November 2013 /
IN THIS ISSUE/ 52 Forming an SME & Trading in… A.I. speaks to experts from l Mexico: Grupo Anda. l Andorra: Servissim, S.L. l Taiwan: PwC
Deals of the Year: Meet the winners TMT
Consumer - UK
Real Estate - Europe
Energy and Resources - UK
Energy and Resources - UK
Health Care - Europe
TMT - Europe
Leading Financial Adviser
Consumer - Asia Pacific
Energy & Resources
Health Care - Asia Pacific
Real Estate - Asia Pacific
AI Deal of the Year
Real Estate - UK
Financial Services - Middle East Africa
Support Services - UK
TMT - Middle East Africa
Industrials - UK
Environmental Technology - Asia Pacific
Energy & Resources - Middle East & Africa
Getting to grips with merger control
Dealing Effectively With the Challenges of Transfer Pricing — Acquisition International speaks to Marc Veuillot, managing partner of CMS Euro Francis Lefebvre Maroc. / 77
— We get the views from Facio & Canas: Costa Rica, Krogerus: Finland, Vivien & Associes: France, Tadmor: Israel, King & Wood Mallesons SJ Berwin: UK and Wilmer Cutler Pickering Hale and Dorr LLP: the US. / 64
The new rising stars: Turkey — Safak Herdem, founder and MD of Herdem attorneys at law discusses the business environment in Turkey. / 37
www. ACQUISITION-INTL .com
CONTENTS: November 2013
Editors Comment Welcome to the November edition of Acquisition International. Regular readers may notice two things – firstly, it’s a bumper issue and secondly, the name at the bottom of this column has changed.
CONTENTS — November 2013
After spending 16 years communicating the results of the types of deal we report on in Acquisition International to affected employees, I joined the magazine halfway through the production process for this issue. It’s been fascinating to take a step back and see the depth and breadth of what’s happening in the world of M&A rather than focussing on the implications of just one deal. So, what’s grabbed my attention this month? Well, obviously, the deals of the year have impressed – they wouldn’t be deals of the year if they didn’t. What’s inspired is the attention to detail that so many of our contributors have expressed – whether it’s advice on transfer pricing or mediation, or the rewards and challenges of investing in their region. A global economy brings new opportunities – take a look at our arbitration seats feature (page 92) – new challenges – you can get to grips with merger control from page 68 – and new threats: white collar crime is increasing (page 82). I hope you enjoy the issue. Louise Birkett, Editor Louise.Birkett@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, Unit 10 Barton Marina, Barton Turn, Barton Under Needwood, Burton on Trent, Staffordshire, DE13 8AS. Tel/ +44 (0) 1283 712447 Email/ reception@acquisition-intl.com Website/ www.acquisition-intl.com Find us on/
ON THE COVER – DEALS OF THE YEAR / 11-35 As 2013 draws to a close, it’s the time of the year when Acquisition International presents you with the Deals of the Year. They’re the deals that have captured the imagination, presented some of the best synergies and opportunities around, and have shown off some of the best business and professional skills worldwide.
NEWS: /4 The Latest News Stories From Around The World.
SECTOR TALK: /9 Powered by Zephyr/ Bureau van Dijk
REGIONAL ROUND-UP: /36 Our regional round-up travels the globe to bring the experts’ view.
DEAL DIARY: /110 Introduced by Zephyr/ Bureau van Dijk.
playHARD: /127 @acquisition-int
Acquisition International’s monthly lifestyle Review.
58/ Leading Advisor 64/ Getting to grips with merger control 72/ Insurance issues arising during M&A transactions 75/ 2013 cash shell resurgence 77/ Dealing effectively with the challenges of transfer pricing 82/ Implementing pre-emptive forensic strategy 83/ The impact of white collar crime in today’s market 84/ Insolvency, turnaround and restructuring 84/ Vendor due diligence 85/ Luxembourg manages the AIFMD 85/ Actuarial consultancy in transactions 87/ Protecting intellectual property assets 88/ Mediation: a real alternative 92/ Arbitration seats 98/ Protecting and patenting your business ideas 100/ The impact of the alternative investment fund manager’s directive 101/ Pensions issues in M&A’s 102/ Real estate and REIT’s 104/ Streamling relocation 106/ The power of immigration to boost economic recovery 107/ Trusteeship & Irish pension funds 107/ Corporate finance & exit strategies 108/ Q3 review 109/ Global expertise directory 122/ Deals of the Year
Acquisition International | November 2013 |
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NEWS: from around the world
News: from around the world Appointments
What’s in a name? The power of brand
Vandersluis joins LPFA board The London Pensions Fund Authority (LPFA), one of the largest local government pension scheme funds in the UK, has announced the appointment of Robert Vandersluis – GlaxoSmithKline’s (GSK) director of global pension investments – to its board as a non-executive director. The appointment comes shortly after the release of the LPFA’s Annual Report 2013, which showed that the fund grew by £427m during 2012-13, to £4.6bn. At GSK Robert manages a large derivative and investment portfolio, as well as providing strategic advice to GSK’s Trustees for pension funds in Europe, the US and Japan. Having developed and overseen the implementation of GSK’s interest rate and inflation hedging strategies, and established its London-based pension investment department, he is ideally placed to enhance the LPFA’s expertise in asset and liability management. The LPFA has also announced that Michael Cassidy retired from the Board at the end of September following the completion of his second and final term.
In the 21st Century the word brand conjures up much more than a name of an organisation or a product – it gives an essence of experience, story, aspirations, expectations and relationships. It can be a company’s most valuable intangible asset, which is why in the world of M&A it’s always an important consideration. It can take years to build a brand and minutes to give it all the wrong connotations. There can also be a slow erosion of brand power – private banking brands are losing their allure as professional services firms use their combined strength to provide exclusive, high-value benefits. Justin Urquhart Stewart explains the shift in power. Inertia has been a powerful force in retail banking for years, and has probably done more to help with customer retention than either good service or high-quality products. Private banks tend to rely on something even more intangible than inertia to attract and retain their customers – brand. The attraction of a particular brand may be the promise of a high level of personal service or it may be a simple case of old-fashioned snobbery. In practice, private banks have often been product- and sales-driven organisations, with such a huge client base that they could afford to lose clients who were unimpressed by the level of service they received. This is no longer a sustainable business model given stronger competition from new entrants. This competition is largely coming from accountancy and financial planning firms offering a broader range of services and expertise, which can be delivered to the customer in a coordinated way, due to improved technology. A decade ago this might have been impossible, but there is already a real alternative being offered − and very successfully. A seamless service So what should customers expect a proper private banking service to look like? The answer varies from client to client but, in essence, it is the provision of a range of coordinated high-quality financial services for the whole family. This will include financial planning and investment, through to the provision of deposit and loan facilities. Tie into this the necessary taxation expertise, accounting and
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NEWS: from around the world
legal services and all a family’s primary needs can be fulfilled. It is the financial planning and accounting elements that are at the core of this, so the accountancy firm will need to have a central position. Joint ventures and tie-ups with old-style independent financial advisers (IFAs) have often gone wrong in the past. This was usually due to the difference in culture and behaviour of the professional accountancy firm and the sales-focused IFA. However, the situation has significantly altered as long-term feebased planning, taxation and accounting facilities are now provided in a complementary way. In addition, the evolving technology of wrap platforms, and planning software linking to tax wrappers and accountancy systems, also result in a far more seamless structure for the accountancy firm and the client. Becoming indispensible Accountancy firms can also provide links to solicitors and other vital service providers, including investment firms, as part of a longer-term service to the client. In some cases, broader family support, such as mortgage arrangements and even travel, are offered to clients. These ‘concierge services’ are the traditional territory of the true private banks and family offices. They are high-value services providing a level of exclusivity that clients appreciate and will expect to pay for. Once established, it is hard for a family to leave such a varied set of services and network of relationships behind. This is of great longterm value to clients and therefore to an accountancy or planning business. This is the Holy Grail of financial services, where service leads the relationship and any form of selling is wholly unnecessary. Properly
managed, the relationship is not only self-perpetuating across the generations, but is self-generating as it will produce referrals when happy clients talk proudly about the exclusive service from their new-style private bank. The private banking model has shifted away from brand-related sales towards something far more intelligent. By harnessing the power of the professions, and applying intelligent technology, a far more superior and responsible private banking service can be provided to clients. Justin Urquhart Stewart is a member of the ICAEW Wealth Management committee, part of ICAEW Financial Services Faculty. The faculty, which is open to non-ICAEW Chartered Accountants, provides technical, professional support ranges from technical releases providing formal guidance on complex issues, to practical updates and briefing papers on the latest developments. The Inspiring Confidence in Financial Services campaign focuses on debating issues affecting confidence in the financial services sector. It is developing new insights and ideas by asking questions about financial services providers, consumers and regulators, how they interact with each other and how the information flows between them. Drawing together these elements helps develop stable, efficient markets that support consumer interests and sustain wider economic development. The campaign consists of four themes: responsible providers; responsible consumers; better regulation; and better information. Further information can be found at www.icaew.com/fsf
Acquisition International | November 2013 |
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NEWS: from around the world
News: from around the world Appointments
Points of view
Alternatives sales for Vincent
How much influence do directors and institutional investors have on current corporate governance issues? That was the question posed by PwC US research.
Franklin Templeton Investments has announced the appointment of Peter Vincent as Head of Alternatives Sales, Europe. Mr Vincent is responsible for new business development of the group’s alternative products in Europe. Based in London, he will work closely with the existing European distribution teams to support the growth of Franklin Templeton’s alternative products. Before joining the group, Mr Vincent worked at Fauchier Partners for seven years where he was responsible for institutional business development and client relations in the UK and Ireland. Mr Vincent said:
“This is an exciting opportunity. Franklin Templeton is one of the world’s largest asset managers with extensive presence globally. The group has an excellent array of products which offer tremendous opportunity for the alternatives channel.” Franklin Templeton’s alternative investments offerings include: • the integrated hedge fund solutions of K2 Advisors, in which Franklin Templeton holds a majority stake • the emerging markets private equity capabilities of Darby Private Equity and Templeton Emerging Markets Group • the global property and real asset offerings of Franklin Templeton Real Asset Advisors • the commodities and managed futures strategies of alternative investments specialist Pelagos Capital Management • select global macro strategies of Franklin Templeton Fixed Income.
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The answer – perhaps unsurprisingly – was that perspectives largely depend on ‘whose shoes you are in’ but there are areas of strong agreement, including new regulations not increasing public trust in the corporate sector. Key survey findings include: 1. Voices influencing compensation. Directors and investors both believe that compensation consultants are ‘very influential’ over board decisions on executive compensation (41% and 37%, respectively). And both groups had similar views on the influence of institutional shareholders, rating them ‘very influential’ at 22% and 18%, respectively. However, investors are 38 percentage points more likely than directors to believe that CEO pressure has a ‘very influential’ effect on board decisions about compensation. 2. Does say-on-pay advisory voting really matter? In response to say on pay voting results 70% of directors indicate that some type of action was taken by their company while 82% of investors believe some action was taken. But investors believe that directors should reconsider their companies’ executive compensation plan at relatively lower levels of negative voting. One in five investors says that 11-20% negative shareholder voting signals a need to revisit compensation, compared to only 13% of directors. 3. Skepticism about recent regulatory and enforcement initiatives. According to 47% of investors and 64% of directors recent legislative, regulatory and enforcement initiatives have increased investor protections ‘not very much’ or ‘not at all’; very few (2% and 4%, respectively) believe they have helped ‘very much’. At the same time, a third of directors and almost one in five investors think the costs to companies of such increased activities have ‘very much’ exceeded the potential benefits. Eighty per cent of investors and three quarters of directors also conclude these initiatives have increased public trust in the corporate sector ‘not very much’ or ‘not at all’. 4. Feeling better about overall board performance. Twenty-eight per cent of directors say the ability of boards to provide effective oversight has increased in the last twelve months, compared to 19% of investors. Similarly, 33% of directors say that board effectiveness in overseeing risk has increased compared to 27% of investors. 5. Differing interpretations of director nominee voting results. Nineteen per cent of investors indicate the board should reconsider re-nomination of a director if he/she receives between 11% and 15% negative shareholder support, compared to only 8% of directors. However, an identical percentage of directors and investors believe directors should rethink re-nomination at negative voting thresholds of 16-20% and 21-30%.
NEWS: from around the world
News in brief Speedy’s Caspian JV Speedy has entered into a 50/50 joint venture with J & J Denholm Group to provide asset management and equipment rental services to the extensive oil & gas sector in Kazakhstan, including the ‘super giant’ fields at Tengiz, Karachaganak and Kashagan, three of the largest oilfields in the world. China invests in Chiswick China Investment Corporation is set to buy Chiswick Park, a west-London office development, from US private equity group Blackstone for about £800 million (HK$9.93 billion), the Financial Times reported. The talks are at an advanced stage, and a deal could be finalised before the end of this month. Big box: big fund Commercial property fund manager Tritax has launched a £200m flotation to raise funds to become the first listed pure ‘big box’ UK real estate investment trust. ‘Big boxes’ are vast warehouses of more than 500,000 sq ft that are let to online retailers who need masses of space and logistics to house goods and sophisticated packaging technology to meet their next-day delivery targets. Rise of the 500 Assets managed by the world’s largest 500 fund managers rose by over 8% to USD68trn in 2012, making up any lost ground from the previous year when assets in the survey fell by 3%, according to Pensions & Investments/ Towers Watson World 500 research. Total assets are now almost back to the record levels of 2007 (around USD69trn). Standout financials Research from S&P Capital IQ has revealed that Financials looks set to be the ‘standout’ sector for global M&A volumes and has registered growth of 234% post-crisis (2008-2013 YTD). Analysing M&A statistics both regionally and cross-sector, S&P Capital IQ notes the Financials sector currently leads in both TTV (Total Transaction Value) and Deal Volume. Mid-market boost Mid-market private equity activity in the US improved in the third quarter, according to a report issued by BMO Harris Bank. Deal activity picked up, particularly in healthcare and software sectors, buoyed by debt markets that are clearly open for business.
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SECTOR TALK: Powered by Zephyr/Bureau van Dijk
Sector Talk: Chemicals The chemicals sector has made a positive start to the second half of 2013, already surpassing the value of dealmaking from H1. In the opening six months of the year there were a total of 727 transactions worth a combined USD 27,866 million. The first half of 2013 proved disappointing in terms of volume and value, as both declined from levels reached in H2 2012, according to Zephyr, the M&A database published by Bureau van Dijk. Deal numbers were down 15 per cent from 858 to 727, while considerations dropped 45 per cent from USD 50,534 million to USD 27,866 million over the same period. Values reached their lowest ebb since the second half of 2009, when USD 20,756 million worth of dealmaking was recorded. We would need to go even further back to find the last time volume plumbed such depths; in H1 2006 there were just 681 transactions. However, there have been some positive signs in recent times. The last four months alone have chalked up more deal making than the six months prior. In total there has been investment of USD 33,519 million in the chemicals sector since the end of June, surpassing H1 2013’s USD 27,866 million. This is even more notable given that it is spread across only 466 deals, representing a much lower volume than in previous periods and suggesting that higher value transactions are the cause of the climb. However, it remains to be seen whether aggregate
NUMBER AND AGGREGATE VALUE (MIL USD) OF CHEMICALS DEALS GLOBALLY: 2006-2013 YTD (as at 30 October 2013) Number Number Aggregate Deal half yearly value of deals of deals deal value (mil USD) with (Announced known date) values 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 H2 2013 TD
681 843 892 970 923 827 751 833 796 879 901 896 808 858 727 466
355 490 537 627 608 531 509 599 558 621 628 638 577 614 484 326
46,850 29,746 37,909 92,423 37,796 53,995 22,206 20,756 46,922 43,264 93,672 28,197 31,283 50,534 27,866 33,519
considerations will be able to surpass the USD 50,534 million recorded in the last six months of 2012 or even reach such heights as the USD 93,672 million invested in H1 2011. Given the aforementioned deal value growth, it comes as no surprise that the majority of the top ten chemicals sector deals by value in 2013 to date were announced in the months from the start of July onwards. The highest consideration in that period involved the Oman Oil Company ploughing EUR 1,800 million into German oxo chemicals manufacturer OXEA. That deal, which remains subject to approval by regulatory bodies, will provide an exit for Advent International and is in line with the acquiror’s plans to build an integrated chemical platform in Oman from its current investment base. However, this was not the industry’s most valuable investment in 2013 to date; that took the form of UK consumer goods company Unilever upping its stake in Indian toiletries, detergents and food maker subsidiary Hindustan Unilever to 67 per cent in exchange for a USD 3,538 million injection.
Surprisingly, the world region which has attracted the most investment in 2013 to date is Eastern Europe, which has secured USD 15,625 million so far. However, hot on its heels were North America with USD 15,040 million and the Far East and Central Asia with USD 14,723 million. The presence of North America is not unexpected given that the region had five deals in the top ten by value, but the other regions’ performances are more surprising given their more modest showing at the head of the field. The Far East and Central Asia led the way by volume on 477, followed by Western Europe (327), North America (162) and Eastern Europe (112). In conclusion, H1 2013’s disappointing result looks to have been counteracted somewhat by impressive levels of investment over the last four months. No single deal appears to be the cause of the increased aggregate value, suggesting that perhaps investors are finally starting to regain more of the confidence they lost in the wake of the global financial crisis. However, the coming months and years will make clear whether this is the case and if so, whether the current inclination to dig deep is sustainable.
NUMBER AND AGGREGATE VALUE (MIL USD) OF CHEMICALS DEALS GLOBALLY BY DEAL TYPE: 2006-2013 TO DATE (as at 30 October 2013) Deal type
Number of deals
Acquisition Minority stake Institutional buy-out Management buy-out Demerger MBI / MBO Merger
5,395 7,132 372 99 29 3 39
Number of deals with known values 2,521 6,023 141 22 4 1 2
Aggregate deal value (mil USD) 368,405 286,556 53,293 898 445 85 48
NUMBER AND AGGREGATE VALUE (MIL USD) OF TELECOMS DEALS BY SECTOR: 2006-2013 YTD (as at 30 September 2013) Zephus classification (target)
Number Number of deals
Aggregate deal of deals with known values value (mil USD) Chemicals, Petroleum, Rubber & Plastic 12,099 8,274 669,153 Wholesaling 4,097 2,835 256,366 Mining & Extraction 183 157 55,872 Industrial, Electric & Electronic Machinery 694 576 46,884 Biotechnology, Pharmaceuticals & Life Sciences 537 424 46,730 Personal, Leisure & Business Services 942 668 45,579 Banking, Insurance & Financial Services 286 247 21,582 Food & Tobacco Manufacturing 164 107 21,517 Retailing 180 127 18,945
Acquisition International | November 2013 |
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DEALS OF THE YEAR: The Best Deals of 2013
TMT Deal of the Year for Americas (the Insight Venture Partners led series A funding in AirWatch)
Dan Wardle is Director of global finance at AirWatch. After recently being awarded TMT Deal of the Year, as voted by Acquisition international readers, Dan tells us more about the software provider and its specialist area of expertise. -------------------------------------------------------------AirWatch is the global leader in mobile security and the largest enterprise mobility management (EMM) provider, with solutions for BYOD and device, application, email and content management. Director of global finance, Dan Wardle, tells us more. “Our mission is to simplify enterprise mobility, and we help companies achieve mobile enablement, security and simplicity at an affordable price,” he explains. “Founded in 2003 by the executive team that started Manhattan Associates, the world’s largest supply chain solutions provider, AirWatch’s executive leadership brings more than 20 years of mobile device management (MDM) experience to the company. In the last three years, AirWatch has grown from 150 to 1,500 employees. We now have more than 8,500 EMM customers, including four of the top five global Fortune companies and enterprises across all industries, including retail, education, healthcare, transportation, finance, hospitality and government. The AirWatch platform was developed from the ground up to be multi-tenant, highly scalable and able to integrate with existing enterprise systems, all while offering the flexibility of cloud, on-premise and hybrid deployment models.” AirWatch ensures its continuing success by distinguishing itself from the competition, and Dan comments on how the firm does this. “AirWatch has the broadest and most flexible mobile ecosystem of any solution on the market. With a fully integrated enterprise mobility management (EMM) suite, including mobile application management, mobile device
management, mobile content management and containerization, AirWatch offers the most robust feature set to its customers. Additionally, AirWatch has built a strong network of NAC vendor partnerships, and it has implemented the most OEM-APIs out of any EMM provider. AirWatch is more than twice the size of any other EMM provider, with 1,500 employees and the largest research and development staff. For this reason, we are first to market with same-day support for the latest mobile platform releases. Additionally, we have built a strong reputation with industry analysts, and we were recognized as a leader in the 2013 Gartner Magic Quadrant for Mobile Device Management for the third consecutive year.”
to grow our global footprint. We look forward to integrating with more players in the mobile ecosystem to continue our growth and broaden our solutions.
The deal in question which helped AirWatch clinch the prestigious title of TMT Deal of the Year was a round of series A funding led by Insight Venture Partners. Dan explains more about the deal and the strategic reasoning behind the funding.
Dan also has predictions for the future and how AirWatch can stay ahead of the game to ensure success in 2014.
“This was AirWatch’s first round of outside funding, and while we did not need outside capital, it provided us with additional flexibility and validation of our leadership position. The $200 million Series A investment will be used to fund strategic acquisitions, accelerate global growth and drive innovation and adoption of AirWatch’s content collaboration solution, Secure Content Locker™. The funding is also helping to scale our more than 450-person research and development team so that we can continue to improve our solutions and create new platforms. “With this investment, we will continue to expand existing platforms and create new features for customers. We expect that the solution expansion will attract new customers and further increase our market share. As a global company, AirWatch manages devices, applications and content in more than 150 countries, and the additional capital will help us
“Last year, we grew revenues significantly and our employee base by more than threefold. In a year, we will be able to assess the funding’s success by how much we increase our market share. We fully intend to continue to lead the market by broadening our suite of EMM solutions, with complementary products like Secure Content Locker and AirWatch Workspace, which manages enterprise applications and leaves the personal side of the device unmanaged and private.”
“To maintain our position as EMM market leader, we must continue to grow our team internationally so that we can provide our global customers with the best solutions and support. AirWatch currently adds more than 400 new customers each month, and we fully expect to continue this growth. We currently have more than 8,500 customers, and we anticipate this number will rise tremendously as companies recognise the importance of mobility and determine that AirWatch is the best provider for their needs.”
Company: AirWatch Name: Dan Wardle Web Address: www.air-watch.com Address: 1155 Perimeter Center West, Suite 100, Atlanta, Ga. 30338
Acquisition International | November 2013 | 11
DEALS OF THE YEAR: The Best Deals of 2013
Energy & Resources Deal of the Year for The Middle East/Africa (4d Global Energy Advisers Investment in Aladdin Middle East ) Mr Cem Sayer is President and Chairman of the Board of Aladdin Middle East Ltd. He talks to AI magazine about Aladdin’s commitment to successful business development and value growth, and the transformation of a private oil and gas company into an internationally recognized and professionally run profit centre.
It is a distinct pleasure for me first to introduce myself, then to discuss oil & gas potential of Turkey, and finally, relate the history and current outlook of Aladdin Middle East Ltd. (“AME”) with which I have been associated for over twenty-four years in various capacities. I happen to represent the third generation in a family dealing in the oil and gas industry. The late A. Ecvet Sayer, my grandfather was among the pioneers to generate interest in petroleum business when he was with The MTA (Turkish Mineral Research Institute) which was the Government-formed institution to search for minerals and petroleum before the enactment of the first Petroleum Code and the formation of TPAO (the Turkish Petroleum Corporation) in 1954. With the advent of a milieu favorable for investment, on my late father, Oyman Sayer who started as a lands-man for CALTEX, became involved in several oil and gas companies in different capacities that eventually led him being a partner in AME. He is regarded and remembered as the first private entrepreneur in Turkey to partner with and operate an integrated oil and gas company. As a crucial player in the local oil and gas industry, my father has been my primary mentor to me. I learned a lot from him over the years. I still miss him dearly. I have been engaged in AME’s affairs in Turkey since 1989, always being involved in several Company projects, when I was still a university student. I am a graduate of Richmond University in the United
Kingdom where I obtained a B.A. degree in 1989, in Business Administration and Economics, with International Business as my major. I also attended various courses in the USA on petroleum economy and drilling practices. I have had the unique opportunity to work at different divisions in the Company from field-hand to land-man to oil-scout and then move to technical and financial departments at the head office, giving me a grassroots experience and a background to understand the business in all its different and intricate aspects, especially in skills required for reorganization and restructuring. My field of expertise involves intensive work in international oil & gas projects and contracts, legislative and financial issues, as well as, corporate restructuring and institutionalization processes. The accomplishments included successful utilization of the company to international drilling contracts outside Turkey, making successful farm-outs, as well as, efficient and profitable appraisal of discovered oil fields in Turkey. My particular emphasis has been on effective team work and a uniform Board-level support and commitment to company policies and fiscal programs. Thanks to its restructuring, with participation from numerous reputable international investors, AME today operates as a stream-lined company aiming to grow value on its promising oil and gas projects.
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As a token of my great interest in the oil and gas industry, I was one of the five individual founding members of PETFORM (Petroleum Platform Association) which was established at the support of operating oil and gas companies in Turkey, to voice out industry opinion and perspective vis-à-vis the Government and related bodies. I served as Vice-Chairman and led the Exploration and Production Group of this Association for five years between 2000 and 2006. I am pleased to see that the Association was quite active during the legislative process in the recent adoption of an entirely new Petroleum Law in Turkey which is hoped to open a new era in oil and gas sector in the years to come. The Petroleum Industry in Turkey While Turkey has a known oil and natural gas capacity (estimated proven reserves currently, of 307 mm boe and with local production approximately 66,000 boe/d in 2010), the Country’s oil and natural gas basins are relatively under-explored and under-exploited. Only about 3,730 wells had been drilled in Turkey up to the end of 2009, of which approximately 60% were drilled in the period from the mid-1950s to the late 1980s. Considerable parts require more extensive exploration drilling given the size and prevalence of the sedimentary basins in the country. Unlocking Turkey’s Potential It is well-known within the industry that Turkey can benefit greatly from increased E & P investment and a much broader application of modern technology and industry practices, including 3D seismic, deeper
DEALS OF THE YEAR: The Best Deals of 2013 vertical drilling, horizontal drilling, hydraulic fracturing, workovers and recompletions, as well as, secondary recovery methods. These practices and technology, if employed on a larger scale, have the potential to dramatically increase reserves and production from both conventional and unconventional plays. While that potential cannot yet be quantified, due largely to the infancy of these practices, there is reason to be very optimistic based on the initial results of some pioneering work being done by local and international players. Welcoming Investment In addition to this untapped potential, Turkey’s competitive royalty rate of 12.5% and corporate tax rate of 20% result in relatively high netbacks from a global context, and make Turkey a very lucrative target for investment. Given strong reference prices, and a Government take that is amongst the best in the world, companies operating in Turkey should be capable of reaping very robust returns. Well-Defined Plays Historically, Turkey’s oil and natural gas exploration and development has primarily been focused in Southeast Turkey in the Anatolia Region, near the border with Syria and Iraq, where over 100 oil fields have been discovered to date. The other area of focus has been the Thrace Basin, a natural gas prone region located in Northwest Turkey where approximately 25 natural gas fields have been discovered to date. The Thrace Basin is a prospective target for unconventional gas (tight gas and possibly shale gas) that has the potential to be unlocked with fracturing technologies in vertical and horizontal wells. A Wealth of Opportunity Turkey’s proximity to energy consuming markets, relative ease of monetization, strong realized pricing, robust crude oil and natural gas prices and favorable fiscal terms make it an excellent prospect for international investment. As new players enter the market, bringing with them new capital, new technology, and new industry practices, Turkey’s oil and gas sector is poised to a fast take-off. And now an introduction to AME, the Company itself: Aladdin Middle East Ltd. (“AME”) is an independent American oil and gas exploration and production company organized in 1961 and focused on the strategic exploration and exploitation of oil and gas assets primarily in Turkey. AME’s head office is in Wichita, Kansas, while the Company’s operational headquarters is located in Ankara, Turkey. Additional field offices are located at operating sites for AME’s production leases. My family has worked diligently for all these years to build it into the exemplary corporation it is today. Thanks to our commitment to excellence and to our experienced, dedicated professional staff, AME has been a trusted name in the Turkish petroleum industry for over 50 years. Throughout all these years, we have strived to build up a wealth of institutional knowledge about the Turkish oil and gas market, including everything from the country’s unique geology to the laws and regulations which govern the industry. AME has excellent relationships with all of Turkey’s most important industry players, in both the private and public sectors. Unlike in the early days when we started our operations, there is now a fairly well developed oil and
gas industry in Turkey that has ultimately enabled us to exit the very competitive drilling contract business, allowing us to concentrate our efforts more fully on the oil and gas exploration and production projects which are still the primary focus of AME going forward.
based private equity investor that specializes in the energy sector. The equity financing will enable AME to finance its committed and contingent work programmes and working capital to build on its asset base in the Republic of Turkey.
Today, the Company holds a balanced portfolio of exploration and production assets that have short, medium and long term potential with over 500,000 hectares of onshore exploration and production licenses and leases mainly in the Southeast Turkey Basin (North Arabian Shield).
Over the past two years, we have focused on restructuring AME to realize the value in AME’s promising oil and gas assets and to enable us to use that existing asset base to accelerate growth in the Company. In particular, we exited the drilling services sector, enabling us to concentrate solely on E&P projects. We are extremely pleased to welcome 4DGEA into AME, and we believe their investment will prove to be profitable both for 4DGEA and for our other investors.
AME has been crucial in the development of Turkey’s upstream sector. Through AME’s efforts many underexplored basins in Turkey have been evaluated, yielding a vast amount of technical, geological and geophysical information bringing not insignificant financial and social benefits for Turkey. With its rich data-base and library of information, AME has helped to attract a large number of American and European energy companies to Turkey as first time investors in the oil and gas sector. AME is an industry leader in the Turkish upstream and the most senior private player, the country second only to TPAO, the national oil company. AME’s success is a credit to our superior staff of professionals whose dedication, knowledge and skill allow AME to find new and innovative ways to develop value for our partners and investors.
AME is uniquely positioned as the oldest independent oil and gascompany in Turkey, with in-depth knowledge, data and expertise in the region, and will look to continue to develop its core business, participating in several existing Joint Ventures in South East Turkey, exploiting its new oil discoveries, and participating in new projects in the country and the surrounding region. AME, strengthened by 4DGEA, is well positioned to capitalize on both conventional and unconventional oil and gas production opportunities in Turkey, and to benefit from the country’s favorable fiscal terms. This is indeed a new and exciting chapter in AME’s long history.
AME is committed to respecting the environment, maintaining safety and upholding high standards of social responsibility throughout its operations. AME’s success is built on technical expertise, business acumen, strong partnerships and proven ability to deliver superior results. Every indicator shows that global oil demand will continue to grow and AME is positioned like never before to increase production and achieve higher returns due to its favorable structure. At AME, we strive each day to live up to the legacy of excellence associated with our Company name, and I know that we will continue to grow value for our shareholders with our promising oil and gas exploration and development projects. The Deal Earlier this year AME raised US$20 million in new equity from 4D Global Energy Advisors SAS, a Paris-
Name: Cem Sayer - President and Chairman Company: ALADDIN MIDDLE EAST LTD. Email: info@ame.com.tr Web: www.ame.com.tr Address: (Corporate Head office) 123 South Market Wichita, Kansas 67202 USA Phone: +1-316-265 9602 Fax: +1-316-265 7014 (Operational Headquarters & Turkey Branch office) Iran Caddesi, Karum Is Merkezi 21/394 Kavaklidere, Ankara / Turkey 06680 Phone: +90-312-427 9020 (5 lines) Fax:+90-312-427 9025
Acquisition International | November 2013 | 13
DEALS OF THE YEAR: The Best Deals of 2013
Financial Services Deal of the Year Middle East/Africa Amethis Finance investment in Kenya’s Chase Bank
Laurent Demey is co-founder and managing partner of Amethis Finance. The firm was recently awarded Financial Services Deal of the Year – Middle East Africa by Acquisition International. -------------------------------------------------------------Amethis Finance is a financial holding dedicated to Africa, with a total investment capacity at inception of USD 330m since its first closing done in December 2012, split between USD 180m in equity and USD 150m in debt (financing the lending activity). Amethis Finance has been created by a team led by Luc Rigouzzo and Laurent Demey, and by La Compagnie Benjamin de Rothschild. They have been joined by a large group of private investors combining financial institutions and family offices. Amethis Finance provides a full set of long-term financial instruments, investing both in debt and equity, with high objectives in terms of development, social, environmental and governance matters, while delivering attractive performance to its investors. Amethis Finance is aiming for a final close at the beginning of next year with a target equity base of USD300m and a debt facility base of USD 200m. After decades of successful investments in Africa both in debt and equity, the founders Luc Rigouzzo and Laurent Demey, partnered with la Compagnie Benjamin de Rothschild to create a differentiated approach from traditional private equity funds that can be a game changer in the African financial industry. They aim to build a private financial company specializing in longterm responsible financing in Africa.
