulatory standards, cost effectiveness, flexibility in a number of areas, including holding board meetings, capitalizing the captive, and where it resides. These advantages, she outlines, are bolstered by the BVI’s political and economic stability, its expert professionals and its speciality in a broad range of international captives.

Commenting on the increasing regulation in the industry, Ms Pickering stated that it is key to find the balance between remaining competitive and business friendly, and having the right touch of regulation. “There is nothing wrong with increased scrutiny, you just need to be mindful that one governing structure does not fit all situations and that proportional regulation is what will attract business,” she explained. Discussing the impact of technology, she stated that the concept of a global marketplace has never been more accurate.

Company: USA Risk Group (BVI), Inc. Name: Brenda Pickering Email: bpickering@usarisk.ky Web: www.usarisk.com Address: 2nd Floor, Harbour House, Road Town, Tortola, BVI VG1110 Telephone: +1 284 494 5242

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SECTOR SPOTLIGHT:

Exploring the Captive Insurance Industry -----------------------------------------------------------------------John J. Kelly is the Founder and Managing Partner of Hanover Stone Partners, LLC, a New York based organisation that provides risk consulting and risk management services to the Global 1000 companies. ------------------------------------------------------------------------

John J. Kelly has achieved 40 years of experience in the risk management sector, always specialising in alternative risk transfer including heavy utilisation of captives. Discussing Hanover Stone Partners’ distinguishing features, Mr Kelly stated: “We are global, objective, comprehensive and independent of any insurance brokerage or underwriting organisation.” Mr Kelly described captives as fundamentally a highly efficient financial tool to help organisations formally fund and manage increased levels of self-insured retentions. He noted that captives enable organisations to materially reduce or eliminate high friction costs of direct insurance transactions and if managed properly, accumulate policyholder surplus that enables the captive and its parent, over time, to increase its level of self-insured retentions. “There are many other rationalisations for utilising a captive (better access to reinsurers, possible tax and cash flow advantages, investment income on reserves, avoidance of local tariff insurance rates, etc.) but fundamentally it is a preferred vehicle to self-insure insurable and non-insurable exposures to loss,” he explained. Hanover Stone Partners focuses on the Global 1000 companies, and Mr Kelly noted that the combination of the firms’ Risk Consulting Practice, consisting of over 40 Senior Advisers, each with Fortune 1000 company experience, and its 30 Partner Firms that provide captive management, captive assessment, turnaround and runoff

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services, captive reinsurance consulting, actuarial and captive employee benefits capabilities, allows the team to provide comprehensive capabilities and expertise through the complete life cycle of a captive from conceptual feasibility study to closure and run-off.

“What I do know is, there is evidence of increasing litigation between captives and reinsurers and despite arbitration clauses in reinsurance agreements, increased levels of litigation are starting to find their way into the U.S. courts.”

Kelly anticipates continued exponential growth in the number of captive domiciles, both in the U.S., Europe, Asia and the Caribbean.

As global companies face continued pressure on profitability in a weak global economy, coupled with upward pressure on pricing in the insurance sector, Mr Kelly believes there will inevitably be increased utilisation of captives to fund increased levels of self-insured retentions.

“It will become increasingly difficult for captive domiciles to differentiate themselves, other than the quality of their legal and banking systems, as well as the taxes and other frictional costs to operate,” he elaborated. “In the U.S. corporations will increasingly feel pressure to redomesticate their captives to the State where they are headquartered.” In Mr Kelly’s opinion, there is a wide gap between effective corporate governance and the operational realities of a mature captive. He noted that a colleague, Andy Braille, has been trying to get the captive industry, the captive regulators and the rating agencies to focus on the issue, “but he is speaking to deaf ears”. He continued: “As captives develop and mature by writing third party business and use increasingly sophisticated analytical tools and investment products, they become increasingly analogous to publically traded insurance companies, yet how many captives have outside independent directors who really understand insurance companies from an operational perspective? “The regulators don’t want to push it because they don’t want to be more stringent than their competing domiciles. So far, the rating agencies don’t seem to be focuses on the issue either.

“The future looks quite promising for the captive insurance industry, but captives will increasingly become more scrutinised as governments at all levels look to challenge any mechanism that accelerates tax deductibility or alternatively, defers income recognition. The more mature and sophisticated a captive becomes, the greater the need for stronger and more experienced board oversight coming from outside independent Directors with real insurance company operational experience,” he concluded.

Hanover Stone Partners LLC

Objective. Creative. Comprehensive.

Company: Hanover Stone Partners, LLC Name: John J. Kelly Email: john.kelly@hanoverstonepartners.com Web: www.hanoverstonepartners.com Address: Harborside Financial Center, 2500 Plaza 5, 25th Fl., Jersey City, NJ 07311 Telephone: +1 201-309-4830

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SECTOR SPOTLIGHT:

Pensions Issues in M&A Transactions / Profiting from Defined Benefit Pensions

PENSIONS ISSUES IN M&A TRANSACTIONS l In current market conditions it is of the upmost importance for purchasers to understand the risks and costs of a potential target’s pension plan, post-retirement medical plan and other benefit plans. Understanding the pension implications of a proposed corporate transaction is essential to reducing and managing the risk associated with pension obligations post transaction, as well as the overall risks posed on the business. Anna Gustring Boman and Tom Ekberg, Senior Managers within Tax Services at PwC, examine the pension implications of corporate transactions. According to Ms Boman, the skills required of an adviser when dealing with pension issues in M&A transactions vary depending on the pension agreements provided by the company subject of the transaction. She stated that in a due-diligence process, in order to understand the pension arrangements in place and hence verify appropriate accounting treatment, actuarial and accounting skills are required. In addition, legal and tax experience is of great importance in order to verify potential risks in breach of contracts, e.g. collective agreements and individual pension agreements. “From a post-merger or post-divestiture point of view, legal experience is vital in order to map potential efficiency and harmonisation possibilities in relation to the pension schemes operated within the organisation,” she explained. “In addition actuarial skills are important in a post-deal situation in order to verify potential cost and risk drivers behind the different schemes.” The firm is of the opinion that pension due diligence is very important in order to identify potential risks in relation to inappropriate accounting treatments of Defined Benefit pension schemes as well as identifying non-recurring costs and potential risks resulting from breach of existing pension agreements.

“In Sweden there is no retroactive limit in relation to collectively agreed pension plans which obliges the employer to meet the obligations stipulated in the agreed pension plan at any time,” explained Mr Ekberg. He continued: “PwC’s pension team in Sweden have extensive experience from due-diligence and post-deal projects and can cover all aspects of potential risks resulting from the pension agreement, such as verifying and quantifying pension liabilities, potential other net debt adjustments, non-recurring costs and legal risks.” In conclusion, Ms Boman highlighted a recent regulatory change which has affected the firm’s role as an adviser. “In accordance with revised IAS 19 potential taxes relating to Defined Benefit schemes should be reported in the liability. This has an impact on our work in order to verify the correct accounting treatment of the special payroll tax (Sw. Särskild löneskatt) within the local legal entity and the Group. In addition, since the corridor is no longer applied the balance sheet provision is more volatile and as a result it is of even greater importance to understand the effects of changes in actuarial assumptions.”

Company: PwC Web: www.pwc.com/se Name: Anna Gustring Boman Email: anna.gustring.boman@se.pwc.com Telephone: +46(0)709-293289 Name: Tom Ekberg Email: tom.ekberg@se.pwc.com Telephone: +46(0)709-294209

PROFITING FROM DEFINED BENEFIT PENSIONS l A defined benefit pension scheme is a type of plan in which an employer/sponsor promises a specified monthly benefit on retirement that is predetermined by a formula based on the employee’s earnings history, tenure of service and age, rather than depending directly on individual investment returns. While many see this type of pension plan as an obstacle in M&A, Nick Griggs, Head of the Corporate Consulting practice at Barnett Waddingham, explains how defined benefit pension schemes can add to the value of a deal.

Defined Benefit (DB) pension schemes are often seen as negative factors in acquisitions, or even deal breakers. Indeed, the Bank of England’s recent survey of employers with DB schemes found that over 30% of them felt the deficit had a “major impact” on their ability to sell, buy or restructure businesses.

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Given the right sort of attention, though, a DB scheme could actually add to the value of a deal. The starting point will always be to ensure that all pension hazards are identified and properly valued. Once a mutually acceptable commercial price has been agreed the purchaser, rather than leaving the scheme to its own devices, should work with an adviser to reduce the scheme deficit and the size of the scheme relative to the company, during the period until onward sale. The main goal is not a reduction in deficit contributions (although that is welcome), but the improvement in resale value of the business corresponding to the reduced deficit and size of the scheme (alongside other improvements made to the business itself by the purchaser).

The costs of the exercises can sometimes be partially met from existing deficit contributions, reducing the need for additional expenditure. Company guarantees and asset backed contribution structures can also have a significant immediate positive impact on the deficit.

These aims can be met from a variety of sources. For example, a “transfer at retirement” option allows nonpensioners over age 55 to consider (with the help of an IFA) transferring to a bespoke immediate annuity with a potentially higher initial pension and/or tax free lump sum than their existing entitlement. Such exercises are viewed positively by members, as it simply offers them more choice, but can help to reduce the deficit and size of the scheme.

Company: Barnett Waddingham LLP Name: Nick Griggs Email: nick.griggs@barnett-waddingham.co.uk Web: www.barnett-waddingham.co.uk Address: Cheapside House, 138 Cheapside, London, EC2V 6BW Telephone: +44 (0) 20 7776 2200

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SECTOR SPOTLIGHT:

Insolvency: Don’t Just Wait for Recovery

INSOLVENCY Don’t Just Wait for Recovery

l Over the course of 2012 and 2013, the number of big-name brands that are forced into bankruptcy continues to shock us. Many in the international business community have been ‘hanging on’ to survive but it is becoming clearer, year on year, that in this environment the ‘hold tight and wait for recovery’ approach simply isn’t working. Low interest rates and patient creditors have allowed many companies to survive in the short-term, however when 100% of business capital gets consumed by overheads and debt repayments, there is little room for expansion and innovation. These ‘zombie’ firms clog the market and prevent competitors from mopping up and, as Richard Fleming, head of restructuring at KPMG points out, stand in the way of economic recovery. Many insolvency specialists predict that the only companies who will thrive this year will be those who create a firm business plan based on succeeding in current market conditions and not those who sit tight, waiting for the return of cheap credit. Stanislav Demčák, an associate at the law firm SEDLAČKO & PARTNERS, describes the firm’s services related to bankruptcy and restructuring, and explains how a proactive approach to recovery is vital. SEDLAČKO & PARTNERS provides a full range of services in the field of bankruptcy law. The firm also concentrates on restructuring and searching for opportunities for debtors to use the firm’s services to prevent final collapse and to remain a going concern. “Our company has many years of practical experience in more than 100 insolvencies and restructurings, representing the interests and defending the rights of creditors,” said Mr Demčák. “We have had to face a number of various situations, in which we have obtained invaluable practical experience that allows us today to react quickly and effectively to each bankruptcy-related issue.” Mr Demčák stated that failure to solve problems with recovery may lead to a chain reaction that can bring major financial difficulties for a company and finally insolvency. “Irrational waiting for recovery without taking action ultimately distorts the market, where irresponsible companies (with no fear of not meeting their obligations) gain an advantage (through cost-free foreign sources) over companies that behave responsible towards its creditors,” he elaborated. “Such a situation then forces responsible companies to approach their creditors irresponsibly.”

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In the current market conditions, the firm believes that the key issue is the preparation of a powerful and high-quality business plan for the next two years, based on information from available economic resources, assumptions and strategies, as well as specific features of the particular market segment. This business plan should establish an adequately flexible and sufficient reserve to cover any unexpected situations and market fluctuations that may appear in future periods. “We have been involved in the preparation of dozens of business plans for restructuring companies, with plenty of both theoretical knowledge and practical experience in the field,” said Mr Demčák. “There were always the restructuring processes of companies strictly complying with the conditions and objectives established in their business plans and also the rapid collapses of companies that disregarded these conditions. Therefore, we can assess a company’s strengths and weaknesses not only when a business plan is created, but also in gradually implementing it. As a result we are able to continually assist debtor companies in the process of restructuring and put them back into business.” The firm believes that “creditor restructuring” – where the main financial creditor initiates a restructuring process with the debtor’s consent – is not being utilised enough. In this type

of restructuring the creditors do not allow rescuing debtors to make all of the critical decisions independently, because some of them do not always have to conform to the creditors’ interests. “In this regard, creditor restructuring seems to be an appropriate instrument for saving debtor and maintaining a higher degree of creditor claims being satisfied when a debtor business enters a crisis situation. We expect the creditors will become more active in this field of solutions of recovering their claims and this section will expand in practice,” he concluded.

Company: SEDLAČKO & PARTNERS, s.r.o. Name: Stanislav Demčák Email: demcak@sedlacko.sk Address: Štefánikova 8, 811 05 Bratislava, Slovakia Telephone: +421254630226

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SECTOR SPOTLIGHT:

Corporate Governance as a Strategic Tool

CORPORATE GOVERNANCE AS A STRATEGIC TOOL

l The global economic crisis has brought to the fore the pertinence of corporate governance issues in industrialised, emerging and developing economies alike. As part of an effort to minimise future economic problems, policymakers and regulators are increasingly making changes to corporate governance practices in order to enhance transparency, get greater director accountability, and give shareholders more say in certain boardroom decisions. Integrity has become a critical consideration and there are considerable external pressures from investors, shareholders and even international governments, which are making waves on the decisions that are reached in the boardroom. Good corporate governance, if implemented effectively, can be a strategic asset that can help a company’s overall performance and those that take these issues seriously tend to reap the rewards. Whilst members of the board may excel in the day-to-day running of the business, they are not often informed enough to design and implement an effective framework; hence the onus is typically placed upon external advisory firms. Acquisition International speaks to Abel Sequeira Ferreira, Executive Director at AEM, the Portuguese Issuers Association, to learn more about corporate governance in Portugal. of 10.000, and 77.3% of the listed companies recorded ratings ranging from AAA to A (which compares favorably with last year’s value of 9.452 and percentage of 72.8%). Therefore, the comparison of the practices followed by the Portuguese companies in 2011 with the first Report’s shows a positive trend in the degree of compliance with the Code by listed companies, which was already high. This means that Portuguese companies have, generally speaking, improved their corporate governance good practices. -----------------------------------------------------------------------AEM represents the companies listed on the Portuguese Index PSI 20, as well as the majority of other national quoted companies. ------------------------------------------------------------------------

Representing the Portuguese Issuers, AEM has developed a strategy of consistently defending and giving voice to the concerns and expectations of quoted companies in matters of corporate governance, namely, taking the lead in creating a governance benchmark that is unique and independent from the views of any other institution dealing with these matters in Portugal. In fact, the monitoring model in force in Portugal, by which the supervision authority (CMVM) is responsible for assessing the degree of compliance with its own Corporate Governance Code (Code), is without parallel in most of the E.U. State-Members, and AEM has set a private and independent assessment of the degree of compliance with the Code. Thus, in 2011, AEM presented its first “Corporate Governance in Portugal - Report on the Degree of Compliance with Corporate Governance”, a major contribution to the reform of the Portuguese legal system for corporate governance, carried out, independently, by the Católica-Lisbon University. This was a pioneer study because of the introduction of a Corporate Governance Index and a Corporate Governance Rating, which allows for a collective assessment of the Portuguese listed companies and will

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make possible to determine the future evolution of the companies in this domain. Knowing that a significant part of the investment carried out in the Portuguese Exchange is currently originating from abroad, the Report adopted a methodology where compliance is evaluated according to international benchmarks, namely, (i) The recommendations and rules arising from European Law; (ii) the OECD principles on Corporate Governance; (iii) the UK Corporate Governance Code. The private monitoring also presents advantages when compared to the verification carried out by the supervisory entities, avoiding, for example, the confusion between governance and compliance, which tends to occur in public monitoring.

Meanwhile, the Code is currently under revision and a revised set of recommendations is likely to be approved within a short period of time. AEM has been consulted by the authority to state its view on the new wording of the revised Code and is actively involved in its drafting and preparation of the new Code, albeit on a consultative basis. In any case, and even if there are still a number of difficult reforms to be implemented in Portugal, with the very high levels of corporate governance compliance and with matters like strategic planning and growth strategies, organizational performance and shareholder value, being paramount to the Portuguese listed companies, the Portuguese capital market presents plenty of trade and investment opportunities for the long term.

In 2012, a second Report was prepared and developed by Católica-Lisbon University. Both the 2011 and the 2012 Reports show that, even in the adverse environment of an excessive level of recommendatory density, heavier than the compared international benchmarks, the degree of acceptance of corporate governance recommendations by national listed companies is remarkably high and has in fact been growing. Indeed, for the companies listed on the PSI 20, the median values were above average, 9.615, in a maximum

Company: AEM – Associação de Empresas Emitentes de Valores Cotados em Mercado (the Portuguese Issuers Association) Name: Abel Sequeira Ferreira Email: abel.ferreira@aem-portugal.com Web: www.emitentes.pt Telephone: + 351 21 820 49 70

July 2013 /

SECTOR SPOTLIGHT:

Implementing an Effective Anti-Money Laundering System / Managing Collective Redundancies

IMPLEMENTING AN EFFECTIVE ANTI-MONEY LAUNDERING SYSTEM l The investigation and prosecution of money laundering has changed dramatically in recent years. In 2012 record-breaking fines issued by regulators worldwide dominated the financial services landscape, a trend which looks set to continue through 2013 if regulators identify further failings in firms’ compliance with money laundering, sanctions and tax requirements. Although financial institutions have had anti-money laundering (AML) and economic crime control programs for some time, many still do not have sustainable, cost-effective processes in place. Senior executives and board members are increasingly seeking to build integrated, risk-based and efficient AML compliance control programs. Financial services firms are well advised to ensure cultural changes towards compliance-driven objectives are made as a key priority if they wish to avoid their reputation being tarnished by potential scandals. Those who find themselves unexpectedly caught up in money laundering investigations whether as witnesses or suspects will need to seek the advice of those in the know to help implement detection and compliance initiatives. Acquisition International looks into the key issues in AML policy and compliance with commentary from Michael G. Kessler, the President and CEO of Kessler International in New York, NY. -----------------------------------------------------------------------As founder and principal, Mr Kessler has over three decades of law enforcement and investigation experience, and has assisted in hundreds of successful investigations for business and government. Working closely with each client, this valuable experience is brought to bear on each unique case. -----------------------------------------------------------------------“The Kessler staff of forensic accountants, CPAs, researchers and investigators are the best in the field, with years of sleeves-up service and training in their disciplines,” he commented. “The Kessler team knows what to look for in complex paper trails, and they know what it takes to conduct investigations quickly, discretely and cost-effectively.” “Kessler employs cutting edge methods and tools to help meet today’s highly sophisticated, high-tech criminals head-on. We constantly invest in new technologies, like the latest audio and photo/video equipment, continuously-updated company and personal profile databases, and our exclusive Internet monitoring software. That way, we’re always ready to uncover, document and resolve cases with utmost speed and discretion.” Mr Kessler stated that the firm’s money laundering detection and prevention programs are proven, cost-effective and dependable. With increased legislation against corporations involved in laundering money, including stiff penalties and broad asset forfeiture provisions, he advises that companies

cannot afford to assume money laundering is somebody else’s problem. “Kessler also offers a proactive anti money laundering prevention program designed to keep businesses “dirty money” free,” he continued. “We help businesses establish procedures for customer background searches, employee and compliance officer training programs, and regular ad hoc audits to help restore and maintain legal and ethical standards.” In a recent case, at the request of a European governing agency, the team at Kessler was asked to determine the course of funds that a European official and his associates invested in the United States. “Our researchers and investigators profiled the financial history of each individual involved and found a trail that placed the illegal money in the United States,” elaborated Mr Kessler. “After reviewing the information, the governing agency took immediate action.” Kessler’s investigative expertise has helped uncover even the most subtle and sophisticated money laundering schemes. The firm is familiar with all the red flags that indicate suspicious financial activity in both bank and non-bank institutions, and can trade and document all such activity until the entire money laundering process is revealed.

“We have over two decades of experience helping both domestic and international businesses and governments identify the source of money laundering and implement solutions in order to help prevent it in the future,” concluded Mr Kesller.

Company: Kessler International Name: Michael G. Kessler World Headquarters: New York City, 45 Rockefeller Plaza, 20th Floor, New York, NY 10111 Telephone: +1 (212) 286-9100 Fax: +1 (212) 730-2433 London, United Kingdom, 29th Floor, One Canada Square, Canary Wharf, London E14 5DY Telephone: +44 20 7956 8849 Fax: +44 20 7712 1501

MANAGING COLLECTIVE REDUNDANCIES

l As economic recovery continues to falter, collective redundancies, and disputes in relation to redundancies, are unfortunately not an uncommon occurrence. Acquisition International discusses the current issues with Dr Sebastian Frahm, a Partner of Naegele – Employment Law since 2007. -----------------------------------------------------------------------Naegele – Employment Law provides professional advice on the highest level and its team is personally committed to furthering its clients’ interests. Nationwide, the firm represents: large and small enterprises; corporations and associations; members of boards of management; managing directors; members of supervisory boards; and executive staff. -----------------------------------------------------------------------“A particular concern of ours is representation of clients at court and in conciliation board proceedings,” said Dr Frahm. The firm advises and gives on-going support to enterprises in: • Restructurings, reorganisations and all associated tasks; • Negotiations on the on the settlement of conflicting interests and redundancy schemes (social plans); • In-company legal issues with the works council or staff council; • Collective bargaining and pay disputes; • Developing remuneration systems and working-time schemes; • Complex questions of social security law relating to employment and occupational pension schemes; • Legally watertight termination of employment relationships and entering into termination agreements; • Issues of individual employment law from unfavourable treatment and discrimination to holidays.

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For members of boards of management, managing directors and members of supervisory boards, the firm: • Drafts clauses compatible with compliance requirements, and help out if they are not; • Clarifies liability issues and handles the litigation; • Drafts contracts and enforce claims. “Our exclusive practice area is Labour Law,” said Dr Frahm. “Thus we provide as a team of six lawyers our broad expertise and are in every situation able to cope with new projects. We are very flexible for our clients to provide our service throughout Germany.”

“However we have to provide a time frame for our clients until the end of the negotiations,” he elaborated. “The termination of employment relationships is possible only after the termination of the negotiations. “The formal side is very important. Mistakes will have the consequence that the costs will increase dramatically,” he concluded.

Dr Frahm also highlighted the firm’s excellent contacts with trade unions and the media, which allows it to reach fast results, as well as its transparent billing system. “The collective dismissals are our daily business,” he continued. “We provide drafts of any agreements which have to be negotiated (reconciliation of interests, collective bargaining agreements, social plans, notification of mass layoffs). We guarantee the correct formal procedure.” According to Dr Frahm, the key challenge in handling mass redundancies is the time line. He noted that the works council and/or the labour unions are normally not willing to come to an agreement.