Company: Amethis Finance Name: Laurent Demey Email: laurent.demey@amethisfinance.com Web Address: www.amethisfinance.com Address: 18, rue de Tilsitt, 75017 PARIS - FRANCE Telephone: +33 (0) 1 56 68 85 60
Laurent Demey tells us more about the company and divulges how it distinguishes itself from competitors in the industry. “Amethis Finance engages into long-term relationships with key clients by providing them a comprehensive financing offer. Amethis Finance is a ‘one stop shop’ which provides all long-term financial instruments (long-term debt, equity investment and arrangement capacity), with high objectives in terms of development, social and environmental criteria as well as governance. “Amethis Finance is at the center of a Pan-African community of long-term investors and business partners from Africa, Europe, MENA area, the US and Emerging countries, offering a strong project sourcing capacity. “The firm focuses on fast growing existing companies with a priority on consumer-related sectors and the main bottlenecks of the continent, i.e. financial sector, energy, agribusiness, retail, services (including telecom). Amethis takes minority stakes with strong governance presence and value added.” Recently Amethis Finance invested in Kenya’s Chase Bank and Laurent Demey explains more about this transaction, including the rationale behind it. “The banking sector in Africa and especially in East Africa should continue to enjoy an impressive growth in the coming years supported by (i) the emergence of a middle class market with growing needs for financial services, (ii) the development of the African economies and the expansion of SMEs, (iii) improved regulation and (iii) an dramatically underpenetrated market. “The Kenyan banking sector, one of the most successful and profitable in Africa, has remained relatively closed to M&A and PE investments and bank owners struggled to remain independent, in spite of a strong appetite from all African PE funds. Chase Bank is one of one of the fastest growing and most innovative Kenyan banks, supported by a strong management. Chase Bank engaged an ambitious development plan. Its strategy is to focus on (i) the extension of the retail network to lower the cost of funds (ii) products diversification and innovation (mobile, internet, trade finance…), (iii) keeping the SME focus while engaging in a regional expansion. Chase Bank will have recurring financing
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needs to accompany its growth and looks for longterm partners such as Amethis Finance to enter into its capital. This transaction offers Amethis Finance the possibility to build a strong partnership with a future regional champion in a key country and region. “Chase Bank is a locally owned diversified financial institution, modeled around relationship banking and focused on the provision of innovative products towards the SME segment. It offers a full range of corporate and retail banking products and services, with a well-established strategic positioning on the SMEs segment. Chase Bank has also developed innovative and promising ventures through a licensed deposit taking microfinance subsidiary (Rafiki) and an Islamic sharia compliant window (Chase Iman).” The investment will allow Chase Bank to implement its ambitious development plan over the next 3-5 years. Amethis Finance is the first institutional investor to join Chase Bank shareholding. Since Amethis investment, DEG (the German development finance institution) and ResponsAbility (a Swiss based social impact investment manager) have joined the shareholding. François-Xavier Vucekovic, Investment Manager and in charge of the transaction, adds: “through its USD 15m investment, Amethis Finance will contribute to a great part of Chase Bank development plan with the following positive social impacts. Amethis will indirectly enable the creation of 390 additional jobs over the period. It will also allow 69 000 additional bancarised clients, 32 000 additional SMEs clients and 217 000 additional microfinance clients through Rafiki. The equity investment will enable a volume of EUR 67m of new loans for Chase Bank customers.” François-Xavier Vucekovic tells how Amethis will closely monitor the performance of Chase Bank over the next 12 months to assess the success of the investment. “Governance has been strengthened with the board including a majority of non-executives and independents,” he says. “Additionally, the on-site due diligence allowed the team to identify key areas of improvements, which resulted in the elaboration of an immediate strategic action plan. This plan has already been successfully implemented thanks to the strong commitment of Chase Bank teams.”
DEALS OF THE YEAR: The Best Deals of 2013
Real Estate Deal of the Year UK Aston Property Ventures acquisition of Riverside House
Tim Keig is Managing Director of Aston Property Ventures, a privately-owned firm specialising in the investment of commercial property. He talks to Acquisition International about the company and the industry it operates within. -------------------------------------------------------------Aston Property Ventures is a privately owned company that invests in commercial property across the varying sectors and lot sizes. Managing Director, Tim Keig, has specialised in the origination, syndication and management of property investments for 20 years. In the 1990s he joined a London based company where he was directly involved in the purchase of commercial investments covering the leisure, retail, office and industrial sectors, whilst providing investment strategy and general property advice. Tim was appointed Managing Director of Aston Property Ventures in 2012. Tim explains more about the firm’s approach. “It’s flexible and opportunistic - typically selecting under-performing assets that have the capability of being bought well and improved in the short-term through a combination of capital investment and active asset management. It’s very much a team effort.” He continues to explain how the firm strives to distinguish itself from the competition. “We constantly analyse the dynamics of the market as a whole and also by sector. By combining extensive research with a proper understanding of our investors’ objectives, we are able to
acquire assets and deliver enhanced returns. We have a robust due diligence process to ensure the viability of each investment, which assists us in identifying opportunities that could otherwise by overlooked.” Recently, Aston Property Ventures acquired Riverside House (assisted by the Ambassador Group) and Tim tells us more about the strategic rationale behind this transaction which saw the firm achieve Real Estate Deal of the Year – UK. “The investment story in Aberdeen is well-known with high occupational demand and limited high-quality stock. Riverside House presented a fantastic opportunity for Aston Property Ventures for the following reasons: - a prestigious Grade A office block in a fastgrowing market - a robust income profile - 100% of the income is to D&B 5A1 and Government tenants - an attractive yield - with lease events on the horizon we will be intensively asset managing the property to secure new leases and enhance the WALT.” The deal took just eight weeks from offer to completion and, although this was fast Tim says the process was not without its challenges. “A previous bidder pulled out of the process so we committed to step in to the shoes of the other party and honour the timescales previously agreed,” he says. “I can’t emphasise enough
how hard the team worked to accomplish this.” Speaking about the benefits this deal brings, he adds: “As this was our first deal in the Aberdeen market we feel we bought at the right time as its yields continue to compress and rents continue to rise. Occupier demand in Aberdeen is also very strong. Therefore we anticipate this deal will generate strong capital growth and a healthy return to our investors.” With regards to the next 12 months, Tim believes that success can only continue. “2013 was our first year of trading in which we completed eight transactions. “In 2014, we intend to further strengthen our team whilst broadening our investor base. Transaction activity will be maintained with a capital spend targeted at £250m as we seek to further grow and diversify our portfolio across all sectors and locations.”
Company: Aston Property Ventures Name: Tim Keig Email: timk@astonpropertyventures.com Web Address: www.astonpropertyventures.com Address: Knox House, 16-18 Finch Road, Douglas Isle of Man, IM1 2PT Telephone: 01624 647 091
Acquisition International | November 2013 | 15
DEALS OF THE YEAR: The Best Deals of 2013
Energy & Resources Deal of the Year UK / CUI Global, Inc acquisition of Orbital Gas Systems Limited
William Clough is president & CEO of CUI Global Inc. and the Chief Executive Officer & General Counsel of its wholly owned subsidiaries, CUI Inc. (a US corporation based in Oregon) and Orbital Gas Systems Ltd. (a British corporation based in the UK). Recently CUI Global was awarded Energy and Resources Deal of the Year, UK, as voted for by AI readers.
CUI Global is a platform company focused on the commercialization of innovative products and technologies through acquisitions and internal product development. The company has built a diversified technology portfolio in power management, electronic components, and test & measurement. President and CEO, William Clough, explains more about the company and how it differentiates itself from its competitors. “CUI Global and its subsidiaries distinguish ourselves from our competitors in a number of ways, but most significantly is our undying commitment to superior customer service and to providing the most advanced, market-ready technologies in the electronics power delivery arena and to the natural gas industry with both engineering and technical solutions to address such issues as natural gas metering, odorization,
gas sampling, remote telemetry, pipeline control and more.” Recently, CUI Global closed on a share purchase agreement to acquire 100% of the equity interest in Orbital Gas Systems Limited, a company organized under the laws of England and Wales from Orbital’s sole shareholder. The purchase price for the acquisition of Orbital was £17,000,000 British pounds sterling. Clough explains extensively about the acquisition, including the strategic rationale behind it. “The acquisition was immediately accretive and increased CUI Global’s revenue base by ~50%. The acquisition also offers significant synergy for revenue growth, as Orbital has proven experience and credibility in the natural gas infrastructure segment. This expertise and
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credibility will help bring together the patented VE-Probe™ technology from Orbital, with the GasPT2™ device from CUI Global allowing us to offer the GasPTi™ system to the natural gas industry. He adds: “In addition to accretive revenues and earnings, by acquiring Orbital we also acquired exclusive access to Orbital’s proprietary VEProbe, which, by letting us acquire a sample gas from a high-pressure pipeline in as few as two seconds as opposed to the industry standard time of five to ten minutes, enables us to reduce our total sample-analysis turnaround for the GasPTi to fewer than five seconds. This turnaround time is far faster than the turnaround time of any other technology currently available to the gas industry. “In brief, through an exclusive licensing contract with GL Industrial Services UK, Ltd.
DEALS OF THE YEAR: The Best Deals of 2013 (GL), formerly British-based Advantica, Ltd., CUI Global owns exclusive rights to manufacture, sell and distribute a Gas Quality Inferential Measurement Device (GasPT2) designed by GL on a worldwide basis and marketed as the GasPT2 (pictured below at Figure No. 1). The natural gas inferential metering device, the GasPT2, is a low cost solution to measuring natural gas quality. It can be connected to a natural gas system to provide a fast, accurate, close to real time measurement of the physical properties, such as thermal conductivity, speed of sound and carbon dioxide content. From these measurements it infers an effective gas mixture comprising four components: methane, propane, nitrogen, and measured carbon dioxide and then uses ISO6976 to calculate the gas quality characteristics of calorific value (CV), Wobbe index (WI), relative density (RD), and compression factor (Z). “This new and innovative technology has been certified for use in fiscal monitoring by, among others, Ofgem in the United Kingdom, the Polish Oil & Gas Company Department of Testing and Calibration in Warsaw, NOVA Chemical/ TransCanada in Canada, the Pipeline Research Counsel International (PRCI) in the US and SNAM RETE in Italy. At present, there is no equivalent product competition. There are instruments like gas chromatographs (“GC”), but they are slow, complicated to use and as much as five times the price of the GasPT2. “By way of example, there are more than 500,000 miles of natural gas pipeline currently in operation in the US and Continental Europe with more than 50,000 separate off-takes. In addition, according to industry statistics, there are more than 120,000 miles of pipeline under construction with more than 20,000 unmonitored off-takes. All of those customer access ports would be applicable for the GasPT2 Technology.
Following the acquisition of Orbital, CUI Global is comprised of two subsidiaries as follows: a. CUI Inc.: An Oregon based provider of electronic components including power supplies, transformers, converters, connectors and industrial controls for Original Equipment Manufacturers (OEMs). Since its inception in 1989, CUI Inc. has been delivering quality products, extensive application solutions and superior personal service. CUI Inc.’s solid customer commitment and honest corporate message are a hallmark in the industry; and, now, b. Orbital Gas Systems Ltd.: A UK-based company that has operated successfully in the natural gas industry for over 29 years. Orbital is a leading provider of natural gas infrastructure and high-tech solutions to National Grid, the national gas transmission company in the U.K. and one of the most respected specialist gas engineering companies in the world. Orbital has developed its portfolio of products, services and resources to offer a diverse range of personalized gas engineering solutions to the gas utilities, power generation, emissions, manufacturing and automotive industries.
approximately $41,500,000 in annual revenues; and had yet to turn profitable. In early 2012, we had completed a $15,000,000 capital raise and in February 2012 we had up-listed to the Nasdaq Capital Market. In order to acquire Orbital, the company needed to raise at least $30,000,000 – Needless to say, what can only be described as a “Herculean” goal.
The negotiations and culmination of the acquisition was an approximately 18 month project that developed initially from the benefits the two companies envisioned from combining the VE-Probe Technology and the GasPT2 Technology.
Although Clough cannot disclose any details of the company’s financial forecast he does have predictions for the future following this acquisition. “We intend to focus on expanding our presence and market penetration into both the European and North American natural gas markets, while continuing to grow our core electronics business (at CUI Inc.) and our core engineering solutions business (at Orbital).”
“In addition, there are currently 50,000+ gas-fired turbines in operation worldwide. Each of those turbines is subject to variances in natural gas quality. Depending on the quality of the gas, by using our GasPTi Technology, those very expensive machines can be tuned to run more efficiently and therefore longer with much cleaner emissions. Currently, because of the delay in information available from the GC’s, such tuning cannot be effectively accomplished. It this greater efficiency that has lead National Grid in the UK to change its entire turbine control strategy, recently cancelling an order for several GC’s and, in October 2013, replacing those GC’s with an order for eight (8) GasPTi devices specifically designed for natural gas-fired turbine control.
Clough embellishes: “During the course of combining, marketing, developing, and beginning to sell those two technologies, I developed a friendship with, first, the Managing Director of Orbital, Andy Ridge, and then the owner of Orbital, Andy Clews. Over time, those friendships grew and became the basis for the acquisition. For his part, Andy Clews was looking to retire and exit the company, but wanted to place it in the hands of someone he trusted and believed would continue the reputation, growth, professionalism and corporate culture that he and his father (Peter Clews) before him had created. For my part, I saw the opportunity of acquiring Orbital as a perfect fit to the corporate culture already in place at CUI Global and CUI Inc., along with immediately accretive revenues and earnings. But, most significantly was the opportunity to combine the two technologies and take them to market with the significant reputation, expertise and credibility Orbital enjoys in the worldwide natural gas industry. In short, the acquisition was “relationship” driven and never would have happened without the friendship and trust felt by all parties.”
“With this acquisition of Orbital, CUI Global is set to aggressively market a disruptive technology to the natural gas industry. With a solid balance sheet that contains $28,100,000 in cash (~25% of market cap); CUI Global is setting the stage for revenue growth and margin expansion.”
Despite the success of the transaction the deal was not without its challenges, as Clough continues: “Probably the single biggest challenge to the acquisition was the capital raise. At the time, CUI Global had a market cap of approximately $60,000,000; was generating
“My CFO, Dan Ford, and I first identified CraigHallum Capital Group LLC out of Minneapolis as the appropriate US banker for the transaction and filed an SEC Form S1 registration in March 2013. During early April 2013, Dan and I presented the opportunity to European investors with the help of our European Advisor, Dorian Prosdocimi of the London-based Prosdocimi Ltd. We then made 90 presentations in 14 cities over eight days with Craig-Hallum in the US. The result was almost $87,000,000 in committed demand. We ultimately raised approximately $48,000,000 and, after fees and costs were deducted, the company netted approximately $45,000,000, part of which we used to acquire Orbital effective April 1, 2013. Approximately 20% of the capital came from Europe and the rest from US investors.”
Company: CUI Global Inc. Web Address: www.cuiglobal.com Name: William J. Clough Email: wclough@cuiglobal.com Telephone: +1-503-612-2307 Name: Daniel Ford Email: dford@cuiglobal.com Telephone: +1-503-612-2319 Address: 20050 SW 112th Avenue, Tualatin, Oregon 97209 USA US Direct: +1 (503) 612-2307 US Mobile: +1 (925) 989-6651 UK Direct: +44 (0) 1785 857003 UK Mobile: +44 (0) 7583 076516
Acquisition International | November 2013 | 17
DEALS OF THE YEAR: The Best Deals of 2013
TMT Deal of the Year for The Middle East/Africa (Consortium invest in Etisalat Nigeria) Rama Diallo Shagaya is Deputy Director of Treasury & Corporate Finance at Etisalat Nigeria. After recently clinching the TMT Deal of the Year Middle East Africa, Shagaya tells us more about the economic climate in Nigeria.
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DEALS OF THE YEAR: The Best Deals of 2013 Etisalat Nigeria has three groups of shareholders: sovereign wealth fund Mubadala Development Company, leading telecom operator Etisalat Group and MyaCynth, a consortium of Nigerian investors led by Mr. Hakeem Belo-Osagie, Chairman of Etisalat Nigeria. In January 2007, Mubadala, through Etisalat Nigeria acquired a 15 years Unified Access Service License from the Nigerian Communications Commission for US$ 400 million. The UASL became effective on March 15, 2007 and includes a frequency range in the 900 and 1800 MHz GSM bands, equivalent to those of the pioneer GSM operators in Nigeria. The UASL allows the company the right to offer mobile, fixed, data and international services. Etisalat Nigeria has been in operation since October 2008, operating using its UASL license as well as a 3G license which was acquired from the Dangote Group in 2010/2011. The company currently serves approximately 16 million subscribers with a current market share estimated of around 14.0%. Its network consists of over 4,100 base stations across Nigeria’s 36 states. Etisalat Nigeria’s vision is a world where people’s reach is not limited by matter or distance; a world where people will effortlessly stay in touch with family and friends; a world where businesses of all sizes can reach new markets without the limitations of distance and travel.
Service and Most Innovative Mobile Operator among others.” In May 2013, Etisalat Nigeria successfully closed a US$1.2 billion term loan facility with 13 Nigerian lenders from a consortium of local banks to finance the construction, operation, maintenance and administration of its network and/or all other associated costs incurred in the course of providing telecommunication services. The Existing Facility comprises a NGN155,000 million tranche and a US$235 million US$denominated facility. The transaction took seven months in total to complete and Shagaya explains a little more about it, including the strategic rationale behind the deal. “We plan to use the proceeds to refinance the existing commercial medium term debt of US$650 million and continue its network rollout across Nigeria. We will also continue the release of innovative products and services to its over fifteen million subscribers.
local (FBN Capital under the leadership of Patrick Mbengwelu) and international bank (Citi under the leadership of Matt Holland) as financial advisers.” The investment will positively affect the company and its investors, providing the firm with superior customer experience with mobile data which will allow the company to offer the fastest and most reliable service in the Metro Data areas in Nigeria. It will make the company more aligned in its customer focus meaning it can offer a superior experience in care and support through its contact centre, distribution partners and retail shops. The company will not outsource the areas of the business that affect the customer experience and network quality of service. It will provide innovation as Etisalat will offer the best value-added data services to customers as a result of innovative partnerships, and it will improve the firm’s quality of service as it will have the densest radio access network, comprised of Wi-Fi, small cells and macro cells, as well as the densest fibre network within the Metro Data areas.
“We plan to use the proceeds to refinance the existing commercial medium term debt of US$650 million and continue its network rollout across Nigeria. We will also continue the release of innovative products and services to its over fifteen million subscribers”
Etisalat Nigeria aims to have a strong focus on creating a superior customer experience that is driven by continuous innovation and a relentless focus on improving quality of service. Deputy Director, Rama Diallo Shagaya, tells us more about the company and how it distinguishes itself from the competition. “Nigerian telecommunications operators have historically offered poor service quality and customer care and this is an area where Etisalat Nigeria distinguishes itself from its competitors,” she explains. “Etisalat has received several awards and endorsements for its quality and innovative services. After barely six months of operations in Nigeria, the Nigerian Communications Commission (NCC) pronounced Etisalat, Nigeria’s best network based on quality of service indices. In November 2012, Etisalat again received another award from the NCC for Excellent Customer Service. Other notable awards include - Brand of the Year award, Fastest Growing GSM Company of the Year, Best Marketing Company, Most Innovative Corporate Social Responsibility Company, Friendliest Tariff Mobile Operator, Best Telecoms Customer
This loan is a testament to the robust strategy of the company and the faith of the banking community. It will serve to further boost the company and the telecommunications sector. It is important to also note the enabling environment created by the Federal and State governments of Nigeria as well as the National Communications Commission. In this process, Etisalat Nigeria has benefited from the experience and support of its pioneer shareholders; Etisalat Group, Mubadala and Myacynth.”
“We will assess the success of the overall investment in 12 months times,” explains Shagaya. “We will be able to see how successful it has been by seeing a growth in subscriber numbers, increased revenue, an improved performance score (ranking the GSM operators) from NCC (the telecom industry regulator in Nigeria) on network quality, and through a lower churn rate.” Shagaya also has many predictions for Etisalat for the forthcoming 12 months, as well as the future beyond this point. “We will continue to invest and develop partnerships to improve our infrastructure. In the next 12 months, we should start to see the fruits of our steady investment program in terms of additional subscribers and greater satisfaction for the Etisalat customer.”
Despite the success of the deal, Ms Shagaya explains that there were certain challenges which had to be addressed along the way. “Meeting completion deadlines due to number of parties involved in the syndication process and documentation requirements was challenging. These challenges were overcome by having a dedicated project team composed of relevant members from various parts of the business. We also benefitted from the support of our advisers. We were particularly fortunate to have both a
Company: Etisalat Nigeria Name: Rama Diallo Shagaya Email: rama.shagaya@etisalat.com.ng Web Address: www.etisalat.com.ng Address:Etisalat Nigeria HQ, Plot 19L, Banana Island, Ikoyi, Lagos, Nigeria
Acquisition International | November 2013 | 19
DEALS OF THE YEAR: The Best Deals of 2013
Health Care Deal of the Year Europe (Karolinska backs Forendo Pharma)
Risto Lammintausta is Chief Executive Officer and co-founder of ForendoPharma Ltd. He talks to Acquisition International about the current climate and about winning the Health Care Deal of the Year – Europe award. -------------------------------------------------------------ForendoPharma was founded in 2012 to form a new consortium of competences to progress drug development for women’s and men’s health. The founders have long background experience from discovery and development of new drugs from bench to market, the latest product being ospemifene which was launched in the USA in May of this year. Co-founder and Chief Executive Officer of ForendoPharma, Risto Lammintausta, explains how the company distinguishes itself from the competition. “The core competence of Forendo, the organ specific regulation of sex hormone effects, is at verge of very interesting new science. From endocrinology in textbooks we are entering tointracrinology era. This opens multiple novel opportunities to treat common problems in women’s and men’s health, including problems like endometriosis, breast cancer and prostate
Company: ForendoPharma Ltd Name: Risto Lammintausta , CEO Email: risto.lammintausta@forendo.com Web Address: www.forendo.com
cancer. Forendo, with sharp focus and a team with long-term experience on innovations on this area, is in a good position to exploit this new biology. “The competitive edge of Forendo among its peers is coming from the world leading academic research as basis of its core competence,” he says. “This is combined with a successful track record of multiple drugs developed to global markets in small company settings. Also the investors devoted to pharma innovations and contributing their competences and network are a significant competitive asset to secure the success of the development.” Recently, ForendoPharma saw significant investment from Karolinska Develpoment and Risto tells us more about this transaction and the rationale behind it. “We believe the strong scientific background of the programs and the track record of the core team made Forendo a promising investment target for Karolinska Development and Novo Seeds to co-lead the investment round. “We signed the LOI just before Christmas in 2012. This was just a couple of months after we had the terms sheet for the acquisition of the assets from Hormos Medical. We closed the investment in June 2013. During this process we closed the asset purchase and the R&D loan arrangements from Tekes. “The main challenge faced during this time was associated to the asset purchase arrangement from Hormos, which is a subsidiary of the USA based QuatRx. Today the transfer pricing and
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the tax allocations between countries is under close scrutiny. Therefore before finding a feasible model for the acquisition, we had to make a few iterations between the authorities. There were also government R&D loans associated to the different programs in Hormos, which made that authority a separate party in the negotiation. “There were three separate deal negotiations at the same time, dependent on each other, with legal counsels on each side. Although each bilateral negotiation was pretty straight forward, the whole process took more time than expected at LOI point. Forendo is now looking for partners for its phase II product fispemifene but will progress with its own resources for the HSD17B1 inhibitor towards the clinical POC. “The funding by the expert investors on pharma sector gave for us significant credibility and also more negotiating power. The programs are now progressing with good pace in a new setting. “We hope to reach significant milestones in both programs during the first year: both in partnering fispemifene and progressing the novel HSD inhibitor to clinic. We expect to raise also more capital during the first year to secure the effective progress of the products. This will secure value creation to our investors as well. The future looks bright for ForendoPharma and Risto has predictions for the next 12 months. “During the first year we will focus strongly to execute our business plan with help of our investors and leverage our fiscal and competence resources by adding an additional expert pharma investor to the team.”
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 attorneysat-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.
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Acquisition International | November 2013 |
DEALS OF THE YEAR: The Best Deals of 2013
Energy Resources Deal of the Year Europe (Demeter Partners investment in Ideol) Paul de la Gueriviere is CEO of Ideol, a firm specializing in the design and supply of innovative foundation for the offshore wind industry. -------------------------------------------------------------Ideol is a company specialised in the design and supply of innovative foundations for the offshore wind industry. Headquartered in La Ciotat in France, the company has been founded out of an extensive background in renewable energies and oil&gas offshore industry. Ideol has more specifically developed a new family of floating foundations based on the Damping Pool ® system, aiming at transforming the potential of offshore wind by unlocking the current water depth constraints induced by bottom fixed foundations.
“The solution developed by Ideol cuts the costs of floating foundation by two in comparison with any other concept, making floating cost competitive with bottom fixed foundation starting from 35 m water depth.
Chief Executive Officer, Paul de la Gueriviere, has more than 12 years of experience in developing and financing renewable energy projects all over the world, giving him a cross-sectorial and cross-countries vision. He has an extensive network in renewables, including policy makers, project developers, manufacturers, investors, in developped and emerging countries. Paul recent experience includes development of new businesses in China and in carbon finance.
“The Ideol solution represents a technological breakthrough over current seabed-fixed foundation technologies. It is extending current offshore wind market by enabling new floating options. It eliminates water-depth constraints, optimizes wind conditions, and minimizes usage conflicts.”
Here, Paul explains more about the firm and what sets it apart from the competition.
“The Ideol ring-shaped surface floating platform is characterized by its internal moonpool and its hull in concrete. The moonpool is designed to act as a damper to wave motion which makes Ideol solution performance exceptional compared to other surface floating platforms. The use of conventional pre-stressed concrete construction techniques optimizes the supply chain and ensures a local and flexible construction adaptable to all port constraints.
Recently, Ideol received investment from Demeter Partners and Paul de la Gueriviere explains further about this transaction and the strategic rationale behind it. “Ideol has raised in June 2011 a Series A with some key family office, including offshore engineering veterans such as the former CEO of Doris Engineering and former CEO of SubSea7. A Series B was issued in March 2013, including Demeter Partners, Sofimac Partners and the existing shareholders.
Company: Ideol Name: Paul de la Gueriviere Email: contract@Ideol-offshore.com Web Address: www.Ideol-offshore.com Address: Espace Mistral Bat. B, 375 av. du Mistral, 13600 La Ciotat, France Telephone: + 33 4 86 20 80 50
“The proceed of Series B is to finance a two MW demonstrator to be installed in 2015, allowing us to have a fully proven technology ready for commercialisation.”
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The deal took nine months to complete and de la Gueriviere states that it was not without its challenges. “Offshore wind is a long term and capitalistic market, not favourable for investment funds involvement. Our challenge has been to demonstrate how a start-up could have a place in these conditions and how our strategy could effectively ensure an exit with high return in the next 4-5 years for investors. Our clear strategic roadmap, the partnerships already in place with some key industrials, the quality of the management team with proven exit experience, the track-record of similar transactions in tidal sector for example, has been convincing arguments.” The investment is a demonstration of the company’s ability to harness various financing sources, private ones as much as public ones, a key factor to its success. “Thanks to this fund raising and the partnership with two VCs of reference in the European cleantech marketplace, Ideol confirms its unique expertise, demonstrates the pertinence of its technology developed over the past years, and confidently continues its ambitious development program,” says de la Gueriviere. “The investment will be a success if by 2015 we have a demonstrator operating offshore, finally proving our technology, with pre-series projects under development underlying the tremendous market potential of our solution.” The future look bright for Ideol, very bright indeed, and Paul de la Gueriviere finishes by explaining that the company intends to raise a Series C funding round from Cleantech Funds by June 2014 in order to boost its expansion plans in some key markets, including the UK, Japan and France.
DEALS OF THE YEAR: The Best Deals of 2013
Dealmaker 2013
Clock tower in old port of Montreal city, Canada
Ian Wooden is the President of IJW Management Inc, a corporate finance boutique offering M&A, corporate finance, and business valuation services to small to mid-cap companies in Canada. -------------------------------------------------------------IJW Management was founded in 2004 and has recently become one of the fastest growing corporate finance boutiques headquartered in Montreal. The firm specializes in advising companies with enterprise values between $5 million and $50 million. Whether advising its technology, food and beverage, consumer products or healthcare clients, the firm’s core competency is by far its valuation expertise. According to Ian, “Whether it is a corporate finance or M&A engagement, our clients rely on our professionals to provide objective and accurate valuation advice,” he says.
firm and its advisors, receiving a multitude of awards and accolades. IJW Management was awarded Leading Financial Adviser for the 2013 Acquisition International M&A Awards, Canada’s Corporate Finance Boutique of the Year for the 2013 ACQ Global Awards, and Financial Advisory of the Year- Canada for the 2013 Acquisition International Finance Awards. In addition, Ian Wooden, IJW’s Founder and President was a winner of the prestigious 4th annual 40 under 40 M&A Advisor recognition awards for the Dealmaker category.
market, assisting Canadian clients in their M&A activities. “We have quickly developed a market presence due to the fact that there is a high demand for M&A and valuation expertise,” said Ian. “Continuously, we have been fortunate enough to develop strong relationships with local governments and the business community, helping us gain traction in our deal making activities.” For 2014, IJW has managed on lining up a good deal pipeline. That being said, according to Ian, deals will still remain slow to close. “There is still significant uncertainty in the M&A market, and until things become more predictable, deals will take a long time to close,” says Ian. “We believe that the tech sector will be more dominant in the market with traditional industries lagging. This is mostly due to the unique nature of tech companies and their ability to be disruptive in the market place. It is also a function of certain inflated valuations of tech companies in the public markets. This will have an indirect influence on special interest acquirers and the VC community for these type of deals.”
“Whether it is a corporate finance or M&A engagement, our clients rely on our professionals to provide objective and accurate valuation advice,”
“Though the year has not yet come to an end, 2013 has been a very exciting year for us,” says Ian. “We saw many of the sell-side engagements we started in 2012 finally come to a close. Also, some of our buy-side engagements found attractive acquisition opportunities at good valuations, which helped us get those deals over the goal line.” Some highlights for the year included IJW’s sell-side engagement in the sale of Collage Pediatric Therapies to Morneau Shepell, IJW’s buy-side engagement as related to the acquisition of Manycam by Visicom Media, and IJW’s sell-side engagement for the sale of Randex to Orkin Canada. On top of IJW’s successful deal pipeline, 2013 has been a phenomenal year for the
Some significant developments for the firm included the addition of some new members to their team, including the addition of Rodrigo Mendes Marques (formerly with Deloitte Touche Tohmatsu Consulting) and Gerardo Ganem Cuenca in the junior analyst group. In addition, the firm appointed Jonathan Goldstein as Vice President, Business Development. Jonathan will be helping build IJW’s practice in Canada and abroad with a focus on consumer products and technology clients. In addition, IJW was in the process of expanding its operations, opening a second office in the Province of Quebec to serve the North-Shore of Montreal as well as a satellite operation in St-John’s, Antigua. Since the first quarter of 2013, IJW has been active in the Caribbean
Management Inc.
Company: IJW Management Inc. Name: Ian Wooden Email: iwooden@ijw.ca Phone: 514.685.8047 Ext. 103 Web Address: www.ijw.ca
Acquisition International | November 2013 | 23
DEALS OF THE YEAR: The Best Deals of 2013
Support Services Deal of the Year - UK Bank Leumi investment in Bromford Industries
Brighton West Pier at Dusk
Phil Woodward is Managing Director of Leumi ABL, a specialist asset-based lending subsidiary of Bank Leumi plc. Recently, Leumi ABL was voted by Acquisition International readers to receive the Support Services Deal of the Year – UK award. -------------------------------------------------------------As the specialist asset-based lending subsidiary of Bank Leumi (UK) plc, part of the Bank Leumi Group, Leumi ABL offers growing businesses a range of flexible finance solutions that work in tune with their business. Managing Director, Phil Woodward, explains more.
Woodward divulges more about the company and how, in particular, it differentiates itself from the competition. “Healthy prospects for the UK economy are translating into some interesting deals for Leumi ABL and we continue to see good introductions from the deal making community. Our continuing success in UK ABL awards is testament to the core values we work to – spending time to build strong relationships and delivering high quality, client focused business funding solutions. Our flexible, personal approach and ability to
“At Leumi ABL we draw on a range of solutions to offer a completely tailored funding package to our clients.” “At Leumi ABL we draw on a range of solutions to offer a completely tailored funding package to our clients. Invoice discounting can be combined with stock lending, plant & machinery finance and long term overpayment facilities to provide additional funding. Furthermore, we can increase funding through the facilities of Bank Leumi (UK) plc, who provide trade finance, property finance and a commercial banking offering.”
Company: Leumi ABL Name: Phil Woodward Email: pwoodward@leumiabl.co.uk Web Address: www.leumiabl.co.uk Address: 126 Dyke Road, Brighton, East Sussex BN1 3TE Telephone: 01273 716200
structure multi-facility deals can often result in higher levels of funding for our clients.” Recently, Leumi ABL worked with Bromford Industries to provide a flexible finance package to the Birmingham-headquartered company. Woodward embellishes on the deal and the rationale behind it. “Bromford Industries specialises in precision engineered components for the aerospace and industrial power sectors.
“This deal was a refinance of a Private Equity portfolio business looking for a more flexible funding package to support growth and potential acquisition opportunities. The total funding facility of £20m included invoice discounting, stock finance, a plant & machinery facility, and a cashflow line from Bank Leumi (UK). “Provision of the facility required a detailed understanding of the aerospace sector and its buying patterns. The Leumi ABL team
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worked closely with the management team of Bromford Industries through an involved diligence, refinancing and legal process to ensure that the facility met all future working capital requirements.” Mike Smith, Chief Executive Officer of Bromford Industries, added his comments regarding the deal: “Since the company was acquired in 2009 we have continued the transition of the business, improved its image and reputation and responded to ever changing business demands. As we enter the next phase of our development it is essential the business is structured so as to take best advantage of future opportunities and one of the key considerations was our debt facilities. “This is a significant opportunity for both Bromford Industries and Leumi ABL, and further supports and underpins our desire to be the manufacturer of choice to our customers, whilst showing our continued commitment to invest in technology which allows us to operate in a global arena. Leumi ABL has shown a desire to work very closely with our team and I look forward to building our working relationship and the opportunities that this will bring in the future.” Martin Risman, Leumi ABL Regional Sales Director, also stated: “Leumi ABL is delighted to provide a £20 million senior debt and asset based lending package that facilitates the specific working capital requirements and supports the growth aspirations of Bromford Industries. We recognise that a business of the quality and reputation of Bromford needs a commercial and responsive funding partner with detailed sector knowledge. We very much look forward to working with their highly committed management team to achieve their goals in the future.”
DEALS OF THE YEAR: The Best Deals of 2013
Health care Deal of the Year Asia Pacific Siloam International Hospitals IPO
Ketut Budi Wijaya is President Director of PT Lippo Karawaci TBK and President Commissioner of PT Siloam International Hospitals TBK. He is also President Commissioner in PT Siloam International Hospitals, Tbk. Recently, the company was awarded Health Care Deal of the Year – Asia Pacific by Acquisition International readers. -------------------------------------------------------------Lippo Karawaci is Indonesia’s largest listed property company by Total Assets and Revenues, anchored by a large land bank and solid recurring income base. Its business comprises of Residential/Township, Retail Malls, Hospitals, Hotels and Asset Management.
The company is listed on the Indonesian Stock Exchange with a market Capitalization of Rp 27 trillion or USD 2.5 billion as of October30, 2013. Siloam is a leader in innovative clinical service models, state-of-the-art equipment, patient-centric facilities and integrated clinical and non-clinical services in Indonesia. Over the last 17 years, Siloam has been a pioneer and been a part of many significant milestones in the development of healthcare in Indonesia. For instance, Siloam Hospitals Lippo Village was the first hospital in Indonesia to be accredited by the Joint Commission International in 2007 and has successfully maintained its accreditation since that time. As of September 30, 2013, Siloam operated 14 hospitals, with a total bed capacity of 3,800 beds, 1,369 doctors and specialists, and employed 2,650 nurses and other allied health personnel. Ketut Budi Wijaya, President Director in PT Siloam International Hospitals, Tbk, explains more about how the companies distinguish themselves from their competitors. “Lippo Karawaci distinguishes itself by having large and high quality landbank of approximately 1,400 ha that will be sufficient for our planned development for the next ten years. Our policy is to maintain a landbank sufficient for ten years of future development, subject to price, availability and quality. We believe that the recurring revenue generated by several of our business units particularly Healthcare, provides us with an advantage over our competitors
who are not as diversified. We will continue with our strategy to maintain roughly around 50% of our revenue contribution from recurring sources which will mitigate us from the cyclical nature of the property market. “Siloam International Hospitals distinguishes itself by being the largest private hospital group in Indonesia in terms of number of hospital beds as of Dec 31, 2012 according to Frost & Sullivan. As of September 30, 2013, Siloam had a total bed capacity of 3,800 beds, 1,369 General Practitioners and Specialist and 2,650 nurses and we plan to further expand to total bed capacity of 10,000 beds by 2017. Siloam is the leader in innovative clinical service models, state of the art equipment, patient-centric facilities and integrated clinical and nonclinical services in Indonesia.” Recently, Siloam International raised funds through its Initial Public Offering. Wijaya explains more about this funding round and the rationale behind it. “Siloam IPO successfully raised Rp 1.4049 trillion, comprising of up to 156,100,000 newly issued common shares at an offering price Rp 9,000 per share, which puts the value of Siloam at Rp10.4 trillion or approximately US$1.0 billion. “Goldman Sachs and Credit Suisse are acting as lead Underwriters and Global Book runners, with Co-lead underwriters CLSA, CIMB, Credit Suisse and Ciptadana Securities.
communication systems in supporting the “hub and spoke” hospitals systems and nationwide emergency call systems.” Despite the transaction being a great success, Wijaya states that there were certain challenges to be overcome. “The transaction was priced during an emerging markets downturn which saw extreme volatility in Indonesia. During the bookbuilding period alone, the Jakarta Composite Index fell 15.6 pct in 7 days and the Indonesian Rupiah depreciated by 10.1 pct, implying a 23.3 pct fall in the index in US$ terms. We overcame the situation by anchoring the final book with a few healthcare-specialist and global long-only investors resulting in an international longonly dominated book with international investors. Premium pricing was still achieved despite the challenging market conditions.” The IPO strengthens the Siloam network and coverage, plus it will make affordable world-class healthcare services throughout the Indonesian region. “We will assess the success of the IPO in one year time, by reviewing its success in implementing its growth strategy and the resultant financial performance,” states Wijaya. He also adds his plans for expansion for the coming 12 months. “We plan to have 40 hospitals by year 2017. Each year we plan to open 6-7 hospitals. So for the next 12 months, we targeted to have 20 hospitals in operation.”
“Immediately following completion of the Offering, Lippo Karawaci will beneficially own or control approximately 86.5% of total outstanding common shares before the Over-allotment Option has not been exercised, and currently approximately 86.0% of total outstanding common shares after full exercise of the Over-allotment Option in October 2013. “The strategy behind the IPO: providing Siloam greater access into the Health care funds, enabling Siloam in realizing its vision and commitment to be the most dominant player in Indonesia’s healthcare industry. Further, the IPO will unleash Siloam’s full potential by funding Siloam’s acquisition of state of the art medical equipment as well as high technology
Company: PT Lippo Karawaci, Tbk Name: Ketut Budi Wijaya Email: ketut@lippokarawaci.co.id Web Address: www.lippokarawaci.co.id Address: MenaraMatahari, 22nd Floor, 7 Boulevard Palem Raya, Lippo Village, Tangerang 15811 Telephone: +6221 25669000
Acquisition International | November 2013 | 25
DEALS OF THE YEAR: The Best Deals of 2013
Environmental Technology Deal of the Year Asia Pacific / LP Amina closes Series C Funding
Will Latta is the founder and CEO LP Amina, a USbased energy and environmental company with focus on sustainable power generation. He speaks to Acquisition International about LP Amina and how it felt to win the Environmental Technology Deal of the Year Asia Pacific award. -------------------------------------------------------------LP Amina is a multinational environmental engineering company with research and development activities in the US, Europe and Asia. Established in 2007, LP Amina now has over 100 full-time employees and a vast network of site technicians working in diverse locations around the globe. Asked about the company’s vision, Will Latta comments: “We strive to be an innovative clean energy development company with a focus on solutions that will create an environmentally sustainable and affordable energy future.” There is much to show for this claim. LP Amina of today focuses on two main areas: • Emission reduction and efficiency improvement solutions of existing coal-fired power plants through set of proprietary technologies. LP Amina is one of the leading providers of DeNOx solutions for power plants in China. Since opening its China office in 2008, the company has built a strong track record of implementing advanced emission reduction solutions using cutting-edge technologies, and to date has
LP AMINA
Energy and Environmental
Company: LP Amina Name: Will Latta Email: info@lpamina.com Web Address: www.lpamina.com Address: 13850 Ballantyne Corporate Place, Suite 125, Charlotte, North Carolina 28277 Tel: 855. 572.6462 Fax: 704.945.7742
completed over 30 projects in 11 provinces and 2 municipalities. • In addition to the emission reduction business, LP Amina is developing and commercializing poly-generation systems for converting coal and biomass into a wide range of chemicals parallel to power production. The poly-generation technology improves power plant’s efficiency by converting a current waste stream into a wide range of high-value industrial chemicals, significantly improving the economics and carbon footprint of the facilities. Mr Latta adds: “LP Amina provides tailor made solutions for power plants. Experience in plant design and operations, strong engineering expertise, and a base of patented technologies allow the company to deliver superior solutions that produce immediate economic value to its clients. LP Amina’s know-how in system integration ensures seamless interaction of all components and guarantees optimal performance.” “Since opening its China office in 2008, LP Amina has formed strong relationships with utilities, research institutes, universities and other companies, collaborating on both commercial and R&D projects. For example, LP Amina’s poly-generation technology was developed in collaboration with Bayer and has undergone rigorous proof of concept and lab testing since 2010. At the moment, in partnership with a major Chinese power producer Gemeng International Energy (GMIE), LP Amina is building its first commercial scale 50 MW demonstration facility in China.” LP Amina has also achieved alignment with the public sector in the areas of clean energy technology development in the US and China. LP Amina is a founding member and co-chair of US-China Energy Cooperation Program (http://www.uschinaecp.org/) and US-China Clean Energy Research Consortium (http://www.us-china-cerc.org/). Both platforms have been recognized by the highest level of officials from the US and Chinese government for the advancement of clean energy.
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Recently, LP Amina completed a series C funding round. Will Latta explains more about the deal including the rationale behind it: “The Series C investment will support rapid growth of LP Amina’s core pollution control business and promote the development of several innovative clean energy technologies in China, US and other global locations. We plan to expand company’s engineering, field service and product development departments to satisfy rising customer demand and provide better technical support in China and other Asian markets. The other part of this investment will go into company’s R&D efforts, where we plan to introduce several innovative clean energy technologies in China, US and other global locations in the near future.” LP Amina builds and maintains relationships with a select group of investors on an ongoing basis. After the company decided to pursue Series C funding, it says it took about three months to select the optimal combination of investors and another two months to complete due diligence and the legal work. When asked about LP Amina plans in the coming 12 months Will Latta comments: “In the next 12 months we plan to grow our core pollution control business in China and will start to introduce our technologies to other international markets. In addition to this, we will continue to focus on developing our poly-generation Technology. At LP Amina we truly believe that this technology has the potential to be industry transformational. By utilizing existing coal fired power plants we can derive high value liquid hydrocarbons, including gasoline, from upgraded coal, biomass and waste ash, for a fraction of the cost of conventional technologies,” he said. “Our first commercial demonstration is being commissioned now and is scheduled to be fully operational in 2014. The demonstration facility is a full-scale 50 MW coal plant that has been retrofitted to co-produce 100,000 barrels of synthetic crude. So in the next 12-24 months we plan to build similar demonstration facilities in U.S. and other locations, and are in the process of identifying strategic and financial partners. We are very excited about the benefits that this technology will bring to utilities and their customers globally.”
DEALS OF THE YEAR: The Best Deals of 2013
AI Deal of the Year MBK Partners acquisition of ING Korea Michael ByungJu Kim is a Partner and one of the founding members of MBK Partners, which was recently awarded AI Deal of the Year. -------------------------------------------------------------Prior to MBK Partners, Michael was President of Carlyle Asia Partners, responsible for overseeing Carlyle’s buyout activities in the Asia-Pacific region (outside of Japan). He was also a member of The Carlyle Group’s Management Committee. Before Carlyle, he was Managing Director and COO of Asia-Pacific Investment Banking for Salomon Smith Barney and an Executive Director at Goldman Sachs & Co. Earlier this year, MBK Partners acquired ING Life Korea for KRW 1.8 trillion (approximately €1.24 billion). ING Life Korea is the fifth largest life insurer in Korea in assets (KRW 20.8 trillion, or €14.3 billion) and the largest foreign life company, with over 2 million contracts in force. Under the terms of the agreement, ING will
hold an indirect stake of approximately 10% for an amount of KRW 120 billion (approximately €80 million). ING has also reached a licensing agreement that will allow ING Life Korea to continue to operate under the ING brand for a maximum period of five years. Established in March 2005 by six founding members who worked together for many years at a global private equity organization, MBK Partners is a leading local and independent private equity firm in North Asia. MBK Partners seeks to acquire industry-leading companies and, in partnership with management, to grow and create value in the companies over the long term. Investors include government agencies, public and corporate pension funds, financial institutions, funds of funds and university endowments from Korea, China, Japan, Southeast Asia, North America, Western Europe and the Middle East.
With a dedicated focus on buyouts in North Asia - Korea, Japan and Greater China (China, Taiwan and Hong Kong) – its investment teams are located in Seoul, Tokyo, Shanghai and Hong Kong and are composed of local professionals with strong local relationships and market knowledge. MBK Partners today owns and operates16 companies across North Asia in its portfolio.
Company: MBK Partners Name: Michael B. Kim Web Address: www.mbkpartnerslp.com
Acquisition International | November 2013 | 27
DEALS OF THE YEAR: The Best Deals of 2013
Real Estate Deal of the Year Europe / PenSam acquisition of portfolio of mortgage bonds from Finansiel Stabilitet
Benny Andersen is CIO at PenSam, a labour market pension fund based in Denmark. Andersen speaks to Acquisition International about the pension industry in Denmark and a recent unequalled transaction which PenSam participated in. 28 | Acquisition International | November 2013
DEALS OF THE YEAR: The Best Deals of 2013 Benny Andersen is Chief Investment Officer at PenSam. He has been at PenSam since June 2007 where he was hired to renew and internationalise the investment portfolio. Prior to that, he has held various positions within the pension industry over a period of 10 years. Responsibilities include the fixed income portfolio, starting the alpha beta separation and setting up an internal beta neutral hedge fund both in the fixed income. Besides that he was responsible for the ALM process including the hedging programme. Benny Andersen holds a Master of Science of Economics degree from University of Copenhagen. Recently, PenSam acquired a DKK2.2bn (€295m) portfolio of mortgage bonds from the country’s state liquidator, Finansiel Stabilitet. The portfolio contains 6,000 lien loans and represents the entirety of the mortgage bond business at Finansiel Stabilitet. This deal was part of PenSam’s overall investment strategy, Mr. Andersen explains: “My aim has been to change the investment strategy into an (very) active strategy coming from an indexed approach. In 2010 it was decided to be active in four phases. In doing so, PenSam has executed on more investment sub-strategies than peers – and by bringing the investment return into the absolute top, we have been successful in doing so.”
“Hence, the acquisition of mortgage bonds from Finansiel Stabilitet is part of our overall investment strategy to enhance return by investing in alternatives. We strive actively to reduce the sensitivity in our portfolio to changes in the interest rates relative to what is seen in government bonds etc. The mortgage bonds offer an opportunity to do that. Before that, PenSam had been the seed investor when the manager Halkin started as an asset manager in Denmark. Thereby investment skills and experience was at place – and with a good investment track record. It was important that the team in cooperation with PenSam had developed the analytical competencies needed to price the individual security and the whole portfolio as such. We were ready to do best in class pricing and admin meaning we were in a rewarding position when the opportunity emerged.” The negotiation period ran over almost nine months with several gates where the pricing skills, as well the operational capabilities, had to be documented. However, Mr. Andersen found it was a very open process where Finansiel Stabilitet acquired PenSam’s pricing of each single security.
return and hence better pensions alongside the overall strategy. A strategy that so far has been successful and giving return top of peer group.” Over the next 12 months Mr. Andersen states that PenSam has plans for assessing the success of the recent acquisition, as well as looking further forward. “We have a dedicated strategy to increase return in this portfolio but also to lever up on the track record by doing direct lending to commercial companies and commercial real estate. This is a market that banks are leaving due to Basel III. And it is a market that we, for the time being, are pioneers in developing.” PenSam manages occupational pension schemes for approximately 340,000 wage-earners employed in Danish municipalities, regions and in private organisations. PenSam was founded in 1986 joining four pension funds for each of the sectors within the trade union organisation FOA. PenSam’s utmost aim is to generate the best possible ROI to its customers, enabling these to have a healthy pension upon retirement. Also, through the demographic makeup of its customers PenSam can develop its insurance products to fit its customers in the best possible way.
“We are helping to clean up after the financial crisis, and, at the same time, we are able to get a good return for the benefit of our customers,”
“In phase 1, the strategic asset allocation focused on increasing return by increasing investment risk considerably but with a disciplined approach to risk budgeting and risk taking. Increasing investments in alternative asset classes has been and is still a strong strategic focus.” “As part of understanding the value proposition in the different asset classes a tactical team has been established in the second phase and a broad based tactical strategy was formulated. Focus was on exploiting return opportunities in asset classes that from a value perspective was cheap while taking into account the needed holding horizon. That meant traditional strategies in equities vs bonds but also tactical strategies in illiquid asset classes like credit, illiquid credit like senior secured bank loans, mezzanine debt, distressed consumer credit, private equity and real estate.” “Phase 3 could be labelled active management in each asset class that gives opportunities to increase return above a passive strategy. That is increasingly being done internally in private equity, credit (direct lending), real estate, fixed income, ALM hedging, FX.” “The fourth phase 4 entails leverage of alfa in strategies in RE, Equities, investment grade bonds, credit.”
“Challenges included a long process with a ton of documentation of handling abilities etc. that ended in a simple although long lasting discussion of price. However, we were prepared and due to our superior pricing skills we felt comfortable throughout the process. In combination with the fact that Finansiel Stabilit is bound to sell its assets sooner or later this obstacle was overcome by being stubborn on return expectations. And the result we found was fair. We took over a portfolio that demands a lot of operational risk but is giving a nice double digit (expected) return with upside potential due to the economy and housing market improving.” Overall Mr. Andersen was pleased with the transaction and believes it will add real value to PenSam.
Pensions comprise the main activity in PenSam, accounting for approx. 90 per cent of all revenues. Moreover, PenSam provides general insurance and private banking products to its customers. “PenSam acquires the majority of its customers through trade union agreements,” he begins. “In these agreements it is stated that PenSam is first choice pension provider for the FOA members. In this sense, PenSam distinguishes itself from other pension funds,” Mr. Andersen explains. “FOA’s members primarily work in the public health care sector as nursing home assistants, hospital porters, cleaners and nursery assistants. Furthermore, PenSam’s customers include fire fighters, bus drivers and lifeguards.”
“We are helping to clean up after the financial crisis, and, at the same time, we are able to get a good return for the benefit of our customers,” he explains. He noted that the global economy was now improving, and that PenSam expected yields to rise. “We have built up the necessary skills to be able to move out of bonds into other asset classes with better potential returns,” he adds. “Our customers will enjoy higher investment
Company: PenSam Name: Benny Andersen (CIO) Email: beba@pensam.dk Web Address: www.pensam.dk Address: Jørgen Knudsens Vej 2, DK 3520 Farum Telephone: +4523383476
Acquisition International | November 2013 | 29
Şehit Ertuğrul Kabataş Cad. No:3 D:13 K:3 Mecidiyeköy, İstanbul, Turkey +90 212 356 88 89
DEALS OF THE YEAR: The Best Deals of 2013
Consumer Deal of the Year UK
/ Kout Food Group acquisition of Little Chef Jamie Constable is CEO of Rcapital Partners LLP. He talks to Acquisition International about the current climate and the recent sale of Little Chef. ---------------------------------------------------------------Rcapital is a private investment business that provides turnaround and growth funding to UK companies. Unlike a traditional private equity house, Rcapital uses its own capital to invest in businesses, so the firm has a vested interest in delivering long-term results. Jamie Constable explains: “Since its inception in 2004, Rcapital has revived 39 businesses with significant financial and operational challenges. “The Rcapital team has a unique skill set in reversing the fortunes of small and medium-sized firms by financially restructuring the business, forming strong partnerships with management and rebuilding operations. Rcapital focuses on SMEs with turnover of between £5m and £200m and typically invests between £200K- £20 million in businesses in any industry sectors.” The team prides itself on adopting creative, out of the box solutions that are tailor-made to fit a company’s individual needs. Even so, this still necessitates a quick approach to assess the business issues and opportunities. A key factor is that the Rcapital team can action turnaround investment in a matter of days. “As a private investment business owned and managed by two partners we are not controlled or hindered in the same way that traditional private equity houses often are, which can both slow and limit what they can do,” explains Jamie. “We are flexible and able to move quickly to meet shareholder and business needs not the needs of investors.
“We can offer investment, but on its own it will not bring returns. Because we invest our own money we are fundamentally committed to delivering results. And from experience we know that cash needs to be paired with change to achieve positive results and long-term value in a business.” An example of this is their Deal of the Year: Rcapital’s sale of the Little Chef chain of roadside restaurants to Kout Food Group Restaurants. Jamie explains more about the rationale behind this divestment. “Rcapital took the decision to explore options for the roadside restaurant business in April 2013 and appointed a corporate finance firm to manage the process. The aim was to find a buyer that would take the business and its operating brands on to the next stage,” he says. “Since we put Little Chef up for sale people have asked us, why sell the business? The answer is very simple. We are specialists in reversing the fortunes of businesses with significant financial and operational problems. We turn businesses around, we rebuild and fix them, that’s our business. Looking back, Little Chef was the biggest and longest turnaround in our nine-year history. “When we bought the chain, it needed huge changes to revive the business and bring it back to profitability. It was much harder than we expected. As the country faced one of the worst economic declines in living memory, we rolled up our sleeves and got on with it, we believed we could make it work and we did. “Having owned Little Chef for a long time it feels like we are selling part of ourselves. But we take comfort from the fact that the new owners will take the brand to the next stage.”
Following on from this successful transaction, the future looks bright for Rcapital and its specialisation of breathing life back into distressed and stressed businesses. “We pride ourselves on being more than a turnaround investor,” says Jamie. “We provide unique expertise and practical skills to restructure businesses and turn them around. We see potential in ‘insolvent’ and complex situations. Once the cash pressure has gone, our team of experienced operators go in to support the management teams on the journey of creating sustainable businesses that are fit for the future. “We have plans to continue to seek out businesses that need help and I expect that the next one to two years will the busiest we have ever been. We see on average 50-60 deals a month and we expect that this will grow by a third as confidence in the economy grows and we move towards recovery. Why? Because history shows that companies often collapse trying to fund working capital on the way out of recession.”
Company: Rcapital Name: Jamie Constable Email: jamie@rcpital.co.uk Web: www.rcapital.co.uk Address: 5th Floor, 24 Old Bond Street Mayfair, London, W1S 4AW Telephone: 0845 293 9888 Twitter: ttps://twitter.com/RcapitalUK LinkedIn: http://www.linkedin.com/company/ rcapital
Acquisition International | November 2013 | 31
DEALS OF THE YEAR: The Best Deals of 2013
TMT Deal of the Year - Europe TestPlant acquisition of Facilita Software Development George Mackintosh is CEO of TestPlant. Recently, the company was awarded TMT Deal of the Year – Europe, and Mackintosh tells us more about how it felt to receive this accolade. -------------------------------------------------------------TestPlant was formed in 2008 and, with VC backing from Seraphim Capital, immediately made an acquisition of US-based Redstone Software Inc. The company has grown from five employees to 50, with development centres in Boulder Colorado and Manchester. The HQ is in London and there are also sales offices in Hong Kong and Boston –with another soon to open in San Francisco. TestPlant develops the ‘eggPlant’ range of software quality tools competing in a market previously dominated by HP, IBM and MicroFocus. The company’s strategy is to build profitable and sustainable revenues by selling its tools to major enterprises on a term license basis and it has an aggressive and long-term growth strategy. Chief Executive Officer, George Mackintosh, explains more about the company and how it distinguishes itself from the competition. “The eggPlant range contains patented and patent-pending technologies and is designed for the ‘agile’ and ‘mobile’ test and development environments,” he begins. “The tools deliver the ability to test any software running on
Company: TestPlant Name: George Mackintosh Email: george.mackintosh@:testplant.com Web Address: www.testplant.com Address: 6 Snow Hill, London EC1A 2AY Telephone: 020 7002 7888
any computing platform – from mainframe to desktop to mobile - in a much easier to use method than our competitors. Furthermore, the licensing model is simple and more flexible than the industry leaders’. With tools that are quick and easy to deploy and flexible enough to be the standard tool of choice in large organisations, use of eggPlant products results in much lower cost of ownership when compared with the more established but now ageing competitor solutions.” Recently, TestPlant acquired Facilita Software Development. Mackintosh comments on the deal and reveals the rationale behind it. “The purpose was to find good IP in test technology which would be complementary to the product acquired with Redstone Software in 2008. Facilita had a perfect fit with its performance test product which allowed us to extend our eggPlant Functional test ability into a range of tools able to test software as it appears on the screens of desktop systems or mobile devices [the ‘GUI’ or ‘interface’ functionality] and simultaneously able to measure the server [or ‘back end’] performance under load. The acquisition widened our range and much improved our ability to compete for more “wallet share’ from our customers. “The acquisition of Facilita was very long in its gestation [five years] and slow [11 months] in its closure. But that time allowed for a perfect technical and business ‘fit’ to be established, much in favour of TestPlant as we had hugely out-performed Facilita which had actually been bigger than TestPlant in 2008. The deal was extremely well received by the pool of customers and by all current employees. Market analysts – notably TechMarketView and Gartner – applauded the logic and execution of the transaction. The integration plan was extremely effective and quick. The best result can be measured by our sales – up by some measure above our own best expectations.”
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During the 11-month period it took to complete the acquisition there were several challenges, which Mackintosh tells us more about. “First, it was difficult to agree a method for comparing the respective values of the two businesses. TestPlant’s new CFO, starting in September 2012, brought a pragmatic approach to the process and ‘heads’ were agreed in November 2012. Secondly, negotiations were complicated by diverging interests amongst the selling shareholders, with one looking to retire and exit the business and two others enthused by the technical and commercial fit and keen to stay and grow with the new combined business. The TestPlant board remained solidly behind the deal during these delicate negotiations.” Mackintosh states that the company can already judge the deal to have been a great success. “In 2013 TestPlant had forecast sales order growth of 26%. YTD this year we have achieved 87%. Over 42% of that figure is deemed organic and the other 45% is a result of the April acquisition of Facilita’s business and the multiplier effect of having a more potent and wider range of tools. Also worth mentioning has been the willingness of Facilita’s prospects to commit significant orders to the much larger operation under the control of TestPlant. “Generated cash and profits have already allowed us to accelerate our product development plans and to introduce new and updated products, such as ‘eggCloud’ and v14 of eggPlant Functional. We will continue to move warily about future acquisitions but to move boldly ahead with the sales and marketing of the existing product range. Very early in 2014 we will open our sales and support base in San Francisco and re-locate our Chief Sales Officer to that location. We look forward to continued high and profitable growth in 2014.”
DEALS OF THE YEAR: The Best Deals of 2013 City, and is in the most central location. Vincom Mega Mall RoyalCity, which opened on July 26, 2013, is the largest shopping center in Vietnam and the largest undergroundshopping and entertainment complex in Asia.The stabilized properties in the portfolio are at or near full occupancy with long-term, committedleases from top global brands.
Real Estate Deal of the Year Asia/Pacific / Warburg Pincus investment in Vingroup
On May 28, 2013, Vingroup and Warburg Pincus announced a definitive agreement under which a consortiumled by Warburg Pincus makes a US$200 million investment to acquirean approximately 20.2% equity interest in Vincom Retail. The agreement also includes a commitment from Warburg Pincus to participate in a future overseaslisting of Vingroup for up to US$25 million. In addition, it alsoincludes an opportunity for the Warburg Pincus Consortium to invest an additional approximately US$100million and the parent to make a matching investment up to four-folds in Vincom Retail to expand the platform and explore future retail property related opportunities. The first tranche investment of US$150 million was closed in July 2013, whilst the following two tranches are expected to close by the first quarter in 2014.
Hanoi / Vietnam
Ms Le Thuy is Vice Chairwoman cum CEO of Vingroup JSC, based in Vietnam. She speaks to Acquisition International about a recent transaction which should help shape Vingroup’s future. ---------------------------------------------------------------------Vingroup Joint Stock Company is the largest listed real estate company in Vietnam by market capitalisation with controlling interest in over 30 developments, which are in prime urban and high growth areas in key cities throughout Vietnam. In January 2012, the merger of Vinpearl JSC (established in 2001) and Vincom JSC (established in 2002) formed Vingroup JSC nowadays. Vincom JSC was the Vietnam’s No.1 brand-name in the real estate field, consisting of complexes of high-end shopping malls, offices and apartments in prime locations, which in turn created large modern urban complexes, and thus leading Vietnam’s trend of luxury smart eco-urban areas. Vinpearl JSC was the leader in the tourism industry with a series of international five-star and over hotels, resorts, beach villas, entertainment parks, golf courses. The amalgamation of Vincom and Vinpearl created Vietnam’s largest and integrated real-estate, commercial and hospitality group, poised to leverage the long-term economic development of Vietnam. As of November 2013, Vingroup JSC owns and controls over 30 large-scale real estate and tourism properties in prime locations across the country and at the same time possesses the largest charter capital in Vietnam’s stock market of nearly USD3 billion. Vingroup is also recognizedwithin Vietnam and in the region as one of the most dynamic and sustainable private enterprises with high a potential for international integration. Vice Chairwoman cum CEO, Anne Pham, tells us more about how Vingroup distinguishes itself from the competition. “The company differentiates itself by being the largest developer in Vietnam with a premium brand name,” she explains. “Our strong brand equity attracts premium tenants & clientele. We are a fully-integrated real estate owner and developer with exposure to key consumer segments throughout Vietnam, and we have
a clear focus on serving all of the needs of the growing middle class Vietnamese consumers.” Ms Le Thuy embellishes on the recent investment led by a group of private equity investors into Vincom Retail, including the strategic rationale behind the transaction. “Warburg Pincus has been a leading private equity investor since 1966. Since its formation, Warburg Pincus has invested more than US$46 billion in approximately 675 companies across 35 countries, of which more than 120 companies have been listed on internationally recognized stock exchanges. “Warburg Pincus was also one of the first international private equity firms to invest in Asia in 1994. Since then, they have invested in over 70 companies with a total aggregate investment of over U.S.$3.7 billion. Additionally, Warburg Pincus has a long history of investing in Asia’s real estate sector at both the entity and asset level. This strategic partnership is founded on a common vision and that is to develop Vincom Retail’s operation so as to benefit from one of the world’s fastest growing domestic retail sectors, the favorable long-term economic outlook in Vietnam and the rapid development of an urbanized middle class. The partnership brings together Vincom Retail’s marketleading position in Vietnam’s most important urban centers and Warburg Pincus’ global retail and consumer industry expertise.” Vincom Retail is a subsidiary of Vingroup that owns, manages and develops retail projects throughout Vietnam. After Vincom Mega Mall Times City goes into operation in December 2013, Vincom Retail will have the largest portfolio of retail properties in Vietnam with six properties at prime locations in Hanoi and Ho Chi Minh City. Vincom Retail’s portfolio is unquestionably the best in class in Vietnam. According to CBRE, The retail spaces at Vincom Center Ba Trieu—Tower B and Vincom Center BaTrieu—Tower C collectively form the largest modern high-end shopping center in the central business district ofHanoi. Vincom Center Dong Khoi is the largest shopping center in Ho Chi Minh
The structure allows the Warburg Pincus consortium to make a direct investment into Vietnam’s largest retail platform, but also ensures that the sponsors are committed to the potential opportunities and long-term growth of the franchise. Leveraging onWarburg Pincus’ network and experience in developing retail businesses will allow Vingroup to accelerate itsroll-out of business plan in addition to growth capital. Last but not least, the management at Vingroup is hopeful that the partnership will helpenhance management capabilities and strategic flexibility with two Warburg executives joining the Board of Directors of Vincom Retail. Vingroup plans to expand into up-and-coming cities such as Hai Phong, Ha Long and Da Nang as well. The joint venture establishes an exclusive vehicle for the development and management of Vingroup’s retail property portfolio. Within the Group, Vincom Retail will have priority rights to develop and expand retail or mixed-use projects in key major cities across Vietnam. As for the rest of the Group, with regards to the future, Ms Le Thuy adds: “Vingroup intends to continue to focus on what it does best, to use its expertise and experience in identifying and securing prime sites in major urban centers and tourist destinations in Vietnam, in negotiating and bidding for sites, in carrying out land clearance and designing and in executing development projects with the highest standards of construction. We believe these qualities are particularly important for high profile sites, where bidders are assessed based on various criteria, including financial capacity and track record of successfuldevelopment.”