Company: Naegele-Kanzlei für Arbeitsrecht Name: Dr Sebastian Frahm Email: frahm@naegele.eu Web: www.naegele.eu Address: Rotebühlplatz 8, 70173 Stuttgart, Germany Telephone: +49 711 25 35 84 0 Mobile: +49 162 434 1766

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SECTOR SPOTLIGHT:

Joint Ventures and Strategic Alliances: An Attractive Alternative to M&A

JOINT VENTURES AND STRATEGIC ALLIANCES An Attractive Alternative to M&A

l Joint ventures and strategic alliances provide a desirable way for many individuals and businesses to expand, enter new markets and to achieve their business development objectives. The globalisation of business models and the dramatic change in the way that businesses operate in today’s economy have resulted in a shift in M&A strategy. Increasingly, corporations and investors are going beyond the traditional acquisition/disposal model, using Joint Ventures (JVs) and business alliances to further develop their business. There are certainly lots of commercial advantages in entering into joint ventures; new product/development opportunities, entrance into new markets, cost sharing, mitigation of risk etc. However it is now more important than ever to ensure that the venture is managed and monitored closely. Failure to identify and consider the variety of risks in these arrangements can impact the success of the JV and the value of the overall enterprise. Acquisition International examines the advantages and challenges of JVs and strategic alliances with expert commentary from leading firms. -----------------------------------------------------------------------Alex Kyriakoulis is a corporate finance/M&A partner in Holman Fenwick Willan’s London office. He talks to AI magazine about JVs in the shipping sector. -----------------------------------------------------------------------The economic crisis appears to have been a catalyst for increased joint venture activity, between corporates but also between corporates and financial investors. Two of the reasons for this include the following. Firstly, with bank lending decreasing significantly from pre-Lehmans levels many businesses have had to seek other forms of finance in order to grow. Secondly, with large parts of the economy suffering a decline in revenues and profit financial investors have looked to previously untapped sectors to achieve attractive returns. A sector where this has been prevalent is shipping, according to Kyriakoulis. It is estimated that over US$100 billion will be required in 2013 to cover orders for new vessels, and to finance purchases of existing vessels. With many traditional maritime financing institutions reducing their exposure to the sector, shipping companies can either club together to share the costs or private equity / hedge funds can step in to bridge the funding gap.

“What we have seen is that there is strong appetite for sizeable investments by PE houses in existing shipping companies as well as in new JVs. I think this is largely driven by low asset values and the ‘distress’ experienced by some shipping companies, so the PE houses see upside opportunities. An outright acquisition is often too risky for most financial investors given that it is quite a specialist sector dominated in large part by families and private groups who have been in this business for decades, so a joint venture can make a lot of sense for both sides” says Kyriakoulis. Whilst they may be an attractive solution, Kyriakoulis cautions against JV structures being easy to agree: “The joint venture partners have very different characteristics, but will both want to be in control. Careful consideration of the governance arrangements will be very important as well as the mechanisms for dealing with disagreements and exit. A further complication arises from the fact that one joint venture partner may well have vessels outside the joint venture which are in competition with the JV’s vessels. This will also need to be addressed.”

Holman Fenwick Willan is an international law firm with offices in Europe, the Middle East and Asia Pacific. It is a top tier firm in a number of areas, and regularly advises on M&A and joint venture transactions in various sectors including aviation, shipping, energy and infrastructure.

Company: Holman Fenwick Willan LLP Name: Mr Alex Kyriakoulis Email: alexis.kyriakoulis@hfw.com Web: www.hfw.com Address: Friary Court, London EC3N 2AE Telephone: +44 207 264 8782

Joint Ventures… When They Can be a Value-Added Alternative to M&A -----------------------------------------------------------------------Adam Zarren is a Partner at Saul Ewing LLP. -----------------------------------------------------------------------Joint ventures have become an increasingly popular alternative to mergers and acquisitions (M&A). Unlike M&A, joint ventures typically allow the parties to first understand whether their affiliation works (upfront)…the old adage of “living together before marrying.” A joint venture is an initiative in which two or more parties create a business relationship for a specific or common business purpose. There are many different types of joint ventures and ways to structure them. They can be formal or informal. Typically, a joint venture is a contractual arrangement, and is more flexible than M&A and allows the parties to form a relationship for a particular business initiative without the cost and complexity of engaging in an M&A transaction. In many instances, it should also be considered by a company seeking to grow and expand its product and service offerings. Some simple joint venture structures include a reseller relationship, strategic partner arrangement such as a finder or sales mechanism for one party to compensate another, creating an alliance for joint initiatives, among others, each of which is simply created by an agreement between

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the parties. There are also more complex, but rewarding structures. For instance, where one party desires to utilize certain products or services of another, rather than initially engaging in an M&A transaction, those parties create a new business entity that would be co-owned by the parties. This new business can be structured as a limited liability company, partnership, corporation, or other legal entity, and operate as a new, separate business. There are many benefits associated with creating this alliance so that the parties can formally explore their synergies without embarking in an M&A transaction – in fact, many times joint venture partnering often subsequently results in an M&A transaction after their venture proves profitable and effective. Some of more common benefits of a joint venture include: the pooling of skills, knowledge, and resources, ease of beginning and exiting the relationship, risk reduction, expanded technological and other capabilities, non-exclusivity aspects of it, cost reduction, significantly less capital requirements, increased buying power, larger market share, allowing partners to it to maintain separate management structures while retaining the right to compete in other business areas, and access to wider or new markets, among others.

M&A certainly has its benefits and advantages but a joint venture is a common alternative that should be considered particularly where at least one of the parties is hesitant to engage in an M&A transaction. Summary: I represent joint ventures on a daily basis with their business initiatives all over the world.

Company: Saul Ewing LLP Name: Adam Zarren Email: azarren@saul.com Web: www.saul.com Address: 500 E. Pratt Street, Suite 900, Baltimore, MD, 21202-3133, USA Telephone: +1 (410) 332-8725

July 2013 /

SECTOR SPOTLIGHT:

Private Panamanian Funds â&#x20AC;&#x201C; An Overview

PRIVATE PANAMANIAN FUNDS An Overview

l The Republic of Panama is a presidential independent, sovereign state. It is known as one of the most developed international business centres. The country has the fastest growing economy and the largest per capita income in Central America. Panama presents a host of advantages, including a high level of privacy protection, a well-developed financial services industry and professional infrastructure, as well as an excellent telecommunications system. Daniel Cann is the Marketing Director of the Folio Group and the Managing Director of Folio Administrators (Panama) SA. He resides in Panama and has been involved in funds since 2000. Here, he discusses the viability of Panamanian Private Funds (PPFs). From a practical standpoint, PPF set-ups are not particularly onerous. A couple of points to note are that the M&A and PPM need to be filed in Spanish. Also, operationally, bank and broker/custodial accounts need to be established for the Fund with institutions who are comfortable with Panamanian entities and with Funds. From a cost perspective, the set-up and on-going operational fees are not too dissimilar to other jurisdictions. There will be legal fees, time and incorporation costs to consider in the set-up. Thereafter, on-going costs relate to administration, audit, corporate, bank, broker/custodial fees and regulatory fees. As far as taxes are concerned, all Panama companies (including PPFs) are exempt from tax on income received from overseas and are widely used for doing business and holding assets outside Panama. The other key benefit is the fact that the registration and supervision fees are extremely low (USD250 registration and 0.001% of average net assets for a year with a minimum of USD500 and a maximum of USD5,000). These factors alone make Panama an attractive new option as a Fund jurisdiction. Panama, one of the worldâ&#x20AC;&#x2122;s fastest growing economies (recording its second consecutive year of double-digit growth in 2012), is undoubtedly the banking and financial services hub of Latin America. The resulting new wealth and growing middle class has created an ever increasing demand for new investment products and vehicles. Not unexpectedly, professionals are asking about the viability of Panamanian Private Funds (PPFs). As is the case in the banking sector, many Latin American professionals and investors generally feel more comfortable utilising Panamanian entities rather than traditional offshore entities. This can be for a variety of reasons, ranging from legislative and language familiarity to specific regulatory issues in their home country. From a practicality and viability standpoint, the processes are not too dissimilar to the set-up of a Fund in, for example, the BVI. Firstly, the requisite due diligence on the client must be collected, then, together, with a specialist law firm, the various necessary documents must be drafted, including the Memorandum and Articles of Association (M&A), Offering Memorandum (PPM) and the Subscription Document, as part of a formal application to the Superintendent (of the

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Securities Market of Panama) for permission to incorporate and proceed with the establishment of the Fund. Depending on whether the Fund will have any offerings within Panama or whether it is managed in Panama, this process can take between 30 to 60 days. The more involvement the Fund has in Panama (such as local Investors, a local Manager, a local Administrator or a local Custodian), the more heavily scrutinised the Fund will be. The Fund can only be offered in a private capacity (up to 50 persons) and cannot be a public offering. Furthermore, the persons who are offered the Fund and eventually invest into the Fund can only be sophisticated investors (USD100,000 minimum investment with a net worth of USD1 million or more). However, there are no restrictions on the type of investment the Fund can make. The Fund is required to appoint three Directors (who do not need to be based in Panama), the same number as required to form a basic Panamanian company. A suitably qualified Administrator and Auditor must also be appointed, as well as a Custodian to hold the assets.

With its already excellent reputation as a banking and international financial services centre and the combination of a strong economy, growing infrastructure and its geographical location, Panama should firmly position itself as a viable and attractive Fund jurisdiction in the future.

Company: Folio Corporate Services Limited Name: Daniel Cann Email: daniel@folioadmin.com Web: www.folioadmin.com Address: 5th Floor, Edificio Vallarino, Calle 52 y Elvira Mendes, Panama, Panama Telephone: +507 214 7289 Fax: +507 214 7157

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

The (not so) Unified European Patent Court

THE (NOT SO) UNIFIED EUROPEAN PATENT COURT

l Currently, national courts and authorities of the contracting states of the European Patent Convention are competent to decide on the infringement and validity of European patents. In practice, according to the European Patent Office, this gives rise to a number of difficulties when a patent proprietor wishes to enforce a European patent - or when a third party seeks the revocation of a European patent - in several countries: high costs, risk of diverging decisions and lack of legal certainty. Forum shopping is also inevitable as parties seek to take advantage of differences in national courts’ interpretation of harmonised European patent law and in procedural laws, as well as differences in speed (between “slow” and “quick” courts) and in the level of damages awarded. The Agreement on the Unified Patent Court addresses the above problems by creating a specialised patent court (“Unified Patent Court”, or UPC) with exclusive jurisdiction for litigation relating to European patents and European patents with unitary effect (unitary patents). Martyn Fish, a Partner at Harrison Goddard Foote LLP, discusses the implications of the creation of the Unified Patent Court.

Complex, expensive and open to forum shopping is how patent litigation in Europe is often perceived. However the landscape of European patent litigation is set to change with the creation of a new centralised patent court, the Unified Patent Court (UPC). The signs are that although the idea behind the proposed system is to be welcomed, in practice it is unlikely to be much better than the disparate systems that currently exist. Current Problem

The unitary patent will be a patent having uniform protection within at least 13 of the 25 participating Member States of the EU. The UPC will have ability to grant injunctions throughout the participating Member States and to centrally revoke both EPs (both existing and future) and unitary patents. For the first time a real pan-European injunction will be available. Will it work?

Proposed Solution

On the face of it this should mean that patent litigation should be far more straightforward. However there are many reasons to doubt whether the system will work any better than the current system. Many patentees are happy with the current system as in practice decisions of a limited number of courts will resolve most European patent litigation. Further the UPC allows for central revocation - many patentees will not welcome this. The proposed system also has complex rules governing the language of proceedings and multiple court hearings are still likely. Forum shopping will still continue and costs are unlikely to be reduced.

The basic idea of the UPC is to provide a single court for the enforcement of the proposed new European unitary patent.

Before the UPC comes into effect, 13 EU countries are required to ratify the legislation – this may not happen.

Currently any infringement or revocation action (after the post-grant opposition period) for a European Patent (EP) must be brought in the national European courts – there is no centralised system of enforcement. Some of the perceived disadvantages of this are duplication of costs (if you want to revoke or enforce in each country you require separate actions), divergent decisions between national courts and the ability of the patentee to forum shop to its advantage.

ACQUISITION INTERNATIONAL

If it happens the UPC will be a powerful way to enforce patents in Europe but it should not be assumed that the UPC is any better than the current system and not without its disadvantages. Businesses need to consider their current European patent portfolio with a view to developing a strategy for the proposed change.

Company: Harrison Goddard Foote LLP Name: Martyn Fish Email: mfish@hgf.com Web: www.hgf.com/partners Address: Belgrave Hall, Belgrave Street, Leeds, United Kingdom, LS2 8DD Telephone: +44(0) 113 233 0100

July 2013 /

SECTOR SPOTLIGHT:

Introducing the Licensed Access Scheme

INTRODUCING THE LICENSED

ACCESS SCHEME

l The licensed access scheme has been welcomed by a wide range of individuals across the business community. It allows certain organisations and individuals direct access to a barrister, recognising that there are significant areas of work in which the traditional solicitor referral approach may be unnecessary and simply increase the overall cost. Providing those with the appropriate knowledge and skill set the ability to communicate directly with a barrister saves the client money, the solicitor time and ensures that the Bar remains competitive. Acquisition International speaks to a number of barristers for their opinions and advice on the scheme.

-----------------------------------------------------------------------Maurice MacSweeney is the Director of Business Development at the Chambers of Orlando Pownall QC at 2 Hare Court. -----------------------------------------------------------------------For almost 60 years barristers from the Chambers of Orlando Pownall QC at 2 Hare Court have provided individual and corporate clients with advice and representation in cases involving: serious, organised and corporate crime; fraud and financial crime and related internal investigations; financial services regulation; health and safety; professional discipline; licensing; environmental crime; and other forms of business regulation. “In addition to working on the instructions of a client’s solicitors, we also provide our services through the Bar’s public access and licensed access arrangements, which in many circumstances allow barristers to take instructions directly from members of the public, or from directors and officers of companies,” said Mr MacSweeney. “It has long been recognised that solicitors are not alone in being able to offer clients the skills and specialist knowledge they seek; the Bar can also offer these, which is why such arrangements are in place. But whilst those arrangements facilitate a more direct relationship between clients and the specialist advisers the Bar can provide, few organisations or individuals are aware these routes are open to them.” Mr MacSweeney noted that instructing a barrister directly has a number of key benefits, including direct contact with

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the client’s specialist of choice and avoiding duplication of work and cost. He highlighted that the Bar operates on significantly lower overheads than solicitors; therefore clients can benefit from lower hourly rates or fixed fees and obtain greater value for money. Some professionals such as accountants, tax specialists and surveyors, can already instruct the Bar directly without using a solicitor. Mr MacSweeney explained that licensed access allows a wide variety of other organisations and individuals to be recognised as having sufficient experience and knowledge to provide barristers with the key information required so as to be able to receive meaningful advice and assistance in return. “Organisations or individuals seeking a licence must apply to the Bar Council who will consider the type of work the applicant wishes to refer to the Bar, any relevant expertise or experience, familiarity with relevant areas of law, and so on,” he elaborated. “Safeguards are in place, and a barrister cannot take on such work unless it is in the interests of the lay client and the interests of justice so to do. Guidance is available from the Bar Council, and we would also be pleased to advise further on the system, or to have an informal discussion about how we might be able to help.” Mr MacSweeney stated that the sort of work which might be suitable for the scheme includes: advising on the law generally or the merits of a particular case; drafting legal

documents and company policies; managing internal investigations and reporting on the product of those; drafting statements of case and court documents; and representation at legal hearings. “In a straightened economic climate, an increasing number of corporate clients are finding that, by instructing a barrister directly, they can receive the highest quality of advice and representation, at an extremely competitive price which offers significant value for money. Please do get in touch if you would like further advice or information,” he concluded.

Name: Maurice MacSweeney Email: mauricem@2harecourt.com Web: www.2harecourt.com Address: 2 Hare Court, Temple, London, EC4Y 7BH Telephone: +44 (0) 20 7353 5324

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Introducing the Licensed Access Scheme -----------------------------------------------------------------------Kevin Leigh is a Barrister & Vice-chair of the Bar Council’s ‘Access to the Bar Committee’. -----------------------------------------------------------------------Since 1989 Licensed Access (LA) permits direct instructions to barristers in England and Wales instead of using solicitors. Some professionals are already licensed to instruct on behalf of lay clients in matters that fall within their professional expertise and any person or organisation that wishes to instruct directly can apply for a licence to the Bar Standards Board (BSB) – details can be found at: https://www. barstandardsboard.org.uk/regulatory-requirements/thecode-ofconduct/annexes-to-the-code/annexe-f1-licensedaccess-and-recognition/ Professionals A wide range of professionals are currently authorised (set out on the BSB website in a Schedule) including: • Accountants • Tax advisers • Insolvency practitioners • Architects • Surveyors • Planners • Engineers • Valuers • Actuaries • Chartered secretaries & administrators • Insurers Licensing Licensing takes into account various factors such as the: • Need for counsel’s services • Degree of skilled and specialist services of the individual or organisation’s members • Applicant’s familiarity with relevant law • Applicant’s ability to instruct and manage the matter • Existence of professional or disciplinary rules governing proposed licensee

ACQUISITION INTERNATIONAL

• • •

Applicant having insurance covering negligence in handling the matter Existence of suitable arrangements for holding client moneys Ability to ensure counsel’s fees are paid promptly

The instructing person must be a member of a Scheduled professional body or specifically licensed by the BSB – unless the barrister thinks it is not in the interests of the lay client or of justice to act directly. The barrister will supply standard ‘Licensed Access Terms of Work’ or such other terms as agreed. Instructions will vary but must identify the nature of the advice sought, any timetable and material to be considered. Limitations Barristers cannot conduct litigation (for example, go on record, instruct others or manage a case). Unlike public access – another scheme whereby barristers can be instructed directly without the need for a licence – LA barristers cannot attend court or the Employment Appeals Tribunal but professionals can instruct a barrister in other tribunals to provide advocacy services. There is guidance and links on the Bar Council website: http://www.barcouncil. org.uk/instructing-a-barrister/licensed-access/

Future LA will continue to fill a role for Scheduled professionals and organisations since they can automatically instruct counsel. However, since introduced in 2004, Public Access (PA) (http://www.barcouncil.org.uk/instructing-a-barrister/ public-access/) has grown as an alternative method of using accredited counsel without the need to be licensed, especially as there is no limitation on appearing in court. Lay clients can use PA for a wider range of work. With approximately two thirds of the Bar already accredited by the Bar Council for PA work, the likelihood is that LA will play a reduced role in accessing specialist legal services. No.5 Chambers Whether using LA or PA, members of No.5 Chambers are able to take instructions as appropriate from anyone or any organisation to advise and appear in legal matters. As one of the UK’s largest sets of barristers’ chambers, No.5 has an enormous breadth of experienced (and in PA cases, accredited) counsel available to suit all pockets and requirements according to the individual circumstances of the particular case.

Advantages LA has proved popular especially in planning law along with financial and commercial law. There are the cost savings without having to instruct a solicitor and the speed of directly accessing the wealth of experience and expertise at the Bar. Counsel can advise and draft and, where appropriate, appear as advocate without the need for an additional lawyer. Other than recommendation and specialist publications, people rely upon the Internet to search for barristers and their chambers. Most chambers have websites explaining their areas of specialisation and members’ details.

Chambers: No. 5 Chambers Name: Kevin Leigh Web: www.no5.com

July 2013 /

SECTOR SPOTLIGHT:

COPYRIGHT INFRINGEMENT AND PROTECTION l Copyrights are put in place to protect what is often seen a company’s most critical business assets. Today’s digital economy and the evolving laws governing copyrights and the internet pose significant challenges and unique opportunities for copyright owners, as well as third parties. Copyright laws are constantly updating to protect individuals and businesses against copyright theft and potential infringements. It is important for individuals and businesses alike to seek the advice from the right copyright professionals who have the depth of experience and broad resource base to help prospective clients protect and enhance the value of copyrighted works and defend against claims of infringement. Copyright infringement can have adverse effects on the future of your business. Senior executives need to ensure they are protected against this devastating form of intellectual property theft. Acquisition International examines the key issues with leading copyright experts. -----------------------------------------------------------------------Luis Miguel De Camps García is a Partner at De Camps Vásquez & Valera. ------------------------------------------------------------------------

form of scientific works as well as the neighboring rights of performers, producers of phonograms and broadcasting organizations.

transactional matters and, should the need ever arise, our Firm litigates and mediates intellectual property disputes in both judicial and administrative jurisdictions.

Copyright in the Dominican Republic is based on the concept of “right of the author”, not only on the “copyright” concept. This differs from concepts used in copyright law in common law jurisdictions, where its primary difference lays in the protection of moral rights and personality, in civil law systems a less restricted definition of ownership of copyright is used, creating a separation between the legal person and the work of the author; in common law jurisdictions these are embodied in other regulations. Our law on author’s rights is influenced by the continental droit d’auteur concept and recognized by the Constitution of the Dominican Republic, therein established as a basic human right recognizing the protection of ownership rights over scientific, artistic, and literary works.

The agency responsible for ensuring the protection of copyrights in the Dominican Republic is the National Copyright Office (“ONDA” for its name in Spanish). Under the terms of international treaties ratified by the country, this entity has actively assumed its supervisory role of copyright protection and of intervening and solving conflicts that arise between authors. Furthermore, the government created the National Commission for Protection of Intellectual Property Rights, a commission that holds the task of defining and implementing the national policy to fight against the violation of intellectual property rights and of coordinating the activities of the different public bodies that participate in the field.

As a result of the development of the industry, intellectual property law has acquired a mayor level of importance. Aware of this situation, De Camps, Vásquez & Valera is prepared to offer its clients legal advice of the highest level on all the issues of this area of the law.

After the Dominican Republic signed the Berne Convention for the Protection of Literary and Artistic Works in September 1997, and in an effort to adopt the appropriate tools required to fight piracy, in August 21st 2000, the Dominican Republic enacted Law 65-00 and its Rules of Application No. 362-01, dated March 14th 2001, which regulate copyrights and other related rights in Dominican Republic. Consequently, copyrights in our country are composed of the authors and holders of rights in literary and artistic works and the literary or artistic

De Camps, Vásquez & Valera is a full service law firm that provides a range of intellectual property law services specializing in international patent, trademark, copyright, unfair competition, sale or licensing of IP rights and entertainment law to both domestic and international clients, including counseling, prosecution, enforcement, domain name dispute proceedings, litigation and advocacy in copyright and trademark disputes. The Firm also acts as local counsel to overseas law firms and their clients in intellectual property disputes. We represent clients in

-----------------------------------------------------------------------Sara Moyo is a Partner in the firm of Honey & Blanckenberg and heads the Intellectual Property Department of the firm which specialises in the protection, filing and registration of intellectual property rights in Zimbabwe and in the African Intellectual Property Organization (ARIPO). The latter is headquartered in Zimbabwe. -----------------------------------------------------------------------Honey & Blanckenberg has a prominent history as a law firm providing intellectual property services in Zimbabwe and the region pre-dating national independence in 1980. In Zimbabwe copyright arises automatically for works that qualify for copyright protection under the Copyright and Neighboring Rights Act [Chapter 26:03] without any registration formalities. Honey & Blanckenberg has vast experience representing authors, musicians, publishers, film producers, corporates and copyright collecting societies. Where there has been theft of our clients’ copyright, we ensure that our clients are able to establish clear title to the copyright works, whether as originator of the copyright works or as the owner of the copyright by transfer of rights, and that copyright still exists in such works.

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Our firm has mediation, arbitration as well as litigation skills which can be applied towards recovery of compensation for infringement of our clients’ copyright, and if necessary, we assist our clients file criminal complaints against infringers. We also assist clients accused of copyright infringement by ensuring firstly that the complainant is able to demonstrate clear title to the alleged copyright work and by assessing whether copyright validly exists in the work alleged to have been infringed.

Company: De Camps, Vásquez & Valera Name: Luis Miguel De Camps García Email: lmdecamps@dcvlex.com Web: www.dcvlex.com Address: Torre Empresarial MM, Suite 201, Avenue Gustavo Mejía Ricart No. 100, Santo Domingo, República Dominicana Telephone: +1 809 567 8444 Fax: +1 809 567 8200

Whilst there have been no recent changes to local copyright laws, businesses and individuals in Zimbabwe are more aware of copyright and there is an increase in litigation concerning theft of copyright work and breach of confidential information. There is greater appreciation of the importance of consulting legal advisors before confidential information is released in business negotiations. There are also more enquiries concerning ownership of copyright in works created by employees, and of the legality of use of works on the web.

Secondly in circumstances where the use of the copyright work is not disputed, we assess whether our client’s use is justified under the Copyright and Neighboring Rights Act. Our litigation experience enables us to defend civil and/or criminal infringement proceedings that may be instituted against our clients. Our firm has recently been involved in transactional work relating to the disposal and acquisition of the copyright portfolio of a publishing house, the negotiation of blanket licenses for a collecting society, advice on the licensing of film and litigation concerning copyright in industrial designs.

Company: Honey & Blanckenberg Name: Sara Moyo Email: sara@honeyb.co.zw Web: www.honeyb.co.zw Address: 200 Herbert Chitepo Avenue, P.O.Box 85, Harare, Zimbabwe Telephone: + 263 4 735280-6, 762552, 732398

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: 2013 Q2 Review

2013 Q2 REVIEW

l 2012 turned out to be a be a tumultuous year, overwhelmed with the European debt crisis and a slowdown of growth in emerging markets, and US deal value decreasing 4% from 2011. 2013, however has seen some signs of recovery within the first quarter, M&A deal value reached $690.3bn in Q1 2013 – up 18% compared with the same period in 2012. It seems that the global economy is finally heading back towards a growth path, according to the latest forecasts from the OECD, with the current economic environment remaining relatively resilient in the second quarter and with the growth rate of the world economy set to hold steady at 2.6%. Financial market stress in Europe remains at manageable levels, in the US, a substantial contraction of fiscal policy appears to be offset by other positive factors and in Japan, a new monetary policy holds promise of better growth. Acquisition International speaks to leading experts around the world to discuss their experiences of the second quarter of 2013.

Q2 LEADING ADVISERS

Company: Friedrich Graf von Westphalen & Partner Web: www.fgvw.de Address: Cologne | Freiburg |Alicante | Brussels | Shanghai | Sao Paulo | Istanbul Name: Dr. Barbara Mayer (managing partner) Email: barbara.mayer@fgvw.de Telephone: +49-761-218080 Name: Carsten Laschet (managing partner) Email: Carsten.laschet@fgvw.de Telephone: +49-221-208070

-----------------------------------------------------------------------Jean-Claude Gonneau is the Managing Director of Camden Associates. ------------------------------------------------------------------------

Camden Associates focuses on international transactions with a particular emphasis on tech, biotech, mining and real estate. Mr Gonneau stated that the trends which were identified at the beginning of the year have developed faster than expected. “The growing disinterest in mining has materialised turning into a stampede in the last month,” he observed. “The resurgent interest in Biotech and real estate is confirmed.” In the last quarter, Camden raised money for a French biotech company called Theravectys which is at the

ACQUISITION INTERNATIONAL

human clinical trials stage for a new vaccinal paradigm with a first application in HIV. The firm hopes to close the financing in the next few days.

Company: KNP LAW Nagy-Koppany Varga and Partners Web: www.knplaw.com Address: MAHART HAZ, 6th Floor, H-1051 Budapest, Vigado utca 2 Telephone: +36 1 302 9050 Name: Dr. Kornelia Nagy-Koppany, LL.M., Co-Managing Partner Email: knagykoppany@knplaw.com Name: Dr. Istvan Varga, Ph.D., Habil., Co-Managing Partner Email: ivarga@knplaw.com

In conclusion, Mr Gonneau stated that GDP predictions have proven largely too optimistic in the last two years, however “the eagerness companies have to act should not be derailed by below expectations predictions.”

Mr Gonneau highlighted a new sense of urgency in some sectors, such as real estate where he noted that buyers are starting to realise that the imbalances in the market will have to end. “In recent weeks prices have moved up spectacularly in the Florida and New York market largely due to an influx of foreign buyers,” he added. According to reports, global M&A deal volume increased 18% in Q2 2013 when compared with the same period in 2012. Mr Gonneau believes it is very likely that this trend will continue, stating: “The realisation the time to move is now should persist and even accelerate.”

Company: Camden Associates Name: Jean-Claude Gonneau Email: jcg@camdenassociates.co.uk Web: www.camdenassociates.co.uk Address: 27 Hill street London W1J 5LP Telephone: +44 (0) 20 7290 9812

July 2013 /

SECTOR SPOTLIGHT: 2013 Q2 Review

Q2 LEADING ADVISERS

Sophia Square / Kyiv - Ukraine

Company: Houlihan Lokey Web: www.HL.com Address: 83 Pall Mall, London SW1Y 5ES Telephone: +44 (0) 20 7839 3355 Name: Brian McKay, Co-Head of Corporate Finance, Europe Email: BMcKay@HL.com Name: Stephen Winningham, Co-Head of Corporate Finance, Europe Email: SWinningham@HL.com

-----------------------------------------------------------------------Glib Bondar is a Partner at Avellum Partners. Artem Shyrkozhukhov is an associate with the firm. -----------------------------------------------------------------------The first five months of 2013 saw the international debt capital markets coming back to life for Ukrainian issuers. This is more than welcome after 18 months of almost complete silence, not counting several issues of Ukrainian sovereign Eurobonds, and Eurobonds of Ukrainian stateowned entities Fininpro, Oschadbank and Ukreximbank. During this period, Ukrainian issuers developed an immense hunger for long-term, reasonably priced funds to support the growth strategies of their businesses, which explains a surge of activity with up to ten deals running simultaneously. So far this year, there have been seven successful issues: (1) an offering of US$175 million 10.875% loan participation notes due 2018 by PrivatBank in February; (2) a debut offering of US$275 million 10.875% notes due 2018 by Ukrlandfarming in March, and a tap offering of US$150 million on the same terms in May; (3) an offering of US$750 million 8.25% high-yield notes due 2020 by MHP in March; (4) an offering of US$600 million 7.875% high-yield notes due 2018 by DTEK in early April, and a tap offering of US$150 million on the same terms in late April; (5) an offering of US$400 million 9.45% bonds due 2018 by Mriya Agro Holding in April; including those of the following state-owned entities: (6) an offering of US$500 million 8.875% loan participation notes due 2018 by Oschadbank in March; (7) a debut offering of US$500 million 9.5% loan participation notes due 2018 by Ukrainian railway transport companies managed by Ukrzaliznytsia in May. Avellum Partners acted as Ukrainian legal counsel to either the issuers or joint lead managers in the first four of the deals listed above. A number of companies are hoping to ride this wave of optimism and close deals in the coming weeks. Whether that optimism results in successful issues, we will have to wait and see, keeping in mind market volatility. At the same time, positive sentiment witnessed on the debt front does not seem to be transferring to the equities market; IPOs seem unlikely for the near future, but there may be some movement in the second half of this year. Based on our experience of advising on capital markets deals, we would like to make a few recommendations which we hope issuers and joint lead managers (JLMs) equally will find helpful in their work on current or prospective capital markets deals out of Ukraine.

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Three Recommendations to Issuers: 1. Organisation, organisation, organisation: Time and time again, we find that companies approach Eurobond issues not fully prepared for legal and financial due diligence in terms of having full due diligence documentation in order. Well-organised, user-friendly data rooms, dedicated in-house teams, timely provision of documents, and generally staying organised on every front will save huge amounts of time which is sometimes the edge that a particular capital markets project needs to move at the desired speed and succeed. 2. Disclose your problems early: The reality of the Ukrainian business environment is that almost all operating businesses have a skeleton of one sort or another hidden in the closet which requires disclosure in the prospectus. It is strongly advisable that issuers carry out timely internal audits and disclose these problems to JLMs and respective legal counsel at the outset, rather than wait until the lawyers discover them as part of their due diligence; this is particularly true of public encumbrances, ongoing disputes, and so on. This will allow all parties to have sufficient time to properly evaluate the materiality and potential impact of such issues and to draft the wording of the risk factors in a mutually satisfactory way. Issuers need to remember that risk factors are not designed to scare away investors but to offer them a safety cushion – protection should such problems materialise.

and often unavoidable steps which can slow the process down. Primarily, we are talking about corporate approvals and consents from lenders under financing agreements. Obtaining these can take time, e.g., at least 30 days to hold a general shareholders meeting (which is required by law for joint stock companies if certain financial thresholds are met or may be required by charters of issuers) and two to three weeks to get consents from lenders (which may be required under existing loan facilities). These important steps need to be accounted for in the initial timeline, which very often appears to be not very realistic. It is also advisable to allow some time to prepare Ukrainian versions of transaction documents which need to be signed along with the English version. 3. The more local counsel the better: In an effort to save costs, some participants choose not to involve their external local counsel. Although this is a commercial decision, it is strongly advisable to have both JLMs’ and issuer’s local counsel – each counsel has a different role and will view the same issue from different angles. At the end of the day, this helps to ensure a proper checksand-balances system and, as a result, a more accurate disclosure and proper risk assessment.

3. It is not all about lawyers: Each issuer needs to have a responsive English-speaking team in place who are able to review and comment on the prospectus, provide information and coordinate communication with all participants of the project. Issuers need to remember that they are responsible for the accurate disclosure of all material aspects of their business and not omit anything material – much in the same way as external legal counsel who verify and put these in the prospectus form. Three Recommendations to Joint Lead Managers: 1. Structuring: Despite the fact that most of the deals stick to the beaten track in terms of structure – either a loan participation notes structure or a holding guarantee structure – in light of the changing global and local legal and tax environment, some deals may bring forward legal and tax issues which need to be analysed in greater detail and which may demand alternative structuring solutions. It is strongly recommended that lawyers are involved from the very beginning of the structuring discussions. 2. Timing: The breakneck speed of capital markets projects is a given, however, there are certain obligatory

Company: Avellum Partners Web: www.avellum.com Address: Leonardo Business Center, 19-21 B. Khmelnytskoho Str., 11th floor, 01030, Kyiv, Ukraine Telephone: +380 44 220 0335 Name: Glib Bondar Email: gbondar@avellum.com Name: Artem Shyrkozhukhov Email: ashyrkozhukhov@avellum.com

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: 2013 Q2 Review

FIDAUDIT GMBH WirtschaftsprĂźfungsgesellschaft with its headquarters in Berlin and branch office all over Germany is a cross-sectoral association of public accountants, tax advisers and lawyers. We consider it our task to render available to you comprehensive consultation in an evermore complex economic field. FIDAUDIT has established international consultation competence through its memberships in cross-border networks. Thus, the firm makes allowance for the world-wide development of markets. FIDAUDIT is an Independent Member of Enterprise Worldwide (www.EnterpriseWorldwide.org) and the German Near and Middle East Association, Berlin (www.numov.de).

Paderborner StraĂ&#x;e 2 - 10709 Berlin Tel.: +49 (0) 30 235078-0 Fax: +49 (0) 30 235078-90 E-Mail: vonHoyningen@t-online.de

www.fidaudit.de

ACQUISITION INTERNATIONAL

July 2013 /

SECTOR SPOTLIGHT: 2013 Q2 Review

-----------------------------------------------------------------------Şafak Herdem is the founding and managing partner of HERDEM&Co. ------------------------------------------------------------------------

HERDEM&Co provides business-focused comprehensive legal services to international and local corporations. The firm’s lawyers have extensive international legal experience and are proficient in English and Dutch. Attorneys of the firm are experienced in matters involving: commercial paper; bank deposits and collections; letters of credit; bulk transfer; fraudulent transfers, equipment leasing; loan origination and review; loan restructuring; and workouts of unsecured and secured loans. No official source exists in Turkey for growth forecasts; however Mr Herdem stated that there are many international land local companies which publish their own report on an annual basis. “Even M&A legislation has been re-defined in the New Turkish Commercial Code,” he explained. “M&A activities reached one of the highest volumes in 2012. Q2 2012 has followed the same and it seems that local companies are mostly involved in M&A -----------------------------------------------------------------------Anne O’Donoghue is the Director and Principal Lawyer at Immigration Solutions Lawyers Pty Ltd. ------------------------------------------------------------------------

Australia, like many of its Western counterparts, has a strong regime in place for the purposes of attracting investors through its migration program. On 24 November 2012, the Australian government introduced Significant Investor Visa (SIV) into the Business Innovation and Investment Program. This visa is targeted towards individuals who make an investment of at least AUD5 million in at least one of the complying investments in Australia. In return for investment, applicants will have the benefit of considerable concessions and a more streamlined avenue to permanent residency. These include i) removal of points test, ii) no upper age limit and iii) significantly relaxed residency requirement - the visa holder reside in Australia for at least 160 days while holding a 4 year provisional visa. As part of the application process for a SIV (Provisional), an applicant must first submit an Expression of Interest through the DIAC*’s online system indicating which states or territories they are interested in investing in. The applicant must then be nominated by a State or Territory Government to apply for a visa. Each Australian state and territory government has its own nomination criteria -----------------------------------------------------------------------Daniel Novela is a Founder / Partner at Novela Law. -----------------------------------------------------------------------Novela Law was founded in 2002 and is based in Miami Florida. In the last quarter, Novela Law represented: an Azerbaijani telecom company in an equipment purchase agreement in excess of $50Million with a Chinese supplier; a Florida based company in acquiring the assets of and forming a multi-million dollar joint venture with a manufacturing company based in Erie Pennsylvania; a US based national bank in negotiating and closing an $8 million construction loan for a waterfront home in Miami; a $3million merger agreement between a Texas corporation and Mexican based company; a venture capital investor in negotiating and closing a $1 million Series A round for a Miami based technology company and assisting numerous other clients in capital raising, real estate and commercial finance. The firm has seen significant investment, both inbound and outbound to the United States, with Latin America figuring prominently in the Miami market. Mr Novela described Miami as a hub for this kind of investment, including both corporate and real estate. Mr Novela noted that the recent implementation of the CAFTA and Colombian free trade agreements are having a positive effect on trade with the United States and specifically

72 / July 2013

activities when compared with the rates of previous years.” In the last quarter, HERDEM&CO has represented international firms in the energy, banking and aviation sectors. Mr Herdem stated that there is increased investor interest in the energy, textile and good and beverages sectors.

He concluded: “Even the crisis in EU or recession in USA affected the whole world, I may say that Turkey has been affected less than any other country. This demonstrated to us that the investment finds its route against all obstacles. We believe that the growth for 2014 will be better than 2013 if the sustainability goes on the same.”

Discussing regulation, Mr Herdem stated that M&A was not regulated in Commercial Code before June 2012. “Together with the new law, there are some material changes in M&A transactions that we believe are very bureaucratic and not cost effective,” he observed. In terms of deal volumes, Mr Herdem noted that it “depends on tendency of companies to where they wish to invest”. He highlighted Turkey’s continuously developing economy and its great location in the region, stating that “as long as the sustainability continues we believe that this trend will continue”. when making this decision. For example, NSW requires applicants to demonstrate that they have at least AUD5 million in assets that are unencumbered, lawfully acquired and readily transferrable and declare that they will invest at least AUD5 million in complying investments including a minimum of AUD1.5 million in NSW Waratah Bonds.

Company: HERDEM & Co. Name: Safak Herdem Email: safak.herdem@herdem.av.tr Web: www.herdem.av.tr Address: Uprise Elite Tower Floor 27 No 234 34880 Kartal Istanbul/Turkey Telephone: +90 216 2901277

all aspects of the SIV program. For further information regarding SIV as well as any general immigration queries, please feel free to contact Immigration Solutions Lawyers. * Department of Immigration And Citizenship

To date, NSW and Victoria have been the most attractive states with 47% of visa applications for NSW and 38% for Victoria and current expected processing time for SIV applications is within 6 to 9 months. If you are interested in investing AUD5 million into the Australian economy and have a genuine and realistic commitment to reside for at least 160 days in Australia for duration of the 4 year provisional visa, you may be eligible for a SIV which has no upper age limit and English requirements. After maintaining the complying investment for at least four years on a provisional visa and upon satisfying other relevant criteria, the investors and their family members will be given a pathway to the permanent residency in Australia. Working in collaboration with accountants and business advisors, our professional staff including immigration lawyers and registered migration agents can help you with

through Miami. Mr. Novela was recently quoted about this development in a front page story in the South Florida Business Journal. The firm expects continued trade growth between Latin America and Miami, which is being positively affected by these free trade agreements. It is also seeing increasing international financing, including EXIM backed financing, which has also been positively affected by these free trade agreements. “The South Florida region including Miami has completely emerged from the global recessions and is booming,” enthused Mr Novela. “We are seeing new highs in real estate prices. We are seeing higher multiples being paid in mergers and acquisitions. “We also see significant growth in our global high net worth practice group Novela+, where we structure offshore corporate and trust holding structures (as a global investment holding structure). This also includes investment from high net worth individuals and families in expensive toys, with our jet aircraft and yacht practice seeing significant growth. For the near future, we see no slowdown and we are very bullish on Miami’s growth and future.” According to reports, global M&A deal volume increased 18% in Q2 2013 when compared with the same period in 2012.

Company: Immigration Solutions Lawyers Pty Ltd Name: Anne O’Donoghue Email: anne@immigrationsolutions.com.au Web: www.immigrationsolutions.com.au Address: Suite 1304, 87-89 Liverpool St, Sydney NSW 2000 Telephone: +61 (02) 9264 6432 Who’s who profile: www.whoswholegal.com/ profiles/41931/0/o%27donoghue/anneodonoghue/

In the firm’s experience, South Florida has seen growth greater than 18%; however Mr Novela noted that it is seeing growth that is regional. “Certain parts of the USA are experiencing far less growth and certain regions are still in recession. However, there is opportunity in both growth and recession, and we focus on providing solutions which are adaptable to both,” he concluded.

Company: Novela Law Name: Daniel Novela Esq Email: dnovela@novelalaw.com Web: www.novelalaw.com Address: 1390 Brickell Avenue, Suite 200, Miama, FL 33131 Telephone: +1 305 371 6711

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: 2013 Q2 Review

Q2 LEADING ADVISERS

Company: Barrios, Velez, Gutierrez Abogados Name: Luis Felipe Barrios Email: lfbarrios@barriosvelez.com Web: www.bvgabogados.com Address: Calle 79A No. 8-63, level 6th and 7th, Bogotá D.C., Colombia Telephone: +571 3171513

-----------------------------------------------------------------------Scott Maras is a Sales Director at ITG Worldwide, International Insurance Specialists. -----------------------------------------------------------------------ITG Worldwide is one of the few insurance agencies in the world dedicated specifically to global benefits and winner of the 2013 M&A Awards for Medical Insurance Adviser - USA. For over 25 years, ITG experts have served individuals and companies engaged in international travel and long-term expatriate assignments. ITG Worldwide is frequently involved in solving benefits challenges that arise as a result of mergers and acquisitions. Since mid Q2, the firm has been engaged by an organisation’s domestic benefits broker to find competitive proposals for a recently acquired group of pilots performing hazardous activities in Afghanistan and other developing nations. “This is an on-going case that requires a sophisticated review of the employee population, their activities and work locations, and the client’s benefits philosophy and budget,” explained Mr Maras. “A large part of our effort is put into educating carrier underwriters about the true nature of the risk, often detailing the safety measures and other precautions clients take to reduce risk which leads to reduced insurance cost.” Mr Maras stated that the U.S. Patient Protection and Affordable Care Act (PPACA) legislation has had an effect on international benefits and insurance. He noted that the impact is much more immediate and significant for USbased plans for all-US employee groups, but there has still been an impact for international plans. -----------------------------------------------------------------------Richard Hall is the CEO and Founder of CloudOrigin. ------------------------------------------------------------------------

Richard has over 25 years global experience in the IT industry and 14 years in pre and post Transaction Advisory, Due Diligence, Performance Improvement and Strategy roles across the TMT sector and industries dependent on technology such as financial services. He founded CloudOrigin in 2009 to address the changing enterprise technology landscape working with end user firms, hyper growth technology providers, Private Equity and Venture Capital investors. CloudOrigin’s deal volume has more than trebled over Q2 2013, compared to the prior three years, with a significantly higher percentage reaching completion than over the previous 18 months. “We have completed several Software as a Service due diligence assignments, of which a high proportion have progressed to a transaction but are still embargoed,” said Richard. “We have also conducted preliminary assessments on Business

ACQUISITION INTERNATIONAL

Company: IDRIS FARO & CO. Name: IDRIS FARO Email: farojuris@idrisfaroandco.com Web: www.idrisfaroandco.com Address: Suite J 147, Ikota Shopping Complex, Victoria Garden City, Lekki Peninsula, Lagos, Nigeria Telephone: +234-1-8972756; +234(0)8034052624

“There are many unanswered questions and details are yet to be released,” he commented. “ITG Worldwide monitors leading resources from the government, legal counsel, carriers and broker trade associations and advises clients accordingly. “Through the combined efforts of many in the international benefits and insurance industry, PPACA regulators were educated about the unique qualities of international plans. Regulators in March then granted “transitional relief” which essentially provides broad relief for qualified expatriate health plans from most of the market reform requirements under PPACA through December 31, 2015.”

“They are among our most challenging of cases because they usually involve the blending of different employee populations with different benefit plans. Often time is limited and benefits are not the first item the parties are concerned about during the deal negotiations and closure. A best case scenario would be for organisations considering a merger or acquisition to involve their global benefits broker as early in the process as possible. Important documents and plan data can be gathered from all parties early before a deal closes that will be of tremendous help when formulating the new benefit plans and costs,” he concluded.

According to Mr Maras, this legislation has had no noticeable impact on the amount of international business travel or foreign assignments the firm’s clients are doing. He stated that it has created more work in terms of the firm educating itself and then communicating its findings to its clients. “PPACA is not unlike many challenges clients face when they operate around the world,” he observed. “So many other countries around the world have government healthcare systems and complex compliance rules; PPACA is just another challenge amongst many.” Mr Maras’ anecdotal observations as an insurance benefits professional are in synch with reports stating that M&A deal volume has increased. He stated that this activity creates opportunities for the firm to develop new plans for new clients, and to maintain and improve plans when a current client is involved.

Process Outsourcing and hosting firms suggesting further consolidation in these segments, while noting a more positive outlook on FinTech providers after the recent lull. “We have seen dramatically increased interest across the European Software as a Service segment, and renewed interest in market leaders within the internet, managed service and cloud hosting as they consolidate and launch higher margin offerings. Early stage VC investment activity has also surged in the UK tech sector.” Richard stated that the overall attitude regarding growth and deal opportunities in the UK is much improved since Q2 2012, “circa three times”. He noted sustained interest from TMT specialist houses who have successfully raised significant new funds and from trade buyers. “While many generalist funds have had difficulty closing new funding rounds and retrenched, and the asset quality at the top end of the market with

Company: ITG Worldwide Name: Scott Maras Email: scottm@itgworldwide.com Web: www.itgworldwide.com Address: 500 Professional Center Drive, Suite 515, Novato, CA 94947 Telephone: +1 515 954 7392

respect to growth and debt ratios has put a question mark under several high profile deals, the continued performance of high growth mid-market TMT targets suggests there will be more activity in this segment at least,” he concluded.