Company: Vingroup JSC Email: ir@vingroup.net Web: www.vingroup.net Address: No.7, Bang Lang 1 Street, Vincom Village, Viet Hung Ward, Long Bien District, Ha Noi Tel: +84 (4) 3975 9999/ ext. 926
Acquisition International | November 2013 | 33
DEALS OF THE YEAR: The Best Deals of 2013
Industrials Deal of the Year - UK Wood Group acquisition of Pyeroy Group Limited Tony Di Nozzi is Group Head of Mergers & Acquisitions for Wood Group. Recently, the company was awarded Deal of the Year by Acquisition International readers and Tony is delighted to tell us more about what helped the firm clinch this prestigious accolade. 34 | Acquisition International | November 2013
DEALS OF THE YEAR: The Best Deals of 2013 Wood Group is an international energy services company with around $7bn sales, employing about 43,000 people worldwide and operating in 50 countries. The Group has three businesses – Wood Group Engineering, Wood Group PSN and Wood Group GTS - providing a range of engineering, production support, maintenance management and industrial gas turbine overhaul and repair services to the oil & gas, and power generation industries worldwide. Group Head of Mergers and Acquisitions at the firm, Tony Di Nozzi explains more about the company and what sets it aside from competitors. “At Wood Group we focus on achieving market leadership in our long-term growth sectors,” Tony says. “Our track record reflects a history of doing exactly this—building market-leading positions based on clear differentiation both organically and through strategic acquisitions. “Wood Group’s Core Values are at the heart of our business because they define who we are, how we work, what we believe in and what we stand for. Our Core Values provide a sound basis to make decisions. “Our global reputation has been built upon decades of successfully managing even the most complex engagements for our clients, offering a broad range of integrated services across the asset lifecycle. Today, as always, we are focused on safely delivering innovative, fit-for-purpose solutions to our diverse base of customers.” Recently, Wood Group acquired Pyeroy Group Limited, a provider of specialist coatings, access and fabric maintenance services to the oil & gas, marine and rail industries. Headquartered in Gateshead, UK, Pyeroy was founded in 1973 and employs approximately 1,800 personnel at eight locations throughout the UK and Ireland.
The fit was ideal in the sense that Pyeroy’s client base did not include our key North Sea competitors; is a company that has room for growth in the sector; and has the skills and experience to complement our oil & gas capability. “The strategic rationale for Wood Group acquiring Pyeroy Group Limited was compelling for the following reasons: • Fabric maintenance is considered complimentary of WG PSN’s core services (O & M, E & C) and is consistent with the companies brownfield services offering • Brownfield integrity is considered a growth market as ageing infrastructure in the North Sea requires further investment (further oil and gas recoveries estimated at between 15 to 24 billion barrels of equivalent) • The Pyeroy acquisition supports Wood Group solutions to customers particularly in the areas of maintaining production, reducing operating costs and providing integrity assurance • Wood Group can look to insource a greater volume of fabric maintenance work following the acquisition which simplifies Operator interfaces with the Supply Chain • Wood Group capabilities have been enhanced in core markets such as Decommissioning as Pyeroy services include innovative access solutions and cleaning services.” From letter of intent to closing the deal took just under seven weeks. Despite the quick turnaround of this transaction Tony explains that it wasn’t all plain sailing and that many challenges were presented to Wood Group. “We faced many issues as part of the acquisition, including some which we had never experienced before. However Wood Group has a highlyexperienced internal acquisitions capability and we were well able to deal with these challenges.”
Tony tells us more about the transaction and the strategic rationale behind it.
The success of this acquisition will be considered against a number of criteria, says Tony.
“The acquisition of Pyeroy marked a strategic move into specialist coatings and access services which broadened our service offering to oil & gas customers. Several major operators in the UK Continental Shelf had asked us to provide these services which are particularly relevant for ageing infrastructure and decommissioning projects.
“The criteria for analysing the deal’s success include integration, growth targets, customer and employee satisfaction and financial targets. “Wood Group is committed to helping the Pyeroy business grow in its existing markets (Marine, Power, Infrastructure) while helping it to achieve its growth targets in the Oil and Gas sector.”
“Pyeroy maintains and continue to grow its presence in the marine, rail and onshore construction sectors, but as part of Wood Group will also expand its services in the UK and international oil & gas sector, complementing our existing brownfield production services capabilities. “There was a real cultural alignment between Pyeroy’s own company values and Wood Group’s Core Values, particularly in terms of Safety, Innovation, People & Relationships.
Company: Wood Group Name: Tony Di Nozzi Web Address: www.woodgroup.com
Acquisition International | November 2013 | 35
REGIONAL ROUND-UP: The Best Deals of 2013
Regional Round-up From the rising stars of the emerging world to European economies that have made headlines for the wrong reasons during the economic crisis, our regional round-up travels the globe. We’ve spoken to leading business, legal and financial professionals to find the best investment opportunities and the greatest challenges. From in-depth analyses to quick-fire round-ups we cover everything from where to start an SME to driving FDI. 36 | Acquisition International | November 2013
REGIONAL ROUND-UP: The New Rising Stars: Turkey
The New Rising Stars... Turkey
Istanbul / Turkey
Safak Herdem is the founder and the managing director of Herdem Attorney’s at Law. Herdem provides legal services for national and international companies and individuals in transactions where one party is Turkish. We mainly focus on contract management, advisory services and litigation & arbitration in legal and taxation matters. However, what distinguishes us from our competitors is the way we structure our firm to provide our clients with services beyond legal counselling. The firm is involved in fund raising transactions and acts as a gateway between investors and promising industries. We deal with each and every case in a manner that takes the considerations of the different parties in to account, thus creating an environment where all the interested parties respond together to the challenges at hand. ---------------------------------------------------------------------The business environment in Turkey is quite competitive, as it should be, and it sits on strong legal foundations. The economic reforms that followed the 2001 economic crisis in Turkey managed to create a very strong and sustainable basis for the Turkish business to flourish. The efforts for economic liberalization coupled with almost surgical intervention and adaptation of critical regulations for some of the key sectors all combined to generate a very dynamic environment for the Turkish companies to do business. Investors should evaluate Turkey by its economic performance, political stability and its sound legal basis. The Turkish economy has not only been one of the fastest growing economies of the world during the last ten years but, importantly, it has also weathered the recent economic crisis well and proved its resilience. Moreover, the Turkish political scene has been very stable during the last decade as a result of single party governments and the Turkish legal system has recently been reorganized along lines that guarantee equal treatment for the firms with foreign capital and Turkish firms. The country is strategically situated at the crossroads of Europe and Asia so it serves as an economic, logistical and cultural hub in the region. Its population of 75 million, mostly young people, creates economies of scale for investors.
The real estate, construction, energy, healthcare and hospitality industries are considered to be potential developing industries in Turkey. Recently business and financial services have also become key developing areas.
As an emerging market, Turkey is not able to stand away from global financial markets’ integrity. However, economic authorities intend to take some precautions to mitigate the risks of a financial crisis.
In particular, the renewable energy sector is projected to perform an upward trajectory in the near future. The fostering of renewable energy policies has acted as a catalyst for solar, wind, hydro and biomass licensing procedures and criteria.
In contemplation of US expanding monetary policy amendment, Turkey will apply for decreasing interest rates and open market transactions with buy or sell bonds by determining extraordinary days in terms of global markets political and financial circumstances.
Although the economy’s performance has made it a bright spot, there is the potential of pitfalls ahead. The biggest risk is Turkey’s dependency on external financing. Due to the emerging market’s fragility in relation to developed economies’ recession risk, US tapering monetary policy probability and the EU credit crisis, there are concerns these factors may cause a slowdown to Turkey’s economy.
Additionally, against a potential Euro zone credit crunch, Turkey maintained a self-protection mechanism in the scope of banking system. Furthermore, the Turkish Government delivered a new vision on the energy sector with significant breakthroughs on severe energy areas. New nuclear power plant establishment agreements with Japan and Russia, long-term renewable energy feed-in tariffs and a new energy stock exchange launch are noteworthy steps in the Turkish energy market.
Furthermore, the Turkish economy is dealing with a current account deficit and incremental foreign debt amount whereas a steady economic growth is forecasted to appear at the end of 2013. In the sight of these circumstances, Turkey has become an import-dependent country, most particularly in energy sector. Aside from economic indicators, foreign direct investments (FDI) will be geared up with additional incentive schemes and tax reliefs to attract investors. The key components for coping with internal and external challenges are sustainable economic and politic reforms. Turkish policy makers intend to carry out economic reforms to deal with volatility on capital flow.
In consequence of regulated energy markets and production capacity, Turkey is expected to import far less energy from 2023. As a consequence of these developments, Turkey is projected to be an energy hub and will act as a market integrator for Europe and the Middle East. Taking the ongoing work into account, I believe Turkey presents plentiful opportunities for would-be investors. What is particularly noteworthy is the proven resilience of its economy. Even in the midst of the global economic crisis, Turkey’s economy remained stable.
Increasing austerity and productivity are the key elements for sustainable economic growth. The Individual Retirement System, with government contribution, is a concrete step for the purpose of increasing savings. New Turkish Trade Law and Capital Markets Law are expected to drive stronger fiscal discipline and a well-structured banking system. Nevertheless, as a fragile emerging market, Turkey will augment Central Bank dollar reserves against potential market risks. In the scope of Eurozone countries, Turkey is positioned as a secured country in terms of capital adequacy, the cash ratio requirements of banks that show parallelism with Basel III Accords.
Company: Herdem Attorneys at Law Name: Safak Herdem Email: safak.herdem@herdem.av.tr Web Address: www.herdem.av.tr Address: Uprise Elite Tower Floor: 27 No: 234, Kartal - Istanbul / Turkey Telephone: (+90) 216 290 12 77
Acquisition International | November 2013 | 37
panama
cayman islands
malta
REGIONAL ROUND-UP: The New Rising Stars: Argentina
Argentina
Puente De La Mujer Bridge Of The Women designed by Santiago Calatrava Buenos Aires Argentina
Carlos E. Alfaro, is the Managing Partner AlfaroAbogados, an international corporate law firm from Argentina. The firm primarily represents foreign companies doing business in Argentina and pays careful consideration to asset protection and transparency issues. The firm also provides political risk analysis. Its services are divided among industry groups and areas of practice. Industry Groups: Energy, Oil and Gas, Aviation, Aircraft Finance, Automobile, Pharma, Healthcare Services, Farming and Wineries, Banking and Finance, Transportation and Logistics, Medical supplies and equipment, Mining, Food and Confectionary and Infrastructure projects. Areas of Practice: Mergers & Acquisitions; Antitrust; Project Finance; Protection of Foreign Investments; License and Distributorship Agreements; Arbitration & Mediation; Protection of Intellectual Property Rights; Lease Financing; Joint Ventures and Strategic Alliances; Immigration; Human Resources; Sports and Entertainment. -------------------------------------------------------------The Argentine economy has shown remarkable resilience to a variety of international events that affected the economy worldwide in 2009 and also local pitfalls due to partial incorrect measures adopted by the Government. But the country will grow 5.1% this year, which is a significant result.
The areas in which Argentina offers good opportunities for investments are: oil and gas exploration and services in the petroleum activity (drilling, transportation, etc.); mining; infrastructure development (energy, ports, roads); automobile (manufacturing of automobile parts, suppliers); trains; farming and food processing and technology (IT, software). In certain areas the Government is providing incentives (oil and gas, technology, automobile) but primarily the country’s main objective is to promote local manufacturing in order to reduce imports and improve the balance of payments. In this sense, incentives are available and the Government is open to negotiating with a potential foreign investor in sectors that provide employment and produce goods for the local market and exports. This policy is also supported by a program that boosts the demand and increase consumption. Excluding Brazil, Argentina offers precisely the large local consumer market that Uruguay, Chile, Paraguay, Bolivia and Peru do not have in terms of population and purchasing power. And, amazingly, compared to many of these countries the value of assets in Argentina is lower. The Government is taking measures to normalize its international relations. It has reached an agreement to pay the awards rendered at the International Centre for Settlement of Investment
Disputes (ICSID); one of its immediate effects was the granting of a three billion line of credit by the World Bank. This is only part of a battery of measures aimed at having access to world financing and investments. Securing an inflow of hard currency investments is of the essence to provide financing for the infrastructure development of the energy sector in Argentina. By 2020 the country could become a large exporter of oil and gas due to an adequate exploitation of its shale reserves, the third largest in the world. This effort will also generate a domestic growth and an increase of the reserves of the Central Bank, two pillars of any successful economy.
Company: ALFARO-ABOGADOS Name: CARLOS E. ALFARO Email: cealfaro@alfarolaw.com Web Address: www.alfarolaw.com Address: Av. del Libertador 498 (C1001ABR) Buenos Aires, Argentina Telephone: 54-11-4393-3003
Acquisition International | November 2013 | 39
REGIONAL ROUND-UP: The New Rising Stars: Ghana
Ghana
Kwame Nkrumah Memorial Park, Accra / Ghana
Edward Effah is the Managing Director and CEO of Fidelity Bank Ghana Limited. He believes the driving force behind Fidelity’s rapid growth in Ghana’s banking industry are: the expertise of our people, a strong brand image, local knowledge of the market, and a flat operating structure.
Company: Fidelity Bank Ghana Limited Name: Edward Effah Email: info@myfidelitybank.net Web Address: www.fidelitybank.com.gh Address: Ridge Towers - Ridge, Accra PMB 43, Cantonments, Accra, Ghana Accra Telephone: 233-302-214490
Kojo Nunoo is the General Manager - Sales & Distribution at Kasapreko Company Ltd Its services are divided among industry groups and areas of practice. ----------------------------------------------------------------
Company: KASAPREKO COMPANY LTD Name: KOJO NUNOO Email: kojo.nunoo@kasaprekogh.com Web Address: www.kasaprekogh.com Address: DTD #64, OFF SPINTEX ROAD, BAATSONAA, ACCRA GHANA Telephone: +233302810956
These factors facilitate prompt decision making, innovative solutions to clients’ problems and quick turn-around times. ---------------------------------------------------------------The medium to long-term view for Ghana is fantastic considering the oil and gas industry has yet to impact significantly on the economy. At the onset of commercial oil production, there was an outstanding growth in GDP from 8.0% in 2010 to 14.4% in 2011. In the short-term, the deficit will pose a challenge for infrastructure development that needs to take place but after that I believe Ghana is set to be a global high performer in 2014 and beyond. The country has a favourable business environment for the growth of businesses. In Ghana, it is relatively easy to start a business as it requires only registration of the company with the Registrar General’s Dept, for a fee ranging between GH¢35 for sole proprietorships to US$1,000 for foreign companies.
Other factors which contribute to making Ghana a good business destination include: easy access to credit (over 26 commercial banks and other lending institutions), investor protection and enforcement of contracts by the laws of the country and various other initiatives by the Ghana Investment Promotion Center. Financial Sector reforms have greatly improved disclosure and compliance to global market standards, all of which have cumulatively enhanced performance in the sector. The government’s focus on infrastructural development has also improved contribution from the industrial and real estate sectors of the economy. It is worth mentioning that all this development would be hindered in the absence of a stable political environment; Ghana, as a beacon of democracy in Africa, is privileged to have a sound and peaceful democratic regime.
Over the past several years, Ghana has enjoyed political stability which has engendered investor confidence in the country. The discovery of oil in commercial quantities in Ghana has also brought in a flurry of investors into the oil sector, thereby boosting economic growth.
Kasapreko Company Ltd is an alcoholic and non-alcoholic beverage manufacturing company established in 1989 by Dr Kwabena Adjei. It prides itself on producing herbal products that are functional in nature, giving it an advantage over its competitors.
In recent times, the country has also enjoyed high commodity prices on the world market. Ghana also has a large pool of relatively skilled and semi-skilled population which support industry. The greatest investment opportunities lie in oil-related industries, the packaging industry, and hotel and real estate businesses.
Dr Adjei began operations in his garage at Nungua, a suburb of Accra in Ghana, and managed to grow the company from four employees to a multi-million dollar company employing 200 full-time employees and 200 third-party staff. It also boasts the most modern production facilities in Ghana, supplied by Krones AG, a leading bottling line manufacturer in Germany. Kasapreko has also gone international exporting to Nigeria, South Africa and Liberia among others.
There are drawbacks: Ghana has a high debt portfolio, high cost of borrowing and a weak currency. Energy costs and utility tariffs are also high. However, these can be solved by the effective planning and execution of government infrastructure projects, and selfless and visionary leadership to take bold and fundamental decisions that will catapult the country to another level.
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Kasapreko also has a very strong distribution network all over the country, which ensures product availability in the whole of Ghana. The company constantly undertakes market research and prides itself on its highly skilled and competent staff led by its founder and CEO who drive the business on a daily basis with passion and zeal.
REGIONAL ROUND-UP: The New Rising Stars: Slovakia & Serbia
Slovakia Bratislava Apollo Bridge / Slovakia
Frantisek Sedlacko is senior partner and the founder of SEDLACKO & PARTNERS, s.r.o. law firm, which ranks among the most dynamic and leading medium law firms in Slovakia. As an independent law firm, we can react flexibly to clients´ needs and requests. Clients benefit from our precise knowledge of the Slovak law and legal system, the local business environment combined with our long-term experience. ---------------------------------------------------------------The Slovak business environment is changing rapidly as our economy opens up for foreign investors. The Slovak Republic belongs among Europe’s most dynamic economies in recent years, largely due to sizeable foreign investments. The country enjoys positive ratings from international rating companies and gained the best position among the CEE countries in World Bank’s Doing Business Report 2008 – 2013. Slovakia is an ideal investment destination mainly because of its political and economic
stability strengthened by the common European currency, the Euro; competitive taxation system, and availability of a highly skilled and educated workforce with favourable labour costs. This country offers great advantages to foreign investors and its strategic location between East and West Europe provides great export potential. In order to promote further economic expansion and attract foreign investments, the Slovak government is following up on the priority of connecting the western (with borders to Austria and Czech Republic) and eastern parts (with borders to Hungary, Poland and Ukraine). The business environment has been improved by new taxation legislation and the introduction of e-Government. The proximity to eastern trades is also decisive. Slovakia’s economy has been growing and this trend is reflected in daily life. It is expected that the export-oriented economy in 2013 will not
Company: SEDLAČKO & PARTNERS, s.r.o. Name: Frantisek Sedlacko Email: office@sedlacko.sk Address: Stefánikova 8, 811 05 Bratislava 1 Telephone: +421 2 546 30 226-8
Each office is interconnected via state-of-the-art technology and computer systems. Telephone and video conferencing facilities as well as a centralized server and intranet system ensure that otherwise remote locations adhere to even the smallest detail in our client service and philosophy; thus making us local experts with global knowledge. Our client portfolio in Serbia encompasses a number of industries including, but not limited to, manufacturing, retail, real estate, energy, financial services, media and entertainment, and airlines.
Belgrade / Serbia
Eurofast has been operating in Serbia for over 10 years, offering a range of professional services in the country. Eurofast is a boutique international professional services including Accounting, Payroll, Regional Tax, M&A, Corporate Finance, Cross Border Structuring organisation employing over 250 people in south east Europe and the east Mediterranean. It delivers a range of professional services in the region through its fully fledged offices in Lefkosia, Athens, Sofia, Bucharest, Belgrade, Podgorica, Tirana, Skopje, Zagreb, Pristina, Banja Luca, Sarajevo, Cairo , Alexandria, Tbilisi and Beijing. Its roots go back for more than 30 years.
Also a major improvement in public finances has been accepted, which could influence prospective investors. This indicates that investing in Slovakia could indeed be profitable in the next few years.
to ensure that our standards and philosophy are implemented and maintained throughout every office.
Serbia
Serbia’s strategic location, attractive investment incentives, favourable business environment, and the availability of a multilingual and highly skilled workforce have made the country a great investment destination in south east Europe.
avoid a slowdown of growth, due to the sovereign debt crisis in the Eurozone, but the positive report is that it will definitely not stop growing.
Our team of experienced professionals have great experience in serving local Serbian businesses, multinational companies and high net worth individuals. We have become the number one reference point for entrepreneurs interested in expanding in Serbia or reaching new markets outside Serbia. This is because we offer localized professional services in each country we operate in and have a vast array of associates globally, so we are able to support our clients anywhere they decide to go. The fact that all local Eurofast offices are 100% fully fledged subsidiaries and not representative offices, allows Eurofast to truly implement and maintain a uniform region-wide management policy with the same client-focused approach and partner-led personal service. Our teams are led by experienced local professionals who are guided by the group’s management team
We welcome the opportunity to discuss the opportunities available to you and how an investment can add value to your business.
• Mergers & Acquisitions • Accounting & Payroll • International Tax • Cross border Transactions • Corporate Finance
Company: Eurofast Name: Panos Diallinas, Regional Director Email: panayiotis.diallinas@eurofast.eu Website: www.eurofast.eu Address: 31/4 Beogradska street, 11 000 Belgrade, Serbia Tel: +381 11 3241 484 Fax: +381 11 3038 848
Acquisition International | November 2013 | 41
REGIONAL ROUND-UP: Spain: Uplifting the econony & Iceland: Attracting foreign investment
Spain: Uplifting the Economy
Ignacio Lacasa is Managing Partner of Across Legal SLP ---------------------------------------------------------------Across Legal is a Spanish legal firm providing across the board legal services to both international and national clients, together with specialized departments dealing with International Mergers, Acquisitions, and Venture Capital.
Coastline of Barcelona, Spain
for outside investors and institutions to take full advantage of. We have found that Joint Ventures, strategic acquisitions and direct investment in startups have proved successful.”
Across legal: across countries, across industries, helping clients succeed
“We are of the opinion that recent reforms to the labor market will yield long term growth. On the other hand, the property market remains an area
“Our legal team is perfectly placed in this “new order”, we speak a number of European languages as well as Russian.“ “I feel that, at this moment business confidence is returning and there are encouraging signs that the economy is beginning to recover, leading to investment opportunities for foreign investors. The restrictions on the availability of finance from the banking sector have left a gap in the market
of concern but at the same time provides “rock bottom” bargains for foreign investors.” “Our legal team is perfectly placed in this “new order”, we speak a number of European languages as well as Russian. “
Company: Across Legal, SLP Name: Ignacio Lacasa Email: ilacasa@acrosslegal.com Web: www.acrosslegal.com Address: Rambla de Catalunya, 86, 1º 1ª, 08008 Barcelona, Spain Telephone: +34 932 724 837
Iceland: Attracting International Investments Northern Lights, Barcelona / Spain
Stefán Karl Kristjánsson, District Court Lawyer, KRST law firm ---------------------------------------------------------------The Icelandic business environment is full of opportunities. As a nation we learned a valuable lesson from the banking crisis: not to put all our eggs in the same basket. In the last few years many exciting young companies have emerged. Many of these are solely based on the intelligence of its founders. The opportunities are everywhere and foreign investors are heartily welcomed. Iceland is rich with green energy but the question is how it is to be used and in what. There is also exploration for offshore oil and gas. As an island nation, rich with natural resources, we do not consider other countries as competition. We are focussed on keeping our unique status while continuing to welcome travellers and investors.
The opportunities for investors are limitless. There is plenty of green energy that is relativity cheap if one is seeking that. However, I think that there is an even greater opportunity in small Icelandic companies that are seeking investor aid to help them to take the next step. KRST law firm is a relatively young law firm but is based on an older firm. In our approach we like to maintain a close relationship with our client to ensure his interest and wishes are secured. We are a fresh, open-minded, hard-working law firm seeking the opportunity to work for investors willing to take the chance in the exciting new Icelandic business environment. We think it has to be interesting for companies to arrive in the early stages of an exciting new business environment. To be a new foreign
investor who is able to voice an opinion and be heard must be a good thing. It is our belief that locating in Iceland will give companies the mark of high quality, high standards and become very valuable.
Company: KRST law firm Name: Stefán Karl Kristjánsson Email: stefan@krst.is Web Address: www.krst.is Address: Tryggvagata 11, 101 Reykjavik, Iceland Telephone: 00 354 551 64 12
Acquisition International | November 2013 | 43
REGIONAL ROUND-UP: A positive spin on Hungary’s economy
A positive spin on Hungary’s economy Acquisition International talks to Steven Conybeare, Partner of Conybeare Solicitors.
How would you describe the current business environment in Hungary? The current business environment in Hungary is not as positive as many people believe it could be and it remains a politically sensitive destination for foreign investors. FDI has slumped in the past year compared to a relatively strong 2012 when banks re-capitalised and whilst there is no accurate rationale, a continuing lack of general confidence is certain to play a key part. There are a number of reasons for this lack of confidence, but primarily the environment is perceived as not providing a stable and established platform on which investors are willing to risk investment capital. The government seems content to fight against certain established economic principles to find a new way to bring growth and stability to its economy, whilst at the same time making no secret of its nationalistic desires to be more independent, partly by bringing back certain business sectors within the Hungarian fold and heavily targeting the banking, telecom and energy sectors with special taxes and effective price regulation for domestic customers. Examples include the state’s purchase of 21.2% in MOL, 100% of E.ON’s gas trading and storage assets, the 20% reduction in domestic utility fees, conversion of FX mortgages, the imposition of temporary surtaxes on these industries which have not been as temporary as first understood, monopolising tobacco sales and adopting and amending a new constitution with some controversial provisions.
These events have dented investors’ confidence in Hungary, which consequently has a negative impact on sentiment and it is this government’s current economic philosophy which is seen as “unorthodox” and unsettling for foreign investors. Elections are due in May 2014 and therefore it is to be expected that decisions are likely to be based more on populist rather than sound fiscal rationale, but there is a longer term issue: by shifting the need for ongoing capital investment onto the shoulders of the state a financial burden will be imposed in the not too distant future, with consequences of increased borrowing unless profit levels can be maintained by the public sector. The current government enjoys the benefits of its 2/3 super-majority, which contrasts with the usual coalitions in European governments and some say that it realises that it may not retain this in the future so a number of decisions have been embedded by requiring a future super-majority to amend. This super-majority effectively gives the Hungarian government carte blanche to adopt and pursue such economic policies as it believes will create a growth economy without having to take into account anybody else’s view – whether Hungarian or European. To be fair, Hungary has done well in standing up for what it believes to be right and there are similarities beginning to appear in other countries, but the real question is at what future
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cost? A short term gain for long term pain? Only time will tell. Statistics indicate an improving environment, but real growth (excluding state funded projects) remains low, with depressed levels of corporate lending to the private sector so it may all potentially be no more than illusory. However, on the positive side, there are pockets of apparent resurgence with tourism figures showing an increasing trend, employment may be on the increase (but wages are not following), low inflation (primarily from the cut in utility fees), low bank rate (down to 3.6% from 10%), exiting the Excessive Deficit Procedure for the first time since accession in 2004 and IMF funding repaid and local office closed. What plans are in place to maintain growth? In this pre-election period, it is expected that there will be increased spending on populist items to ensure the “reality” of economic restoration is felt by the voting public, including by strategically placed advertising on public transport to remind the local audience. Tax allowances, subsidies and infrastructure development will increase and in the latter case the real driver of growth in the construction sector will remain the state-ordered projects financed by EU funds. Real growth in GDP will end up somewhere between 0.1% and 0.5% for 2013. With predictions of around 2% for next year, it assumes that the global sentiment
REGIONAL ROUND-UP: A positive spin on Hungary’s economy remains positive, the EUR/HUF FX rate remains beneficial for exporters and none of the targeted industry sectors decide to pack up and go home. Many see that there is no cohesive strategic plan, but rather there is a collection of ideas that form the basis of policy which in turn become initiatives to ensure re-election rather than exclusively designed to boost the economy. A special (low interest) credit facility has been recently introduced to try to boost lending, as without lending the economy will not grow. This is not unique to Hungary, but the environment is such that banks are struggling with existing portfolios and new lending is very low. Is the forthcoming election having any other impact? Hungarian media is generally benign so the domestic news can be rather different to that reported by foreign media. The message from government for its domestic audience usually differs to that offered to foreign outlets. The government is communicating a positive message about the Hungarian economy, which many Hungarians do not share or experience, partly based on attributing blame for their current predicament on outside influences, but making clear that it is this government which is able to protect them and ensure that their lives will improve. The real cost of living in Hungary is increasing with no corresponding increase in real wages; despite cuts to utility prices, increases in VAT and various taxes are all ultimately borne by consumers. There is a general feeling that economic policies are designed for short term gain, and changed at will, rather than for long term sustainable development and growth. In particular, it needs to find a way to retain its young workers who appear to be leaving en masse – an estimated 200-300,000 have left in the past three years.
How has Hungary been dealing with the European crisis? The current administration has argued that the crisis was caused by a system that didn’t work, by previous administrations and that it was elected to fix the problem and to ensure that the same mistakes are not repeated. It is this philosophy which stands behind its initiatives to give it greater control over its own destiny and be less reliant on third parties. Ensuring that the government and its related apparatus control or own key aspects of the economy so that it may continue to deliver headlines which do improve statistics but the long term result of which is still unknown. Focussing on national sovereignty to ensure that Hungary is not bullied by systems and policies which it believes caused the economic failings in the past means that from time to time Hungary stands out from the crowd and draws unwelcome attention to itself, particularly from foreign media seen as being left-wing and who generally do not toe the same line as domestic media. A weak currency provides Hungary with a certain amount of flexibility to protect its export-based economy.
Property prices remain heavily depressed and there are mixed messages as to whether the market can go any lower. There is a lack of liquidity in the domestic market and the commercial market is very slow, but there are opportunities for regional investors who include, rather than focus exclusively on, Hungary. The energy sector remains depressed with significant hikes in the so-called Robin Hood tax which has cooled interest of new investors into the Hungarian oil & gas sector and, despite an exemption for smaller players, the recently announced terms for the new bidding round for hydrocarbon licenses has been received quietly by E&P companies, due to the bidding terms. The bidding closed 15 November with results due in February 2014 and the industry awaits the outcome with interest. As part of the EU, Hungary enjoys the benefits by way of being able to provide grants and subsidies to encourage foreign investment for capital investment and job creation, and it offers low headline tax rates. But against this it doesn’t always appreciate being told what it can and cannot do, and how. By retaining its sovereign currency (the Hungarian Forint or HUF) it retained the ability to pursue economic policies of its own design, including allowing HUF to depreciate to a level (near 300 Ft/€1) thus ensuring its exports are cheaper and more competitive. There is an educated work force with good skilled labour and competitive wages.