Company: CloudOrigin Name: Richard Hall Email: Info@CloudOrigin.com Web: www.CloudOrigin.com Address: Exchange Building, London, UK Telephone: +44 203 642 5715

July 2013 /

SECTOR SPOTLIGHT: 2013 Q2 Review

-----------------------------------------------------------------------Loucas Haviaras is a Partner at Haviaras & Philippou L.L.C.. ------------------------------------------------------------------------

Haviaras & Philippou L.L.C. is a law firm formed in 2008 but its members have been practicing law in Cyprus since 1976. They consider the practice of law to be, first and foremost, about their clients. The professionalism they aim to have and the commitment to offer exceptional service to their clients give them the advantage they seek to obtain over their competitors. The firm has a strong litigation team which is able to represent clients on legal conflicts of any nature. The firmâ&#x20AC;&#x2122;s ever â&#x20AC;&#x201C; expanding client base comes from -----------------------------------------------------------------------Pieter Christiaan van Prooijen is a Partner at Hermes Advisory in the Netherlands. ------------------------------------------------------------------------

Hermes Advisory is a Dutch consultancy firm specialised in Corporate Finance, Valuation and Dispute Resolution. The transaction market for small to mid sized companies is still depressed and the market outlook remains bleak. The valuation market on the other hand is very active. Over the last year we have seen a significant increase in valuation work for disputes and for distressed companies. The disputes vary from professional large scale corporate litigation to quarrels on the valuation of a company in a divorce procedure. Commenting why this increase is happening, Mr van Prooijen comments that developments of the dispute resolution and forensic valuation market are more favorable than the transaction services as a result of more conflicts (for instance related to earn out structures) and awareness of parties to substantiate the level of their claim by valuation experts.

all over the world and includes private individuals, as well as, private and public companies involved in activities such as energy, construction, insurance, manufacturing and shipping to name a few. The firm has been asked to advise and litigate on all matters relating to Admiralty & Shipping Law, Corporate & Commercial Litigation, Insurance Law, Banking & Finance, Arbitration, Administrative Law, Employment Law, Estate planning & Trusts. The skilled corporate team can assist any physical or legal person with the incorporation of a company in Cyprus and various other jurisdictions, with the creation of trusts and funds, dispute resolution, mergers and international tax planning issues. Management, secretarial and accounting services are also being provided. The multilingual personnel and the firmâ&#x20AC;&#x2122;s steady cooperation with a wide network of lawyers, bankers, accountants and corporate service providers ensure that the firm can deliver impressive results internationally.

Furthermore, corporate litigators, mediators, divorce lawyers and judges are aware of the necessity to look at earning capacity rather than old fashion book values. We expect this progress to continue further and see a larger role for certified valuators (Register Valuators) in the Netherlands. Currently only 148 people in the Netherlands are qualified as certified valuator. This group will likely grow over the coming years and with it the importance of the role of the certified valuators in disputes. We also expect valuation activities to increase in the restructuring and recovery business. Currently, discussions are taking place to incorporate a prepack procedure in the Dutch bankruptcy code. Most of the times the curator (comparable with the receiver in UK Law) is specialised in law. We expect valuation skills to be needed before a take over of the distressed activities can be realized. It will also not suprise us if a clause will be included in syndicated loan documentation which states that in case a party wants to execute the pledge of shares a binding valuation needs to be performed by a certified valuator. We have seen cases whereby the

The firm projects that despite the recent financial downturn in Cyprus, the tax hikes in the Western world will continue to be on the rise, giving Cyprus the competitive edge as a low tax jurisdiction and insists that it will remain focused on delivering results of the highest quality in any business climate.

Company: Haviaras & Philippou L.L.C. Name: Loucas Haviaras Email: hphlaw@hphlaw.eu Web: www.hphlaw.eu Address: Haviaras & Philippou L.L.C., 20 Stasandrou Street, Off. 101, 1st floor, 1060 Nicosia, CYPRUS Telephone: +357 22 764 001

value broke in the middle of the capital structure. The unsecured lender claimed the value was higher than the lenders with secured pledge claimed and lawsuits followed. In distressed cases parties want clarity and speed to handle.

Company: Hermes Advisory B.V. Name: drs Pieter Christiaan Van Prooijen RV Email: VanProoijen@Hermes-Advisory.com Web: Hermes-Advisory.com Address: Julianalaan 8, 3743 JG Baarn, The Netherlands Telephone: 0031 6 30154753

The use of dispute boards for the avoidance and expedient resolution of disputes on major projects -----------------------------------------------------------------------Mark Entwistle is the Director of Mark Entwistle Ltd. ------------------------------------------------------------------------

The construction and engineering industry has, over many years, given the impression of being beset with disputes. The size and complexity of projects, the numbers of both corporate and individual participants, the use of detailed standard and non-standard contracts and what has historically been a confrontational approach to corporate relationships have all conspired to generate disagreements between parties. These factors, coupled with the essentially highly competitive environment in which projects have traditionally been procured, have caused parties to expect disputes to arise. The resolution of these disputes has, over the years relied heavily upon non-court processes, increasingly in recent years. Bu the costs incurred by the parties involved can be considerable, with relationships between them also being put at risk. The focus has switched in more recent times from binding resolution by tribunal decision imposed upon

74 / July 2013

parties, to a more co-operative and non-confrontational approach. Processes such as mediation, negotiation and expert determination have tended to remove the heat from disputes and to preserve the relationships between parties. The complexity of contract terms reflects the magnitude and variety of risks that parties consider themselves subject to, but also introduce further risks of obligation and liability. By dividing the risks, if effectively drafted, contract terms might be said to assist the resolution of disputes. The use of dispute boards has grown globally in recent and provides a cost-effective adjunct to the effective management of projects, by reducing the risk of disputes and by resolving them quickly and inexpensively. A dispute board can comprise of one or three members, selected by agreement of the parties and either put in place at the start of a project or convened once a dispute has arisen. The benefit of early appointment is that the board monitors

the project and can assist, from an independent standpoint, in the avoidance and resolution of actual or potential disputes. They have been spectacularly successful around the world in assisting the achievement of project temporal and financial objectives, but also assist in preserving party relationships. For more information, email markentwistle@consltant.com

Mark Entwistle Company: Mark Entwistle Name: Mark Entwistle Ltd Email: markentwistle@consltant.com

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: 2013 Q2 Review

-----------------------------------------------------------------------Mark Woeppel is the President of Pinnacle Strategies, an international management consulting firm focused on operations management excellence. -----------------------------------------------------------------------Pinnacle Strategies works with organisations to increase shareholder value by developing high-performance business processes that significantly enhance productivity, reduce costs and time to market, improving profitability and accelerating sustainable growth. Our technology and implementation approach delivers substantial results quickly. Our customers typically begin to see results within weeks and the typical payback period is 60-90 days. At Pinnacle Strategies, we understand that each of our clients has unique challenges and varying complexity. Where other consultants implement a one-size-fits-all solution and struggle in new environments, Pinnacle Strategies builds customised solutions to fit the unique situations of our clients. When Pinnacle Strategies consultants approach any situation, we concentrate on solving your problems, rather than deliver a canned solution. Every solution we deliver is tailored to your organisation, values, and culture. -----------------------------------------------------------------------Tan Chong Huat is the Managing Partner of RHTLaw Taylor Wessing LLP. -----------------------------------------------------------------------RHTLaw Taylor Wessing LLP is a Singaporean law firm that delivers capabilities internationally. The Firm offers clients intelligent and innovative legal and business solutions from a team that is attuned to the nuances of working in Asia, with the added perspective and expertise of an international firm. The Firm offers client access to a network of over 900 legal professionals across 22 offices in Asia, the Middle East and Europe via their memebership with Taylor Wessing group. The Firm is also the exclusive Singapore member of the Interlex Group, a global network of leading law firms. According to Mr Tan, the growth forecasts by official sources have been cautiously optimistic in Singapore. He noted that 2013 started off on a slow note for the country, but there have been signs of growth moving forward. “This has been consistent with the business activities that we are seeing in our practice groups,” he commented. “As a firm we are cautiously optimistic for 2013 and mirror the growth projections of the Singapore Government.”

Pinnacle Strategies consultants have expert abilities with credentials to match. Our consultants have deep industry experience, which helps them to be quickly accepted into your organisation because they have the industry experience and have walked the walk. This experience allows us to speak your language, which speeds the buy-in of the solutions leading to fast implementation of the solutions and thus you see the results in a short time. Our consultants have spent years mastering the sensitivity of managing the change process in a variety of cultures while still being true to achieving the desired results. The transition from the old ways to the new ways is seamless and sustainable. At the end of your engagement, your employees and associates will own the changes and take pride in the results that they have achieved. While other consulting firms can achieve results initially, they do not do a good job of managing the change process and the results do not sustain. We recognise that symptoms are not the actual problem. Rather, they point to it. Our strength is identifying and solving the core problem that creates the symptoms so the entire problem is eliminated. This leads to high impact, sustainable solutions. Our core technology is focused around Theory of Constraints and constraint based technology that allows us to focus on the core problem and get results.

activity in 2013 to remain soft with growth expected in 2014.”

“Indonesia is a jurisdiction that has continued to drive growth in this dynamic emerging market, especially where the energy and natural resources sectors are concerned,” he continued. “Other potential high-growth sectors include financial services, consumer-led industries, and also the largely untapped infrastructure sector.”

“Singapore’s export-dependent economy is heavily exposed to the global business cycle, but stronger demand in Asia has limited the impact of the prolonged economic slowdown in the West. Non-oil domestic exports have been weak. However, global conditions will improve from mid-2013. We expect GDP growth to pick up modestly this year and to accelerate more strongly in 2014,” he concluded.

Changes were made to the Real Estate law in December 2012 which, according to Mr Tan, took their toll in Q1 2013. However, he stated that “people are optimistic in Singapore, and bad news inevitably becomes old news”.

-----------------------------------------------------------------------Adrian Stevens is the Chief Executive Officer of Aura Healthcare Limited. -----------------------------------------------------------------------Aura has exceeded market forecasts and its own financial target, and Mr Stevens stated that there are always market opportunities for products, services and solutions that meet a clear need and offer clear benefits.

due to the government’s commitment to strengthen the healthcare system to make healthcare accessible to all. This aligns with Aura’s strategy of focusing on emerging markets and countries that are committed to major investments in healthcare generally. Aura HC South Africa (PTY) Ltd was formed in May 2013 with offices in Sandton, Johannesburg.

Mr Stevens highlighted South Africa as a key market, noting that the country promises significant opportunities

ACQUISITION INTERNATIONAL

GDP is set to improve in Asia, and Mr Tan believes that Singapore will benefit from this in 2014.

While attitudes are certainly more cautious than in Q2 2012, which is reflected in the volume of M&A deals happening in Singapore, Mr Tan stated that Singapore remains the M&A hub of South East Asia and he expects growth to return.

In the last quarter, the firm acted for Nipsea Technologies Pte Ltd (“Nipsea”) in the sale of its biocide subsidiary, PCTS Specialty Chemicals Pte Ltd (“PCTS”) to Lanxess AG. Through the sale, Lanxess is now one of the leading suppliers of biocides for paints and coatings in the rapidly-growing Asia-Pacific region.

The company has won a number of new orders this quarter with existing and new customers and also in new territories. Southern Health and Social Care Trust in Northern Ireland has agreed a deal for Aura’s patient flow solution and to a rollout of the company’s clinical noting application at a second hospital. Hospitals in England and Ireland have placed orders for clinical noting with the University Hospital of Galway being the next hospital to benefit from Aura Healthcare’s Immix clinical workflow and clinical noting solutions.

Company: Pinnacle Strategies Name: Mark Woeppel Email: info@pinnacle-strategies.com Web: www.pinnacle-strategies.com Address: 6505 W. Park, Suite 306-335, Plano, TX 75093 Telephone: +1 972-492-7951

“Further, the PCTS facility in Singapore will become the new Asia-Pacific headquarters of Lanxess’ Material Protection Products business unit (“MPP”), which is already one of the world’s leading suppliers of biocides,” added Mr Tan.

“While global M&A deal volume may have increased, Singapore has seen a dip in M&A volume in comparison to 2012,” he observed. “According to Thomson Reuters, a total announced deal volume for transactions involving Singapore-based parties is US$6.4 billion (S$8 billion) yearto-date, compared with US$7.4 billion (S$9.3 billion) in the first quarter of 2012. This was the weakest first quarter since 2009’s US$2.4 billion (S$3 billion) start. We expect M&A

“Aura’s Immix software applications give people on the frontline of healthcare the information they need to make informed decisions about their patients without delay, leading to safer and better quality standards of care,” he commented. “Increasing government demands for value for money and the drive to a paperless NHS has provided growth in the healthcare sector with SME and employment opportunities becoming increasingly relevant.”

Our Expertise: • Focused Lean: A leveraging of best process practices that produces bottom line results in a matter of weeks • ViewPointtm Visual Project Management: A revolutionary approach to achieving project results through visualising the project execution process. • Demand –Pull Supply Chain – Reduces your supply chain costs while simultaneously reducing your risk

“The government in South Africa has committed itself to increasing the level of healthcare spending under a 14-year programme to achieve universal healthcare coverage,” said Mr Stevens.

Company: RHTLaw Taylor Wessing LLP Name: Tan Chong Huat Email: chonghuat.tan@rhtlawtaylorwessing.com Web: www.rhtlawtaylorwessing.com Address: Six Battery Road, #10-01, Singapore 049909 Telephone: +65 6381 6868 In terms of M&A deal volume, Aura expects the volume of deals to increase in line with the move away from centralised national programmes that have proved to be unsuccessful and stifled innovation. “The re-emergence of SME (small/medium enterprise) in the procurement process will drive both innovation in the market as well as growth opportunities,” added Mr Stevens. “GDP growth will remain static over the period as the market develops. Personally I believe the outlook for GDP growth in 2014 will be very dependent on the market evolution in 2013 across multiple sectors,” he concluded.

“The need to improve the efficiency of services and quality of care while reducing healthcare costs are driving demand for IT applications, especially modern, innovative solutions that can also support care in remote areas.” Discussing regulation, Mr Stevens stated that Aura will benefit from the shift in UK government policy, which will see a move from large, centralised projects to decisions made locally by individual NHS trusts. “The government’s drive for innovation and more involvement in the market by small to medium sized companies is also helping companies like Aura,” continued Mr Stevens. “Plans for a paperless NHS by 2018 underpin the government strategy for a more efficient NHS for patients and staff alike.”

Company: Aura Healthcare Limited Name: Adrian Stevens Email: info@aurahealthcare.com Web: www.aurahealthcare.com Address: 1210 Parkview, Arlington Business Park, Theale, Reading RG7 4TY Telephone: +44 (0) 118 373 2218

July 2013 /

SECTOR SPOTLIGHT: 2013 Q2 Review

Q2 Leading Advisers Rosenblum Newfield, LLC

Company: Rosenblum Newfield, LLC Name: James Rosenblum Email: JBR@JBResq.com Web: www.RosenblumNewfield.com Address: One Landmark Square, Stamford, Ct 06901 Telephone: 203.358.9200

Company: Solomon Harris Name: Sophia Harris Email: Sharris@solomonharris.com Web: www.solomonharris.com Address: 3rd Floor, FirstCaribbean House, PO Box 1990, Grand Cayman KY1-1104, CAYMAN ISLANDS Telephone: 1 345 949 0488

Company: TIGGES Rechtsanwälte Name: Dr. Michael Tigges Email: tigges@tigges-info.de Web: www.tigges-info.de Address: Zollhof 8, D-40221 Düsseldorf Telephone: +49-211-8687131

Company: Corporate Research and Investigations Pvt. Limited (CRI Group) Name: Lilia Santos Email: lsantos@crigroup.co.uk Web: www.crigroup.co.uk Address: 25 Canada Square, London E14 5LQ, United Kingdom Telephone: +44 207 038 8023

Company: CRA Timor Name: Tiago Sousa Dias Email: tsd@cratimor.com Web: www.cratimor.com Address: Sang Tai Hoo Building - 1st Floor, Colmera Main Intersection, Díli, Timor-Leste Telephone: +670 332 53 60

Company: Ernst & Young Name: Missle Ephrem Email: missle.ephrem@et.ey.com Web: www.ey.com/et Address: P.O. Box 24875, Code 1000, Addis Ababa, 1000, Ethiopia Telephone: +251 11 550 4933

Company: Future Materials Group Name: Adrian Williams Email: adrian.williams@futurematerialsgroup.com Web: www.futurematerialsgroup.com Address: St. John’s Innovation Centre, Cowley Road, Cambridge CB4 0WS Telephone: +44 (0)1223 421025

Company: Ibarra Espinoy Cia Name: Artemio Ibarra Email: aibarra@ibarraglobal.com.mx Web: www.ibarraglobal.com.mx Address: Adolfo de la Huerta No. 437 Sur., Col. El colegio, C.P. 32340, Cd. Juárez, Chih., México Telephone: +52 (656) 616-82-05

Company: Olisa Agbakoba S.A.N & Co Name: Tosan Barlow Email: olisa@agbakoba-associates.com Web: www.agbakoba-associates.com Address: Maritime Complex, 34 Creek Road P.O. Box 3169, Apapa, Lagos, Nigeria Telephone: +234 1 2790915 6

76 / July 2013

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: 2013 Q2 Review

Company: Environet Solutions Name: Gerard Kelly Email: gerard.kelly@environet.ie Web: www.environet.ie Address: Dungarvan Business Centre, Dungarvan, Co. Waterford, Ireland Telephone: +353-58-51155

Company: MIAC | Acadametrics Name: David Pickles Email: circulation@miac-acadametrics.co.uk Web: www.miac-acadametrics.co.uk Address: 3rd Floor Regal House, 70 London Rd, Twickenham, London TW1 3QS Telephone: +44 (0) 20 3397 4904

Company: Bahas, Gramatidis & Partners LLP Name: Yanos Gramatidis, Managing Partner Email: y.gramatidis@bahagram.com Web: www.bahagram.com Address: 26 Filellinon Street, 105 58 Athens, Greece Telephone: +(30) 210 3318 170

Company: TP Services GmbH Name: Cherie Lehman Email: Cherie@globaltpservices.com Web: www.globaltpservices.com Address: Eidmattstrasse 51, 8032, Zurich, Switzerland Telephone: +41 79 678 6560

Company: Osprey Capital Limited Name: Ronan Kearney Email: ronan.kearney@osprey-capital.co.uk Web: www.osprey-capital.co.uk Address: Osprey Capital, Fifth Floor, Horton House, Exchange Flags, Liverpool, Merseyside, L2 3PF Telephone: 0151 244 5462

Company: Craig Fund Consultancy Name: Philip Craig Email: philip@craigfundconsultancy.com Web: www.craigfundconsultancy.com Address: Suite S1, Dublin Exchange Facility, International Financial Services Centre, Dublin 1, Ireland Telephone: 00 353 86 819 2128

Company: Folio Corporate Services Limited Name: Calum McKenzie Email: calum@folioadmin.com Web: www.folioadmin.com Address: Folio House, PO Box 800, Road Town, Tortola, British Virgin Islands Telephone: + 284 494 7065

Company: Iskandarsyah & Partners Law Firm Name: Reno Iskandarsyah Email: reno@iskandarsyahlaw.co.id Web: www.iskandarsyahlaw.co.id Address: Mayapada Tower 7th, Jl. Jendral Sudirman Kav.28, Jakarta 12920 Telephone: +62 21 29518593 â&#x20AC;&#x201C; 94 Facsimilie: +62 21 29518595

Company: MJF GROUP Name: Dr. Michael J Freestone. B.Comm. Hons. FCIS, FCIBM. MBA, DBA Email: info@mjfgroup.biz Web: www.mjfgroup.biz Address: P.O. Box 449 Halfway House Midrand South Africa 1685 Telephone: +27112387858

ACQUISITION INTERNATIONAL

July 2013 /

DEAL DIARY:

Introduced by Zephyr/Bureau van Dijk

Deal Diary

Acquisition International’s round up of recent M&A activity, introduced by Zephyr/ Bureau van Dijk. This month’s statistics examine the Financial Services sector, of which we’re covering 9 transactions; please turn to pages 87-89 to read more. l M&A activity targeting the financial services sector has made a disappointing start to the year, failing to live up to the high standards it set in previous six monthly periods. In the first half of 2013, there were 4,675 deals worth USD 310,443 million targeting companies in the industry, representing a decline by both volume and value.

Number and Aggregate Value (mil USD) of Financial Services Sector Deals Globally: 2006 - 2013 YTD (as at 30 June 2013) Period

Number of deals

Aggregate deal value (mil USD)

H1 2006 H2 2006 H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013

5,191 5,229 5,728 4,927 4,554 4,865 5,022 5,578 5,090 5,089 4,705 4,839 4,667 4,883 4,675

514,096 536,183 895,798 505,285 592,982 1,059,410 744,926 529,197 459,165 400,207 424,601 369,850 311,104 436,314 310,443

2012 finished strongly for financial services companies, with both volume and value reaching their highest levels in some time, according to data from Zephyr, the M&A database published by Bureau van Dijk. In H2 there were 4,883 transactions, representing a 5 per cent increase on the 4,667 deals recorded in H1 and the best result since H2 2010. There were USD 436,314 million worth of announced deals, up from USD 311,104 million in the first half of the year and the highest showing since the opening six months of 2010. This positive display may have allowed investors to dream the industry was on the way to a full recovery and approaching the heady days of H1 2007 (USD 895,798 million) and H2 2008 (USD 1,059,410 million). However, it appears anyone hoping for a return to those levels may have been getting slightly ahead of themselves. By the mid-point of 2013, 4,675 deals worth USD 310,443 million had occurred in the financial services industry. As mentioned, this is primarily disappointing as a result of the green shoots seen at the end of 2012, but the showing is actually very comparable to figures recorded in the first half of last year. In H1 2012 there were 4,667 deals worth USD 311,104 million. Of the transactions notched up in the opening half of 2013, a few made significant contributions to the aggregate deal value. The highest ranked transaction by value took the form of a rights issue by Spanish banking player Bankia, which issued 3,900 million shares to raise USD 13,748 million. Hot on its heels was another banking deal, in which the National Bank of Greece also carried out a rights issue, this time bringing in EUR 12,753 million. In third place, Barclays announced a convertible bond issue worth USD 10,594 million.

Of the financial services sector deals recorded in the first half of 2013, a large number involved targets in Western Europe. In total the region accounted for 1,605 transactions worth USD 130,035 million, representing 42 per cent of global investment for the period. As such, it outranked all other regions in terms of both volume and value. By investment, it was followed by North America with USD 82,837 million and the Far East and Central Asia with USD 40,062 million. The region’s success is perhaps unsurprising given that of the top ten highest valued deals for H1, eight have targets in Western Europe. Should these results carry through to the end of the year, 2013 would represent the first time North America has not come out on top by value since 2007. However, there are still six months in which it may be able to recapture the top spot. Minority stake deals were both the most common and highest valued transactions recorded in the opening six months of 2013, with 2,897 transactions worth USD 180,549 million taking place during the period. Acquisitions placed second, with USD 118,381 million across 1,702 deals. This pattern was also apparent in results between 2006 and the present day. In that time span, there were 44,169 minority stakes worth USD 4,181,322 million and 28,847 acquisitions valued at USD 3,652,188 million. In conclusion, it has been a disappointing start to the year for companies in the financial services sector, with a decline shown across the board. However, the fact that the results are at a similar level to those of H1 2012 means all is not lost. If 2012’s pattern repeats itself, we could be about to see an upturn in the months between July and December, but only time will tell if this comes to pass.

Aggregate Value (mil USD) of Financial Services Sector Deals by Region: 2006 - 2013 YTD (as at 30 June 2013) World region (target)

2006

2007

2008

2009

2010

2011

2012

2013 YTD

Western Europe North America Far East and Central Asia South and Central America Eastern Europe Africa Middle East Oceania

477,559 329,407 123,920 33,991 41,288 15,915 11,642 23,225

546,228 423,768 241,333 40,570 48,311 24,001 36,166 49,673

539,688 720,992 179,999 74,382 43,981 20,670 27,848 42,165

377,730 457,783 252,530 82,551 31,876 7,533 14,324 50,217

209,712 221,332 215,769 73,170 17,654 7,452 9,982 19,970

233,688 251,068 150,547 43,025 53,144 17,199 9,156 34,334

234,303 252,699 146,921 44,310 28,117 6,603 10,581 23,508

130,035 82,837 40,062 19,810 17,875 6,986 6,951 6,820

Breakdown of Aggregate Value (mil USD) of Financial Services Sector Deals by Region: 2006 - 2013 YTD (as at 30 June 2013) World region (target)

2006

2007

2008

2009

2010

2011

2012

2013 YTD

Western Europe North America Far East and Central Asia South and Central America Eastern Europe Africa Middle East Oceania

45% 31% 12% 3% 4% 2% 1% 2%

39% 30% 17% 3% 3% 2% 3% 4%

33% 44% 11% 5% 3% 1% 2% 3%

30% 36% 20% 6% 3% 1% 1% 4%

27% 29% 28% 9% 2% 1% 1% 3%

30% 32% 19% 5% 7% 2% 1% 4%

31% 34% 20% 6% 4% 1% 1% 3%

42% 27% 13% 6% 6% 2% 2% 2%

78 / July 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

DEAL INDEX

M&A from around the world

CONSUMER

PARTNERSHIP ASSURANCE GROUP

FAN MILK INTERNATIONAL

SUCCESSEHS

ELIXIA

WARNER CHILCOTT PLC

ESSENZA

LEDUN PECHEURS D’ISLANDE

BRINDERSON

LIBERATION GROUP

CERAMTEC

MUNKSJÖ

DELTA INDUSTRIES

PLANET CRUISE

HCS

SUNTORY IPO

IBERCHEM

VUE

SCHAETTI

INDUSTRIAL

REAL ESTATE

ENERGY & RESOURCES

AMALYST

CAN FIRST

LAMPIRIS

LANDMARK VILLA TRE VILLE

SP AUSNET LTD

SILESIA CITY CENTER MALL

FINANCIAL SERVICES

SUPPORT SERVICES

AFP HORIZONTE

ALEX

GENERALI U.S. LIFE REINSURANCE BUSINESS

EDUCAR/EDUCADOR

HANSEATICA RUECKVERSICHERUNGS

INGEN IDEAS

HEALTHCARE FINACE GROUP

OAG

HEDGE FUND SOLUTIONS

RAE SYSTEMS

KEY RETIREMENT SOLUTIONS

SEACURUS

NATIONAL FINANCIAL PARTNERS CORP.

ONLINE RESOURCES CORPORATION

ETISALAT NIGERIA

PACIFIC AND ORIENT INSURANCE

CIVICA

HEALTHCARE

CUBEWORKS

CARDIO3 BIOSCIENCES

NEXTEL PERU

IVY HEALTHCARE GROUP

PROCAM MBO

OKAIROS

SAGE CONSTRUCTION MBO

ACQUISITION INTERNATIONAL

TMT

July 2013 /

DEAL DIARY:

Consumer Deals

CONSUMER

Consumer Deal Of The Month FAN MILK INTERNATIONAL l The Abraaj Group, a leading investor operating in growth markets, has agreed to acquire a 100% stake in Fan Milk International (“FMI”), West Africa’s market leading manufacturer and distributor of frozen dairy products and juices. Established over 50 years ago, FMI possesses an impressive track-record of organic growth in West Africa where it has become the undisputed market leader in frozen dairy products. FMI currently operates through subsidiaries in the rapidly growing markets of Ghana, Nigeria, Togo, Ivory Coast, Benin and Burkina Faso. The company has successfully built and controls a unique and fully integrated regional manufacturing and distribution cold chain network, as well as a broad portfolio of convenience food and beverage brands that reaches over 31,000 end-sales points. FMI, through its subsidiaries, currently sells over 1.8 million products on a daily basis across West Africa.

ELIXIA

ESSENZA

l TryghedsGruppen and Altor have joined forces by bringing together the strongest and most respected brands in Nordic fitness. The merger of SATS, Elixia and Fresh Fitness will strengthen the companies’ offering and geographical coverage. Altor Fund III and the Elixia shareholders will own 51% of shares in the combined entity, and TryghedsGruppen will own 49%.

l NBTY Europe has acquired Essenza, the Belgian health and wellness chain.

The new group will have more than 2,000 employees, combined revenues of approx. 2.5 billion NOK, 181 fitness centers and nearly 500,000 members, and will continue operating under the brands of SATS, Elixia, Fresh Fitness, SAFE and Metropolis. The new group will have sufficient presence and financial backing by the owners to continue to invest in improving its offering to customers in all segments and better address their individual needs and preferences. The group expects to launch new club formats, applications, and offerings that address even better customer preferences and needs in an innovative way.

FMI’s range of frozen dairy and beverage products supply some of the world’s fastest growing consumer, youth and urban markets with projected private consumption growth rates ranging from 4.2% to 9.9% and GDP growth rates of up to 8.3% across FMI’s core, target markets in West Africa.

The fitness market is undergoing change due to new competitors, changed customer preferences and demographics, new technologies, and in new ways of training. This merger will allow us to bring customers a wider range of training options, to invest in and lead changes in new technology and products to support our customers’ training preferences says Olav Thorstad, CEO of TryghedsGruppen’s Health & Fitness Nordic.

Building on this portfolio of highly recognized brands, FMI is now well positioned to embark on further penetration and growth into new African markets. Abraaj will work alongside the company’s strong, locally experienced management team to tap the ongoing rise of the African consumer class, in FMI’s existing market reach of over 250 million consumers and beyond.

Deloitte Financial Advisory Services represented Tryghedsgruppen/SATS, a long-standing Deloitte client. The team was led by Michael Toxværd Hansen and Lars Berg-Nielsen, Partners Transaction Services, Deloitte Denmark. The firm provided financial due diligence and tax structuring advice.

The transaction is expected to close by the end of November this year. Freshfields Bruckhaus Deringer acted as legal advisors to The Abraaj Group. Norton Rose Fulbright acted as legal advisors to Fan Milk International. THE ABRAAJ GROUP ACQUIRES 100% STAKE IN LEADING AFRICAN FROZEN DAIRY BUSINESS

Wiersholm acted as lead legal adviser to Altor in the transaction, i.e. on due diligence, negotiations, competition and financing. The firm has a long relationship with Altor. The team was led by Harald Hellebust (partner) and Jon Petter Haaland (managing associate). Mr Hellebust commented: The transaction was carried out as a merger of equals which brings with it a special dynamics in the transaction. Also the fact that four jurisdictions are involved raises challenges.

ELIXIA, SATS, AND FRESH FITNESS TO BE COMBINED INTO THE LARGEST NORDIC

DRV Corporate Finance HEALTH AND FITNESS GROUP

NBTY Europe is the highly acquisitive parent company behind a number of popular UK high street brands such as Holland & Barrett, Nature’s Way and GNC. The company also owns the De Tuinen brand in Holland and a number of Franchises globally. Together, it forms Europe’s largest well-being retailer offering quality health foods and supplements in over hundreds of stores across Europe with sales in excess of £700 million. Peter Aldis, NBTY Europe CEO, commented: This is an important acquisition for NBTY Europe as it fits perfectly with our wellness strategy and adds further to our aim of being at the forefront of health retailing in Europe. “We share common values with Essenza in striving for retailing and customer service excellence. We have set ambitious expansion plans for growing the business in Belgium following the success of our Holland & Barrett and De Tuinen brands in respect of their store presence and omni-channel aspirations. I am looking forward to working with Melissa and her team to make sure the transition is seamless. Melissa Hellebuyk, CEO of the Essenza chain, will remain in the business to manage the transition, assisted by the De Tuinen management team. Further terms of the investment were not disclosed. Mazars LLP represented NBTY on the transaction, led by Chris Jackson, Transactional Services Partner.

Chris Jackson

He commented: We provided a team that combined UK and Belgian expertise to ensure that the requirements of NBTY were met on a timely basis by senior team members.

“We are very pleased to have helped NBTY with this acquisition and to have helped advance the growth of their business in mainland Europe. www.mazars.co.uk chris.jackson@mazars.co.uk

HOLLAND & BARRETT PARENT ACQUIRES ESSENZA STORE CHAIN

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80 / July 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

Consumer Deals LEDUN PECHEURS D’ISLANDE CONSUMER

l Delabli SAS, a French subsidiary of Labeyrie Fine Foods Group, has acquired Ledun Pecheurs d’Islande, a specialised fish business. Ledun Pêcheurs d’Islande SAS provides fish processing and marketing services including salting, smoking, and fish conservation. The company was incorporated in 2000 and is based in Fecamp, France. DELABLI S.A.S. provides seafood processing. The company was incorporated in 1986 and is based in Paris, France. DELABLI S.A.S. operates as a subsidiary of Labeyrie SAS, itself a subsidiary of Labeyrie Fine Foods PLC. Labeyrie Fine Foods is a leading European Group in the agro-food sector. The firm has been creating a broad range of delectable products for nearly 70 years. Through its flagship brands, Blini, Delpierre, Labeyrie and Lyons Seafoods, Labeyrie Fine Foods is a leader on its different markets. At the same time, by supplying the private labels of major supermarkets, the Group stands out as a partner of choice for the retail sector. Labeyrie Fine Foods’ structure, organised around six Business Units, allows the company to bring together entrepreneurial initiatives and Group synergies. Each independent Business Unit, with its own individual identity and knowhow, takes part in Labeyrie Fine Foods’ strategy in order to meet established goals. With the benefits of shared support functions (accounting, treasury, legal, IT, purchasing strategies, on-the-ground sales force, etc.), each Business Unit represents a building block in Labeyrie Fine Foods’ structure, contributing to the Group’s success. At the head of each Business Unit, a Managing Director leads a management team with a comprehensive scope of action (marketing, industrial policies, sales, management). These teams are driven by their entrepreneurial spirit, in-depth knowledge of their markets and a perpetual drive for results. Landwell & Associes represented Delabli SAS on the transaction, led by Catherin Olive, Partner, and Stéphane Catays (Director). The firm has a long and strong relationship with Labeyrie Fine Foods, having already represented it for the acquisition of the frozen activities of Brossard in 2010.

DELABLI (LABEYRIE FINE FOODS) ACQUIRED THE SAURISSERIE BUSINESS OF LEDUN PECHEURS D’ISLANDE

LIBERATION GROUP

MUNKSJÖ

l Six of the Channel Islands’ best known pubs and bars have been acquired by the Liberation Group in a deal agreed with Sealyham Investments Limited/ Lapwing Trading, for an undisclosed sum.

l NASDAQ OMX has announced that trading in Munksjö Oyj (MUNK1) shares commenced on the main market of NASDAQ OMX Helsinki. Munksjö is a mid-cap company within the sector Basic Materials. Munksjö Oyj was formed by combination of Munksjö AB and Ahlstrom’s Label and Processing business.

The properties were originally part of the CI Traders group of businesses, but when Sandpiper CI acquired the company’s portfolio of pubs and bars in 2007, these six were not included. The Liberation Group bought the remaining pubs, brewing and drinks business of Sandpiper CI in 2008 and has continued to supply drink products to the six businesses that are part of the agreement. In Guernsey the acquisition includes the Ship & Crown and Crow’s Nest Restaurant, and L’Auberge, both of which are managed sites. The Happy Landings close to Guernsey Airport and the Captain’s Hotel are the two tenanted businesses acquired. In Jersey the Ha’penny Bridge and the Seymour Inn, both tenanted, will also become part of the Liberation Group portfolio. All managers and staff will remain as part of the deal. Mark Crowther, CEO of the Liberation Group said: The pubs have been well invested in and looked after under the stewardship of Lapwing Trading for the past seven years and we are delighted to now welcome these great sites into the Liberation Group family. We have no plans to make any changes to the day to day operation for any of the sites or their employees, other than we will look to integrate the two managed sites into our popular Inndulgence card loyalty programme. KPMG provided tax due diligence support to the Liberation Group helping to ensure the smooth completion of the transaction. The team was led by Jason Laity managing director of KPMG Channel Islands (‘KPMG’) supported by an experienced team of tax experts in both Jersey and Guernsey. KPMG has worked with the Liberation Group for several years and was delighted to be able to assist them in another significant step in the evolution of the Group. mashburn@kpmg.jersey.je www.kpmg.com/channelislands

THE LIBERATION GROUP ACQUIRES ICONIC PUBS Tax Adviser

The Munksjö Group is a speciality paper company producing select materials that form vital parts of customer design and manufacturing processes. Founded in 1862, Munksjö is among the leading producers in the world of Decor paper, Relase Liners, Electrotechnical paper, Abrasive backings and Interleaving paper for steel. The combination makes Munksjö Oyj a global leader in high-quality specialty papers with combined pro forma net sales of EUR 1.2 billion. Munksjö Oyj will have approximately 3,000 employees and 15 production sites. Munksjö’s unique product offering will offer and serve its global customers with a focused range of high-valueadded specialty papers to selected industry sectors and consumer-driven products. For more information, visit www.munksjo.com Jan Åström, President and CEO of Munksjö Oyj commented: We are today happy to start trading on the main market of NASDAQ OMX Helsinki. Both the exchange and Munksjö have a history going back for over 100 years, and it is with great pleasure that we now continue our journey together. As the majority of our shareholders reside in Finland, a listing in Helsinki was a natural choice for us. Lauri Rosendahl, President of NASDAQ OMX Helsinki said: We would like to extend a warm welcome to Munksjö Oyj to NASDAQ OMX Helsinki where it will be a great addition to our group of internationally strongly positioned mid cap companies. We look forward to a strong partnership and to providing the company and its shareholders with the highest level of service, liquidity and brand visibility associated with a listing on NASDAQ OMX markets.

TRADING IN MUNKSJÖ OYJ’S SHARES STARTS AT THE HELSINKI STOCK EXCHANGE Advisers to Munksjö

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82 / July 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

Consumer Deals

l Iglu.com, the UK’s leading online ski and cruise agent, has completed the acquisition of Planet Cruise, an online and TV cruise retailer, with backing from Growth Capital Partners (GCP). GCP provides blended equity and debt to UK SME’s and invested in Iglu.com in May 2012 in a deal valued at £19 million. The acquisition will make Iglu.com the largest independent cruise agent in the UK with a combined turnover of around £100 million. Based in Portsmouth and employing 75 people, Planet Cruise was founded in 2005 by husband and wife team Gary and Jenny West. They initially began marketing the business through the traditional route of newspapers and magazines and then in January 2008 launched a cruise show on the Ideal World Shopping Channel. The Southern BDO corporate finance team, led by Andrew Lock, Partner assisted by Craig Hewitt-Dutton, Manager acted as advisors for shareholders of Planet Cruise Limited in their trade sale to Iglu.com. Mr Hewitt-Dutton commented: Having met with the principle shareholders Gary and Jenny West, we helped them to position their business for a sale to either Private Equity or Trade buyer. The shareholders received a number of offers from both trade and Private Equity before agreeing to the bid submitted from Iglu.com. The Iglu.com proposal was the most attractive proposition for the shareholder financially and also enabled them to carry on in their existing roles. White Hart Associates presented existing clients Iglu.com Limited and Growth Capital Partners on the deal, led by Christopher Photi, Head of Travel Leisure. Mr Photi stated that the main challenge in the deal was the UK/EU consumer Christopher Photi protection regulatory framework, adding that the team are experts in negotiations with the travel industry’s principal regulators. Osborne Clark acted for Iglu.com as the Purchaser, led by Corporate Partner Al Livingstone. The firm acted for GCP last year when they funded the MBO of Iglu.

SUNTORY IPO l Suntory Beverage & Food Limited was listed on the First Section of the Tokyo Stock Exchange on 3rd July, 2013. The IPO is being reported as the largest in Asia so far this year, and is aimed at building finance for overseas acquisitions. Suntory Beverage & Food is a soft drinks company with an integrated platform in four key regions: Japan, Europe, Oceania and Asia. The company also operates businesses in the U.S.. Suntory Beverage & Food is a core company in the Suntory Group responsible for non-alcoholic beverages and food. It is also the largest operating company in the Suntory Group. The company has achieved 20 consecutive years of sales volume growth in Japan and its overseas business is now expanding rapidly as well, driven by core brands in key markets worldwide. In Europe, the company sells carbonated drinks such as Orangina and Schweppes and fruit juice Oasis, and in Oceania it focuses on energy drink V and a range of fruit and vegetable juices called JUST JUICE. In Asia, the company also sells a range of health food such as BRAND’S Essence of Chicken, where its businesses are rapidly growing. In the U.S, the company manufactures and sells Pepsi brand soft drinks, mainly in North Carolina. The company has steadily expanded its overseas business base through aggressive M&A since the acquisition of Pepcom in 1980. Its overseas operations accounted for 31% of net sales and 45% of EBITDA in fiscal 2012. In a recent announcement, the company stated that it aims to contribute to achieving rich cultures and lifestyles of people worldwide by offering attractive products that appeal to consumer tastes and needs. The Company will continue ceaseless efforts to realise its bold vision of becoming the world’s leading soft drink company.

VUE l OMERS Private Equity (“OPE”), the private equity investment arm of the OMERS pension plan, in equal partnership with Alberta Investment Management Corporation (“AIMCo”) on behalf of certain of its clients, have signed a definitive agreement to acquire Vue Entertainment (“Vue”) from Doughty Hanson and management for an enterprise value of GBP935m (C$1.48 billion). Vue is a multiple award winning highly successful world-class operator of modern state-of-the-art multiplex cinemas in the United Kingdom, Ireland, Germany, Denmark, Portugal, Poland, Latvia, Lithuania and Taiwan. The transaction is expected to close by late July 2013. Vue is a pan-European market leader and one of the largest cinema operators in the world. Over the last three years, it has doubled the number of cinemas under its ownership from 70 to 146 and nearly doubled its screens from 678 to 1,321. Vue acquired Apollo Cinemas in the UK in May 2012, CinemaxX, Germany’s second largest operator in July 2012, and most recently agreed to acquire Multikino, the second largest operator in Poland, in May 2013. The company has also rolled out state-of-the-art digital projection technology across its circuits, opened a number of new cinemas including two of the top three highest grossing cinemas in the UK and Ireland at Vue Westfield London and Vue Westfield Stratford City and continued its market leading alternative programming delivering even greater choice for its customers through the screening of music concerts, sports, opera, theatre and other events. The Vue management team, including the founder and CEO Tim Richards, will retain a substantial equity stake and continue to manage the business. OPE and AIMCo will support the management team as they seek to capitalise on the significant organic growth opportunities across all of its markets, and to combine this with selective acquisitions. Vue perfectly fits the selective acquisition criteria of both OPE and AIMCo.

IGLU.COM ACQUIRES PLANET CRUISE

SUNTORY IPO

OMERS, ALBERTA TO ACQUIRE VUE ENTERTAINMENT FOR GBP935M

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ACQUISITION INTERNATIONAL

July 2013 /

CONSUMER

PLANET CRUISE

DEAL DIARY:

Energy & Resources Deals AMALYST

ENERGY & RESOURCES

l UCLB spin-out company, Amalyst Ltd, has completed a seed investment round to fund the commercialisation of a novel low cost electrocatalyst for use in fuel cells and water electrolysers. The round was financed by UCLB and Midven, a Midlands based regional venture capital company, and monies will be used to support team expansion and accelerate the market introduction of the company’s catalyst materials. The electrode catalysts currently employed in proton exchange membrane (PEM) fuel cells and water electrolysers are primarily comprised of platinum and platinum-based alloys; with large amounts used to ensure high performance over the lifetime of the product. Platinum is very expensive and consequently the electrode cost has a large contribution to the total cost of the fuel cell. There is global demand for a low cost catalyst that is a ‘drop-in’ substitute for platinum, which offers both commercial and environmental benefits. The next generation materials developed by Amalyst are high performance but lower cost than platinum, resulting in significant cost savings for fuel cell and electrolyser industries. The market traction Amalyst has received since we began discussions with leading hydrogen technology developers played a major part in the decision to make this seed investment” said David Hodgson, CEO of Amalyst. “The combined research efforts of our stakeholders has provided a platform for us to build on and the team is excited by the opportunity. The first structure was rejected for tax reasons and the alternative was over complicated and costly. Midven recommended Nick Waterhouse-Brown Tax Partner at Luckmans to CMR – the vendor. Nick acts as an “adviser to the advisers” having just moved from being a tax director at a top 10 firm. Nick rejected the complex deal and showed both sides why the first, simpler deal should be done. Jill Shaw director at CMR said Nick’s input was invaluable. He renegotiated the deal structure saving complexity and expense. His tax technical knowledge is second to none, and I wholeheartedly recommend him to anyone. Nick WaterhouseBrown

AMALYST LIMITED SECURES SEED INVESTMENT TO COMMERCIALISE A NOVEL LOW COST ELECTROCATALYST

LAMPIRIS l Gimv and SRIW are jointly investing €40 million in Lampiris, a green energy supplier. Lampiris will use the fresh capital to enhance its balance sheet and fund its ongoing growth. This will enable Lampiris to achieve its ambition to become Belgium’s leading independent supplier of gas and green electricity. The Belgium based Lampiris was set up by Bruno Vanderschueren and Bruno Venanzi in 2003. The company now has more than 770,000 subscriptions (for individuals, companies and the public sector) to which it supplies gas or 100% green electricity. The business focuses primarily on Belgium, but Lampiris also obtained a license in 2011 to supply gas in France; as a result, it can now also offer a combined energy package (gas and electricity) on the French market. Lampiris currently has a workforce of 170. With a market share of roughly 9% in the gas market and 6.5% in the electricity market, Lampiris is the third largest energy supplier in Belgium, but has posted the highest growth figures in the energy market every year (sources: CREG, VREG, CWAPE) since its launch in 2005. Lampiris recorded a turnover of €695 million in 2012, representing an 82% increase on 2011. The number of subscribers increased by 55% - to 655,034 – over the same period. inno.com participated in an investment deal on behalf of GIMV, in the evaluation of the ICT-services and landscape. The challenge for the team was to evaluate the operational and strategic risk of the ICT-environment. inno.com managed to give a sound professional advice, thanks to its organisational and technical knowledge and its vast experience in similar assignments. inno.com is THE independent specialist with regards to Enterprise Architecture. inno.com provides strategic ICT-consulting as well as ICT-delivery services to both the private and public sector. Next to its consultancy business, inno.com runs a master-course in Enterprise Architecture, officially recognised by the government as an academic master-degree. www.inno.com johan.cattersel@inno.com

LAMPIRIS OF BELGIUM WINS INVESTMENT AS GIMV BETS ON GREEN POWER

SP AusNet & JEMENA l Linklaters and Allens have jointly advised State Grid International Development Limited, a whollyowned subsidiary of State Grid Corporation of China, on two of Australia’s largest power asset transactions. Under the terms of the two transactions, State Grid has agreed to acquire from Singapore Power International Pte Limited, the international operating arm of Singapore Power Limited, 19.9% of the stapled securities in SP AusNet, an ASX and SGX-listed entity, and a 60% interest in SP (Australia) Assets Pty Limited, which trades as Jemena. The matter was led by Linklaters partners Judie Ng Shortell and Thomas Ng, both based in Beijing, and Allens partners Anna Collyer and Wendy Rae, both based in Melbourne. Ms Shortell commented: “The deal involved two separate but contemporaneous transactions – the acquisition of a 19.9% interest in ASX and SGX-listed SP AusNet and the acquisition of a 60% interest in privately-held SP (Australia) Assets Pty Limited. The companies own and operate gas and electricity transmission and distribution assets in Australia, some of which are regulated. The transactions are subject to customary regulatory consents in Australia and in China, including foreign investment approval from the Treasurer of the Commonwealth of Australia and approval from the PRC’s National Development and Reform Commission. The size and complexity of the transactions required both public and private M&A input, energy sector expertise and contributions from finance, tax, employment and property specialists. The transactions showcased the quality and depth of the Linklaters and Allens teams, drawing from the combined resources at each firm to provide State Grid with the best team for the deal.”