“The current business environment in Hungary is not as positive as many people believe it could be and it remains a politically sensitive destination for foreign investors.”
Strategic partnerships are being used to demonstrate the credibility of the government to “partner” with foreign companies, but otherwise foreign capital is unhealthy and allows the Hungarians to be taken advantage of. However, all of this may be considered as being adapted to suit the circumstances of the forthcoming elections in May 2014. I am happy to hear the government’s rhetoric of economic growth and well-being because then there remains a hope that this will become reality. However, the key in the coming years will be to close the gap between rhetoric and reality, so that Hungary does attract new investment and new investors. In the short term it may be expected that growth will continue to be anaemic (it’s forecasted to be 2% in 2014 but I expect it will be less) boosted by a surge in public spending on infrastructure related projects with low inflation and low interest rate environment. Otherwise there is unlikely to be any change to the current economic policies as it is more than likely that the current government will succeed in staying in power for another term, particularly as the opposition is still in disarray and lacks offering any credible alternative. The real question is if it will have a 2/3 super majority again, but even then it may not matter as many of its policies have been enshrined and can only be changed by a future 2/3 super majority.
How is Hungary competing with other European countries? The plan seems to be to ensure that Hungary can stand on its own two feet (to paraphrase Mr Orban) without the need for third party financing such as from the IMF, and thus to provide a more stable economic environment. But as mentioned elsewhere, the result of general economic policies thwarts its abilities in some cases. However, Hungary is looking East (as well as West) and has made arrangements with countries such as China and Vietnam to secure foreign investment by providing these countries a launch-pad into the EU. Hungary established a special residence investor program by which investors may acquire permanent residence in Hungary and thus apply for a passport subject to buying EUR 250,000 government bonds. This was primarily aimed at Chinese investors offering them a route to a Schengen area passport.
The Hungarian Investment and Trade Agency (HITA) is a revamped state agency which has worked hard and successfully at attracting foreign investors, not always an easy task in the current climate. However, individual grants and subsidies often make the difference between an investment happening in Hungary rather than a neighbouring country. I believe that there are a number of good opportunities for investors who understand the current economic climate and who are willing to engage with local realities. Above all else, Budapest remains a wonderful and charming city for both business and pleasure, and I would urge those who have not yet been to visit and enjoy all it has to offer.
What else is Hungary doing to attract investors? Hungary has attracted its fair share of shared service centres, and continues to do so, with the likes of Vodafone, BT, Exxon all choosing Budapest to locate their EMEA offering. The automotive and light industry manufacturing sectors are still attracting investors, but these are specific projects with beneficial subsidies available. IT/Media, pharmaceutical and consumer segments still seem to be attracting interest, again with financial incentives made available. Agriculture could be a good sector, but this is one which is being dominated by Hungarians with land being made available to selected domestic investors.
Company: Conybeare Solicitors Name: Steven Conybeare Email: law@conybeare.com Web Address: www.conybeare.com Address: Clearwater House, 4-7 Manchester Street, London W1U 3AE Telephone: +44 (0) 870 753 0925 +36 1 577 9936
Acquisition International | November 2013 | 45
REGIONAL ROUND-UP: The jurıdıcal ınfrastructure for foreıgn ınvestors ın Turkey
The jurıdıcal ınfrastructure for foreıgn ınvestors ın Turkey Esra Akcebe is an attorney at the Istanbul Bar Association.
Maiden’s Tower, Istanbul / Turkey
Turkey’s dynamic and rapidly growing economy presents significant opportunities for foreign investors. In recent years, a secure economic environment has been provided for investors through radical economic reforms and strengthening of the legal infrastructure. The fundamental legal structures are: ‘Law No. 5084 Encouragement of Investments and Employment’; ‘Law No. 43875 Foreign Direct Investments Law’; and significant international treaties. The objective of Turkey’s FDI Law is to regulate the principles for encouragement of foreign direct investments; to protect the rights of foreign investors; to define investment and investor in line with international standards; to establish a notificationbased system for foreign direct investments rather than screening and approval; and to increase foreign direct investments through established policies. Besides these regulations, there are ministry decrees and amendments to some laws.
A new encouragement system is being applied from the No. 2012/3305 and 2013/4288 (indicates amendments on some articles) decree of the Council of Ministers. According to the encouragement system there are general, regional, large-scale and strategic investment incentives; it is also separated into specific regions and investment subjects. For example: value added tax exemption; customs duty exemption; tax reduction; employer’s social security contribution support and land allocation in the 1st, 2nd, 3rd, 4th and 5th regions. In the 6th region, the government is providing interest support, income tax withholding allowance and employee’s social security contribution support. As a result of this the number of foreign investors in Turkey is increasing. Up to 2012, there were 32,146 foreign capital companies and 881 liaison offices. Foreign investments are also increasing. In 2012, FDI levels reached US$12.4 billion. Examples of modifications to the law include amendments to the Commercial Code relating to the foundation of joint stock corporations and limited companies, which can now be founded by one person and foreign capitalised companies.
Company: Istanbul Bar Association Name: Esra Akcebe Web: www.istanbulbarosu.org.tr
Another significant modification is an amendment to Article 36 of the Land Register Law, which states: “Foreign national natural persons and legal entities incorporated in accordance with legislation of foreign
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countries and incorporated companies established in Turkey where 50% or more shares are owned by international institutions or the authorisation of assignment and release of majority of directors which are granted to international institutions, can acquire ownership rights on land.’’ This change to purchasing real estate has paved the way for foreign-invested companies to be established in Turkey. Besides these legal regulations to encourage FDI, the Republic of Turkey’s Prime Ministry, Investment Support and Promotional Agency has a fundamental duty to provide assistance to investors at every stage of the investment process and to promote Turkey’s investment opportunities to the global business community. Another significant institute is the General Directorate of Incentive Practices and Foreign Capital. Turkey’s commitment to attracting FDI has seen the draft law to establish the Istanbul Arbitration Center put on the front burner again. It is expected the arbitration center will come into being in April 2014 and will be an independent legal entity, capable of competing internationally. Foreign investors should consider investment in: informatics; industry; technology; defence; energy; transportation and retail. Among these, informatics and technology should be considered on a preferential basis.
REGIONAL ROUND-UP: FDI Outlook for Thailand
FDI outlook for Thailand Written by John Evans with contributions from Martin Jancik
Bangkok / Thailand Despite the recent slower growth by the Asian region as a whole, Thailand continues to be one of the most attractive locations for foreign direct investment (FDI) in Southeast Asia, but where and why will be different than in the past. Provinces to the north of Bangkok and the Eastern Seaboard, the traditional and popular areas of investment, face issues of rapidly rising wages due to labor supply constraints, shortages of land in industrial estates and the on-going threat of unpredictable natural disasters. To continue to drive FDI growth outside these areas, Thailand will increasingly rely on supporting its urbanization and its new, but not yet introduced and official BOI-scheme, to de-zone its previous areas to attract FDI. Centered in the middle of the Greater Mekong Subregion (GMS) with direct access to the Gulf of Thailand and Andaman Sea, Thailand is located in a strategic geographic position with key trade routes throughout the region. The Thai government is taking full advantage of the nation’s geographic location as it prepares to launch a series of aggressive infrastructure development projects aimed at improving regional connectivity. Ultimately, these infrastructure developments, coupled with carefully planned industry clusters and investment incentives, are part of the government’s long-term mission to move Thailand away from a labor-intensive economy into a new, value-added position higher up the supply chain, especially with the looming ASEAN Economic Community.
Earlier this year, Prime Minister Yingluck Shinawatra unveiled an ambitious US $67 billion plan to increase public spending on several large-scale infrastructure projects from 2013-2020 as part of the National Development Strategic Plan to lift Thailand’s economic growth annually over the next decade and ultimately transform the nation into a higher value-added economy. According to industry research giant Business Monitor International, the project includes plans to expand 45 highways from two to four lanes and double-track rail networks by 2773km which would allow trains to travel in both directions at the same time.
an aim to increase Thailand’s competitiveness. When a draft of this plan was introduced to investors in 2012 it included de-zoning the investment areas of the country and establishing knowledge-based and industry-focused clusters. The introduced plan was initially met with skepticism from investors. However, the new revised plan, which is to take effect in January 2014, will mainly focus on de-zoning the country. Companies in targeted sectors that currently receive incentives are unlikely to be affected by the new changes. The sectors expected to experience high growth include automobiles, electronics, food processing and medical device industries, among others.
One of the largest projects is the construction of four new high-speed railway lines from the Bangkok to rural provinces in Nong Khai, Chiang Mai, Padang Besar, and Rayong. These railways stretching throughout Thailand are expected to improve supply chain connectivity as goods produced in manufacturing estates away from the city center can be efficiently transported to Thailand’s key ports and shipped out to Europe and the United States. The Thai government is partnering their aggressive infrastructure development program with investment programs designed to improve the country’s competitiveness. Government efforts to attract investment also include advantageous BoI incentives and an extensive cluster program for key industries. The BoI plans to refocus its strategy for future growth by promoting new regional industrial clusters with
Company: Tractus (Thailand) Ltd. Name: John Evans Email: thailand@tractus-asia.com Web: www.tractus-asia.com Address: 75/63 Richmond Office 17th Floor, Sukhumvit Road Soi 26 Klongton, Klongtoey, Bangkok 10110, Thailand Telephone: +66.2.260.8200-2
Acquisition International | November 2013 | 47
REGIONAL ROUND-UP: Myanmar: An Attractive Location for Foreign Investment
Myanmar: An Attractive Location for Foreign Investment Sam Fox is a Senior Consultant, Global Client Services, South-East Asia at Control Risks.
Sunrise over temples of Bagan in Myanmar
Control Risks has been helping clients in Myanmar (selectively) since the 1980s; over the last two years, however, their caseload has increased dramatically. They are currently consulting on political, operational, reputational, regulatory and security threats – as well as economic opportunities – across a wide range of sectors. Mr Fox described the current business environment in Myanmar as “fascinating”. He noted that the business environment is undergoing profound change, in particular for international investors. “At the most basic level, that begins with the simple ability to do business in Myanmar; beyond that, we are seeing (and will continue to see) changes in the political, institutional and legal spheres that will impact investment decisions for years to come; the upcoming new telecommunications law and potential foreign ownership restrictions as a case in point,” he continued. “However, whilst these on-going structural changes are likely to remain on a largely beneficial tack for international investors, we see the operating environment for businesses in Myanmar remaining one of the (if not the) most challenging in the region. There is a huge amount of goodwill for Myanmar, and the momentum is growing; that has attracted a lot of interest, but we are only now starting to see who is prepared to deploy capital. Those that are investing now will need to commit considerable time, energy and expertise to succeed. But the opportunities are there.”
Mr Fox stated that Myanmar enjoys an abundance of natural resources and agricultural potential, noting that the country requires massive investment in all types of infrastructure, particularly in the telecommunications and energy sectors. He highlighted the country’s large population who should, if reforms maintain and progress, benefit substantially from economic growth. “The apparent openness of the government and an increasingly engaged international community means it is likely to enjoy strong year-on-year GDP growth for the foreseeable future,” he added. “All this in a country which borders 40% of the world’s population and is located in one of the fastest growing regions in the world.” Control Risks has worked with clients representing a comparable cross-section of sectors compared to other similar emerging economies: from natural resources, through energy, transport and communications infrastructure, and more recently consumer sectors and financial services. Two things have interested the firm about that: first, the speed with which interest in Myanmar spread through those sectors – over the course of nine months or so, starting in earnest in early 2012; and secondly, the way in which the firm’s clients in those sectors are now looking to exploit the opportunities that are present.
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“Myanmar is a blank canvas for a lot of our clients, as it is for their international competitors,” enthused Mr Fox. “Entering a new market comes with its own challenges, but in Myanmar in particular we are seeing clients taking great care with their entry strategy. There is an opportunity to make great strides in a short space of time, but the risk profile and evolving nature of the market demand a huge amount of attention. Do I adopt one, low risk, strategy now and monitor for certain triggers to enter the market in a more meaningful way? Do we import our FMCG product and subcontract distribution, or move straight to onshore manufacturing? If I engage these stakeholders now, what could that mean for my relationships in the country in two years’ time (post-2015 elections)? Is now the right time to approach Myanmar, as a GP? If so, how?” Mr Fox believes that these fundamental questions need to be asked, and that any particular investor’s answer to them would reflect their opinion of the likely speed and nature of developmental change. He advised that a business which believes it has a successful formula for market entry in other parts of the world, even in other parts of the region, shouldn’t assume it can be applied in Myanmar. “How you enter a market should always be a reflection of your risk appetite and your view on the development of that market. Whilst the former may be constant, the latter – as regards Myanmar – is arguably more unpredictable than most,” he opined.
REGIONAL ROUND-UP: Myanmar: An Attractive Location for Foreign Investment “We also think that a lot of the goodwill for the Myanmar story has already been priced in to certain sectors – look at the tickets put on the successful telecom tenders recently, the share prices of Myanmar-linked companies in Singapore, or real estate valuations in Yangon. Those examples also carry an indication of the challenges to be faced in Myanmar. For example, the re-run of the telecoms tender, the failure of other Myanmar companies to gain access to the SGX, or land and ownership issues in the real estate space. These headline-grabbing issues can ignore the challenges faced by investors looking for long-term, organic growth opportunities in sectors that aren’t necessarily that politicised or requiring as significant capital commitments. Every sector presents its own challenges in Myanmar, but certain sectors can be approached in ways that might satisfy the more conservative investor (it’s all relative, though…).” In Mr Fox’s view, Myanmar’s natural resources have always attracted foreign investors. He highlighted the foreign companies “grandfathered” in Myanmar and operating in the natural resources space throughout the sanctions period, albeit with a strict mandate not to grow during that time. Today, he believes that Myanmar’s natural resources are playing a dual role: they are themselves attracting foreign investors, to assist in their exploitation; and they provide a hedge to other sectors, seeking forward-looking economic stability in a country emerging from years of isolation. “Much ink has been spilt, for example, on the close connection natural resources have with the country’s burgeoning finance sector,” he elaborated. “If wellmanaged, the natural resources dividend that Myanmar should enjoy can help bring about some degree of financial stability, for the medium term. “When you talk of natural resources, it is also worth considering the wider commodities sector. In particular, a sector that, for many years, was one of Myanmar’s most successful industries: agriculture. We see huge opportunity there for foreign investors, particularly since the traditional dominance of Thai exports in this sector have somewhat waned in recent years, but the challenges remain similar to those faced in natural resources: highly politicised sectors with major legal and infrastructural challenges, often with localised risks attached which can fall by the wayside during a foreign investor’s considerations.”
Shwedagon Pagoda in Yangon, Myanmar (Burma).
their stakeholder engagements aids, or pollutes by association, other foreign investment. Discussing the labour force in Myanmar, Mr Fox stated that there is a significant shortage of skilled labour in parts of the Mekong region. He believes that in Myanmar – a country which previously enjoyed some of the highest standards of education in the region – that shortage is particularly acute. “So it’s fair to say that the skills shortage is an impediment to the growth of knowledge-intensive sectors of the economy,” he continued. “The other side of the equation, however, is the opportunity this presents to investors, in bringing “technical expertise” that is so often requested by governments in developing economies (Myanmar is no exception).
However, he noted that this timeframe will most likely see a raft of changes to the operating environment in Myanmar: constitutional reform; political energy shifting to focus on hard-fought elections; splintered political parties and the balancing act of coalition government; key institutions re-imagining themselves – restructured, enlarged, upskilled or even privatised; local business groups looking to reassert themselves; and the first wave of projects brought about by economic reform will have been weighed and measured. “The risks present during this period will be many: regulatory change and shifting winds of public opinion frustrating existing projects; on-going ethnic tensions inflamed by perceptions of unfair distribution of economic benefits; geopolitical tensions, even the health and wellbeing of a small cadre of key protagonists will need to be monitored as a potential trigger to increased business risks,” he predicted.
“Entering a new market comes with its own challenges, but in Myanmar in particular we are seeing clients taking great care with their entry strategy.”
For example, Mr Fox noted that the risks inherent in tendering for the offshore oil and gas block awards are very different to considering investing in an existing onshore block, or mine, in a region prone to ethnic and/or communal violence, and the itinerant and often heavy-handed military response that follows. He advised that considering the project-level risks in any investment, but particularly in the natural resources sector, is fundamental to success. Typical considerations would include: local political dynamics and interference (as power decentralises); local military commands and the extent of their commercial and operational influence; ethnic and/or communal unrest; logistical, security and operational challenges; the availability of labour and challenges managing that labour ethically; the available business partners and their probity and track record; and the extent to which others operating in the area and
“What will be interesting to watch in Myanmar is when the two come together. Even in sectors which don’t require a high proportion of highly-skilled workers – such as the manufacturing of garments – the requisite numbers of qualified employees are still likely to be found wanting. The government, through the Foreign Investment Law, has slated percentage local content requirements on a sliding scale (25% in first two years, rising to 75% in years five and six of an investment), but that may prove a medium-term drag on growth, and a potential operational risk for the foreign investor. “But the “limited labour force” argument applies beyond the bottom or middle of the pyramid. At the highest level, we are yet to see if the major political parties and institutions possess enough executive decision-making capacity and cohesion to drive meaningful reforms in areas in need of overhaul such as education, the civil service, judiciary and social services.” Control Risks anticipates continued growth for Myanmar is 2013; in Mr Fox’s view the most likely scenario over the next five years will see accelerating FDI and annual GDP growth hovering around 5 – 7 %.
“In sum, we remain cautiously optimistic about the continued trajectory of reform and economic development in Myanmar. But for anyone doing business in the country, the relatively benign economic outlook belies the amount of effort that will need to be expended to succeed in a fluid and evolving environment. This may well be a ‘once in a lifetime’ opportunity, but with that opportunity come a multitude of challenges and risks which need to be monitored and understood, on an almost daily basis,” he concluded.
Company: Control Risks Name: Sam Fox Email: sam.fox@controlrisks.com Web: www.controlrisks.com Address: 331 North Bridge Road, #04-01/04 Odeon Towers, Singapore 188720 Telephone: +65 9833 4834
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REGIONAL ROUND-UP: Malaysia: Continued Growth for 2013 & A Positive Spin on Denmark’s Economy
Malaysia: Continued Growth for 2013 Ramakrishna Damodharan is the Managing Director of Adipven (M) Sdn. Bhd. He is also one of the firm’s shareholders and is responsible for its day-to-day operations. Adipven (M) Sdn. Bhd. is a boutique Intellectual Property (IP) firm, headquartered in Kuala Lumpur, Malaysia. We are registered patent, trade mark and industrial design agents in Malaysia. Our firm handles all IP matters in Malaysia and also IP matters in other countries through our network of associate firms throughout the world. ---------------------------------------------------------------------Malaysia enjoys a stable economic and political situation which means businesses find Malaysia to be an excellent location. Based on the World Competitive
Company: ADIPVEN (M) Sdn. Bhd. Name: Ramakrishna Damodharan Email: rama@adipven.com Web Address: www.adipven.com Address: A-33-3A, Menara UOA Bangsar, No. 5, Jalan Bangsar Utama 1, 59000 Kuala Lumpur, Malaysia Telephone: +603 2201 4023 & +603 2201 4026 Fax: +603 2201 4025
Yearbook 2012, Malaysia is the 14th most competitive country in the world. Also, the Global Competitiveness Report 2012-2013 by the World Economic Forum, which covers 144 countries, places Malaysia as the world’s 25th most competitive country. Malaysia is also listed as the sixth easiest country for doing business, number one for getting credits, number four in protecting investors and number five in trading across borders. Malaysia is able to compete with its neighbours because of its diversified economy unlike its neighbours that focus on certain economic sectors. Although the manufacturing sector provides the biggest income to Malaysia, other sectors such as services, oil and gas and agricultural still provide significant income to the country. As a result, I expect continued growth for the rest of 2013 and into 2014 and beyond. Based on my experience dealing with many businesses in Malaysia, it is my view that agriculture, manufacturing, tourism, logistics services, education, health care, oil, gas and petrochemical, creative industries, electrical and electronics, financial services, palm oil, rubber, fishing and aquaculture provide greatest opportunities for investors. The benefits Malaysia offers are relatively low-cost operations with a good professional and semiprofessional workforce. Also, as English is widely
spoken, foreign investors find Malaysian staff members to be highly employable and professional. Also, as the IP infringement activities in Malaysia are relatively low compared to other countries in this region, foreign investors are able to invest huge amounts of money in the country without worrying too much about possible IP infringement activities. Malaysia has been promoting the country as a great investment location to various corporations around the world. Whilst traditional trading partners such as the US, Japan, Singapore and Europe continue investing in the country, it is noted that Malaysia has been attracting investment from other countries like China, India and the Middle East. Malaysia is currently involved in the negotiations to sign a Trans-Pacific Partnership Agreement, a free trade agreement with Asian and Pacific-rim countries such as US and Japan. Once the country signs the TPPA, Malaysia is expected to enjoy access to bigger markets and also to provide excellent intellectual property protection to investors. Internally, Malaysia also promotes six Economic Growth Corridors i.e. Northern Corridor Economic Region (NCER), East Coast Economic Region (ECER), Iskandar Malaysia in Southern Johor (IRDA), Sabah Development Corridor (SDC) and Sarawak Corridor of Renewable Energy (SCORE). These Corridors provide excellent investment opportunities for investors.
A Positive Spin on Denmark’s Economy Nicholas Liebach and Lasse Dehn-Baltzer are both attorneys and partners with Skau Reipurth & Partners Law Firm, the leading break-out law firm in Copenhagen. Nicholas’ main areas of practice are mergers and acquisitions, joint ventures, restructurings and company law. He also works as an external associate
Company: Skau Reipurth & Partners Law Firm Name: Nicholas Liebach, Attorney, Partner and Lasse Dehn-Baltzer, Attorney, Partner Email: nli@skaureipurth.com Web Address: www.skaureipurth.com
professor in company law (companies limited by shares) at the University of Copenhagen. Lasse Dehn-Baltzer advises on tax, including tax and criminal litigation, restructuring, business succession planning and the tax affairs of major shareholders. His field of expertise also includes company law and commercial contracts as well as commercial dispute resolution. ---------------------------------------------------------------Denmark is among the world’s best locations for doing business. The World Bank ranks Denmark as the easiest place in Europe to do business. And the World Economic Forum ranks Denmark in the top ten of the most competitive economies in the world. Key pull factors include: • No red tape and bureaucracy. High flexibility and a safe business environment are Danish characteristics. Establishing a business can be done in a matter of hours and at very low costs. • The Danish ‘flexicurity’ model. Denmark has some of the most flexible hiring and firing rules in the world, which reduces costs of scaling business operations up or down. Public sector services are also among the best in the world. • Denmark is a natural gateway to Northern Europe. With the region’s airport hub located in Copenhagen and excellent port, railway
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and road connections, Denmark offers the best infrastructure for companies’ regional headquarters. For investors Denmark is a world centre for cleantech and has one of Europe’s strongest life science sectors, covering both biotech and innovative medical technologies. The Danish government recently launched an ambitious ‘Growth Plan’ that aims to make Denmark even more competitive. As part of this plan, the corporate tax rate will be gradually reduced from 25% to 22% by 2016, and a number of other business-friendly deductions in taxes and levies will be implemented. Combined with these new initiatives, the current rules that allow for the depreciation of business expenses will make actual taxation rates even lower. Denmark also has a unique tax rule by which Danish companies are generally not taxed on income from foreign branches, which prevents double taxation. In most other countries, relief from such double taxation may result in adverse tax consequences or financial penalties. This makes Denmark a perfect platform from which to base a Nordic or European headquarters.
REGIONAL ROUND-UP: Israel: Tapping into the Promised Land
Israel: Tapping into the Promised Land Barry Levenfeld is a senior partner at Yigal Arnon & Co., specializing in Mergers & Acquisitions, primarily with technology companies. He also has an extensive venture capital, emerging company and life sciences practice.
Jerusalem / Israel
Israel has not suffered from the same economic crises that have hit most of Europe or the slowdown afflicting the United States. Business, particularly in the technology, oil and gas and infrastructure fields, is booming. The Israeli legal and regulatory environment is friendlier to business than ever, and we are seeing numerous high profile transactions. Most recently, Waze was sold to Google for over $1 billion, and we represented IBM in the acquisition of Trusteer, a transaction that was reported at a value of over $650 million. Investors are attracted by tremendous technological innovation, highly competent and innovative employees, a fair and responsive legal and regulatory system, and highly professional legal and accounting talent. I often feel that the global technology giants enter Israel the way a child goes into a candy store: they are tempted to swallow up most everything they see. Israel is awash with opportunities in traditional technology sectors such as software, encryption, semiconductors, telecommunication
technologies and e-commerce. It also presents tantalizing possibilities in medical devices and life sciences in general. Emerging sectors include data privacy, smartphone-related develops (eg apps) and the recent oil and gas opportunities opened up by the discovery of large fields of natural gas off Israel’s shores in the Eastern Mediterranean. I don’t see any slowdown on the horizon, in fact the opposite. The high profile M&A deals will continue; new sources of funding (like crowd funding and accredited investors clubs) will spur emerging companies, posing a challenge to the VC model, and life sciences will continue to thrive. By the way, the one thing I have not mentioned is Israel’s rather ‘dicey’ neighbourhood, with significant unrest characterizing all of our neighbouring countries. The reason I have not mentioned it is that it has not affected the pace or substance of business. Investors are sufficiently sophisticated to realize that local geopolitical events have not historically put a
damper on the continuing growth of technology and other business opportunities in Israel. Yigal Arnon & Co. is one of Israel’s leading law firms. We are a full service firm representing Israeli and international clients in their investment, acquisition and commercial activities in Israel and beyond. We are known for our expertise, experience and business sense. Clients include IBM, El Al, Computer Associates, Siemens, Medtronic, Intel, ebay and Cisco.
Company: Yigal Arnon & Co. Name: Barry Levenfeld Email: barry@arnon.co.il Web Address: www.arnon.co.il Address: 22 J. Rivlin Street, Jerusalem 94240, Israel Telephone: +972-2-623-9200
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REGIONAL ROUND-UP: Forming an SME and trading in…
Forming an SME and trading in… Taiwan Richard Watanabe is the Deputy Tax Leader, Japanese Business Leader and Financial Services Industry Leader of PricewaterhouseCoopers Taiwan. Taipei / Taiwan
The key considerations for setting up any business are the historical and geographical connection between the location of the new entity and the intended markets, complexity of and the time required for setting up the new entity, and relevant tax liabilities and other regulatory compliance responsibilities. Taiwan has a lot to offer in these respects. Taiwan’s location makes it a perfect place for international corporations to establish their headquarters in Asia Pacific region. As the
Company: PwC Taiwan Name: Richard Watanabe Email: richard.watanabe@tw.pwc.com Web Address: http://www.pwc.tw/ Address: 27F, 333 Keelung Rd., Sec. 1, Taipei, Taiwan 11012 Telephone: +886 2 2729 6704
hub that connects Europe, the United States, Japan and the emerging Asian markets, Taiwan is crucial in terms of its high economic and strategic value. Taiwanese enterprises have been aspiring to integrate manufacturing and service industries and now play a central role in the supply chain of IT industry. Setting up a company in Taiwan is relatively straightforward. With four company types available for selection (unlimited companies, unlimited companies with limited liability shareholders, limited companies, and companies limited by shares), most of the foreign investors favour a company limited by shares as a whollyowned subsidiary, in which the shareholder’s liability is limited to the capital invested. Foreign direct investments in Taiwan still require prior approval from the authorities, but the government plans to simplify the approval process by exempting foreign investment projects below a certain amount from screening prior to implementation. This will make ex-post declaration as a general rule and prior approval as an exception.
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As a member of international organizations such as WTO and APEC, Taiwan is highly free in economic activities. It follows international practices and has a healthy system to protect property rights. China is Taiwan’s biggest trade partner, after entering into the Economic Cooperation Framework Agreement (ECFA) in 2010, Taiwan and China have further signed off the Crossstrait Trade in Services Agreement on 21 June 2013 (currently pending Taiwan legislative authority’s approval), which is expected to be a key step in Taiwan’s economic expansion abroad. Assisting individuals/corporations to conduct business in Taiwan by either incorporating a new entity or acquiring an existing Taiwanese entity is part of PwC Taiwan’s services. With more than 40 years’ extensive experience and deep industry expertise and the only one of the Big Four in Taiwan with affiliated law firm (PwC Legal), PwC Taiwan is able to provide its clients with integrated and value-added services.
REGIONAL ROUND-UP: Forming an SME and trading in…
Mexico Daniel Padilla Ramos is the founder of Grupo Anda, a group of commercial, legal and financial companies in north-west Mexico. --------------------------------------------------------------
that operate in Sonora it is easy to see that these problems do not affect investors and their companies. Besides, Sonora is the safest state in Mexico. It’s also well-connected: Sonora´s capital, Hermosillo, has daily direct flights to most of the important cities in Mexico and the South USA, including: Houston, Texas; Phoenix, Arizona; Los Angeles, California, Cancun and Mexico City.
Starting a company in Sonora, Mexico, is really simple. It takes about a month to set up the whole company, including the tax register id and the workers’ social security authorization, with much lower prices compared to many other countries in the world.
Sonora state government offers unbeatable facilities to establish foreign companies in our region, this includes some tax exemptions and land if the project is considerable.
Sonora is on the US border, therefore it’s a Maquila state, with a cheap and high-quality workforce. It has already attracted companies like Ford, Motorola and some European space companies. The border with the US is almost 600km long and to the west is the Sea of Cortez, with its ports.
The Mexican government is bringing in some important new reforms in taxation, energy and labor. Of particular benefit to foreign investors who wish to establish companies here is the reform that allows the ownership of land without a Fideicomiso (trust). That is wonderful news to all the world’s investors who wish to own a piece of our beautiful beaches, a ranch, a house, a company or any other goods.
The market is free and competitive: remember that Mexico, with its partners the USA and Canada, is part of NAFTA - one of the largest trade blocs in the world. Sadly, Mexico is experiencing a situation with violence and has a reputation for organized crime, which is putting off investors but when you look at the hundreds of foreign companies
Andorra Simon Binsted is the Chairman of Servissim, S.L. in Andorra, which owns the brand names and websites www.servissim.com, www.andorraproperty.com, www.andorra-business.com and www.andorra-holidays.com. -------------------------------------------------------------Andorra, strategically placed between France and Spain, has a Customs Union with the EU. This means that anything produced in Andorra enters the EU tax-free and the new doubletaxation treaties, due first with France and Spain in 2014, and then gradually extending to the whole of the EU will assist greatly in trading from Andorra. Its geographical position means most of the population is multilingual and can communicate successfully in Spanish, Catalan, French and English, with a good proportion of Portuguese speakers as well, thus making it ideally suited as the European base for businesses based throughout the Americas. Unfortunately, setting up a business in Andorra is not as easy as it should be. The reasons are historic – an overwhelming influx of refugees from the Spanish civil war caused Andorra to
We predict that these reforms will transform Mexico into the strongest Latin American economy with growth of around 5%. Economic growth in Sonora is not only due to its strategic geographical location, but to the quality of its people and workers and the solidity enter a 75-year period of economic isolation, from which it only emerged in mid-2012. New legislation now allows for a measure of Foreign Direct Investment on a request basis. Any foreigner already residing in Andorra can now own or open whatever business he wishes, but until someone is formally resident any proposed foreign investment, either in the form of a new business, or in the form of an investment greater than 10% of the capital of any Andorran company, must first be approved by the government. There is preference for nationals of the EU (with which Andorra has a Customs Union, but of which it is not a member) but other nationals may apply and the application process involves supplying a full business plan that not only is designed to see whether any new immigrant can reasonably support himself whilst building up the new business but also whether the new company offers the potential of employing some local people and, in general, being a credit to Andorra. The process is quite complicated and takes a minimum of three months. Nevertheless, the government is very seriously interested and helpful in seeking new investment in the country and is currently working to simplify the process. The costs involved in setting up a company and a business are in the region of €5-6,000.
of our institutions. Fiscal legislation is on the side of the investor. Since it was established 15 years ago Grupo Anda has always been at the vanguard of all new laws and reforms that benefit foreign capital. To facilitate clients’ business with the USA it has a subsidiary – Consultoria Legal Internacional, s.c. – which provides legal advice to both national and international clients. I am positive that we can help all individuals or companies with what they wish to do in my country. I am sure Sonora is the best place in the world to establish a company because companies established in Mexico are very happy with their financial results – and that’s the most important thing.