Mark Green

Alan Kenworthy

Minter Ellison was specialist tax adviser to Singapore Power in this significant transaction. The team was led by partners Mark Green and Alan Kenworthy. Singapore Power has been a key client of Minter Ellison’s specialist tax practice for more than 15 years. In that time the firm has assisted the company on many of its strategic undertakings in Australia, including its acquisition of TXU Corp’s entire Australian operations in 2004 (one of Australia’s largest energy transactions at the time), the IPO of 49% of SP AusNet in 2005 and in relation to the acquisition of assets previously owned by Alinta Group in 2007. mark.green@minterellison.com alan.kenworthy@minterellison.com www.minterellison.com

STATE GRID ACQUISITON OF

SP AusNet & JAMENA DRV Corporate Finance

Systems Due Diligence Provider Tax Adviser to Singapore Power Tax Adviser Legal Adviser to the Equity Provider

Legal Adviser to the Vendor

Advisers to Singapore Power

Commercial Due Diligence Provider Legal Adviser to the Purchaser Vendor Due Diligence Provider & Tax Adviser

Virtual Data Room Provider

84 / July 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

Financial Services Deals

l BBVA Group has sold 100% of the share capital of Peruvian pension company AFP Horizonte S.A. to AFP Integra S.A., owned by SURA Asset Management, and Profuturo AFP S.A., owned by Scotiabank, each acquiring 50% of the company. The share transfer was completed and settled through the Electronic System of the Lima Stock Exchange. The total consideration paid was approximately US$ 544 million, which is equivalent to approximately 1,410 million Peruvian new Soles (nuevos soles peruanos). This amount is composed by a share purchase consideration of approximately US$ 516 million and a dividend distributed prior to the closing of approximately US$ 28 million.

GENERALI U.S. LIFE REINSURANCE BUSINESS l SCOR Global Life Americas Holding Inc., a subsidiary of SCOR Global Life SE,and Assicurazioni Generali S.p.A. (“Generali”) have entered into a definitive agreement pursuant to which SCOR will acquire 100% of Generali U.S. Holdings, Inc. (“Generali U.S.”), the holding company of Generali’s U.S. life reinsurance operations, for a total cash consideration of EUR 579 million (USD 750 million) plus a 2013 earnings adjustment through the closing date. This price represents a significant discount to SCOR’s preliminary estimated Embedded Value of the Generali U.S. portfolio.

AFP Integra and SURA Asset Management were advised by Luis Marcelo De Bernardis and Anahi Com from Peruvian law firm Miranda & Amado Abogados. The international law firm advising on the deal, Covington & Burling, was led by Gabriel Mesa, with the participation of Rubén Kraiem and the assistance of Cecile Zwiebach. New York based merchant banking boutique Three Ocean Partners was exclusive financial advisor to Sura Asset Management and was the originator of the idea and structure for the deal, whereby two strategic competitors obtained regulatory pre-approval to jointly acquire and break up a third. The team was led by Kevin Martins da Silva, Partner. As the former CFO and Head of M&A for ING Latin America, which was sold to Sura in 2011, Kevin has a longstanding relationship with the senior executives of Sura Asset Management and intimate knowledge of the mandatory pension business. While at ING he led a number of deals in the region over Kevin Martins the years, most notably the purchase of da Silva Santander’s pension businesses in 2008 and the sale of ING’s pension businesses in 2011. Three Ocean Partners also had a detailed knowledge of the recent Peruvian pension reform having advised both Sura and Grupo Wiese on a separate transaction in 2012, whereby Grupo Wiese swapped its minority position in AFP Integra in Peru for new shares in the Sura Asset Management regional holding company.

AFP INTEGRA AND PROFUTURO AFP ACQUISITION OF AFP HORIZONTE

Duncan Briggs

The transaction encompasses (a) the stock purchase of Generali U.S. and its operating subsidiaries, including Generali USA Life Reassurance Company (“Generali USA”), which employs a staff of approximately 120 in Kansas City; and (b) the recapture of the retrocession agreements between Generali USA and Generali.

Generali U.S.’s 2012 net earned premiums amounted to approximately EUR 700 million (approximately USD 900 million), all underwritten in the U.S. and all focused on biometric risks, similar to SCOR Global Life Americas (“SGLA”) existing business. Generali U.S. ranked as the fourth largest Life reinsurer in the U.S. on 2012 recurring new business volume. Skadden is representing SCOR on this transaction, led by Armand W. Grumberg (Partner, Head of European M&A) and Robert J. Sullivan (Partner, Co-Head Financial Institutions Group). Skadden has a long-term relationship with SCOR (10 years +) and advised them in numerous M&A and capital markets transactions as well as litigation matters. Mr Grumberg commented: It was a complex transaction with heavy regulatory aspects which had a direct impact on the structuring and required a strong and creative team effort on both sides of the Atlantic. This transaction will allow SCOR to become the market leader in life reinsurance in the U.S. Armand.Grumberg@skadden.com Robert.Sullivan@skadden.com

SCOR ACQUIRE GENERALI U.S. AND BECOME U.S. LIFE REINSURANCE MARKET LEADER Financial Due Diligence Provider & Pensions and Actuarial Adviser

HANSEATICA RUECKVERSICHERUNGS l Run-off insurer DARAG (Deutsche Versicherungsund Rueckversicherungs-AG) has acquired Hamburg-based Hanseatica Rueckversicherungs-AG (Hanseatica) including its entire Run-off portfolio. It is DARAG’s first transaction in 2013 and the first after quadrupling its capital base in April this year. Hamburg-headquartered Hanseatica RueckversicherungsAktiengesellschaft started operations in 1974 as Imperio Rueckversicherungs-AG as part of the Reinsurance business of the insurance company Companhia de Seguros Imperio, which included operations in London, Brussels and Hamburg. The company name was changed in 1985. Hanseatica, whose single shareholder is the Portuguesebased group José de Mello, has not written any new business since 2004. The Run-off portfolio of Hanseatica includes the lines third-party liability insurance, motor, marine and aviation insurance, engineering insurance and fire insurance. As of December 2012, Hanseatica had a balance sheet total of EUR 38 m. DARAG will take over its entire insurance portfolio onto its own balance sheet. Arndt Gossmann, CEO of DARAG, comments: We are excited about the opportunity to take over Hanseatica. It is the first deal following our capital raise in April 2013, proving us right that Run-off business in Europe is experiencing rapid growth. Also, this deal has shown that safeguarding the contractual partner’s reputation is a crucial aspect within the scope of Run-off transactions. DARAG offers first-class alternatives as a landmark provider of Run-off insurance in Continental Europe. DARAG raised capital commitments of EUR 60 m from Keyhaven Capital Partners in London in April 2013. Today, DARAG is pole-positioned for major acquisitions in the growing Run-off market. The transaction is DARAG’s first in 2013 and brings the total number of its transactions to eleven. The parties have agreed not to disclose the terms of the transaction. The transfer still has to be approved by the regulators. For more than 15 years Intralinks® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace™. Today, Intralinks continues our history of innovation to give deal professionals the tools they need to help them manage the full M&A lifecycle - to get more deals done, faster. With a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion, Intralinks is a trusted provider of easy-to-use, enterprise strength, cloud-based collaboration solutions. For more information, visit www.intralinks.com

DARAG ACQUIRES HANSEATICA RUECKVERSICHERUNGS-AG IN RUN-OFF Virtual Data Room Provider

served as exclusive financial adviser to Legal Adviser to the Purchaser & Legal Advisers to the Debt providers

on the joint acquisition with Debt Providers & Financial Adviser to the Purchaser Pensions and Actuarial Adviser of Peruvian pension fund manager

Debt Providers & Financial Adviser to the Purchaser

Financial Due Diligence Provider & Tax Adviser for a total consideration of US$516 million

Legal Adviser to the Vendor

April 2013 ACQUISITION INTERNATIONAL

July 2013 /

FINANCIAL SERVICES

AFP HORIZONTE

DEAL DIARY:

Financial Services Deals HEALTHCARE FINANCE GROUP

HEDGE FUND SOLUTIONS

KEY RETIREMENT SOLUTIONS

l Fifth Street Finance Corp. has entered into a definitive agreement to acquire Healthcare Finance Group, LLC (“HFG”) as a portfolio company. HFG is a specialty lender providing asset-based lending and term loan products to the healthcare industry. Since its founding, HFG has financed in excess of $21 billion in receivables.

l North Street Group, a capital markets and investment banking firm, has acquired Hedge Fund Solutions, LLC, a New York based Alternative Asset Service Provider.

l Phoenix Equity Partners (“Phoenix”), a leading UK middle-market private equity firm, has acquired a majority stake in Key Retirement Solutions Ltd (’KRS’) for a gross consideration of £35m, including £2 million of cash held on balance sheet, from Cabot Square Capital. Completion of the deal remains subject to regulatory approval.

FINANCIAL SERVICES

To effect the acquisition, Fifth Street anticipates investing approximately $110 million and intends to finance the purchase with available liquidity, including operating cash and borrowings under Fifth Street’s existing credit facilities. HFG’s senior management team has an average of 24 years of healthcare finance or related industry experience and will provide continuing leadership to HFG going forward. Fifth Street expects that the HFG acquisition will be accretive to net investment income. HFG’s total outstanding loan portfolio, as of May 6, 2013, consisted of 57 loans with a value of approximately $270 million. Fifth Street believes that HFG’s niche focus in the healthcare industry offers the potential for strong asset quality and attractive yields, even during challenging economic or debt capital market conditions. HFG has a quality track record of managing credit risk since inception in 2000. “Healthcare Finance Group is the oldest, continuously operating stand-alone healthcare asset-based lender in the U.S. We believe that a strategic investment in HFG will provide exceptional opportunities to grow the company’s platform,” stated Leonard M. Tannenbaum, Fifth Street’s Chief Executive Officer, adding, “This investment fits well within Fifth Street’s successful track record for investments in the healthcare sector.” “Fifth Street is the ideal partner to take what we have built at HFG to the next level,” said Isaac Soleimani, Chairman and CEO of HFG, adding, “The combination of Fifth Street’s access to capital, entrepreneurial culture and savvy professionals, as well as HFG’s expertise, reputation and track record in the healthcare industry, will create a potent force in the marketplace that will accelerate HFG’s growth going forward. We are very excited about Fifth Street’s acquisition of HFG.”

FIFTH STREET FINANCE CORP. AGREES TO ACQUISITION OF

DRVHEALTHCARE Corporate FINANCE FinanceGROUP, LLC

Additionally, North Street Group announced the name change and rebranding of Hedge Fund Solutions, LLC to North Street Global Fund Services, LLC. Hedge Fund Solutions offers industry leading fund administration for both emerging and established alternative asset managers. The strategic acquisition of Hedge Fund Solutions, LLC allows North Street to enter the alternative asset management space and expand its service offerings, said Alex Mascioli, Managing Partner of North Street Group. Co-Head of North Street Global Fund Services Dean Betzios stated, The transaction with North Street allows Hedge Fund Solutions’ fund services to strengthen its infrastructure for our clients’ needs. “We’re excited about this opportunity as it sets the foundation to allow us to grow alongside the funds we service, said Joseph Musto, Co-Head of North Street Global Fund Services. North Street is a capital markets and investment banking firm based in New York City. Hedge Fund Solutions is an industry leading fund administration firm in the alternative asset management industry. Teplen Law Group, PLLC acted as Legal Adviser to the Purchaser/Management team on the deal, led by Philip Teplen. Alex Mascioli led the North Street Capital Markets, LLC team acting as Financial Adviser to the Purchaser/Management Team. Rackspace provided Virtual Data Room services. Terms of the agreement were not disclosed. For more information please visit www.NorthStreetFundServices.com

INVESTMENT BANK NORTH STREET GROUP ACQUIRES FUND ADMINISTRATOR HEDGE FUND SOLUTIONS

Financial Adviser to the Purchaser

KRS is the UK’s leading independent distributor of equity release loans and a top ten distributor of annuities. It also provides estate planning services, whilst its subsidiary More2Life is a significant and fast growing equity release lender. In the year to 31 December 2012, KRS generated EBITDA of £5.2m, and employs 240 people. This is the ninth investment from Phoenix’s £450 million fund, which was raised in 2010. Phoenix is backing the existing management team of KRS, led by Chief Executive Colin Taylor, to build the ’go to’ brand for financial products and related services for consumers nearing or in retirement. The management team are investing alongside Phoenix in this acquisition. As the original founder of Partnership Assurance in 2005, Phoenix has strong experience of the UK retirement services market. This sector offers substantial growth prospects given demographic trends, the continuing decline in defined benefit pension schemes and the concurrently growing need for self-provision in retirement, and the pressures on retirement income due to low savings rates and rising living costs. This transaction, strongly supported by Phoenix’s capital and strategic expertise, marks the launch of an exciting new growth phase for the company, helping management accelerate their growth plans. The team’s focus is on continuing to build a resilient and diversified business, through the further development of KRS’s existing offering, the launch of new products, and the potential acquisition of complementary businesses. The aim is to consolidate KRS’s position as the leading provider of high quality, cost-effective financial products and services addressing the needs of the over-55s.

PHOENIX ANNOUNCES INVESTMENT IN KEY RETIREMENT SOLUTIONS

Commercial Due Diligence Adviser to the Equity Provider

Legal Adviser to the Purchaser Corporate Finance Adviser to the Equity Provider Legal Adviser to the Purchaser

Financial Due Diligence & Tax Adviser to the Equity Provider

Financial Due Diligence Provider & Tax Adviser Virtual Data Room Provider

Legal Adviser to the Management Team

86 / July 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

Financial Services Deals ONLINE RESOURCES CORPORATION

l National Financial Partners Corp., a leading provider of benefits, insurance and wealth management services, has entered into a definitive agreement with Madison Dearborn Partners, LLC, a private equity investment firm, under which a controlled affiliate of Madison Dearborn will acquire NFP.

l ACI Worldwide, a leading international provider of payment systems, has completed the acquisition of Online Resources Corporation, a leading provider of online banking and full service bill pay solutions. The acquisition adds Electronic Bill Presentment and Payment (EBPP) solutions as a strategic part of ACI’s Universal Payments portfolio. It also strengthens ACI’s online banking capabilities with complementary technology, and expands the company’s leadership in serving community banking and credit union customers.

Under the terms of the agreement, NFP shareholders will receive $25.35 in cash for each share of NFP common stock they own, in a transaction with an equity value of approximately $1.3 billion, which includes the full value of the Company’s convertible debt. The purchase price represents a premium of approximately 26% over NFP’s closing share price of $20.05 on March 12, 2013, the last day of trading prior to press reports that NFP was considering a possible sale of the Company. As previously disclosed, as a result of interest it had received from private equity firms, NFP’s Board of Directors formed a special committee of independent directors to explore a possible sale of the Company. After a thorough and rigorous process, and with the assistance of its legal and financial advisors, the special committee negotiated and recommended this transaction with Madison Dearborn to the full Board. The transaction was unanimously approved by the Board. UBS acted as the sole financial advisor to MDP on the deal and provided committed financing for this transaction. Within UBS, the transaction was led by the Financial Institutions Group (Mike Jamin, Managing Director and Tushar Virmani, Director) in partnership with Leverage Finance (Erwin Mock, Executive Director) and M&A (Christina Bresani, Managing Director) Investment Banking Team. The transaction further establishes the strength of UBS as a leading advisor and financier for complex and/ or large transactions in the Insurance sector.

ACQUISITION OF NATIONAL FINANCIAL PARTNERS CORP.

DRV Corporate FinancePARTNERS, LLC BY MADISON DEARBORN

Under the terms of the agreement, ACI acquired Online Resources in an all cash transaction for $3.85 per share. Driven by the increase in electronic transactions from online and mobile banking, bill pay is becoming a major pivot point and area of strategic investment for our customers, said Philip Heasley, president and CEO of ACI Worldwide. With the addition of Online Resources’ capabilities, customers can rely on ACI as an end-to-end, integrated provider addressing the full range of payment needs including: wholesale and retail payments, payments fraud, online banking, merchant retail and now bill pay. “In addition, the acquisition will expand ACI’s bestin-class online banking capabilities to offer a suite of solutions supporting banks and credit unions of all sizes, continued Heasley. We are delighted to welcome Online Resources’ talented employees into the ACI family to help seize these opportunities and advance the best solutions to customers going forward. ACI also announced that consistent with ACI’s long-standing lifecycle management policy, the company is committed to maintaining multi-year roadmaps and contractual commitments to Online Resources’ customers. Online Resources’ customers will benefit from ACI’s size and scale to support current and future initiatives. ACI invests 18% of revenues in R&D, significantly ahead of others in the industry. The company also provides a world-class hosting environment, as well as global 24x7x365 support. For more than 15 years Intralinks® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace™. Today, Intralinks continues our history of innovation to give deal professionals the tools they need to help them manage the full M&A lifecycle - to get more deals done, faster. With a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion, Intralinks is a trusted provider of easy-to-use, enterprise strength, cloudbased collaboration solutions. For more information, visit www.intralinks.com

ACI WORLDWIDE COMPLETES ACQUISITION

OF ONLINE RESOURCES DRV Corporate FinanceCORPORATION

PACIFIC & ORIENT INSURANCE l South African financial services group Sanlam has announced that all conditions precedent have been met to conclude the acquisition of a 49% stake in the Malaysian niche short-term insurer Pacific & Orient Insurance Co. Berhad (POI). The value of the transaction is Malaysian Ringgit (MYR) 270 million (approximately R814 million) and the effective date of the transaction is 17 May 2013. The transaction is being executed by Sanlam Emerging Markets (SEM), the business cluster responsible for Sanlam Group’s international expansion into selected emerging markets. PwC South Africa led by Cape Town based Director Tertius van Dijk acted on behalf of Sanlam Emerging Markets Proprietary Limited to perform a financial, tax, actuarial, regulatory and IT due diligence on Pacific and Orient Insurance Company Berhad. PwC South Africa worked in conjunction with PwC Malaysia to gain access to local industry, regulatory and tax expertise. Frost & Sullivan represented Sanlam Emerging Markets, led by Mark Simoncelli Global Director: Growth Implementation Solutions and supported by a Technical Lead: Sanjay Singh Vice President & Head BFS - Asia Pacific. The Delivery of the project was completed by both the Automation & Transportation and Financial Services teams, based in Malaysia. Mr Simoncelli commented: “We have been engaging and working with Sanlam for approximately a year in the build up to this project. Our focus as a Growth consulting company was to partner with Sanlam in order to deliver an in-depth market study and complete the commercial due diligence of the transaction. “The real challenge was to ensure that the right team (Industry experience and Geographic coverage) was mobilised to effectively deliver this global project. It required that the project was led from South Africa, to ensure an intimate understanding of Sanlam’s requirements, yet was delivered from Malaysia to ensure the relevance of the insight and recommendations where the deal was taking place. In order to develop the necessary insight, a three tiered approach was followed between: an in depth market study; customer research, both through primary and secondary mediums; and finally the economic modelling as part of the commercial due diligence.”

SANLAM ACQUIRES 49% STAKE IN

MALAYSIAN PACIFIC & ORIENT INSURANCE DRV Corporate Finance

Virtual Data Room Provider Legal Adviser to the Purchaser

Exclusive Financial Advisor to the Acquirer

Debt Provider

Legal Adviser to the Vendor

Virtual Data Room Provider

ACQUISITION INTERNATIONAL

Financial Due Diligence Provider

Commercial Due Diligence Provider

July 2013 /

FINANCIAL SERVICES

NATIONAL FINANCIAL PARTNERS CORP.

DEAL DIARY:

Healthcare Deals CARDIO3 BIOSCIENCES

IVY HEALTHCARE GROUP

OKAIROS

l Cardio3 BioSciences (C3BS), a Belgian biotechnology company, has increased its equity by €19 million through a private placement with existing investors. The new funds will be used to finance the on-going clinical development of the company’s lead product, C-Cure®, currently tested in Europe in a phase III trial (CHART-1 – Congestive Heart failure Cadiopoietic Regenerative Therapy) and the preclinical development of other product candidates. CHART-1 is the world’s first phase III trial using pre-programmed cardiac progenitor cells and targeting heart failure.

l Deutsche Investitions- und Entwicklungsgesellschaft mbH (DEG), a subsidiary of KfW, has provided Ivy Health and Life Sciences Pvt. Ltd (Ivy) with a quasi-equity loan of €10 million. With its financing, DEG supports the growth of the enterprise: by the end of 2014, four new hospitals with more than 600 beds are to be built in the Indian state of Pubjab.

l GlaxoSmithKline (GSK has acquired Okairos AG (Okairos), a specialist developer of vaccine platform technologies for €250 million (approximately £215 million/$325 million) in cash.

Of the €19 million raised, €7 million is in new equity committed by existing investors with €12 million resulting from the conversion of existing convertible loans. The formal capital increase was approved at a shareholder meeting and is expected to complete by the end of May 2013. C3BS’ C-Cure is a unique therapy that allows the reprogramming of bone marrow cells into ‘cardiopoïetic’ cells with the aim of growing new heart tissue thereby repairing damaged heart muscle. The cardiopoïetic cells are injected into the patient’s heart through a minimally invasive procedure using a proprietary catheter called C-Cath®ez. HEALTHCARE

C-Cure is the outcome of research conducted at May Clinic (Rochester, Minnesota, USA), Cardio3 BioSciences (Mont-Saint-Guibert, Belgium) and Cardiobascular Centre Aalst (Aalst, Belgium). Christian Homsy, CEO of Cardio3 BioSciences, commented: Our ability to raise this significant amount of funding demonstrates the commitment of our investors and their confidence in the considerable value that we can generate from C-Cure. The new funding will allow us to proceed with our European Phase III trial in patients with Congestive Heart failure. We are confident that this study will confirm that C-Cure has the potential to significantly improve the disease course of those very sick patients, and could lead to a paradigm shift in the treatment of heart failure.

CARDIO3 BIOSCIENCES RAISES €19 MILLION

A PRIVATE PLACEMENT DRVTHROUGH Corporate Finance Auditor

At present, Ivy is already operating three hospitals in the rural north of India, where health care supply is particularly poor. The company treats more than 50,000 patients there every year. Ivy is certified with the Indian quality seal of the National Accreditation Board of Hospitals (NABH). The NABH demands high standards for hospitals, for example with regard to medical care and patient care as well as corporate governance. Moreover, Ivy offers free treatment and health care advice for socially disadvantaged people and informs about health care and prevention issues, for example on the topic of breast cancer. ERM India represented by Abhishek Singh, Principal Consultant and guided by Neena Singh, Partner and at the behest of DEG, undertook the Environment, Health & Safety and Social Due Diligence of the Ivy Healthcare Group to assess compliance with IFC Performance Standards (PS). The PS’s are internationally accepted guidelines and standards for benchmarking Environment, Health & Safety and Social performance of a business entity. The due diligence, carried in close coordination with the Ivy representatives, assessed the current performance of the group and identified improvement areas to achieve compliance to the IFC Performance Standards. A road map in the form of an Environmental and Social Action Plan (ESAP) was developed and jointly agreed by DEG, ERM and Ivy. The ESAP is currently being implemented by Ivy across its different assets. Neena.singh@erm.com www.erm.com

DEG INVESTMENT

IN IVY HEALTHCARE DRV Corporate Finance GROUP Environmental Due Diligence Provider (to Equity Provider DEG)

EY, led by Leo Gribben, a transaction advisory services partner, advised GSK on the acquisition. EY was involved in providing pre-acquisition financial and tax due diligence, and tax structuring advice. In addition, the firm continues to support GSK in the post-acquisition work, including the tax and valuation aspects.

Leo Gribben

EY has a long-standing relationship with GSK and has been advising the group on transactions for a number of years, said Mr Gribben. I was delighted to be working with GSK again on a successfully completed cross border acquisition www.ey.com Blum&Grob Attorneys at Law Ltd represented Okairos AG and its selling shareholders, led by Ralf Rosenow, Partner, Head of the Life Sciences Working Group. The firm has represented Okairos AG over approximately the past three years in all contractual and some corporate matters. Mr Rosenow commented: Despite the fact that Okairos is a relative small company with operations only in Switzerland and Italy, the transaction had links to various jurisdictions, on the one side through the acquirer being a multinational big pharma group and on the other side through the international investor group (individuals, VCs and corporate investors) holding and selling shares. Aligning these interests and finding the overall best solution by compromise is a must to close these transactions.