Company: Grupo Anda Name: Daniel Padilla Ramos Email: danielpadilla@grupoanda.com.mx Web Address: www.grupoanda.com.mx Address: Gustavo Muñoz 84, Hermosillo, Sonora, Mexico. 83180 Telephone: 52 (662) 215-2974 & 77
Apart from the ease of personal communication and a highly-educated workforce, the most important of the advantages in trading from Andorra are extremely low taxation and business rates, low social costs (14.5%) and salaries, good access to the whole of southern Europe and, unique in Europe, 100% of all addresses in the country linked by fibre-optic internet connections. Servissim is not only one of only two or three British-controlled businesses in the country, but also the oldest-established English-language consultancy and services company with 27 years of experience of local conditions and an unbeatable network of contacts. Who better to help others set up their businesses here?
Company: Servissim, S.L. President: Simon Binsted e-mails: ceo@servissim.ad; info@andorra-business.com Web address: www.andorra-business.com Address: avinguda Sant Antoni, 26, edifici Rossell, baixos, La Massana AD400, Principality of Andorra Telephone: (+376) 737900
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REGIONAL ROUND-UP: Hot Spots for Oil and Gas Investment
Hot Spots for Oil and Gas
South Sudan South Sudan seceded from Sudan and became an independent nation on 9 July 2011. For governance purposes, the country is divided into ten states, namely: Central Equatoria, Eastern Equatoria, Western Equatoria, Jonglei, Lakes, Unity, Warrap, Upper Nile, Northern Bahr el Ghazal and Southern Bahr el Ghazal. The country sits on an area of 619,745 square kilometres and Juba is the capital and administrative city. The country has the capacity to produce more than 300,000 barrels of oil per day under the current active Exploration and Production Sharing Agreements (EPSAs). The business potential and opportunities in oil and gas remain enormous and vast areas expected to hold oil and gas reserves remain unexplored and/or undeveloped. The main challenges facing the country’s oil and gas sector are sectoral geo-political matters and the need for expertise and competence in the management of the oil and gas operations and revenues. As a new country, there is need for provision of diversified services in oil and gas industry to support this key sector and at the same time build capacity of the nationals. Ernst & Young (EY) took a bold step to champion this cause by establishing a practice in the country at a time when most of the international entities were waiting for things to improve. EY started locally based operations in South Sudan in November 2012. The EY practice in South Sudan was officially launched by the Vice President of South Sudan in March 2013. EY has a strong team of professionals with experience and training in the oil and gas sector. The locally based team can call on resources from oil and gas teams in other EY offices in the region (Nairobi, Mombasa, Nakuru, Kampala, Kigali, Addis Abbaba and Dar es Salaam) and globally whenever required to offer multidisciplinary services including assurance, accounting support, advisory, taxation and transaction advisory. EY believes in ‘Building a Better Working World’. Enquiries are welcome at their Juba office in Tongpiny ,Off UNMISS Road, Off Airport Road,Vivacell / SPLM Driveway, Office: +211955444051, Mobile +211959003339, email: julius.rwajekare@ug.ey.com.
Company: EY Name: Julius Rwajekare Email: julius.rwajekare@ug.ey.com Web Address: www.ey.com
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REGIONAL ROUND-UP: Hot Spots for Oil and Gas Investment
Turkey
Considerable reforms are under way in Turkey. Oil law was re-enacted in 2013 to incentivize exploration. The new law has changed some aspects of the license scheme, such as competing work programs at bidding for licenses. Further changes are expected via secondary legislation and possibly new legislation on deep water drilling. The government is attempting to encourage local and foreign investment in Turkey for exploration and production of hydrocarbons by granting certain incentives and tax benefits to the license holders. As a result of this, certain international oil companies are interested in M&As with local oil and gas companies. The new Petroleum Law restricts applications for new licenses until the first anniversary of the new law (i.e. 11 June 2014), so new licence grants are expected after June 2014. Under the Turkish legal system, unlike North America, the state is the owner of the sub-surface hydrocarbons
and it has absolute discretion as to whether or not to grant petroleum licenses and to whom those licenses should be granted. Since Turkey’s proven reserves in terms of oil and gas are significantly lower than those of major player states in the region, obtaining licenses for valuable fields within Turkey, especially in the Thrace Basin and South East Region, become very important. Ms Ayse Yazici Adanir, Mr Batuhan Eser and Mr Kerem Aric are senior associates at Yazici Law Offices. Over the years, Yazici has advised on oil and gas transactions in Turkey, the CIS countries (such as Turkmenistan, Kazakhstan, Azerbaijan), Russia and Iraq. The breadth and depth of its experience in oil and gas is unmatched in Turkey. Aside from oil and gas transactions and disputes, Yazici advises on corporate and financial transactions, and related dispute resolution, mostly in an international context. It comprises 20 attorneys, all of whom have a considerable degree of oil and gas experience in their field of practice.
Company: Yazici Law Offices Name: Ms Ayse Yazici Adanir, Mr Batuhan Eser and Mr Kerem Aric Email: ayazici@yazicihukukburosu.com beser@yazicihukukburosu.com karic@yazicihukukburosu.com Web Address: http://yazici-hukuk.com.tr/ Address: Piyade Sokak 18/10 Cankaya 06540 Ankara Telephone: +90 312 442 5083
Indonesia
Indonesia’s oil and gas sector operates under a Productions Sharing Contract (PSC) regime, which, although undergoing certain changes, will continue to form the foundation of the industry. At present, the main issues relate to the extension and renewal of PSCs, where business and political considerations are as important as the legal ones, making counsel with a combination of business and legal expertise essential. The independent government contracting agency for PSCs (BP Migas) was recently found to be unconstitutional, and has subsequently been placed under the Ministry of Energy and Natural Resources (as SKK Migas). This has not affected the PSC framework, but will result in a new Oil and Gas Law having to be issued in the near term, which could more significantly change the regulatory environment.
Mohamed Idwan Ganie is the Managing Partner, and one of the founders, of Lubis Ganie Surowidjojo (LGS). He graduated from the Faculty of Law of the University of Indonesia and holds a PhD in Shipping Law from the University of Hamburg. Dr. Ganie was admitted to the Indonesian Bar (PERADI) in 1984 and is a licensed Indonesian Capital Market lawyer. One of LGS’s unique selling points is the combination of its long-standing commercial law practice and its premier litigation department that has extensive experience in dealing with commercial disputes in the context of alternative dispute resolution as well as litigation in the Indonesian courts. This allows its corporate transaction departments to benefit from litigation experience to ensure that any transactions handled by the firm are carried out
with a view to the potential for future disputes and any existing risks.
Company: Lubis Ganie Surowidjojo Name: Mohamed Idwan Ganie Email: ganie@lgslaw.co.id Web Address: 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
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REGIONAL ROUND-UP: Hot Spots for Oil and Gas Investment
Kuwait
The Kuwaiti oil sector is dominated by the Government-owned Kuwait Petroleum Company (KPC) and its subsidiaries, with oversight of the Supreme Oil Council chaired by the Minister of Oil. The strategy of KPC and its subsidiaries is to increase the upstream oil production to 4m bbl/d by 2020 and sustain this to 2030 to meet the Government’s growing financial needs. Gas production is targeted to increase substantially and the Government is also seeking to significantly increase investment in the upstream and downstream abroad. Currently, KPC and its subsidiaries are gearing up and preparing for the contracting and execution of various local mega projects envisaged in the 2030 KPC strategy planned to be delivered by 2020. These projects could see expenditures of around US$100 billion until the end of this decade, of which 40% would be in the downstream sector including two new refineries and 60% in the upstream sector (to unlock gas and heavy oil). The challenge for the local projects in particular, will be to execute these as per plan in terms of
Equatorial Guinea Centurion Law Firm is the largest law firm in Equatorial Guinea that assists oil and gas, construction, transportation, financial services clients, as well as governments, and foreign investors to design and comply with the nation’s business laws. It also provides transaction, project development support, government relations and representation in litigation and administrative proceedings. The firm combines both local and international professionals, which ensures that its clients receive the benefit of in-depth local knowledge, as well as international best practices. As a whole, the firm has extensive experience in different sectors and has advised Equatorial
cost and schedule, especially if mega projects in other sectors are launched at the same time and in view of the existing infrastructure, logistics and execution capacity. Moreover it is essential for upstream projects that support of IOC’s is secured to successfully address technology challenges. This will require incentivizing these companies while safeguarding the interest of the Kuwaiti people. Downstream investment in chemicals and refineries are beneficial for diversification, meeting local and international product demand, maximizing value, adhering to more demanding international product quality specifications especially for refinery products, and to secure long term outlets for oil production (mainly in the Far East, eg Nghi Son refinery and chemicals project Vietnam) while creating local job opportunities. Realizing the importance of the oil and gas sector, the EY Global Oil & Gas Center of Excellence in Bahrain was formed in 2009. This was to cater to the growing demands of the oil and gas sector throughout the MENA region and highly qualified industry experts were hired.
Guinean and international clients on various areas of law, including the following: corporate law; energy and projects; tax law; mergers and acquisitions; banking and finance; real estate law; sports and entertainment law; Foreign Corruption Protection Act; anti-money laundering and regulatory compliance; as well as other areas of practice and business. While the firm is also well-versed in construction law, tax law, conducting litigation, banking and finance, contract law, and labour and employment law, lawyers at Centurion Law Firm have also been involved in some of the largest transactions affecting businesses. The lawyers that comprise the Corporate and Commercial group provide advice and daily counsel to small and medium-sized businesses and its lawyers are highly skilled in specific areas such as acquisitions and divestitures, taxation, and regulatory compliance. In addition to conducting thorough, well-executed transactions, the Corporate and Commercial
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Building on EY’s 90 years in MENA and in Kuwait since 1953, EY is well placed to assist our oil and gas clients to improve their performance and help them become leading energy companies in an increasingly competitive market. Our unique ability to develop strategies and implement these effectively, in addition to tax and M&A solutions, together with our clients sets us apart. Hans van Nues, Senior Director, Oil & Gas, EY Kuwait
Company: EY Name: Hans van Nues Email: Hans.Vannues@kw.ey.com Web Address: www.ey.com/mena Address: 18-21st Floor, Baitak Tower, Ahmed Al Jaber Street, 13001 Safat Square , Kuwait Telephone: +96522955000
Group also familiarises international corporate clients with corporate and civil law matters in Equatorial Guinea. More specifically, the firm provides information regarding real estate, foreign investment, acquiring property rights, leasing properties, and joint investment agreements in Malabo, Bata, and other regions. It is currently involved in numerous transactions involving the transfer of securities and company restructuring.
Company: Centurion Law Firm Email: nj.ayuk@centurionlawfirm.com Web Address: www.centurionlawfirm.com Address: K-3, Carretera de Aeropuerto, Al lado de Restaurante El Paraíso y Embajada de los Estados Unidos de América, Malabo, Bioko Norte, Equatorial Guinea Tel: +240-222-781-613 or 1-647-308-6325
SECTOR SPOTLIGHT: Leading advisor...
France Acquisition International talks to Eric Weil, Partner, Weil & Associés
Weil & Associés’ core speciality is assisting foreign multinationals with economic interests in France, in setting up and carrying out their business in France. This extends to offering strategic advice as well as services as a legal expert. France and Germany may be geographically close; but their cultures are substantially different. This speciality developed from the firm’s origins. Its founder, Heinz Weil, was among the first Germans to come to France in the 60s to study law and contribute to developing the FrancoGerman relationship. Starting his career as the operational managing director of an American multinational’s subsidiary, he sold this company to a competitor. So his first corporate transaction was from the inside. He then decided to practice law in Paris. At the time, the German economy
Company: Weil & Associés Name: Eric Weil Email: info@weil-paris.fr Web Address: www.weil-paris.avocat.fr Address: 26, Avenue de la Grande Armée 75017 Paris Telephone: +33 (0)1 44 15 98 98
was strongly expanding towards export so the market needed bi-cultural lawyers. The firm first specialized in setting up French subsidiaries for German companies. We then started to build up M&A and corporate services, and also set up employment law and litigation / arbitration teams. We then opened up to even more international services in the nineties. Among the partners, the new generation has an Anglo-Saxon background, which helps develop an American and English client base. Today, we are a fully-fledged firm with strong FrenchGerman roots, while we have significantly diversified our international client base. Our expertise has expanded to various areas relevant to our clients’ projects, such as competition law, patent and trademark or white collar criminal law. Litigation represents an important field for most of our lawyers that covers commercial, employment and criminal litigation as well as international arbitration. Our client base mainly consists of industrial manufacturing corporations. We assist middlemarket companies when they expand their business in France through acquisitions, such as the German supplier of heating equipment Vaillant, better known in France under its brand Saunier-Duval. Our Anglo-Saxon clients include large multinationals such as the
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global distributor of electronic components and software solutions Avnet. Our expertise in product liability also led us to represent insurance companies in high stake litigations. The diversification of our client base enables us to assist private investors when they seek to invest in French ventures. For German companies, France remains an important but rather complicated market. The economic relationship took off in the 50s, rapidly expanded in the 60s and reached a peak in the 90s. We have reached a maturity level and it is unlikely that it will develop much more, even though the economic needs and the complementarities remain strong between both countries. Our client base is now roughly split in two: German-speaking countries (including Switzerland and Austria) and English-speaking countries. We feel we have found the perfect balance. Therefore our ambition is to keep the same business model without opening any office abroad. In fact, after having signed a partnership agreement with a major German firm for a couple of years in the 90s, we now choose to remain fully independent as this experience generated more constraints than growth. This is why on an international levelwe also prefer focusing on a soft network of best friends, rather than joining an organized network.
SECTOR SPOTLIGHT: Leading advisor...
Turkey: the potential to transform the mena economies Safak Herdem is the founder and managing director of Herdem Attorneys at Law, a corporate law firm that engages multinational transactions to support business objectives and to transact business in the burgeoning and developing economic environment. He spoke to Acquisition International about Turkey’s economic potential. -------------------------------------------------------------Prosperous macroeconomic strategies, prudent fiscal discipline and a well-structured banking system unveiled Turkey’s demographic and geographic competitive edge. These factors resulted in outstanding GDP growth, which was backed up by phenomenal stock market performance. Turkey’s stock market saw a 60% increase in 2012, compared to the NYSE’s 19%. At the time the international stock markets’ transaction volume dramatically slumped by 23% due to the underperforming derivatives market and low interest rate policies. Currently, Turkey does not possess an extensive derivatives market making it the bright spot in Europe as a result of consistent economic growth and monetary easing policies. The fundamental factor that attracts foreign investors to Turkey is tax incentives which
include customs duty exemptions, corporate tax relief and VAT exemptions. These are provided by the Turkish Government based on industry priority, region and investment volume. Also political stability, sustainable economic growth and a skilled low-cost labor force have resulted in a remarkable investment demand in Turkey. The most significant challenge for Turkey is the fragile state of the world economy. As an emerging market that is well integrated in to the global economy, it can only protect itself from the dangers posed by the global economy to a certain extent. The current account deficit exposes Turkey to the ill effects of global economic fluctuations and the country’s high energy needs have to be satisfied in nonconventional ways as energy is a significant contributor to the country’s current account deficit. I believe there are ways of mitigating the challenges Turkey faces. To counteract US expanding monetary policy amendments, Turkey should apply for decreasing interest rates and open market transactions with buy or sell bonds. Additionally, against a potential Eurozone credit crunch, Turkey should maintain a self-protection mechanism in the scope of the banking system.
Nepal: welcoming foreign direct investment Anjan Neupane, Advocate, Neupane Law Associates -------------------------------------------------------------Neupane Law Associates has been providing business-related legal services for over 30 years. Our clients include local and international companies, financial institutions, government departments, and private individuals. We provide counsel to clients in a variety of matters involving international trade and foreign investments, project financing, insurance, taxation, and more. We also offer skilled litigation representation and negotiation assistance during conflicts. Our lawyers have an impressive history of representing clients at the local, district, and national level, in a variety of nationally and internationally significant cases. Our team boasts a wealth of experience and expertise in a wide range of legal areas. Along with business and finance law, we also provide
The Turkish Government has already delivered a new vision for the energy sector with significant breakthroughs on severe energy areas. New nuclear power plant establishment agreements with Japan and Russia, long-term renewable energy feed-in tariffs and a new energy stock exchange launch are noteworthy steps. In consequence of regulated energy markets and production capacity, Turkey is expected to be far less dependent on imported energy imported from 2023. Along with the energy industry, real estate, construction, healthcare and hospitality industries are considered as potential developing industries in Turkey. Furthermore, business and financial services have also been key areas in recent years.
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
Annapurna mountains
competent assistance in the areas of family law, property law, intellectual property, civil and commercial litigation, and more. In all areas, we have a reputation for commitment to hard work, skilled representation, and a focus on getting our clients the outcomes they’re looking for. Nepal has been growing at a steady rate of around 5% for a past few years, but the government plans to increase investments in infrastructure and power and also invite foreign investors for public private partnerships to increase growth. A high level Investment Board has been set up by the government to attract investors. More reforms are expected after the elections in November 2013. The stock market regulator has plans to liberalise capital markets and promote more private companies to list on the stock market and also plans to reform the bond market.
Nepal’s biggest issue is power shortages; they have increased costs for manufacturers but they also provide opportunities in the energy sector. Other opportunities can be found in tourism, telecommunications, infrastructure, mining, education, health and IT. It is easy to set up a business in Nepal, which benefits from low costs and high profit margins.
Company: Neupane Law Associates Name: Anjan Neupane Email: anjan@neupanelegal.com Web Address: www.neupanelegal.com Address: 90 Devi Galli, New Plaza Road, Kathmandu, Nepal Telephone: +977 1 4011056
Acquisition International | November 2013 | 59
SECTOR SPOTLIGHT: Leading advisor...
UAE: continuing to attract foreign investment The UAE economy is booming and the outlook is sunny. Kiran Ali, a US-qualified attorney who serves as the Head of Global Strategy for Dubai based, CRI Group, a member of the DIFC, explains more. -------------------------------------------------------------Business is currently booming in the UAE. After the economic downturn that plagued the global economy in 2008-2009, the UAE has seen a growth of over 25% in 2012. With its strategic location amongst the world’s bustling markets, and its rapidly growing infrastructure, the UAE is a hotbed of FDI at present, with no signs of slowing. The world’s leading corporations, law firms and consultancies are racing to establish a UAE presence due in part to benefits such as zero tax, customs duties exemption on imports and the opportunity for unbounded domestic growth. By and large, foreign investment in the UAE is pulled by its abundance of ‘free zones’. Emirati free zones are areas where the government has enabled foreign investors to set up businesses that are exempt from local and international taxes. The tax free zones serve as hubs of amnesty from the severe corporate and personal income taxation and levying of import and export duties that is prevalent elsewhere in the world.
With an overhaul of its regulatory mechanism scheduled for 2013/2014, the UAE is set to become even more attractive to financial institutions. While in the past the construction, oil and gas industries have found great success in the UAE, 2014 is poised to become the year that the financial services boom returns to the UAE. In stride with the financial services boom, 2014 is also likely to be the year that the aviation industry sees its sharpest incline in prosperity in the UAE. With the opening of Al Makhtoum airport at the Dubai World Central (DWC) slated towards the end of this year, Dubai will firmly cement its position as a major global transportation hub, astutely taking advantage of its strategic location between Europe, the Middle East and Asia. The outlook is sunny and prosperous. With the UAE’s continued dedication to sculpting and expanding its free zones, in conjunction with its massive regulatory overhaul, there is every reason in the world for a foreign business to set up shop in the UAE. It is expected that those with vision will not let an opportunity like this pass them by.
CRI Group is a global supplier of investigative, forensic accounting, business due diligence and employee background screening services for some of the world’s leading business organizations. Businesses often fail to appreciate the intricacies of how a given culture affects business in a particular region. CRI Group accounts for this by having a ‘boots on the ground’ approach to its operations. With local agents in the world’s emerging markets, CRI Group is able to maintain quality control over the level of investigations and the reports that it delivers to its global clientele. We vet our agents, so you have one less supplier to worry about.
Company: CRI Group Name: Kiran Ali ESQ, Title: Head of Global Strategy Email: Kali@crigroup.com Web Address: www.crigroup.com Address: 904, Liberty House, DIFC, P.O. Box 111794, Dubai, UAE Telephone: +1 646-571-2501
Bridge at Victoria Falls
Zimbabwe:
Attracting foreign investment Alwyn Pichanick is the senior partner of Wintertons, a firm of Legal Practitioners practising in Harare, Zimbabwe. -------------------------------------------------------------Attracting foreign investors is one of the newly elected government’s major targets and it is anticipated that the legislation which inhibited foreign investment, namely the Indigenisation Legislation, will be modified to provide an incentive for foreign investors. The greatest opportunities for investors lie in the agricultural field and development of the industrial and commercial sectors. Zimbabwe has great mineral potential together with an already world-class sophisticated agricultural sector particularly in respect of tobacco in which Zimbabwe is a world leader. Currently the business environment in Zimbabwe is under pressure because of the liquidity crisis. The government has identified this as its prime consideration and steps are being taken to
alleviate the situation. Notwithstanding the liquidity crisis, Zimbabwe is still ranked among Africa’s top ten performing economies because of its substantial natural resources. Wintertons is still receiving many enquiries from clients outside Zimbabwe who are seeking investment opportunities here. With the exception of South Africa, Zimbabwe’s economy is more sophisticated than the economies of its neighbours Zambia, Malawi and Mozambique. While it is difficult to make predictions for 2014, it is clear the government has undertaken to provide the necessary incentives for growth. Wintertons is a partnership carrying out business in Harare as Legal Practitioners, Notary Publics and Patent and Trademark Agents. The firm has been in existence since 1902 and comprises nine partners, four experienced legal practitioners who are consultants and six qualified legal practitioners who are professional assistants.
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The firm provides a comprehensive service in all fields of legal practice in Zimbabwe and we have specialists in litigation, and a commercial practice with particular emphasis on advising external clients requiring advice on investment in Zimbabwe. We have specialists in the fields of conveyancing, trademark and patent advice and administration of deceased estates. Wintertons distinguishes itself from other practices by providing experienced practitioners who have dealt with their specialist fields for long periods.
Wintertons Company: Wintertons Name: Alwyn Pichanick Web Address: www.wintertonslegal.com Telephone: +263 4 250113 to 250129
SECTOR SPOTLIGHT: Leading advisor...
Russia: It is our business to help yours!
Remedy Law Firm LLC renders a wide range of services in the spheres of shipping, finance, European law, taxation, corporate mergers and acquisitions, optimization of property taxes, insolvency and bankruptcy proceedings. -------------------------------------------------------------The firm’s specialists advice on issues related to establishment of companies and subdivisions, joint ventures and trusts. Our lawyers prepare analytical reviews of law enforcement practice pertaining to supplies, rent, agency transactions, carriages, loans and credits. We are often called on to advise clients on all aspects of maritime, trade and finance law, maritime insurance and reinsurance. Remedy Law Firm LLC is highly regarded for its successful handling of a wide variety of major corporate transactions and high value
commercial projects in numerous business sectors. We also advise on a broad range of nontransactional issues, often with a cross-border element. The firm’s experts have a thorough understanding of client’s individual requirements. We offer timely, proactive and cost-effective advice. The firm’s clients range from shipping companies, brokers, underwriting agents, ship owners, charterers, surveyors, shippers and receivers of goods and other market professionals to major independent insurance and reinsurance companies as well as government authorities, banks and non-governmental organizations. We have established effective working relationships with law firms and legal experts with essential local experience of the business and regulatory environment. The close
cooperation with overseas lawyers with similar experience enables us to offer clients a truly international business in a timely manner. Our lawyers are regularly invited to speak as experts at major business and legal conferences. We also hold annual seminars in St. Petersburg.
Company: Remedy Law Firm LLC Name: Andrey Suprunenko / Director Email: general@remedy.spb.ru Web Address: www.remedy.ru Address: 40-42, Nevsky pr., St. Petersburg, 191186, Russia Telephone: +7(812) 702-51-00
Mexico Chepe Nicoli / Shutterstock.com
Miguel Angel Quintana is the Managing Partner of Quintana Arouesty, S.C. -------------------------------------------------------------Important reforms going through the Mexican Congress, particularly those relating to energy and tax, has heightened expectations about the way investors will view the country. The size of the economy should not be underestimated – Mexico does not view its neighbours as competitors. It competes with China, Brazil and European Community countries, among others. There is an important domestic market with opportunities in many sectors, although certain activities related to energy are restricted to private investment, both domestic and foreign, for the time being. Its geographical location – a huge border with the world’s largest economy, Pacific and Gulf of Mexico coastlines – rich natural resources and
political and economic stability make it one of the best destinations for investments.
focus on providing a personal, expeditious and efficient service to our clients.
The Mexican government has traditionally run promotional programs to encourage business investment. Additionally, the states that form the Mexican Republic offer important incentives to foreign investors in order to attract them to establish industrial and commercial facilities.
We possess a combination of knowledge and experience in our fields of expertise, and innovative ideas to best assist our clients, together with attention to detail and personalized service.
Mexico offers a highly competitive legal services market for foreign investors doing sophisticated business in the country. It also has an open economy that allows both domestic and foreign investors to participate. Quintana Arouesty, S.C. was formed in 2006; we specialize in energy, real estate and transactional law, including M&A, antitrust and corporate matters. QA’s partners have more than 30 years’ experience assisting foreign companies doing business in Mexico. As a small-size firm we
Company: QUINTANA AROUESTY, S.C. Name: MIGUEL ANGEL QUINTANA Email: mquintana@qaa.com.mx Web Address: www.qaa.com.mx Address: Montes Urales 754 – Piso 3, Lomas de Chapultepec, 11000 México D.F. Telephone: +(52) (55) 5280-5555/6040
Acquisition International | November 2013 | 61
SECTOR SPOTLIGHT: Leading advisor...
Insurance market Barclays Absa explores global trends and their implications for the South African life insurance market. -------------------------------------------------------------South Africa is a significant insurance market, as confirmed by research compiled by Swiss Re in 2012, ranking the local Life Insurance market in 13th place and the Non-Life Insurance market at 19th place by premiums. Global activity tends to filter into our market and the topical issues of Solvency Assessment and Management (Solvency II), Treating Customers Fairly principles and customer centricity are currently playing out in the South African Insurance Market. The key trend being followed by multinational insurance companies, and cited by both Ernst and Young (EY) and PwC, is geographical expansion. However, while EY notes Asia-Pacific as the foreign territory with opportunities, local insurers view expansion into the rest of the African continent as the market with desired margins. Growth across the continent is
expected to accelerate to 4.8% in 2013 and that is the key driver for the South African Insurance market to expand on the African continent. The Life Division in Wealth Investments Management and Insurance for Barclays Africa is bancassurance business. There are still a lot more opportunities for South African bancassurers to increase sales through bank branches but South Africa has done well in the provision of high advice products. Provision of high advice may not necessarily be the right approach for the expansion into the rest of Africa. The low penetration levels, coupled with opportunities presented by a growing middle class with increased mobile phone access, demands a target strategy. Wealth Investment Management and Insurance for Barclays Africa recognizes that and in its expansion into the African markets where its parent company Barclays has a presence, the approach will be market-specific. This may mean acquiring an existing business in some countries, while in others a greenfield investment might be more appropriate.
To conclude, South Africa, along with its global peers is focused on responding to the regulatory changes and building risk and capital solutions. Additionally, we have our own unique regulatory environments to navigate, like the National Social Security Reform and National Health Insurance. The experience gained locally to improve the insurance penetration levels can be exported to the rest of the African continent, ensuring there is a cultural fit and adjusting to the regulatory environments specific to those markets.
Barclays Absa Company: Barclays Absa Name: Jannie Venter Address: Absa Campus, Absa Towers North, 4th Floor - TN04G151010, 180 Commissioner Street, Johannesburg, 2000, P O Box 421, Johannesburg, 2001 Telephone: 011 846 9739 | 083 675 4361
South Africa Michelle Kucera, Associate, discusses life at Smiedt & Associates -------------------------------------------------------------Smiedt & Associates was founded five years ago and I have been lucky enough to have been a part of the firm since its inception. Together with our loyal clients we were able to face the challenges of a boutique law firm starting out and have grown to become the successful firm we are today. A major asset in our success has been the expertise and knowledge of Alan Smiedt, who has been providing quality legal services to a global network of clients since 1973. We pride ourselves in being a boutique commercial law firm and although we may be small, we pack a powerful punch. That we are a small and focused law firm sets us apart from the rest and ensures that we give each client the maximum care and attention they deserve. We are not afraid to seek opinion from colleagues who are specialists in their fields to ensure that our clients receive the leading advice on their concerns.
All of this we believe in doing as expeditiously and as cost effectively as possible. At Smiedt & Associates we enjoy forming personal relationships with our clients which gives our clients comfort and enables them to better understand the law.
and am personally committed to seeing growth in these areas. Our Litigation, Commercial Contracts and dispute resolution departments have always seen steady progress and we aim to expand them further. I look forward to our bright future ahead.
The current legal environment in South Africa is highly competitive: the amount of law firms in the central business district of Cape Town alone is astonishing, especially in respect of medium to large law firms. This is another reason why we feel, as a boutique law firm that we distinguish ourselves from the competition. At Smiedt & Associates we specialize in many areas of law including but not limited to; Litigation, Commercial Law, Wills, Trust and Estate Planning and Property matters. Our personal goals within the firm are to grow the Conveyancing department as well as expand the Will, Trust and General Estate Planning department while remaining true to our core values of client service and efficiency. I have particular interest in these two areas of the law
Smiedt & Associates Company: Smiedt & Associates Name: Michelle Kucera Email: michelle@smiedtlaw.co.za Web Address: www.smiedtlaw.co.za Address: 19th Floor, Thibault Square, 1 Long Street, Cape Town. Telephone: 021 421 7045
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SECTOR SPOTLIGHT: Getting to grips with merger control
Getting to grips with merger control The target company is in sight, the business plan is finalised and the financing is arranged but what happens when the local merger control regulation raises an unexpected stumbling block? Competition law now exists in over 100 countries and, due to the transnational nature of our global economy, before completion many mergers, acquisitions and joint ventures are subject to approval from multiple antitrust and competition authorities. A panel of experts give Acquisition International readers the view from their jurisdictions‌
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SECTOR SPOTLIGHT: Getting to grips with merger control
France
Muriel Perrier is from Vivien & Associés -------------------------------------------------------------Filing under French merger control rules occurs when transactions lead to an acquisition of control (by one company alone or by several ones acting jointly). In practice, control is acquired with the acquisition of the majority of the capital and the voting rights of the target company. However, even the acquisition of a minority shareholding may give rise to control under merger control rules, where specific rights are attached to this shareholding, through preferential shares or veto rights over strategic business decisions of the target company (such as, for instance, approval of the annual budget or business plan). Sole control exists in situations where only one shareholder is able to veto strategic decisions but does not have the power to impose such decisions (the so-called negative sole control). Finally, the creation of a joint venture shall require also filing as far as the joint venture is jointly controlled by two or several shareholders and has sufficient resources to operate in a market. All these transactions are subject to filing to the French Competition Authority, where the turnover thresholds set forth by the regulation are met (which means that the transaction is below the EU thresholds). If the operation is likely to create competition issues due to the position of the parties concerned in the relevant market or in upstream or downstream markets, it will be authorized subject to remedies. The practice of the French Competition Authority includes not only divestment’s remedies, but also quite frequently the so-called behavioural remedies (including access to licences or technologies, termination or modification of exclusive commercial contracts, etc). The main issue in France is the time necessary to prepare the filing and obtain the clearance
and, thus, to anticipate these constraints. In that respect, the filing can be made before the execution of the purchase agreement. It can also be useful to use the pre-notification procedure (3-4 weeks on average) in order to have more certainty from the Authority concerning whether the transaction must be notified or the extent of information to be included in the notification. There are specific deadlines for the Competition Authority to examine the notification (25 working days for the phase I of the review, unless extended in case of remedies submitted by the parties) but, in practice, the deadline runs from the date of reception of the complete notification, which may be different to the date at which the filing has been made. Vivien & Associés is a French law firm, with a team of 35 lawyers, providing advisory and litigation services for most areas of international business, in particular corporate law, competition and distribution, commercial contracts, tax, labour and employment. Ms Perrier advises on French and European merger issues. She also represents clients during investigations and litigation in relation to competition law (cartels, abuse of a dominant position) before the antitrust authorities and the commercial courts. Her clients are active in various economic sectors, including consumer products (consumer electronics, computer equipment, etc.), pharmaceuticals and medical devices, energy, and automotive.