Ralf Rosenow

“As usual, a big challenge for a lean managed biotech company was to cope with the extensive due diligence requirements of a Big Pharma buyer while continuing day to day operations. Providing support and assistance to the top management in these tough times is one of our services on top of pure legal advice and contract negotiations. Amstutz Greuter Attorneys at law acted as one of the main legal advisers to GlaxoSmithKline (GSK) on the deal. The team was led by Partner Andreas Amstutz, Attorney at Law LL.M., who maintains a close working relationship with GSK since more than ten years on a wide range of legal matters (corporate & commercial issues, M&A). In the context of the Okairos deal Amstutz Greuter Attorneys at Law strongly were involved in both pre-acquisition legal due diligence work and drafting transaction documents. They also are providing post-acquisition support. Andreas Amstutz a.amstutz@amstutzgreuter.ch www.amstutzgreuter.ch

GLAXOSMITHKLINE (GSK)

ACQUIRES OKAIROS AG DRV Corporate Finance Legal Adviser to the Vendor

Advisers to the Purchasers Book Runner

Legal Adviser to the Purchaser (to the Ivy Company)

Menon & Menon Associates Financial Adviser to the Purchaser (to the Ivy Company)

Legal Adviser to the Book Runner Legal Adviser to the Equity Provider

PR Consultant

Legal Adviser to the Purchaser

Tax Adviser (to the Ivy Company)

amstutz | greuter RECHTSANWÄLTE

88 / July 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

PARTNERSHIP ASSURANCE GROUP l Partnership Assurance Group has completed its listing on the main market of the London Stock Exchange and an IPO involving the sale of shares by the management team and funds managed by Cinven. Partnership, one of the UK’s fastest growing companies, specialises in financial products for individuals whose life expectancy is likely to be reduced as a result of lifestyle factors or serious illness. The £1.54 million market capitalisation implied by the offer price is expected to be sufficient to place it within the FTSE 250 index. Partnership is the longest established UK insurer specialising in the design and manufacture of financial products for people whose health and lifestyle means that their life expectancy is likely to be reduced. The company caters for clients with a wide variety of health conditions, from the relatively minor such as high blood pressure, to the more serious such as heart failure, stroke, diabetes, kidney failure and cancer. By looking at every aspect of its clients’ health the company aims to deliver the maximum benefit it can. PAG also offer enhanced retirement annuities for people whose lifestyle choices may impact their life expectancy, such as smoking. The company is a long established specialist and the only company operating in this arena with its own proprietary underwriting manuals and mortality data. Combined with its underwriting and actuarial expertise, the company uses this knowledge and data to assess a customer’s likely life expectancy – rather than the average - and so can usually offer better benefits than a mainstream insurer. KBW was a co-lead manager on the deal, led by Charles Lucas, Managing Director and Head of European Equity Capital Markets. The firm represented Cinven, with whom it has a longstanding relationship.

Charles Lucas

Mr Lucas stated that the challenge was to ensure that Partnership’s growth and margins were fairly reflected in the IPO price.

CINVEN-BACKED PARTNERSHIP

ASSURANCE GROUP IPO DRV Corporate Finance

SUCCESSEHS

WARNER CHILCOTT PLC

l Vitera Healthcare Solutions, a premier provider of ambulatory electronic health records (EHR) and practice management software and services, has acquired SuccessEHS. The acquisition results in an expanded suite of services that helps office-based physicians and Community Health Centers (CHC) improve operational efficiencies, generate revenue and enhance patient health outcomes.

l Actavis, Inc. and Warner Chilcott plc have entered into a definitive agreement under which Actavis will acquire Warner Chilcott plc in a stock-for-stock transaction valued at approximately $8.5 billion. If successfully completed, the transaction will create a leading global specialty pharmaceutical company with approximately $11 billion in combined annual revenue, and the third-largest U.S. specialty pharmaceutical company with approximately $3 billion in annual revenues focused on core therapeutic categories of Women’s Health, Gastroenterology, Urology and Dermatology. The proposed transaction has been unanimously approved by the Boards of Directors of Actavis, Inc. and Warner Chilcott plc, and is supported by the management teams of both companies.

Pending customary regulatory approval, the Birmingham, AL-based SuccessEHS will become a division of Vitera. SuccessEHS provides EHR, practice management, electronic dental record, dental imaging and revenue cycle management solutions, and prides itself on providing exceptional implementation services, training and support to its physician practices and CHCs. Due to the strong demand for its services, the company has doubled in size over the last two years. Our acquisition of SuccessEHS supports our strategy for growth in the changing healthcare marketplace and is indicative of the tremendous progress Vitera has made over the past 18 months, said Matthew Hawkins, CEO of Vitera. The acquisition is a natural progression of Vitera’s strategic intent to be the leader in ambulatory healthcare information technology. We are committed to providing the solutions and services our customers need to succeed in this new era of healthcare. Maynard, Cooper and Gale represented SuccessEHS on the deal, led by Greg Curran and Stuart Maxey, Shareholders. The firm has represented SuccessEHS for the past several years. Mr Curran commented: The transaction had to be negotiated and executed in a very short period of time. We put together a team of lawyers and worked non-stop as a team. Our client understood the challenge, and we worked closely with the management team to develop clear objectives, division of responsibility and scheduling. We also worked closely with the Raymond James investment banking team, which was involved and highly effective throughout the process.

Greg Curran

Stuart Maxey

“When presented with the opportunity to handle significant and complex transactions with sophisticated opposing counsel, our M&A team is outstanding and produces great results.

VITERA HEALTHCARE SOLUTIONS

ACQUIRES SUCCESSEHS DRV Corporate Finance

“We have set as our strategic corporate objective to build a leading global specialty pharmaceutical company”, said Paul Bisaro, President and CEO of Actavis. The combination of Actavis and Warner Chilcott creates a strong specialty brand portfolio focused in therapeutic categories with strong growth potential, and is supported by a deep pipeline of development programs. The combination is commercially and financially compelling, and reshapes the specialty pharmaceutical universe by creating a powerful global competitor. It creates a company with an exceptionally strong balance sheet, coupled with a favorable tax structure to support future growth. “Commercially, this transaction is unique in the combination of the complementary strengths of our two companies, Bisaro added. The combination will enhance the value of each company’s portfolio and provides a substantial foundation to support the successful launch of new products over the next several years, particularly in Women’s Health, including Minastrin 24 Fe, Esmya, metronidazole vaginal gel 1.5%, the progestin-only contraceptive patch and other women’s health products in development from the recent acquisition of Uteron Pharma SA. It also provides an expanded portfolio of specialty products that have the potential to be commercialized in key markets outside of North America.

ACTAVIS TO BUY WARNER CHILCOTT

IN $5 BILLION STOCK DEAL DRV Corporate Finance

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Co-lead

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ACQUISITION INTERNATIONAL

July 2013 /

HEALTHCARE

Healthcare Deals

DEAL DIARY:

Industrial Deals BRINDERSON l Aegion Corporation has acquired Brinderson for a purchase price of $150 million. Brinderson is a leading integrated service provider of maintenance, construction, engineering and turnaround activities for the upstream and downstream oil and gas markets. Primarily focused on serving large oil and gas customers in California, Brinderson’s competitive advantages include its industry-leading safety record, a strong reputation for reliability and quality and comprehensive solutions needed for major refinery maintenance, repairs and retrofits. J. Joseph Burgess, Aegion’s President and Chief Executive Officer, commented: We are pleased to complete this important acquisition enhancing Aegion’s ability to generate sustainable growth, increase cash flow from operations and improve return on invested capital. Brinderson opens a new end market for Aegion. It gives our Company an entry ‘inside the fence’ in what we believe is a growing segment of the US energy market. Aegion’s Energy & Mining revenues from recurring operating and maintenance activities, inclusive of the Brinderson acquisition, are expected to exceed 50%, compared to 45% prior to the acquisition.

CERAMTEC l European private equity firm, Cinven, has reached an agreement to acquire CeramTec from Rockwood Holdings, Inc. (NYSE. ROC) for a total consideration of €1.49 billion. CeramTec is a leading global manufacturer of high performance ceramics for application in medical, automotive, industrial, and electronic end-markets. The Company’s proprietary product portfolio includes hip joint prostheses components, including the Biolox brand; high speed cutting tools; and ballistic ceramics for armour. L.E.K. Consulting represented Cinven in this deal, with whom the firm has been working for over 15 years. L.E.K. brought together a global team involving seven offices worldwide led by partners John Goddard, Florian Funke and Martin Bundschu in Europe and Jeff Stevens in the U.S.

John Goddard

Mr Goddard commented: CeramTec operates in a broad range of end-markets globally which needed to be thoroughly researched and analysed. Leveraging its global network, L.E.K. was able to rapidly mobilise expertise and capability across three continents to ensure the required insights and perspective were available to the Cinven team in a timely manner.

INDUSTRIAL

Aegion has also entered into a new $650 million senior secured credit facility with a syndicate of banks. Bank of America, N.A. served as the administrative agent. Merrill Lynch Pierce Fenner & Smith Incorporated, JPMorgan Securities LLC, and U.S. Bank National Association acted as joint lead arrangers and joint book managers in the syndication of the credit facility.

ERM represented Cnven Ltd. In the Environmental, Health & Safety, Sustainability work stream. ERM’s team was led by Mr Christopher Kiermayr, a Partner within the Frankfurt, Germany based Transaction Advisory Services Team.

The credit facility consists of a $300 million five-year revolving line of credit and a $350 million five-year term loan facility. The Company drew $385.5 million from the new facility on July 1, 2013 for the following purposes: (1) to pay the $150 million cash purchase price for the Company’s acquisition of Brinderson, L.P., which closed on July 1, 2013; (2) to retire $232.3 million in indebtedness outstanding under the Company’s prior credit facility; and (3) to fund expenses associated with the new credit facility and the Brinderson acquisition. This new facility replaces the Company’s $500 million credit facility.

Mr Kiermayr commented: The main challenges for the ERM team were to consolidate and interpret a diverse array of documents and data concerning complex environmental and sustainability regulations, such as but not limited to REACH and the Industrial Emissions Directive in order to provide Mr Kiermayr Cinven with a robust view of the associated commercial, financial and legal implications. ERM worked with the other work streams in the deal team to address these challenges.

AEGION COMPLETES

BRINDERSON ACQUISITION DRV Corporate Finance Legal Adviser to the Purchaser

ERM and Mr Kiermayr have a long standing working relationship with Cinven, having provided support in the context of numerous transactions in the past.

ROCKWOOD HOLDINGS INC. AND CINVEN LTD. SIGN PURCHASE CONTRACT ON THE CERAMTEC GROUP Environmental Due Diligence Provider to Equity Provider

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DELTA INDUSTRIES l MB Aerospace, the international aerospace engineering group, has acquired US-based aeroengine component manufacturing business Delta Industries, which had annual revenues in excess of $60m in 2012. MB Aerospace is an international aerospace engineering group providing complex engineering solutions to some of the key names in the aerospace and defence market. The multi-million dollar deal to acquire Delta, based in Hartford, Connecticut, will expand the MB Aerospace business to projected revenues of more than $160m (£100m) and to 550 employees (up from 370) for the 2013 financial year. The acquisition follows MB Aerospace chief executive Craig Gallagher leading a secondary MBO of MB Aerospace sponsored by Washington DC based private equity firm Arlington Capital Partners (‘Arlington’) in March of this year. Mr Gallagher said: With its wide range of capabilities, long-standing customer relationships and its strong management team, the Delta business has been a longterm target for MB Aerospace. It is a perfect fit with our ambitions for future growth. “We are delighted to have succeeded in securing such a highly prized company and we believe that the combined group is positioned to take advantage of the available opportunities for further expansion in the months and years ahead. “Today’s announcement adds significant technical capabilities to the group, especially in relation to large-diameter fabrications and robotic welding of complex high-value aero engines components. In addition to its high levels of capability, Delta has an industry-leading reputation for its ability to manufacture challenging system-critical components. The enlarged group now has a range of capabilities able to provide OEMs with engineering skills/services alongside the complex products found throughout aero, marine and industrial gas turbine engines. Core product technologies include casings, complex fabricated casings, rotating rings, complex structural assemblies and a range of diffusers, sync rings and high-value casings.

MB AEROSPACE BUYS DELTA INDUSTRIES Virtual Data Room Provider

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90 / July 2013

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ACQUISITION INTERNATIONAL

DEAL DIARY:

Industrial Deals

l Maven Capital Partners (Maven), a leading Private Equity and Alternative Asset manager, has led an investment in HCS Control Systems (HCS) via a Buy-in Management Buy-out transaction (BIMBO) alongside the Simmons Parallel Energy Fund. Maven and Simmons have each provided £4.25m of equity funding to support business growth, with additional investment from Front Row Energy Partners, a consortium of upstream industry specialists which invests in high quality energy service companies. Headquartered in Glenrothes, Fife, HCS is a specialist manufacturer of engineered mechanical, hydraulic and electrical systems for the subsea oil and gas sector. HCS’s integrated service offering includes design, engineering, specialist welding and fabrication processes. Established in 1997, the business has earned a reputation for delivering fast track design, manufacture and testing of topside and subsea control systems to a global blue chip customer base including GE, Cameron, Schlumberger and Expro. Deloitte Aberdeen provided financial and tax diligence for Maven Capital Partners alongside Simmons Parallel Energy Fund and Front Row Energy Partners. The engagement partner was Graeme Sheils with Lyn Cowie managing the engagement. Graeme Sheils commented: HCS has a niche position in the sector and has identified growth prospects both in the UK and internationally. We look forward to supporting the new management team achieve their ambitions for the business. gsheils@deloitte.co.uk www.deloitte.co.uk Kudos IFS worked in conjunction with Maven Capital Partners UK LLP, with whom the firm has a long standing professional partnership. The team was led by Alex Sutherland, Employee Benefit Analyst. He commented: By following our robust due diligence programme and by conducting an in-depth audit of the pension and ancillary benefit programmes we successfully identified all the hidden risks and potential liabilities. We would now wish HCS and their staff every success going forward. www.kifs.co.uk Alex Sutherland

MAVEN LEADS £9M INVESTMENT

IN HCS CONTROL SYSTEMS DRV Corporate Finance Pensions and Actuarial Adviser

IBERCHEM l Magnum Capital Industrial Partnershas acquired 87.1% of the shares owned by Alianza Iberian Private Equity in Iberchem. Iberchem is a producer of fragrances and aromas. The company has over 320 employees worldwide and 11 production centres in Spain, China, Indonesia, Malaysia, India, Italy, Tunisia, Colombia and Mexico. Iberchem had a turnover of approximately €57 million in 2013. The Iberchem acquisition is part of Magnum Capital’s corporate strategy to invest in solid, market leading Spanish and Portuguese companies with the potential for international growth. This is the eighth business operation of Magnum Capital since its foundation, enabling the firm to be active in the healthcare, pharmacy, energy, industry services, infrastructures and geriatrics sectors. Representatives from Magnum Capital representatives stated that the main goal is to support Iberchem personnel in this new long-term expansion phase. Deloitte Abogados y Asesores Tributarios represented Magnum Industrial Partners on the deal, with whom the firm has had an on-going relationship for a number of years. The tax structuring work and global coordination was led by Borja Escriva de Romaní, partner and head of the Deloitte Spain M&A Tax team. The tax due diligence piece was led by José María Gómez Rosende, also a partner to the Deloitte Spain M&A Tax team. The financial due diligence work was led by Senen Touza a partner to the Deloitte TAS team. The firm stated that the main challenge in the transaction was the multinational presence of the target group and consequently the need for an efficient coordination between the Deloitte and Magnum teams in order to comply with the short deadline available to file the binding offer in time. For more than 15 years Intralinks® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace™. Today, Intralinks continues our history of innovation to give deal professionals the tools they need to help them manage the full M&A lifecycle - to get more deals done, faster. With a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion, Intralinks is a trusted provider of easy-to-use, enterprise strength, cloudbased collaboration solutions. For more information, visit www.intralinks.com

MAGNUM CAPITAL ACQUISITION

OF STAKE IN IBERCHEM DRV Corporate Finance Tax Adviser

SCHAETTI l ZM Advisory AG, Zurich (“Zurmont Madison”) and co-investors are taking a majority stake in Schaetti Holding AG, Wallisellen (“Schaetti”). The company makes thermoplastic powder and granulates, and owns production facilities in Germany and China. Daniel Schaetti will continue to hold a minority stake and remain on the Board of Directors. Daniel Anliker, formerly active as a partner at Zurmont Madison, will take over the operational management at Schaetti Holding. Schaetti is a Swiss technology company and plays a leading role internationally in the development, polymerisation, compounding, micronisation and sales of thermoplastic and adhesive powders. The group has its headquarters in Wallisellen, Zurich, and has production facilities in both Germany and China from where it supplies a large number of customers that are predominantly in the textile, automotive, hygiene product, metal coatings and packaging sectors. Schaetti has grown strongly in recent years, particularly in China. The new investors provide Schaetti with strong, industrial partners who will join the management team in continuing to pursue its international growth strategy. Daniel Schaetti commented: After the last three very successful years, I am very happy today to be handing the group over to a competent group of investors to secure the continuation of the growth we had planned. I am particularly pleased that Daniel Anliker, who I know to be an extremely experienced and multilingual CEO, is going to take on the management of the group. Co-Investor AG will be joining Zurmount Madison in taking a stake in Schaetti. This network of investors is based in Zurich and Frankfurt, and is specialised in taking equity participations in medium-sized companies in German-speaking countries. It sees this Swiss company as an ideal fit for its portfolio. Other co-investors include two institutional private equity investors F&C Asset Management plc (investing through F&C Private Equity Trust plc) of the UK and funds actively advised by ParvillaSAS of France. VISCHER represented the seller in this transaction, led by Jurg Luginbuhl, Head of M&A. Jurg Luginbuhl

www.vischer.com jluginbuhl@vischer.com

ZURMONT MADISON LED ACQUISITION

OF Corporate 100% STAKE Finance IN SCHAETTI HOLDING DRV Debt Providers

Legal Adviser to the Purchaser & Legal Adviser to the Equity Provider Legal Adviser to the Purchaser, Legal Adviser to the Equity Provider & Tax Adviser

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ACQUISITION INTERNATIONAL

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July 2013 /

INDUSTRIAL

HCS

DEAL DIARY:

Real Estate Deals CAN FIRST

LANDMARK VILLA TRE VILLE

SILESIA CITY CENTER MALL

l Dundee Industrial REIT has entered into an agreement with CanFirst Industrial Realty Fund III LP and CanFirst Industrial Realty Fund IV LP (“CanFirst”) to acquire a portfolio of 22 industrial properties (the “Portfolio”) for approximately $151.5 million.

l Ivanhoe Italia LLC, a subsidiary of Ivanhoe Capital Corporation, has completed the acquisition of the Villa Tre Ville luxury hotel, a complex of distinctive suites that has been a cultural landmark in the Positano area of south-western Italy for several generations. Villa Tre Ville is nestled on a landscape promontory overlooking the Tyrrhenian Sea.

l IMMOFINANZ Group has announces a large property sale in Eastern Europe: the Silesia City Center in Katowice, Poland, one of the premium standing investments owned by this Austrian real estate company, will be purchased by an international investor consortium led by Allianz. At EUR 412 million, the purchase price exceeds the respective carrying amount. The contract was signed on 27 May 2013. The transaction is subject to suspensive conditions, e.g. approval by the Polish competition authorities, and the closing is expected to take place in September 2013.

The CanFirst Portfolio comprises 1.6 million square feet of gross leasable area wholly located across the Greater Toronto Area (“GTA”) in key industrial markets and along major transportation corridors providing direct highway access. Upon completion of the acquisition of the Portfolio and the recently announced acquisition of C2C Industrial Properties Inc. (“C2C”), Dundee Industrial will own a nationally diversified portfolio totalling 15.6 million square feet of gross leasable area, reinforcing its position as Canada’s largest industrial REIT. The Portfolio comprises 1.6 million square feet of gross leasable area located entirely within the GTA. The Portfolio will provide additional scale in the GTA and further enhances the REIT’s geographic and tenant diversification.

Robert Friedland, Chairman and founder of Ivanhoe Capital Corporation, stated that Villa Tre Ville would form part of an Ivanhoe group of international boutique hotels and villas, with other locations under development in Thailand and Japan. Villa Tre Ville is steeped in the rich cultural history of the Positano region and was home for 35 years to celebrated opera director and moviemaker Maestro Franco Zeffirelli. Thoughtfully converted to luxury accommodations three years ago, it is a magical showpiece of art and design in a spectacular seaside setting. Ivanhoe Capital is a private, family-owned enterprise that specialises in providing venture capital, project financing and related financial services to client companies around the world from its head office in Singapore and international offices in London and Beijing.

The transaction is immediately accretive to the REIT. The Portfolio has a year-one capitalization rate of 6.5%. Including property management fee income, the capitalization rate increases to 6.7%. The CanFirst Portfolio complements the REIT’s existing assets in terms of asset type and quality, as well as other key portfolio metrics. The Portfolio has a current in-place occupancy rate of 96%, a weighted average lease term of approximately 3.7 years and an average in-place rent of $5.83 per square foot. Dundee Industrial will acquire the Portfolio for a purchase price of approximately $151.5 million, equating to a value of approximately $93/square foot. Year 1 NOI is expected to be $9.9 million, resulting in a capitalization rate of 6.5%. Including property management income, the capitalization rate increases to 6.7%.

REAL ESTATE

DUNDEE INDUSTRIAL REIT TO ACQUIRE INDUSTRIAL PORTFOLIO FOR $151.5 MILLION

SCM LAWYERS represented the buyer as legal advisors and due diligence providers in its first deal for the client. The team was led by Vincenzo Sinisi, senior partner of SCM lawyers, with large experience in real estate and hotel transactions. Vincenzo Sinisi

He commented: The main complexity lied on the fact that property is used as top scale touristic resort and property, business and marketing issues were therefore deeply interconnected. Time constraint was an important factor as the deal had to be closed before peak season and smooth turnover to buyer had to be insured. Concurrent use of negotiation team and due diligence team was key factor to close successfully and timely. Several face to face meetings with Sellers help tremendously creating a good will relationship that shortened negotiations. www.scm-lawyers.it

IVANHOE CAPITAL ACQUISITION OF

LANDMARKFinance VILLA TRE VILLE DRV Corporate

Taxand was engaged in tax structuring of sale of Silesia shopping centre representing the seller – Immofinanz AG. Taxand’s cooperation with Immofinanz starts back in 2011. Paweł Toński, partner and head of real estate at Crido Taxand (Taxand Poland) was leading the project and coordinating work of Taxanders. Taxand was engaged in structuring of sale and post-sale distributions. On VAT the centre includes modernized buildings of coal mine which required quite an individual approach to securing seller’s and buyer’s positions. The deal is likely to be a top three Polish real estate deal in 2013 in terms of value. www.taxand.pl Paweł Toński

Dentons, lead by Elzbieta Lis, advised Immofinanz AG’s Polish subsidiary who owns the shopping center known as Silesia City Center in Katowice in its sale of the center to a consortium lead by Allianz Real Estate The team was lead by Elzbieta Lis, counsel in the Real Estate Department, and Head of the Spanish Desk at Dentons. Ms Lis commented: “One of the challenges was to find the right balance between the seller and the buyer’s expectations for such a size of a deal. This is one of the biggest single- asset sales in the last six years in Poland. My focus was on acting like a true counsel, who seeks not only the greatest protection of its client’s interest, but who wishes to achieve a successful closing of the transaction; therefore, the views of all parties to the deal were important in achieving the balance that lead to the successful signing of the preliminary agreements.”

SIGNING OF THE PRELIMINARY AGREEMENT FOR THE SALE BY IMMOFINANZ OF THE

DRVSILESIA Corporate Finance CITY CENTER IN KATOWICE

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92 / July 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

Support Services Deals ALEX l Propel Equity Partners, a private equity firm focused on investing and creating value in leading consumer brands, has acquired ALEX®, a leading maker of children’s creative products. ALEX joins the POOF®-Slinky® family of brands, which includes Slinky®, POOF®, Ideal®, Scientific Explorer® and Fundex Games® on the Propel Equity Partners roster of leading toy brands. POOF-Slinky, Inc. was acquired by Propel Equity Partners in July of 2012, and Fundex Games was acquired in December of 2012. “ALEX has developed into a leading lifestyle brand for kids, presenting tremendous opportunities for expansion,” says Michael Cornell, Chairman and CEO of Propel Equity Partners. “This acquisition represents another step in our mission of bringing the most innovative and successful companies in the toy and craft industry under our umbrella.” The combined strength of the two companies, along with an emphasis on customerdevelopment and brand-building will continue to fortify the brands’ presence. Broadened distribution and intensified consumer communications will drive availability of, and desire for, ALEX products among more households across the U.S. and around the world. POOF-Slinky sells some of the most iconic brands in the toy market, including Slinky, one of the most recognizable toys in the history of the U.S. POOF-Slinky products are sold in more than 35,000 retail outlets. ALEX founders Nurit & Rick Amdur will remain with the company, while Fred Keller, President of POOF-Slinky, will take on the additional title of President of ALEX. For more than 15 years Intralinks® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace™. Today, Intralinks continues our history of innovation to give deal professionals the tools they need to help them manage the full M&A lifecycle - to get more deals done, faster. With a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion, Intralinks is a trusted provider of easy-to-use, enterprise strength, cloud-based collaboration solutions. For more information, visit www.intralinks.com

PROPEL EQUITY PARTNERS BUYS ALEX

DRV Corporate Finance

EDUCAR/EDUCADOR l i2i Events Group has acquired Educar/Educador, Latin America’s leading education exhibition and conference. The event will become part of i2i’s Education and Technology portfolio which includes Bett, the pre-eminent global event for educational products and services which is held annually, in London. Mark Shashoua, CEO i2i Events Group commented: We are delighted to announce this acquisition, which not only strengthens i2i’s position in the Latin American market, but is also part of a wider strategic objective to expand i2i’s established events in new and developing markets, in this instance taking Bett to Brazil. The Melo family have grown the event significantly over the past few years and have built the premier event of its kind in the region. Our aim is to co-locate Bett Latin America with Educar from 2014 and provide the best platform for our clients to expand in Latin America. Educar is the major educational exhibition and congress in Latin America, with annual growth of 15 -20% and is held alongside the Educador conference. The 20th annual edition of the event will be held from 22 – 25 May 2013 at the Sao Paulo Imigrantes Exhibition Centre in Brazil and is expected to cover some 6,600sqm of space and welcome over 15,000 people. Marcos Melo, Director of Futuro Eventos, owners of Educar says, We are delighted to be working with i2i Events Group in bringing Bett to Latin America and in taking Educar to the next level of its development. Costa, Waisberg e Tavares Paes Sociedade de Advogados advised i2i Events Group, led by Antonio Tavares Paes Jr., Partner. He commented: This was the first deal carried out by i2i Events Group in Brazil. The main challenge regarding this deal was the definition of the applicable law, once it was a cross-border transaction and the first deal acquired by i1i Events Group under Brazilian jurisdiction. atp@cwtp.com.br www.cwtp.com.br

EDUCAR/EDUCADOR

I2I EVENTS GROUP DRV ACQUIRED CorporateBYFinance Brazilian Local Legal Counsel to TRG

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INGEN IDEAS l Foster Wheeler AG has acquired Ingen Ideas (“Ingen”), a privately held upstream consultancy company located in Aberdeen, UK. Ingen specialises in field development and project decision support, focused on the evaluation and implementation of oil and gas field developments covering greenfield and brownfield assets. Ingen’s expertise includes field development, process engineering including subsea and topsides design, flow assurance, enhanced oil and gas recovery, carbon management and petroleum engineering. Ingen will become part of Foster Wheeler’s EMEA (Europe, Middle East, Africa) Upstream operations, which already has operations in Woking, Reading, Glasgow and Hull, all in the UK. The acquisition of Ingen is part of our stated strategy to grow our upstream capabilities, particularly for offshore, and to extend our offering to our clients to encompass the full oil and gas value chain, said Kent Masters, Chief Executive Officer, Foster Wheeler AG. Bin Shabib & Associates represented Ingen Ideas in the transaction, handling all aspects which involved the UAE arm and assets of the firm’s client. This involved reviewing the sale and asset purchase agreements as well as all other transactional documents from a UAE law perspective. The firm also provided advice in relation to several regulatory and employment issues critical to achieving completion. Rima Mrad, Partner, and Nadim Bardawil, Associate, lead the team. Ms Mrad commented: There were several issues in relation to implementing the transaction in the UAE. As the UAE legal framework is one that be at times uncertain, we were able to provide important interpretations of the UAE law in practice and find the most suitable way to structure important elements of the deal. Infinity Partnership Limited acted as the lead advisors to the shareholders of both the UK based Ingen-Ideas Limited and the Dubai based Ingen Ideas LLC. Mr Cowie commented: Cross border work always presents a challenge particularly in the Middle East where the employment aspect were so critical to the overall deal structure.

FOSTER WHEELER AG

ACQUISITION OF INGEN IDEAS DRV Corporate Finance UAE Legal Advisers

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94 / July 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

Support Services Deals OAG

RAE SYSTEMS

SEACURUS

l Electra Partners has, following successful regulatory approval, acquired the majority of UBM plc’s Data Services businesses, including OAG.

l Honeywell (NYSE: HON) announced a definitive agreement to acquire RAE Systems, Inc., a privately held manufacturer of fixed and portable gas and radiation detections systems, and software for $340 million. The purchase price translates to approximately thirteen times RAE Systems’ estimated 2013 earnings before interest, taxes, depreciation and amortization (EBITDA), or approximately six times on a synergy adjusted run-rate basis integrating with Honeywell’s gas portfolio. The agreement, subject to customary closing conditions, including regulatory review, is expected to close in the second quarter of 2013 and does not change Honeywell’s 2013 full-year guidance.

l Barbican Group Holdings Limited (Barbican) has acquired Seacurus Ltd (Seacurus), a UK-based specialist marine insurance broker.

The Data Services businesses provide data and information products which professionals use to support their decisionmaking and day-to-day business activities. Operating in 28 countries worldwide, the businesses serve a wide range of sectors including healthcare, technology & IP, global trade, aviation and forest products. OAG, the market leader in aviation intelligence, welcomed the acquisition by Electra Partners, a leading private equity firm, from former parent company UBM plc. Phil Callow, chief executive officer, OAG says: The sale of OAG allows the company to fully capitalise on its competitive advantages. As an independent business, OAG is now excellently placed to extend its position as a leader in the world of global aviation data and intelligence.

RAE Systems, with 2012 sales of approximately $107 million, offers a full line of personal, handheld, transportable and fixed gas, radiation and photo-ionization sensing and detection devices for the government, oil and gas, industrial and emergency response sectors for use in a wide range of personal, plant safety and regulatory compliance applications. Their products are used in more than 120 countries by many of the world’s leading corporations and government agencies, as well as numerous city and state entities in the U.S.

OAG is the industry’s trusted source for aviation information and analytical services. OAG’s leading aviation databases are unrivalled in their scale, accuracy and comprehensiveness and are integral to the world’s aviation industry operations.

“RAE Systems is a pioneer in the gas detection industry with unrivalled technologies,” said Mark Levy, president and CEO of Honeywell Life Safety. “Their strong presence in hazardous material, first responder, and government complements our existing business very well, and their expertise in photo-ionization detection, wireless, and radiation detection represent terrific opportunities to expand our reach. RAE Systems’ geographic, manufacturing and distribution footprint, especially in high-growth countries like China, will help to make our already-strong gas detection portfolio an even greater global franchise in a very good industry. RAE Systems is a very compelling strategic fit for Honeywell.”

For more than 15 years Intralinks® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace™. Today, Intralinks continues our history of innovation to give deal professionals the tools they need to help them manage the full M&A lifecycle - to get more deals done, faster. With a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion, Intralinks is a trusted provider of easy-to-use, enterprise strength, cloudbased collaboration solutions. For more information, visit www.intralinks.com

For more than 15 years Intralinks® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace™. Today, Intralinks continues our history of innovation to give deal professionals the tools they need to help them manage the full M&A lifecycle - to get more deals done, faster. With a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion, Intralinks is a trusted provider of easy-to-use, enterprise strength, cloud-based collaboration solutions. For more information, visit www.intralinks.com

ELECTRA PARTNERS ACQUIRES OAG

HONEYWELL ACQUIRES RAE SYSTEMS, A LEADING GLOBAL GAS DETECTION COMPANY

“Our customers will benefit from new ownership, as it presents us with a welcome opportunity to accelerate the development of new products and deliver even greater overall value for our growing markets around the world.

DRV Corporate Finance

Virtual Data Room Provider Virtual Data Room Provider

Established in 2004, Seacurus focuses specifically on revenue protection in the marine insurance market. A leading provider of marine kidnap & ransom insurance, the company offers a range of products designed to help companies in the shipping industry manage a wide variety of operating and financial risks. Seacurus will continue to operate under its current brand. Details of the transaction have not been disclosed. David Reeves, chief executive officer of Barbican, said: Today’s acquisition marks a significant milestone in the continuing growth of our marine operations. Seacurus has built a leading position within the marine insurance broking sector, particularly in the kidnap & ransom arena. Its success reflects the experience and expertise of its team, led by Thomas Brown. Seacurus is an excellent fit for Barbican and we see clear synergies between us, not only in terms of the portfolios of business, but also the culture which exists in each organisation. Thomas Brown, managing director of Seacurus, added: Becoming part of Barbican provides us with an excellent platform from which to further expand and enhance the comprehensive range of bespoke solutions we deliver to our clients in the shipping industry. We look forward to working closely with our new colleagues to achieve this. RHK represented Seacurus Limited, clients of the firm for almost four years. RHK’s Tax Partner, Bradley Thomas, led the team at RHK in relation to tax advice. David Thompson, RHK’s Senior Partner, supervised the accounting Bradley Thomas requirements. Mr Thomas commented: There were significant challenges throughout the process. There were tax implications in relation to the structure and these had to be considered and negotiated to ensure our clients received the maximum benefit on completion. www.rhk.co.uk bthomas@rhk.co.uk dthompson@rhk.co.uk

ELECTRA PARTNERS ACQUIRES OAG

DRV Corporate Finance

Accounting & Tax Advisers to the Vendor

SUPPORT SERVICES

To date, Electra Private Equity PLC and the Electra Partners Club 2007 have invested £91.5 million and £11.8 million respectively. Electra Private Equity PLC and the Electra Partners Club 2007 have agreed to invest up to a further £7.5 million and £1.2 million respectively to acquire further Data Services businesses from UBM - should this take place Electra Private Equity PLC’s investment would total £99 million. This is lower than the £114 million offer announced in February 2013 as it reflects a £15 million investment by a third party co-investor.

Legal Adviser to the Purchaser

Vendor Due Diligence Provider & Tax Adviser

Financial Adviser to the Vendor

Legal Adviser to the Vendor

Risk & Insurance Due Diligence Provider

Virtual Data Room Provider

ACQUISITION INTERNATIONAL

July 2013 /

DEAL DIARY: TMT Deals

TMT Deal Of The Month ETISALAT NIGERIA l Emerging Markets Telecommunications Services Ltd (EMTS), trading under the name of Etisalat Nigeria, has signed a US$1.2 billion medium term syndicated loan facility. The company plans to use the proceeds to refinance the existing commercial medium term debt of US$650 million and continue its network rollout across Nigeria. The company will also continue the release of innovative products and services to its over fifteen million subscribers. The facility includes both Naira and US dollar tranches from a consortium of Nigerian banks, namely: Zenith Bank, Guaranty Trust Bank, First Bank, United Bank of Africa, Fidelity Bank, Access Bank, Ecobank, Keystone Bank, First City Monument Bank, FSDH Merchant Bank, Mainstreet Bank, Stanbic IBTC Bank and Union Bank. Speaking about this key transaction, EMTS Chairman, Hakeem Belo-Osagie, highlighted that the loan is yet another key step in the company’s development. According to the Chairman, Etisalat Nigeria has grown from strength to strength reaching 15 million subscribers earlier this year. This loan is a testament to the robust strategy of the company and the faith of the banking community. In this process, Etisalat Nigeria has benefited from the experience and support of its pioneer shareholders; Etisalat Group, Mubadala and Myacynth. ǼLEX represented the Borrower on the transaction. The firm has a long standing working relationship with the Borrower, and represented the Borrower in the initial financing upon which this transaction was based. The team was led by Mr L. Fubara Anga, the banking and finance partner of the firm. Norton Rose Fulbright LLP, London based banking partner Michael Ings acted for Etisalat Nigeria on its US$1.2 billion equivalent medium term facility (to be used to finance further network upgrades and expansion). He has a close relationship with Etisalat Nigeria having advised on its initial US$650,000,000 financing made available in 2011 and refinanced by this facility. He commented: As one of the largest infrastructure financings in Nigeria it demonstrates the increased appetite for transactions of this nature funded solely by local lenders, with international legal counsel engaged to ensure that the transaction meets international standards. michael.ings@nortonrosefulbright.com www.nortonrosefulbright.com

ETISALAT COMPLETES US$1.2 BILLION FINANCING WITH CONSORTIUM OF

DRV Corporate Finance NIGERIAN BANKS

Legal Advisers to the Purchaser

CIVICA

CUBEWORKS

l 3i Group plc (“3i”), and funds managed by 3i, have agreed to sell Civica, an international market leader in specialist IT systems and business process services for the public sector, to OMERS Private Equity for an enterprise value of £390m. The total proceeds to 3i and funds of approximately £228m represent a 2.1x money multiple on their investment of £109m.

l Independent creative agency, MBA, has acquired Cubeworks, a leading web / mobile development and systems integration business, for an undisclosed sum. Cubeworks was established in 2002, employs 15 people in its Brighton office and its current clients include CGI (formerly Logica) National Express, Diageo and the UK Government.

3i invested in UK based Civica in 2008, in a public to private transaction. 3i backed the incumbent management team, led by Simon Downing as Chief Executive, to support the team’s growth strategy through both organic and acquisitive growth in the UK and internationally. Since 3i’s investment, Civica has continued its strong track record of organic growth of both revenue and EBITDA, driven by a combination of sustained software sales from Civica’s market-leading product portfolio and the roll-out of cloud-based solutions in all markets. Further growth has come from up-selling services to existing customers including specialist outsourcing, such as an IT-enhanced BPO proposition. 3i has also supported Civica with the completion of 10 acquisitions in the UK, Australia and New Zealand, adding key product and geographical presence to Civica’s existing offering. In the same period, staff numbers across the business have increased from 1,350 to over 2,000, approximately 60% of which are in the UK. This transaction follows 3i’s sale of its stakes in MoldMasters, Giraffe and most recently Hyperion. Proceeds to 3i Group plc from today’s transaction, which is expected to complete later today, are approximately £127m, compared to a value of £68m at 31 March 2012 and £83m at 31 December 2012. OC&C Strategy Consultants provided commercial vendor due diligence to 3i on the deal, led by Partners Colin Tyler, David Hosein and Nigel Stirk.

3I MAKES A 2.1X RETURN

ON THE SALE OF CIVICA DRV Corporate Finance

The move further bolsters MBA’s existing digital and mobile services by offering even more app, ecommerce and tech development opportunities to its new and existing clients, which include Everest, Embraer, Avios, Accor Hotels and Sage by Heston Blumenthal. Cubeworks will be merged with MBA with immediate effect. Cubeworks’ office in Brighton will be renamed MBA Brighton and will continue as a tech hub for MBA London and MBA Miami, which MBA recently opened. Cubeworks’ Managing Director, Alex Cowell, will join the MBA Management Board as MBA CTO as well as continue in his role as MD of MBA Brighton. Alex Cowell, MD of Cubeworks, said We are delighted to be joining up with MBA. Not only do we get on brilliantly, but we also share the same aspiration of delivering our clients the perfect blend of creative technology to drive their ROI. Simon Smith, CEO at Taveners Law Ltd, advised the seller on the structure and the execution of the deal which involved a variety of digital assets and related online services. The transaction included complex earn out provisions and a linked transaction relating to the acquisition of a Simon Smith minority shareholding in a related business, together with service and shareholder agreements reflecting the rights of the various parties. A key feature of the transaction was that all the activities of Taveners Law were carried out remotely without the need for lawyers to be “on-site” at any point. simon.smith@tavenerslaw.co.uk www.tavenerslaw.co.uk Greenberg Traurig Maher (Henrietta Walker and Naomi Feinstein) represented MBA on the acquisition.

MBA ANNOUNCES CUBEWORKS ACQUISITION

Vendor Due Diligence Providers Legal Adviser to the Vendor

Financial Advisers to the Purchaser Financial Due Diligence Provider

Legal Advisers to the Lenders Legal Advisers

Financial Advisers TMT

Security Trustee to the Borrowers/Sponsors/Purchaser

Financial Adviser to the Vendor

M&A Agent

Facility Agent to the Borrowers/Sponsors/Purchaser Management Advisers

ACQUISITION INTERNATIONAL

July 2013 /

DEAL DIARY: TMT Deals

NEXTEL PERU l Empresa Nacional de Telecomunicaciones S.A. (Bolsa de Comercio de Santiago: ENTEL) (“the Company” or “Entel”) and NII Holdings, have agreed to acquire Nextel Perú for approximately US$400 million, corresponding to the enterprise value.

PROCAM MBO l Procam Television has completed a management buy – out of the business led by the existing management team.

The closing of the transaction is subject to certain conditions and is expected to occur in the second half of 2013.

RW Blears acted as legal advisers to Foresight Group, the equity provider on this transaction, led by Valerie Whalley, Partner. The firm has a longstanding relationship with Foresight Group, having recently acted on two other MBOs for the company. RW Blears specialises in providing legal advice to EIS Funds and Venture Capital Trusts. www. blears.com

Nextel Peru is the third-largest mobile telephony company in Peru, has been in operations since 1998 and is wellpositioned in the enterprise segment. Entel also expects to make it grow in the consumer’s client segment.

Valerie Whalley

Antonio Büchi, Entel’s Chief Executive Officer, commented: The purchase of Nextel Peru is an important step for Entel, as it is a long-term investment that will position the Company as a regional operator in the attractive Peruvian market.

Corporate partner Jonathan Leigh-Hunt and associate Fran Spooner advised management on the MBO of Procam TV, a leading broadcast hire facilities business.

He added that this transaction will allow the Company to complement its offering of fixed services, data transmission and IT, which Entel’s affiliate, Americatel Peru, has been offering since 2001, and the call center services developed since 2008 by its affiliate Servicios Call Center Peru. The Peruvian telecommunications market is one that we consider to be very attractive, and in a country that we highly respect. We aspire to being an operator that can, via a permanent investment, offer high-quality services with special attention to clients and to the environment, delivering a high value offer in Peru, he stated. In the negotiation process, Entel was advised by Asset Chile together with BNP Paribas. With annual revenues of Ch$ 1,440,978 million (US$ 3 billion), reported as of December 2012, Empresa Nacional de Telecomunicaciones S.A. provides mobile, internet, data and IT services, as well as local and long-distance telephony to both consumers clients and enterprises in Chile. The Company also has operations in Peru and is listed on the Chilean Stock Exchange (Bolsa de Comercio de Santiago) under the ticker symbol ENTEL. For more than 15 years Intralinks® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace™. Today, Intralinks continues our history of innovation to give deal professionals the tools they need to help them manage the full M&A lifecycle - to get more deals done, faster. With a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion, Intralinks is a trusted provider of easy-to-use, enterprise strength, cloudbased collaboration solutions. For more information, visit www.intralinks.com

ENTEL SIGN AGREEMENT WITH NII HOLDINGS

ACQUISITION OF NEXTEL PERU DRVFOR Corporate Finance Virtual Data Room Provider

The MBO was backed by Foresight Group, NatWest and RBS Invoice Finance, and the management buy-out team was led by current managing director, John Brennan, with other existing senior staff. Clive Jones, a former CEO of Carlton Television, has been appointed as Chairman. Smith & Williamson Corporate Finance advised the shareholders on the sale of Procam to Foresight and the management team. The deal was led by Brian Livingston, Head of Mergers & Acquisitions, and Tim Moore, Director, with support from Simon Beavis, Manager. Smith & Williamson worked with the Company for more than 18 months on this project, introducing both the equity and debt finance providers. Smith & Williamson also played a significant part in structuring a transaction which enabled Procam’s founder to complete the process of stepping back from the business and enabling management to take control going forward. Marsden Clark Corporate Finance was the adviser to the Management team that undertook the MBO. Jim Clark led the transaction on behalf of Marsden Clark, with support from Philip Marsden. Marsden Clark have worked very closely with the Management team throughout Jim Clark the transaction, ensuing the equity and other investment terms were appropriate, and that all investors were fully bought in to Procam’s growth plans and financial projections. The business did not have a full time FD at the beginning of the process, so Jim Clark worked alongside Helen Cardrick (the new FD and co-investor) to ensure the financials were realistic and would stand up to due diligence.

l The Baronsmead VCTs have announced an investment in Eque2 Limited (formerly Sage Construction), a construction related Enterprise Resource Planning (ERP) software provider. The investment will enable the management buyout of Sage Construction from Sage plc. Over the last five years, Sage Construction has operated as a business unit within Sage (UK) Limited’s MidMarket Division. The software caters for businesses of all sizes, across construction, house building, and onshore & offshore services, allowing builders, contractors, architects, engineers and planners to accurately manage cost and processes during a construction project. From its offices in Manchester, Farnham and Glasgow, Sage Construction has been successfully developing, implementing and supporting construction and contracting software for medium to very large companies with products such as Sage ERP Intuita, Sage ERP EVision, Sage Estimating, Sage Housebuilding, Sage 50 Construction and Sage 200 Construction. The management team is led by Wes Simons who will continue his role as CEO. Richard Beaton has been appointed as Chairman. Richard has previously worked with ISIS as Chairman of portfolio companies Boldon James, a secure messaging provider bought by QinetiQ in 2007, and library and resource management provider MLS, which was recently sold to Capita Plc. Bridge Insurance worked with both ISIS, the private equity investor, and Clearwater, who were lead advisory team, having built up a working relationship over many years. The team was led by Gavin Ruben, Director, who commented: For any businesses coming out of a group there are always important insurance challenges. For an advisory business the key protections include past and future liability in respect of Professional Advice and Contract Novation. A comprehensive programme of insurance was successfully negotiated and put in place for deal close for the new company Eque2 Ltd. “We look forward to working with ISIS and Clearwater again in the near future.

FORESIGHT BACKS PROCAM MBO

ISIS BACKS SAGE CONSTRUCTION MBO TO FORM EQUE2

Legal Advisers to Foresight

Insurance Due Diligence Advisers

Management Advisers

Financial Due Diligence Provider

SAGE CONSTRUCTION MBO

Marsden Clark

EQUE2 Legal Advisers

Management Legal Advisers

Legal Advisers for ISIS

Vendor Advisers

Tax Advice

Corporate Finance Limited

Tax Advisers

TMT

98 / July 2013

ACQUISITION INTERNATIONAL