Company: Vivien & Associés Name: Muriel Perrier Email: muriel.perrier@va-fr.com Web Address: www.va-fr.com Address: 3, rue de Monttessuy, 75007 Paris Telephone: + 33 (0)1 45 02 39 50
Acquisition International | November 2013 | 65
SECTOR SPOTLIGHT: Getting to grips with merger control
Israel
Dr David Tadmor, Managing Partner, and Shai Bakal, Partner, Head of Antirust Practice, both from Tadmor & Co. -------------------------------------------------------------Israel applies a mandatory filing regime, which requires parties to notifiable transactions to wait until the IAA approves the merger. The commissioner must render a decision within 30 days of the submission of merger notifications. Otherwise, the merger is cleared. The 30-day period may be extended by the consent of the parties or by the Antitrust Tribunal. As a result, simple mergers would normally be cleared within 30 days. However, more complicated mergers may require additional time (several months in extremely difficult cases). The
Company: Tadmor & Co. Name: David Tadmor Web Address: www.tadmor.com Address: 5 Azrieli Center, The Square Tower 34th floor, 132 Begin Road, Tel Aviv 67021, Israel Telephone:: +972 3 684 6000
review period is influenced by many parameters. The most notable factor is whether there are any (meaningful) horizontal or vertical overlaps. The submission papers, which are drafted by the parties, are also very important. It is crucial for parties to draft a sufficiently detailed, yet simple, filing document. It is equally important that outside counsel is skilled enough to explain in clear and convincing terms to the case handler the parties’ position, and that he is sufficiently experienced to tackle potential difficulties as soon as they arise. There are no filing fees in Israel. Tadmor & Co’s competition law team is one of the leading groups of competition law experts in Israel and is ranked in all professional surveys as a tier 1 firm in Israel in all competition matters. The team offers a top-level, client-focused service, and its specialisation covers all civil and criminal aspects of competition law. The team represents and advises major Israeli and foreign firms in all the areas of the Israeli economy, and it has been involved in almost all notable antitrust cases in Israel in recent years. Among others, the firm represents: • first International Bank of Israel before the Antitrust Tribunal in the landmark case relating to information exchange between banks;
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• Siemens AG with respect to the alleged GIS cartel • Azrieli shopping malls group regarding the IAA’s decision to block its acquisition of One Plaza shopping centre. Other clients to whom the firm advises include Apple, Silver Lake Partners, AC Nielsen, Israel Chemicals, EL-AL, KKR, EMC, the Blackstone Group, Israel Today newspaper, Nestle and Pfizer. The competition group was established by Dr David Tadmor, the former Antitrust Commissioner of Israel, who leads the group together with Shai Bakal, a former head of the mergers task force at the IAA, in which position he drafted key policy documents, including the IAA’s guidelines for merger control law. The firm has successfully acted for clients in complicated mergers and represents clients on appeals before the Antitrust Tribunal. The firm has represented many foreign entities and obtained expedited clearance for very notable foreign-to-foreign transactions. Recent examples are the merger between Korean Air and Czech Airlines, Silver Lake Partner’s acquisition of Dell, the acquisition of Kodak by the Blackstone group and the clearance for the joint venture between EMC and Lenovo.
SECTOR SPOTLIGHT: Getting to grips with merger control
Costa Rica
Arenal Volcano, Costa Rica
Carlos J. Oreamuno is a partner in the law firm of Facio & Cañas in San José, Costa Rica -------------------------------------------------------------The Antitrust Act of Costa Rica was enacted on January, 1995. From the date of its enactment up until April, 2013 there was no pre-notification requirement. Merger evaluation was done ex post and not ex-ante. Therefore, one of the main burdens associated with filing a transaction to the relevant authorities relates with the lack of experience in Costa Rica in relation to this particular subject matter. All of the market players as well as the local antitrust authorities are undergoing a ‘learning curve’ and, despite the fact that Antitrust Authorities have accumulated substantial experience in analysing and resolving other type of monopolistic practices (ie horizontal and vertical arrangements), they do not have a great deal of experience in dealing with mergers and the pre-notification requirements. However, they are doing their best to react in a timely and effective manner whenever a pre-notification filing is made. Following an amendment that was made to the Antitrust Act on October 5, 2012 that became effective on April 5, 2013 mergers between market agents that comply with any of the two following requirements must be notified before the local Antitrust Authorities before the merger transaction takes places or within the following five working days after it has been executed:
(i) if the total amount of the productive assets of the agents involved exceed 30,000 minimum wages (the minimum wage in Costa Rica is normally adjusted two times a year: in January and June, but it is currently around US$515); or, (ii) if the sum of the total income generated in Costa Rica during the last fiscal year of all of the undertakings participating in the merger exceed 30,000 minimum wages in effect in Costa Rica at the time the petition before the Antitrust Committee is filed. The requirement to notify the Antitrust Authorities is triggered by meeting the thresholds indicated above regardless of whether the proposed concentration entails or not a substantial increment/increase in the market share of the undertakings. Notwithstanding the above, concentrations which do not entail a substantial increment/increase are likely to be expeditiously approved by the Antitrust Committee. The duration of the clearance process by the Antitrust Authorities is directly linked to the complexity of the case; however, in principle a decision should be issued within a period between one and three months from the date of filing of the corresponding notification. Facio & Cañas is one of the oldest and largest law firms in Costa Rica and is the exclusive
member in Costa Rica of Lex Mundi, the world´s leading association of independent law firms. A high percentage of Facio & Cañas´ clientele are foreign companies doing business in Costa Rica. This has given a competitive edge to Facio & Cañas as it has traditionally been exposed and subjected to the rigors, standards and demands that foreign clients expect to receive when they seek legal advice. Mr Oreamuno has been a member of the Antitrust Committee on two separate occasions: first as an alternate member from 2000-2002 and then as a direct member from 2009-2011. He predicts that merger notifications will become more frequent in Costa Rica during 2014.
Company: Facio & Cañas Name: Carlos J. Oreamuno Email: coreamuno@fayca.com Web Address: www.fayca.com Address: Bufete Facio & Cañas, Barrio Tournón, frente al Centro Comercial El Pueblo, San José, Costa Rica. Telephone: (506) 2233-9202
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SECTOR SPOTLIGHT: Getting to grips with merger control
Finland
Katri Joenpolvi, Partner, Head of Competition and Regulatory, and Leena Lindberg, Partner, Co-head of Competition and Regulatory, are both from Krogerus Attorneys Ltd -------------------------------------------------------------The Finnish merger control procedure is generally in line with the procedure employed by the European Commission. The notification of the transaction is compulsory when the aggregate worldwide turnover of the parties exceeds EUR 350 million and the individual turnover of at least two of the parties, accrued from Finland, exceeds EUR 20 million.
Company: Krogerus Attorneys Ltd Name: Katri Joenpolvi, Leena Lindberg Email: katri.joenpolvi@krogerus.com leena.lindberg@krogerus.com Web Address: www.krogerus.com Address: Unioninkatu 22, 00130 Helsinki Finland Telephone: Katri Joenpolvi: +358 (0)50 543 6636 Leena Lindberg: + 358 (0)50 511 1937
The definition of concentration and control are equivalent to the concepts used in the EU Merger Regulation (139/2004). The acquiring party or the parties establishing a joint venture must notify the transaction after the conclusion of the agreement, acquisition of control or the announcement of a public bid. It is prohibited to implement the relevant transaction without notifying and receiving a clearance decision. In a case of failure to notify before implementation, fines of up to 10% of the infringing party’s turnover may follow. This requires that the FCCA makes a proposal to the Market Court. The Finnish Competition and Consumer Authority (FCCA) may identify anti-competitive effects caused by the transaction and require commitments to remedy competition concerns. If the remedies are not sufficient, the FCCA may ask the Market Court to prohibit the implementation of the transaction. The main burdens resulting from a filing are therefore the time lost and, in some cases, the uncertainty about whether concluding the deal will be allowed. No filing fees are collected in Finland. The competition authorities may intervene if they are able to present evidence that the transaction impedes effective competition in the Finnish market or substantial part of it; for example, the strengthening or creation of a dominant position. The concentration may only be prohibited if the adverse effects cannot be remedied by imposing conditions. The test used to assess the effects
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of the concentration corresponds to the one employed in EU merger control. A Phase I investigation takes one month. During this period, the FCCA must make the decision to start a Phase II investigation. Once the Phase II investigation has been started, the FCCA must clear the transaction, accept commitments or issue a prohibition proposal within three months. The Market Court has the right to extend the time limit by two months upon a request by the FCCA. If the FCCA makes the proposal to prohibit the concentration, the Market Court has three months to reach a decision. Katri Joenpolvi and Leena Lindberg both have an extensive working experience at the FCCA. Katri acted as a deputy director for the two last years of her tenure, while Leena was in charge of the former Finnish Competition Authority’s merger control team and handled many merger cases in the Market Court and the Supreme Administrative Court. Krogerus is one of the largest corporate law firms in Finland and has acted as an advisor in several merger control cases where the transaction has been cleared unconditionally after an extensive Phase II investigation. The practice covers a broad spectrum of transactional, dispute resolution and regulatory matters. It is regularly retained in some of the most challenging and high-profile assignments in the market.
SECTOR SPOTLIGHT: Getting to grips with merger control
UK
Important changes to the UK merger control regime are in the pipeline. These will not take effect until 1 April 2014, however businesses should start factoring these into their future M&A activity. -------------------------------------------------------------The amendments are being brought about by the Enterprise and Regulatory Reform Act 2013. As has been widely reported the current dual competition authority structure in the UK will be abolished, with a single authority, the Competition and Markets Authority (CMA), taking its place. The new integrated body will be responsible for the enforcement of the UK merger control rules (as well as enforcing antitrust laws and conducting sector-wide market investigations). The current authorities (the Office of Fair Trading and the Competition Commission) will be abolished. As announced last year, the government has maintained the existing voluntary merger control regime in the UK. Accordingly, unlike in most other jurisdictions, purchasers are free to complete a qualifying transaction, and ultimately bear the risk of any subsequent merger control investigation (including, potentially, the divestment of the target business). However, in practice, a number of key changes will be introduced which may increase the incentive on parties to obtain UK merger clearance prior to completion. In order to preserve the target as a going concern, the new
rules will make it much easier for the CMA to take swift action to prevent integration of the merging businesses. In particular, the CMA will be able to block integration in both anticipated and completed mergers (current powers are limited to completed mergers only) and will be able to require parties to ‘unscramble the eggs’ – ie reverse any integration steps already taken. These measures will be backed up by financial penalties of up to 5% of aggregate group worldwide turnover which can be imposed on parties that integrate their merging businesses in breach of an order. Other changes are likely to increase the burden on the purchaser to submit upfront documentation to the CMA and pre-notification discussions with the case team will be increasingly important. Currently parties may make an informal submission which gives some flexibility as to the content and the provision of supporting documents. From April 2014, all first phase merger reviews will be subject to a strict 40 working day time limit and all notifications must be made by way of a prescribed (and detailed) Merger Notice. Parties will have to formally agree any derogations from the Merger Notice with the case team and failing to submit the correct documentation from the outset may delay the start of the CMA’s investigation. Accordingly, it will be critical for purchasers to assess upfront whether a deal might be caught by the broad UK merger control rules and, if so,
to engage proactively with the CMA at an early stage to manage the smooth running of the process. If you would like further information on the new regime, please contact Simon Holmes, global coordinator of King & Wood Mallesons SJ Berwin’s competition team. Our newly combined firm will reshape the international legal sector, creating the first and only global law firm headquartered in Asia with a network of more than 2,700 lawyers in 30 locations across the world, including China, Hong Kong, Australia, Europe, the Middle East, Japan and the US. This new network will be in an unrivalled position to help clients across the world exploit opportunities both within our current platform and beyond and specifically into and out of the rapidly expanding and complex Asian region, especially China.
Company: King & Wood Mallesons SJ Berwin Name: Simon Holmes Web Address: www.sjberwin.com Telephone: +44 (0)20 7111 2281
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SECTOR SPOTLIGHT: Getting to grips with merger control
US
Jim Lowe is a partner in the Antitrust & Competition practice group of Wilmer Cutler Pickering Hale and Dorr LLP based in Washington DC. He is also currently a member of the Council of the American Bar Association Section of Antitrust Law. -------------------------------------------------------------The US merger control regime has a relatively easy filing process, but its review process can be very burdensome in a small percentage of transactions. Determining reportability is relatively straightforward for most transactions and the filing itself, while requiring some information in unusual forms, is not particularly complex and can often be prepared in a few days, or even less, if the required information is readily available. In general, transactions among US entities or persons are reportable if the value of the transaction is greater than $70.9 million, one party to the transaction has total sales or assets of $141.8 million or more and one other party has total sales or assets of $14.2 million or more. Each of these thresholds is subject to annual adjustment. Where the entity or assets to be acquired are located outside the US, the transaction is only reportable if the entity/asset has sales in or into the US of less than $70.9 million; if all parties to the transaction are located outside the US, it
Washington DC / USA
may also be exempt if the parties together have sales in or into the US of $156 million or less. There are a number of other exemptions that could apply to any given transaction, so it is advisable to consult with experienced US counsel to determine reportability. Note that acquisitions of voting securities can be reportable even when they do not confer control as can certain types of corporate joint ventures. There is no deadline for a filing; however, a reportable transaction may not be consummated until all waiting periods have expired. The filing itself contains only limited financial, ownership and subsidiary information along with the transaction documents and certain documents created by or for officers and directors that discuss certain aspects of the transaction or, in certain circumstances, the industry. Each party must make a filing, but each transaction requires only one filing fee, which ranges from $45,000 to $280,000. The filing starts a 30-day waiting period in most cases. If the reviewing agency determines there are substantial issues with the transaction, it will issue to each party a so-called Second Request, which is essentially a massive subpoena for documents and data. After all parties have complied with the Request, the agency has an additional 30 days to complete its review, though often additional time is provided by the
parties. While only 4-5% of filed transactions receive a Second Request, complying with the request can take months and is often very expensive, and parties to competitively sensitive transactions should be prepared for the delay and the burden. Substantively, merger review in the US has not changed significantly in the past 20 years. The review process is less structural than it once was and now relies on more case-specific economic and documentary evidence. The most recent Merger Guidelines, published in 2010, reflect this focus. Purely theoretical defenses will not be sufficient; parties need to present real evidence in support of their positions. Parties to strategic transactions should consider US antitrust risks with care.
Company: Wilmer Cutler Pickering Hale and Dorr LLP Name: Jim Lowe Email: james.lowe@wilmerhale.com Web Address: www.wilmerhale.com/uk Address: 1875 Pennsylvania Avenue, NW Washington, D.C. 20006 Telephone: 202-663-6059
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SECTOR SPOTLIGHT: Insurance Issues Arising During M&A Transactions
Insurance issues arising during M&A transactions
In Germany, strict environmental laws and a rising exposure to natural risks have influenced the approach to risk management.
Company: Pantaenius Versicherungsmakler GmbH Name: Daniel Baum Email: dbaum@pantaenius.com Web Address: www.pantaenius.eu Address: Grosser Grasbrook 10 in 20457 Hamburg Telephone: +49 40 37091 186
Some of the major issues Pantaenius has determined over the past years include insufficient coverage for business interruption and loss of supply chains. Pantaenius has a long experience in due diligence service. As a member of the Wells Fargo Global Broker Network (80 partners in over 140 countries), we are able to provide independent due diligence reports on a global basis. Being linked to one of the world´s largest
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banks, we have proven our highly professional capabilities on several deals in the small and midsize market over the past 20 years. Our knowledge of the local market and long-time established relationships to all major insurance companies in Europe are crucial in times when capacities for medium and heavy risks are on a downslide. Managing director Daniel Baum has been with Pantaenius since 1999. His specialist field of expertise is Insurance Due Diligence for M&A and Alternative Risk Transfer. He has written a dissertation on a captive feasibility study and his responsibilities include the Co-ordination of International Insurance Programmes.
SECTOR SPOTLIGHT: Insurance Issues Arising During M&A Transactions
Denmark
Oresund Bridge, Denmark
Markus Rimner, managing director, Corporate Strategy and M&A, Nordic, Accenture, points to the emerging trend of the increased interest of private equity investors in insurance assets resulting in more requests for integrated endto-end support, starting with due diligence and going all the way to standing up an acquired line of business as a complete corporate entity. So far, the most important changes driving recent deal flow are the increased capital requirements for banks, making them divest their insurance businesses. Of course, Solvency II is the elephant in the room. This trend plays to Accenture’s strengths as it is so deep into the operations of the industry, it can rapidly help clients get a robust understanding of the value creation opportunities in a transaction, and what it would actually take to create that value.
For most bidders, the understanding of the legal environment and exposures is a lot lower in crossborder transactions than in their home jurisdiction. They find that using a risk and insurance specialist helps them identify blind spots. Accenture combines a leading-edge approach to due diligence, focused on the key drivers of value in the transaction – be they related to market growth, cost reduction or crossselling – with unparalleled understanding of the insurance industry, where Accenture is part of the industry fabric. For example, more than 100 insurers world-wide are using Accenture’s insurance software solutions, more than 40 million claims are processed each year using Accenture Claim Components solutions, and it processes transactions for more than 50 clients. Accenture is a global management consulting, technology services and outsourcing company,
with approximately 275,000 people serving clients in more than 120countries. Mr Rimner leads Accenture‘s Mergers & Acquisitions practice in the Nordics. Based in Gothenburg, Sweden, he focuses on helping corporate and private equity clients through the entire M&A cycle with emphasis on portfolio, acquisition and alliance strategies, carve-outs and divestitures, commercial and operational due diligence, and integration planning.
Company: Accenture Name: Markus Rimner Email: markus.rimner@accenture.com Web Address: www.accenture.com
Sweden/Norway The use of M&A-insurance as a strategic financing alternative -------------------------------------------------------------Matching risk to an appropriate form of capital is a cornerstone of successful business management and transactions. Despite this, many transactions use expensive forms of capital such as escrow or seller loans to fund the relatively remote risks behind representations, warranties and indemnities within Share Purchase Agreements (SPAs). Over the past few years the capacity and expertise of the insurance market has made M&A-insurance, or transaction liability insurance, the most cost effective way to fund these risks. Used effectively it can give a competitive advantage to buyers, a cleaner exit to sellers and remove difficult obstacles to the deal – resulting in fewer aborted transactions and greater flexibility for both parties. At a high level this category of insurance splits into two main classes of cover: cover for
identified (specific indemnities, tax opinion, litigations) and cover for un-identified risks (representations and warranties made under the SPA). The cost for cover for un-identified risks is now stable between 1-1.8% of the sum insured (often equivalent to the seller cap) for a period of 5-7 years. For a typical 36 month warranty period the premium can often equate to an annual capital charge of 0.33-0.6 %, comparing extremely favourably to alternative sources of financing the risk. The effect of these changes on the market has been profound: consistent annual growth greater than 10% has resulted in 600-700 M&A policies written in 2012, with over 40 in the Nordics (an increase of over 70% from three years earlier). In more penetrated markets over 80% of transactions use insurance, and in transactions involving PE-firms escrow accounts and indemnities have largely ceased to exist.
Aon can assist you in evaluating the potential for using contingent / insurance capital (insurance) instead of real capital to finance transaction risks. For more details and information, please contact us: UK: Simon Tesselment e: simon.tesselment@aon.co.uk Sweden: Karl Roquet e: karl.roquet@aon.se Norway: Michael Carr e: michael.carr@aon.no Denmark: Claus Trentel e: ctr@aon.dk
Company: Aon Web Address: www.aon.com
Acquisition International | November 2013 | 73
HERDEM&Co.
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HERDEM&Co. is a corporate law firm that engages multinational transactions to support business objectives and to transact business in the burgeoning and developing economic environment with added advantage of knowing a legal team with combination of business management skills is in place of any contemplated activity. Our team with the aim of providing our clients with legal and advisory services and guidance in a wide range of corporate matters to “respond together�. Our firm has effective responsiveness to international clients within maximum 8 hours and holds an appropriate level of professional liability insurance for its jurisdiction. At our firm, attorneys and personnel work on cases together; each individual contributes her or his expertise and knowledge on the case at hand so that it is dealt with in the most appropriate manner. HERDEM&Co. is able to provide high-quality comprehensive legal and advisory services for clients by taking into consideration all legal and administrative consequences of any proposed actions. Please contact our Client Relations Department via clientrelations@herdem.av.tr shall you need more information about our services. Our firm is a member of European Business Aviation Association and National Business Aviation Association.
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SECTOR SPOTLIGHT: 2013 Cash Shell Resurgence
2013 Cash Shell Resurgence Partner Matthew Gardner and associates Matthew Gilbert and Michael Johns all work for Maples and Calder, a leading international law firm advising financial, institutional and business clients around the world on the laws of the Cayman Islands, Ireland and the British Virgin Islands (BVI). With a reputation as an innovative, entrepreneurial firm, Maples and Calder is known worldwide as a market leader with highly qualified lawyers who are specialists in their respective practice areas. We are regularly involved in the largest and most complex corporate transactions involving Cayman Islands, Irish and BVI companies. -------------------------------------------------------------Cash shells are companies that carry out an initial public offering (IPO) on the strength of the management team’s ability to identify a suitable target and successfully consummate a business combination enabling the target to become a publicly listed company.
many businesses that would benefit from being taken public, so cash shells continue to represent an opportunity to list with the support of an independent experienced team into a listed vehicle on a major stock exchange. In addition, the Johannesburg Stock Exchange recently amended its listing requirements to allow Special Purpose Acquisition Companies (SPACs) or cash shells to list on the exchange. This development opens a potential market in Africa, which is a key target for foreign investment in 2013/2014.
They remained an appealing investment during the financial crisis as the value in the trust account, plus the benefit of a decent return from the bonds in which the proceeds were invested, supported a market in the common shares and warrants. This resulted in investors investing without an intention to vote for the business combination. With an improvement in confidence, and increasing values and liquidity in equities, the appetite for transacting deals through listed vehicles, including cash shells, is returning.
For the target: the opportunity to become a public company through an existing listed vehicle; to benefit from the experience of the management team; and the certainty (when negotiating the business combination) of the long stop date and the minimum spend leveraged off the IPO proceeds.
We predict they will grow as the barriers to achieving a public listing remain a reality for
Last year Maples and Calder advised Justice Holdings Limited, a BVI SPAC publicly listed on
They have a number of advantages: for the investors there is the opportunity to share in the increase in value when a market ready company becomes publicly listed; the security of the IPO proceeds, almost all of which are required to be held in a trust account; and the flexible trading strategies offered, for example through retaining or selling either or both the common shares or warrants.
For the management team and founders: the backing to identify and bring to market a suitable target with relative autonomy; and the liquidity of publicly traded shares.
the London Stock Exchange, on BVI law matters in connection with its business combination agreement with Burger King Worldwide Holdings, Inc, the world’s second largest fast food hamburger restaurant chain. Under the terms of the agreement 3G Capital, a global investment firm and Burger King Worldwide’s principal stockholder, received approximately $1.4 billion in cash and continued as the majority shareholder. The Justice shareholders and its founders owned approximately 29% of the combined company and, upon closing, the newly formed combined company listed and commenced trading on the New York Stock Exchange.
Company: Maples and Calder Name: Matthew Gardner Matthew Gilbert Michael Johns Email: matthew.gardner@maplesandcalder.com matthew.gilbert@maplesandcalder.com michael.johns@maplesandcalder.com Web Address: www.maplesandcalder.com
Acquisition International | November 2013 | 75
Avoid taking a gamble in Latin America: uncover risks, safeguard opportunities
Latin-IQ is a dynamic provider of bespoke business intelligence and strategic insight. Because we’re based in Latin America, we’re in touch with what’s really happening on the ground. Latin-IQ has an exclusive matrix of sources across the region, uniquely placed to unmask, monitor and calibrate the specific risks in their respective locations. As a slick and discreet organisation, we can mobilise our team flexibly to meet your specific requirements – and swiftly formulate our findings. We’re unlike some larger, unwieldy risk firms who’ll absorb your valuable time with conference calls, and who’ll eventually deliver you glossy packaging rather than pertinent content. Whether you’re a bank in Europe, a private equity fund in the US, a natural resources company in China, or a technology firm in India, Latin-IQ provides what you need in Latin America: top quality intelligence.
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SECTOR SPOTLIGHT: Dealing Effectively with the Challenges of Transfer Pricing
Dealing Effectively with the Challenges of Transfer Pricing
Marc Veuillot is the managing partner of CMS Bureau Francis Lefebvre Maroc. The 20-strong team he leads provides assistance to international groups in terms of transfer pricing policies, and drafts transfer pricing documentation for Moroccan entities which perform intercompany transactions. As one of the leading legal and tax advisory firm in Morocco, CMS Bureau Francis Lefebvre Maroc negotiates tax settlements with the Moroccan tax administration that include transfer pricing issues. -------------------------------------------------------------In Morocco a company faces transfer pricing issues during pre-acquisition tax audits, during the defence of the interests of a taxpayer in the framework of a tax audit and during negotiation with the Moroccan tax administration. CMS Bureau Francis Lefebvre Maroc provides assistance on all of these issues. Article 7 of Finance Act 40-08 for the fiscal year 2009 introduced an obligation for businesses which are taxable in Morocco to supply the tax authority with documents and information relating to transactions between a Moroccan entity and a non-resident entity of the same group. This obligation is now provided in article 214 (III) of the Moroccan Tax Code. Nonetheless, such documents and information need only be remitted to the tax authority on its express request. Article 213 (II) of the Moroccan Tax Code also refers to the possible transfer of profits realized by two associated companies located in Morocco. In this context, we recommend justifying the prices applied between two affiliated companies located in Morocco in the transfer pricing documentation. In Morocco, the definition of ‘dependent businesses’ is very wide in scope, and the Moroccan tax authority considers that transfer pricing control applies both to transactions between parent
companies and subsidiaries (ie direct connection) and to transactions between sister companies (ie indirect connection). The Moroccan tax administration can require a Moroccan entity to provide transfer pricing documentation, even if the latter is not subject to a tax audit. Under article 214 (III) of the Moroccan Tax Code, documents relating to transfer pricing must be sent at the request of the authority (in the form of a given notice) within 30 days of receipt of that request. The documentation must be consistent and meet the Moroccan tax requirements in terms of transfer pricing. The Moroccan Tax authorities are entitled to adjust taxable profits by bringing in the profits it considers to have been indirectly transferred by means of increases or reductions in purchase prices or sales prices. In its Circular Note n°717, the Moroccan Tax Administration refers to the OECD principles to explain the concept of “transfer of profits”. Therefore, a transfer pricing documentation must prove that the prices are consistent with the arm’s length principle as described by the Moroccan tax administration and the OECD.
Moroccan entity and an affiliate located abroad. However Article 213 (II) of the Moroccan Tax Code refers to the risk of transfer of profits between associated companies located in Morocco. In this context, the Merger of two Moroccan companies of the same group will lower the transfer pricing risks as the transactions performed between both companies (if any) would disappear. We advise Moroccan businesses which have relationships of dependency with businesses established outside of Morocco or in Morocco, and enter into transactions with them, to prepare documentation in advance. CMS Bureau Francis Lefebvre Maroc is the leading tax advisory firm in Morocco (legal 500; Chambers; IFLR 1000). It also benefits from the expertise and support of CMS Bureau Francis Lefebvre in Paris and may at any given time rely, when handling cases that require specific expertise, on one of the members of the CMS network, consisting of major European commercial business and tax law firms. Through the CMS network, CMS Bureau Francis Lefebvre has the expertise to work on the transfer pricing documentation for international groups involving entities located in several countries.
In this context, CMS Bureau Francis Lefebvre Maroc has advised clients concerning (i) the content of a transfer pricing documentation to be delivered to the Moroccan tax administration and (ii) the transfer pricing impacts of group’s reorganization operations. Transfer pricing issues impact Mergers and Acquisition operations, especially when those operations concern two Moroccan entities of the same group. Indeed, transfer pricing documentation requirements for associated companies only concern transactions performed between a
Company: CMS Bureau Francis Lefebvre Maroc Name: Marc VEUILLOT Email: marc.veuillot@cms-bfl.com Web Address: http://www.cms-bfl.com/Maroc Address: 7, rue Assilah, Casablanca 20000 Telephone: +212 5 22 22 86 86
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SECTOR SPOTLIGHT: Dealing Effectively with the Challenges of Transfer Pricing
Taxing times raise questions for M&As and IP planning The latest developments in transfer pricing guidance are creating uncertainties for acquisitions and IP planning
PwC Authors: Lili Kazemi, Director Chad Zimmerman, Senior Associate Rizwan Syed, Manager Garry Stone, Principal Introduction In a global tax environment that is becoming increasingly contentious, governments and regulators have heightened their focus on perceived tax abuses. The prevailing mood, as reflected in recent multinational publications, is one of skepticism among both regulators and the public at large and recent “calls to action” seem to focus on not only curtailing actual abuses, but also combating the perception of abuse. The perception is that through the manipulation of the tax rules, businesses are able to shift income from countries where income-producing activities occur to countries with lower income tax rates (or no tax). This results in the shifting of tax burden in the home country from corporations to individual taxpayers. Much of this tax policy debate revolves around tax planning with respect to intellectual property (IP).
As a result of this perception, governments are increasingly focused on the area of tax known as transfer pricing. Transfer pricing relates to the manner in which profits are allocated for tax purposes among related parties within a multinational group. For many years, a welldeveloped set of principles has been commonly agreed upon by most developed and developing countries. In essence, the basic rule is that allocations of profits among affiliates of a multinational company should mimic the way in which unrelated parties would deal with each other at arm’s length. The allocation of income must be based on the economic realities of intercompany transactions. Despite the existence of well-developed regulations, transfer pricing is a prime area for scrutiny as it relates to the cross-border allocation of profits. Through transfer
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pricing, governments and the public alike see opportunities for multinationals to arbitrarily shift profits to favorable tax locations. As such, governments have called for aggressive new rules as well as expanded enforcement to curtail abuses, both actual and perceived. In particular, recent initiatives, some of which are described in this article, can have unintended effects on the business judgments that inform decision-making in business reorganizations and restructurings. Such effects can impact acquisition activity by increasing uncertainty in cash flows (and therefore valuations), limiting post-acquisition opportunities for cross-border planning, and heightening compliance burden. More concretely, recent developments, including the views expressed by the OECD on IP migration and valuation in its ‘Revised Discussion Draft on
SECTOR SPOTLIGHT: Dealing Effectively with the Challenges of Transfer Pricing Transfer Pricing Aspects of Intangibles’ (referred to as the ‘Revised Intangibles Draft’) , as well as the IRS’s recent public statements indicating its adoption of a stricter interpretation of baseline transfer pricing valuation concepts , has upped the ante for taxpayers. Example of IP Migration in an Acquisition Context Company X, a US corporation, has begun developing new products and technology to break into the emerging 3D printing industry. At the same time, Company X has recently acquired Company Y, a foreign headquartered corporation, which has developed an innovative 3D printing software program where consumers can customize objects using web-based software. Before the acquisition, Company X and Company Y had R&D centers within and outside of the US. Intangible assets developed by Company Y’s R&D centers were jointly developed and owned by the respective US and foreign affiliates under an arrangement known as a ‘cost sharing arrangement’ (CSA), which can be thought of as a joint venture between related parties. Transfer pricing rules in most countries allow CSAs, whereby a taxpayer and related foreign affiliates agree to share costs for development of existing and/or future IP pursuant to a CSA. By doing so, the parties to the CSA are able to share the costs (and economic risk) of IP development as well as profits attributable to the jointly-developed IP. Post-acquisition, Company X intends to merge the R&D service centers of the combined companies. Uncertainty – U.S. Domestic Law Standpoint In the scenario described above, the CSA may create challenges for Company X from both a valuation and a compliance perspective. From a valuation perspective, the allocation of profits among Company Y’s affiliates in different jurisdictions may be questioned and revisited by tax authorities. In particular, current US transfer pricing rules allow for a ‘look-back’ period, which grants the IRS broad authority to revisit investments made and profit earned by CSA participants. This is the case even if each party’s share of investment (and resulting profits) was originally allocated on the basis of reasonable forecasts, as expressly required by existing rules. In practice, the profit potential of in-development IP is notoriously hard to predict. Certain types of IP may continue to generate profits far longer than expected, while other IP may unexpectedly fade. In the valuations context, some of the unpredictability around IP may be addressed in selection of discount rates. However, current US transfer pricing rules seem to give the IRS authority to disregard initial evaluations of risk and focus on the end result. Recent public statements by representatives of the IRS seem to indicate that the US will continue to make
adjustments to valuations based on hindsight. In the current business environment, where technology-related intangibles represent an ever-increasing portion of overall enterprise valuations, reallocation of income among related parties to a CSA can have significant tax (and tax penalty) consequences. These consequences can in turn create uncertainty in actual or projected cash flows and result in substantial uncertainty in valuations. Similarly, compliance efforts for transfer pricing can be challenging and penalties for noncompliance are harsh. For example, in the US the penalty associated with a transfer pricing related valuation misstatement of $20 million or more is 40 percent of the underpayment of tax. As a result, the risk of such penalties may further complicate the valuation and compliance burden when considering an acquisition target. Finally, integration into an existing business (e.g., combining Company X and Company Y’s R&D efforts) can be challenging depending on the nature of the CSA arrangement and precedents set by existing operations. Arm’s Length Treatment of Intangibles The OECD’s Transfer Pricing Guidelines are the standard followed by most developed and developing countries that accommodate large multinational enterprises (MNEs). Each of the members of the OECD has endorsed the arm’s length principle as set forth in the 1979 OECD Report and updated in 1995 and 2010. A number of countries have explicitly incorporated the arm’s length principle into their domestic law. On July 30, 2013, the OECD issued the Revised Intangibles Draft which provides insightful
guidance on how tax authorities should audit taxpayers with regard to the use or transfer of intangibles. The need for uniformity with respect to the treatment of intangibles became magnified with the commencement of the OECD’s Base Erosion Profit Shifting (BEPS) initiative, which has been endorsed by the G20. The latest development in the BEPS initiative is the promulgation in July 2013 of a highly anticipated 15-step action plan requiring, inter alia, that measures be taken to: 1) Adopt a broad and clearly delineated definition of intangibles; 2) Ensure profits associated with the transfer and use of intangibles are appropriately allocated in accordance with (rather than divorced from) value creation; 3) Develop rules for transfer of hard-to-value intangibles; and 4) Update guidance on cost contribution arrangements. The OECD work stream on revising the guidelines addressing the arm’s length valuation of intangibles is therefore a key aspect of the new BEPS landscape. However, the Revised Intangibles Draft presents some vague positions on certain key issues, leaving it unclear how a taxpayer should plan to comply with the views expressed in the Revised Intangibles Draft, especially when those views may diverge from the domestic law of the source or residence income of the taxpayer. This is a crucial gap given the multijurisdictional nature of transfer pricing. Despite the regulatory language around the arm’s length standard, in its transfer pricing action points, the recent BEPS Action plan cautions that “special measures, either within or beyond the arm’s length principle, may be required with respect to intangible assets [and] risks” to align profit with the related economic activity.
Acquisition International | November 2013 | 79
SECTOR SPOTLIGHT: Dealing Effectively with the Challenges of Transfer Pricing Implicit in this statement is a dissonance between arm’s length principle and the OECD’s stated goals. Given the importance of the arm’s length principle as a foundational principle of most transfer pricing rules, and the lack of clear steps outlined by the OECD to resolve this implied dissonance, a possible consequence is even more uncertainty for taxpayers in the context of IP valuation. Valuing Highly Uncertain IP The OECD’s draft discussion on intangibles states “if independent enterprises would have fixed the price upon a particular projection, the same approach should be used by tax administration in evaluating the pricing . . . without using hindsight.” Indeed, in an acquisitions context, valuations are developed based upon bestavailable data at the time of acquisition and players decide to enter into deals without the benefit of hindsight. Such guidance by the OECD may reflect a divergence from the “reasonableness of economic outcome” approach adopted by the IRS, particularly where the IRS reviews results of a transaction on an ex-post basis. Given the multi-jurisdictional nature of transfer pricing, divergence in application of rules can have significant impact on a taxpayer’s profitability and tax valuations. Parties entering into an acquisition or restructuring transaction may find themselves in a position where they cannot reasonably rely upon tax valuations based on information that is available at the time of valuation. ‘Important’ Functions: How Much Of Each Function Is ‘Important’ Enough? Once a MNE has entered into any cross-border intercompany transaction involving the valuation or transfer of intangibles (for tax purposes) issues surrounding TP compliance arise with the transfer of intangibles. The primary issue that taxpayers and tax authorities have struggled with regarding IP revolves around the question of how to appropriately allocate the return that is generated by the IP, referred to in the Revised Intangibles Draft as ‘intangible related returns’. The Revised Intangibles Draft states “other members of the owner’s MNE group may have performed functions, used or contributed assets, or assumed risks that are anticipated to contribute value to the intangible and for which they must be compensated under the arm’s length principle.” The question that arises is: “What functions are not only necessary, but also sufficient to support an intangible-related return?” The Revised Intangibles Draft provides some guidance to taxpayers as to certain ‘important functions’ where functional contributions will be correlated with the allocation of an intangible return. Important functions as described by the Revised Intangibles Draft include design and
control of research and marketing programs, management and control of budgets, control over strategic decisions regarding intangible development programs, important decisions regarding defense and protection of IP, and ongoing quality control over functions performed that may have a material effect on the value of the IP. Although the Revised Intangibles Draft has substantive requirements from a qualitative standpoint, it leaves ambiguity around a question central to any company seeking certainty regarding IP acquisition planning and restructuring: “How much of each function is enough?” Without providing some factors and/ or criteria for the ‘important functions’ test, taxpayers will be left guessing what functions are sufficient to justify an intangible-related return. Additionally, the OECD is silent with regard to how much weight is to be attributed to the performance of one or more of these functions in addition to assuming funding risk. For taxpayers that only fund IP development without bearing any additional risk or controlling the use of the funds, the Revised Intangibles Draft clearly limits the return to the “risk-adjusted rate of anticipated return on its capital invested, but not more.” But if the taxpayer performs other functions and assumes additional risk, the Revised Intangibles Draft provides little guidance as to the key question of how much is enough or what is necessary to justify an arm’s length return attributed to IP. Conclusion With the increased scrutiny by tax authorities involving intangible transactions, a potential acquisition target should be analyzed from a broader perspective, especially if a significant amount of the deal’s value is based on existing or future development IP. Ultimately, if a look-back period is eventually adopted by the OECD, the ramifications to the M&A industry could be substantial leading to decreased deals, valuations, and attractiveness of potential targets. At a minimum, it is imperative that dealmakers contemplate a more conservative approach in striking a deal when the tax rules governing the transfer of IP are so uncertain. A judicious approach to evaluating a potential acquisition target in the current tax environment would be to begin with an understanding of the IP tax footprint sustainability. Moreover, developing a substantive post-acquisition business model (i.e., modeling out the functions and risks to justify the intangible-related returns) for structuring the future transfer of IP is crucial to ensure the success of the acquisition. Failing to perform these steps, could result in substantial tax costs and/or due diligence issues. Therefore, until more clarity is provided by the OECD, the pragmatic course of action is to develop an indepth understanding of these potential pit-falls during the due diligence process when valuing a target on an after-tax basis.
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-------------------------------------------------------------------------------For example, see the Organisation for Economic Cooperation and Development’s (“OECD”) recent publication on Base Erosion and Profit Shifting: “There is a growing perception that governments lose substantial corporate tax revenue because of planning aimed at shifting profits in ways that erode the taxable base” (“Addressing Base Erosion and Profit Shifting”, © OECD (2013), pg. 13). 2 The OECD’s Transfer Pricing Guidelines represent the convention on which most countries’ transfer pricing regulations are based. The “arm’s length principle” is expressly referenced as the “international transfer pricing standard” in the OECD Transfer Pricing Guidelines. (“Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations”, © OECD, ¶1.1 through ¶1.79). Similarly, the U.S. transfer pricing regulations reference the “arm’s length standard” as the foundational principle of the U.S. regulations (see 26 CFR § 1.482-1). 3 The OECD notes that criticisms from civil society and nongovernmental organization may often be “simplistic in nature (“Addressing Base Erosion and Profit Shifting”, © OECD (2013), pg. 13). 4 Hill, Paige, PhD and Stone, Garry, PhD. “The Perils and Potential of Intercompany Pricing on Mergers and Acquisitions in a Multinational Environment.” Acquisition International. “Revised Discussion Draft on Transfer Pricing Aspects of Intangibles”, © OECD (2013). 6 See generally, “Testimony of Samuel M. Maruca, IRS Director of Transfer Pricing Operations”, 22 Transfer Pricing Report 153, (July 7, 2013). 7 See transfer pricing regulations at 26 CFR § 1.482-7(i)(6)(i): “A periodic adjustment is determined after the CSA has been implemented and is based on the actual results of the CSA activity.” 8 See 26 CFR § 1.482-7(i)(6)(i). Further, At the BNA North American Transfer Pricing Conference 2013, Sam Maruca, the IRS Director of Transfer Pricing, explained the agency will continue to litigate its position with respect to cases involving the valuation of intangibles with an inclination towards the application of the income method, aligning current transfer pricing law with the “reasonableness of an economic outcome”, and based on some element of hindsight. “Testimony of Samuel M. Maruca, IRS Director of Transfer Pricing Operations”, 22 Transfer Pricing Report 153, (July 7, 2013). 9 26 CFR § 1.6662-6(b)(2): “A gross valuation misstatement penalty is triggered if the amount determined under a Section 482 adjustment is greater than the lesser of 20 million dollars or twenty percent of gross receipts. 10 Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, © OECD (2010). OECD Publishing. The OECD Transfer Pricing Guidelines are not binding rules on any sovereign nation. Rather this framework is used to facilitate treaty negotiations among tax authorities in transfer pricing during advanced pricing agreement (“APA”) as well as mutual agreement procedure (“MAP”) cases. 11 Transfer Pricing and Multinational Enterprises, © OECD (1979). 12 OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, © OECD, (1995). 13 Mathur, Aparna and Singh, Kartikeya. “BEPS and the Law of Unintended Consequences.” Tax Notes September 16, 2013: 1331-1338. Print. 14 Action Plan on Base Erosion and Profit Shifting, © OECD (2013), pg. 20. 15 Id. 16 Revised Discussion Draft on Transfer Pricing Aspects of Intangibles, © OECD (2013). 17 Revised Discussion Draft on Transfer Pricing Aspects of Intangibles, © OECD (2013), paragraph 65. 1
Company: PwC Web Address: www.pwc.com
A law firm for lifescience and other innovative businesses Helping Life Science Businesses Make The Most Of Their New Ideas Bonaccord is an award winning law firm specialising in the life sciences. We help innovative businesses maximise the commercial value of their technologies. The life sciences sector is highly specialised with unique challenges. Our insightful support and understanding of the industry, based on many years’ experience, aims both to protect your interests and support you in seeing your idea to market. This applies whatever stage your business has reached – whether you’re a one-man consultancy needing advice on setting up, or a huge multinational searching for experts to deliver specialist legal advice. Our clients include companies in the following sectors: l Pharmaceuticals l Genetics l Biochemistry l Biotechnology l Bioengineering l medical devices l Cosmetics l Infomatics l Engineering l Innovative foods l Heritage and traditional foods Bonaccord is based in Edinburgh, and works with clients all over the UK as well as globally. Our services also include training in legal business skills, carrying out commercial mediation and acting as a notary public in Scotland. Bonaccord was founded by life sciences lawyer Patricia Barclay.
+44 131 202 6527 enquiries@bonaccord.eu
www.bonaccord.eu
SECTOR SPOTLIGHT: Implementing Pre-Emptive Forensic Strategy – UK
Implementing pre-emptive forensic strategy – UK
Geoff Mesher, Managing Partner, Tempest Forensic Accounting UK LLP. -------------------------------------------------------------Industry research in the UK suggests that the level of financial crime has increased substantially from an estimated £38 billion per annum in 2012 to £73 billion per annum in 2013. However, it is estimated that the level of ‘unreported’ fraud is significantly greater as the data is based on organisations/people reporting the crime. This accords with our experience where we have been engaged to conduct inhouse investigations on behalf of organisations and to quantify the loss and produce evidence to be used to dismiss the perpetrator. In most cases these crimes are not reported to relevant policing
Company: Tempest Forensic Accounting UK LLP Name: Geoff Mesher Email: g.mesher@tempest-fa.com Web Address: www.tempest-fa.com Address: Fifth Floor, Broad Quay House, Prince Street, Bristol. BS1 4DJ Telephone: 0117 905 8977
authorities as it is felt they are ill-equipped to investigate financial crime. We have found from talking to organisations, especially owner-managed businesses, SMEs and charities that they do not generally consider themselves vulnerable to financial crime due to their size and/or family or charitable values. Consequently only basic policies and procedures for detecting and preventing fraud are implemented. These are not reviewed and revised as the organisation grows, leaving the organisation susceptible to fraud. It is only when a fraud is detected that organisations are willing to spend money on pre-emptive measures to ensure fraud risks are identified. Without doubt, the issues that we have seen with respect to levels of fraud and financial crime will continue into 2013/14. Visibility of fraud has increased over the last few years due to the global economic downturn exposing existing practices. The real risk is that as the recovery continues, fraud once again drops from view and companies become complacent with respect to preventing, detecting and investigating issues. No company would leave its doors unlocked and its assets on view, thus failure to take preventative measures in respect of fraud is nothing but negligent. Tempest Forensic Accounting is an independent practice specialising in a wide range of forensic accounting work for individuals, lawyers,
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companies and the public. We offer independence of opinion, thought and advice and high-quality work at flexible fee structures including fixed and capped arrangements. Through our fraud mitigation service we share our experiences and insights of investigations with clients and offer independent and relevant analysis of potential fraud risk areas, in-house training and increased awareness of fraud risks. We have liaised on behalf of organisations affected by financial crime with their insurers to quantify losses and the value to be paid out under fidelity insurance policies. Advising and assisting the police in respect of their investigations into claims of money laundering and proceeds of crime also forms part and parcel of our service offering. Examples of work include:
• Leading a multi-million pound misappropriation and black-hole investigation at a major UK company and drafting reports which were submitted to both the police and the company’s insurers. • Investigation into malfeasance and alleged fraud by a managing director. We collected evidence and provided a report for group management and the group’s insurers. • Engaged as accounting expert for the prosecution in a crown court fraud trial. Our evidence dealt with an analysis of personal bank accounts, considered aspects of the defendant’s spending profile and calculated a benefit figure.
SECTOR SPOTLIGHT: The impact of white collar crime in today’s market
The impact of white collar crime in today’s market
Acquisition International spoke to Nabeel Sheikh, an internationally renowned lawyer and the senior partner and founder of Neumans LLP. Nabeel‘s expertise lies in litigation where there is an underlying element of criminal conduct/fraud. Areas of expertise include, but are not limited to: VAT/MTIC fraud; general tax fraud; money laundering; extradition and mutual legal assistance; pharmaceutical fraud; confiscation orders; restraint orders; freezing orders; boiler room frauds; banking fraud; financial services fraud; mortgage fraud; directors’ disqualification; insolvency/ bankruptcy as a result of fraud; bribery and corruption; professional discipline and regulatory. ----------------------------------------------------------------------
When considering the gamut of financial crime, I would have to say that the internet is undoubtedly the biggest factor, primarily because it enables the fraudster to target millions of people across the globe in a single keystroke. So the internet has made international financial crime more pervasive but the types of ‘scams’ haven’t really changed. Tax and VAT frauds, investment frauds, insurance fraud and advance fee fraud are still the main categories of financial crime. What has changed is the conduit used to commit fraud generally. The perpetrator’s disguise has also changed; ‘phishing’, fake websites and shady emails have all contributed to make it easier to commit serious financial crime but harder to detect.
It’s generally accepted that the UK has seen a growth in business crime in the past few years although this coincides with the considerable advance in identifying and quantifying the extent of white-collar crime. Only a small proportion of fraud is reported to the authorities. If white-collar crime is defined as covering all manner of offending behaviour within the business environment, including; theft from employer, commercial fraud, cheating the Revenue, swindles, insider trading, embezzlement and a myriad of dishonest business schemes, then it is easy to see just how difficult it can be to compile reliable data.
This means the authorities need to firstly, increase detection rates and, secondly, ensure that justice is seen to be done. In the wake of financial crises the previous government outlined plans to crack-down on white-collar crime but, save for the introduction of the Bribery Act 2010 in July 2011, there is little evidence to indicate any significant progress as UK authorities continue to come under increasing criticism for failing to tackle financial crime. Recent new initiatives, including Action Fraud; introduced in December 2012 as a national reporting centre for all fraud and internet-based financial crime, are measures intended to address the issue. In short, the authorities need to improve information exchange between the public and private sector in order to prevent and detect financial crime, and ensure that criminal and civil enforcement measures used against the perpetrators are effective. Only time will tell if there is sufficient political will to change a regulatory system rife with staff shortages and inadequate resources.
Certainly, white-collar crime in the workplace is becoming more commonplace with employees taking greater risks, and using more sophisticated methods, for greater reward. Statistics indicate that nearly two thirds of business crime is conducted by employees. Corporate fraud is also on the rise, and the demographic of those implicated is expanding with management fraud rising dramatically. Figures published by the Annual Fraud Indicator indicate that fraud loss to the UK economy was running at a staggering £73billion in 2012. Some commentators maintain that business crime is becoming easier to commit, and that more individuals are prepared to take greater risks. However, economic downturns can often lead both individuals and organisations to seek more opportunities to cheat in order to mitigate desperate circumstances.
have a clear confidentiality policy incorporated in the terms of employment. IT networks need to be secure. Recruitment policy should also include formal ID and background checks. Lastly, all staff should be encouraged to report anything suspicious using a secure ‘whistleblowing’ channel to senior management. Neumans is uniquely placed to assist victims of white collar crime, drawing on the expertise of our multi-disciplinary teams to act swiftly and decisively. It is absolutely essential to move quickly at the outset of discovery of suspicious activity as seizing evidence and freezing assets are critical factors in the successful recovery of losses. Our team can provide comprehensive assistance in all areas of white collar crime including: UK and worldwide asset freezing; UK and worldwide search and seizure orders; restraint and confiscation proceedings; negotiations with alleged perpetrators and their lawyers, and tracing stolen assets both here and overseas. We are currently instructed by a corporate entity based in South America in relation to significant financial losses arising from a fraudulent banking interception. Our client was conducting a routine money transfer with a Chinese counterpart when a fraudulent email caused the funds to be diverted to the fraudster’s account in Hong Kong. We are carrying out extensive asset tracing enquiries and advising the client on potential third party liability.
But in the current economic climate and with businesses conducting international transactions using electronic communications, it’s difficult not to see the growth of business crime becoming a continuing trend. Therefore, companies need to be vigilant. Most financial crime is opportunistic and brazen. Implement regular risk assessments and offer fraud awareness training for staff. It’s also important to
Company: Neumans LLP Name: Nabeel Sheikh (Senior Partner) Email: mail@neumansllp.com Web Address: www.neumansllp.com Address: 11 Pilgrim Street London EC4V 6RN
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SECTOR SPOTLIGHT: Insolvency, Turnaround, and Restructuring - US & Vendor due diligence: preparing to sell in today’s market
Insolvency, turnaround, and restructuring: US
Antony Walker, Partner in the US-based restructuring firm PCS, LLC describes the framework for a successful transition ---------------------------------------------------------------------It is incredibly stressful working in the midst of a major transition, be it acquisition integration, or the turnaround of a company in financial distress. However, positive solutions are there for most
Company: PCS, LLC Name: Antony Walker Email: antony.walker@pcsllc.com Web Address: www.pcsllc.com Address: Waltham, Massachusetts, USA Telephone: 857-445-0152
companies in transition and the probability of success increases significantly when the Board and management work collaboratively with an independent restructuring expert. In far too many instances, political infighting, finger pointing or territorial considerations lead to a critical loss of focus that can mean the difference between success and failure. As Sir Winston Churchill said: “If we are together, nothing is impossible. If we are divided, all will fail.” It usually takes time for restructuring experts to garner the trust and respect of the various internal constituents, and this is time that companies can often ill afford. The more that this (for want of a better word) “courtship” can be expedited, the faster vital solutions can be developed, agreed and implemented. The transition process also needs clearly defined areas of focus tailored to its circumstances. This may be along traditional lines of management concentrating
Vendor due diligence:
Boston, MA
on day-to-day operations, customers and staff while the restructuring expert brings a toolbox of solutions to cash, vendor management and operational strategy. But it could be completely different if standard solutions are unlikely to be effective. With the areas of focus defined, continuous communication is critical so that comprehensive solutions can evolve and be implemented using the widest knowledge base possible. With the pillars of trust, focus and clearly defined communication in place, the probability of a successful outcome increases significantly. PCS provides financial and operational support for small and middle market transitions, transactions, and turnarounds. PCS is a nimble, less expensive alternative to large consulting firms and investment banks for companies of all types who need top tier business planning and implementation help through any life cycle transition: start up, expansion, restructuring, exit.
Cologne / Germany
preparing to sell in today’s market
One of the most common mistakes made by business owners when selling their company is the lack of a well-planned exit strategy and preparation for the sales process, writes Inna Ivanova, project manager at maconda GmbH, Cologne.
conducted by an experienced team of advisers in several ways. First of all, a diligent analysis can provide early detection of problem areas and risks that could negatively impact the sales process, enabling the vendor to react appropriately in time.
Business owners can benefit from vendor due diligence
By discussing critical issues early and openly, the management gets prepared for the Q&A from potential investors and their advisors. This ensures the vendor has more opportunity to control the sales process. In addition to this, a vendor due diligence reduces information risks and therefore can improve a vendor’s bargaining position.
Company: maconda GmbH Name: Inna Ivanova Email: i.ivanova@maconda.de Web Address: www.maconda.de Address: Meister-Gerhard-Str. 8, 50674 Cologne Telephone: +49 / 221 / 56964 - 0
Potential investors also benefit from a vendor due diligence: it ensures cost and time savings for the buy-side due to broad information base delivered by the vendor. By this, a diligent analysis contributes to a greater confidence in the sales process by providing an unbiased, third-party opinion.
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Overall, a vendor due diligence reveals opportunities and threats and thus makes the sales process of a company more attractive. This is definitely useful in today’s M&A market. maconda is a German independent management advisor for commercial transaction services, value enhancement and corporate development. 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 to 500 million. Its key services are commercial due diligence analyses, where we are one of the most active and experienced providers in the Germanspeaking market. One part of our USP, besides involving highly-experienced sector experts, is thinking like an investor – also during a vendor due diligence. Understanding the typical questions and concerns of an investor is key to the success of a transaction process.
SECTOR SPOTLIGHT: Luxembourg manages the AIFMD & Actuarial consultancy in transactions
Luxembourg manages the AIFMD
The attractiveness of using a Luxembourg management company in the new AIFMD environment ------------------------------------------------------------------Alternative investment fund managers (AIFMs) are now reviewing and adapting their existing models in order to comply with and benefit from the Alternative Investment Fund Management Directive (AIFMD). Despite some voices to the contrary, it is already quite clear that the AIFMD is creating more opportunities than obstacles to manage and market alternative investment funds (AIFs) in the European Union. It is highly likely that UCITS management companies, once they are allowed to manage AIFs, will be able to leverage their existing UCITS experience into the successful operation of an AIFM provided they focus on cost efficiency and streamlining of operations. The AIFMD aims to create a European brand comparable to the renowned UCITS brand, for
which Luxembourg has proved to be a gateway to Europe and far beyond for many fund managers. For example, Luxembourg UCITS are distributed in more than 80 countries, including the most important markets of Asia, the Middle East and Latin America. Independent service providers based in Luxembourg and specialising in third-party management company services offer an opportunity for non-EU managers. By appointing an AIFMD-compliant management company, non-EU fund managers could create AIFs that can benefit from the AIFM marketing crossborder passport (without having to wait for 2015 to do so). In such cases, portfolio management can be delegated to a non-EU manager authorised or registered for the purpose of asset management (amongst other conditions). Much will depend on whether Luxembourg market participants succeed in adapting to the new framework and in applying the AIFMD’s numerous technical requirements efficiently and
in a commercially savvy manner that satisfies the increasing demand of certain European investors for more risk management, security and transparency. If they do, alternative fund managers might be inclined to choose Luxembourg as the ‘hub to be’ (by setting up their own AIFM) or, alternatively, as the ‘hub to use’ (by using a third-party AIFM).
Company: NautaDutilh Avocats Luxembourg Name: Jean-Florent Richard Email: jean-florent.richard@nautadutilh.com Web: www.nautadutilh.com Address: 2, rue Jean Bertholet, L-1233 Luxembourg Telephone: +352 26 12 29 67
Actuarial consultancy in transactions
When considering a transaction, the pension deficit to which a company is exposed may be very different from the figure shown in the latest company accounts. Firstly, for funding purposes, the liabilities will be assessed differently than is required for the accounting disclosures. Secondly, the deficit can be very volatile and change materially over the course of just a few weeks. The deficit is the difference between two large numbers which vary in different ways – the asset figure is of course the market value of the equities, bonds, gilts, property, etc that the scheme holds (either directly, or through a variety of funds), whereas the liabilities vary with inflation and bond yields. It is not unusual for the two figures to move in opposite directions, causing a large swing in the deficit. The funding requirements of a scheme following purchase of the sponsoring employer can also
change materially if the trustees believe there has been a weakening of the covenant. The trustees may negotiate for a lump sum contribution, increased annual contributions, or additional security (for example a first charge over any unencumbered asset, or a second charge over assets already used as partial security for another creditor). Your actuarial consultant can help to ensure that any additional requirements are proportionate and in line with your business objectives. The Pensions Regulator’s new objective is helpful in this respect - to minimise the impact of scheme funding on employers’ sustainable growth. You can discuss the anticipated funding basis with your actuarial consultant and set up a tracker for the assets and liabilities that will estimate the current deficit and show the approximate movements going forward. Any price adjustments
specified in the sale and purchase agreement can also be incorporated into the model. After the transaction completes, the model can continue to provide useful input to any further exercises to be undertaken in relation to the scheme.
Company: Barnett Waddingham LLP Name: Malcolm Rochowski FIA Web Address: www.barnett-waddingham.co.uk Address: Cheapside House, 138 Cheapside, London, EC2V 6BW Telephone: 020 7776 2241
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SECTOR SPOTLIGHT: Protecting Intellectual Property Assets
Protecting intellectual property assets
Simon Miles is Head of Intellectual Property at Edwin Coe LLP. -------------------------------------------------------------Edwin Coe’s IP Group offers a full service which comprises solicitors specialising in contentious and non-contentious IP and IT and a trade mark attorney. Simon Miles and Nick Phillips are both ranked in the leading directories Legal 500 and Chambers. “Comprising around 70 lawyers in total we offer the personal and responsive service of a boutique, with ‘big firm’ expertise,” said Mr Miles. Edwin Coe advises clients on all areas of intellectual property. The firm works with clients across a range of sectors including: media and entertainment; advertising and sport; fashion; restaurants and electronics. It advises household names in IP/ IT matters as well as a wide range of media clients who are involved in areas such: film; TV; entertainment; new media; advertising; publishing; communications and PR. “We have particular expertise in dealing with regulatory and commercial issues faced by new and innovative technologies in the IT space and also advise on legal aspects of social media and usergenerated content on websites and on new media aspects of defamation,” added Mr Miles. “We act for large enterprises, SMEs, charities, individuals and entrepreneurs. We act for many clients on an international level in relation to their trade marks for example and through our membership of Euroadvocaten.”
According to Mr Miles, the key skills requirements of an IP adviser are knowledge of the industry, the client and a leading knowledge of the relevant law. He added that Edwin Coe is proactive in its advice, which is solutions-driven, whether in getting a deal done or resolving a dispute. “IP rights are the key income generators for most businesses,” he explained. “They are the distinguishing elements of a business and are crucial to its health and long term success. “We get involved with our clients’ businesses at an intimate level in order to understand their objectives and to advise on how intellectual property rights will drive and sustain commercial success. We maintain trade mark portfolios, we advise on exploitation of IP rights and we have advised on some of the largest IP cases over the last 20 years. We are able to deal with any issues which arise in relation to IP and IT rights.” While the specific risks faced when IP is not sufficiently protected depend on the nature of the business in question, Mr Miles explained that, in general terms, the commercial success of the business will be limited. “Trademarks should be sufficient to allow protection in relation to all aspects of the business, copyright and designs should be adequately protected and registered where possible, and sufficient confidentiality agreements should be put in place,” he elaborated. “Patent protection should be audited and investigated at regular intervals.” Mr Miles noted that members of Edwin Coe’s IP group are very experienced in dealing with IP
disputes and that the firm has been involved in many cases in which new law has been made. “We resolve disputes as quickly as possible relying on negotiation, mediation and arbitration in addition to litigation. Members of our dispute resolution group are mediators and arbitrators. In addition, Edwin Coe is well-known for its heavyweight litigation practice and the IP Group is able to draw on that experience where necessary,” he added. Mr Miles sits on the Council of the Institute of Trade Mark Attorneys and is often involved in consultations with the UKIPO, WIPO and OHIM on new legal developments. He concluded: “Increasing harmonisation will help businesses compete and exploit rights more confidently overseas and locally the IP Bill and developments in the Patents County Court will continue to help smaller and medium sized businesses protect their IP rights.”
Company: Edwin Coe LLP Name: Simon Miles Email: simon.miles@edwincoe.com Web: www.edwincoe.com Address: 2 Stone Buildings, Lincoln’s Inn, London WC2A 3TH Telephone: +44 207 691 4000
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SECTOR SPOTLIGHT: Mediation: A Real Alternative
Mediation: a real alternative
Acquisition International speaks to David Liddle, Chief Executive of The TCM Group, to discuss the power of mediation to resolve disputes. -------------------------------------------------------------According to Mr Liddle, mediation has made significant progress in moving into the mainstream in the UK. He stated that 20 years ago, when he started mediating, there was a lot of confusion over what mediation was and many people held stereotypical views of the process. “They saw it as a bit soft and fluffy and not really a credible alternative to the adversarial justice models that we’ve become familiar with,” he commented. “We’ve had a real challenge over the last 20 years as mediators to challenge the established justice models which are predicated on the ‘I win, you lose’ concept. “It’s taken a long time but mediation is now widely recognised as a powerful remedy to often intransigent and challenging disputes. The power of dialogue, when parties come together, is proven to be an effective system for resolving disputes. The mediation process is faster, cheaper and less divisive than litigation or other dispute resolution procedures.”
Mr Liddle noted that every mediation that he has conducted involved enormous amounts of strong feelings and high emotion. In normal dispute resolution processes, that emotion is codified in financial terms as some form of loss. Mediation, however, offers parties a chance to really discuss their feelings and emotions in a way that can develop a much more empathetic and human connection. “Mediation doesn’t just save time, it doesn’t just save money, but it also reduces the stress that conflicts can cause. It is a much more humanising way of resolving our disputes,” he said. “We can talk eye-to-eye, face-to-face, and connect with each other. When there is an on-going relationship, as there often is in business, mediation can protect that relationship. Litigation, for me, tears that relationship asunder and almost makes it impossible for the two parties to engage with each other in any meaningful way again in the future.” Mr Liddle noted that mediation also offers advantages in terms of confidentiality and the risk of brand damage. When a company is dragged into a court environment, or experiences high profile ligation it has to face
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the public glare and the 24 hour press; the speed by which these disputes can be aired on news networks and in the media can have a detrimental effect on the brand. “The dispute resolution landscape is part of the way that an organisation is valued and affects the potential for any acquisition in the future,” he continued. “These issues are very real and they have a bottom line impact. A mediation environment is a much safer, confidential space, where issues can be raised and aired without the glare of publicity. “Also, because of the confidential nature of mediation, the hardened positions that we often see in litigation, which are based on the principle of the matter, can become much softer. The mediator focuses on the interests and needs of the parties rather than the positions that they’ve adopted. It’s what we call ‘interest based negotiation’, rather than litigation which is a positional bargaining process. Mediation gets to the root cause of the dispute because of the way that it’s run. The mediator is impartial and doesn’t impose an outcome. Mediation is about collaborating rather than blaming. That’s what makes the process different.”
SECTOR SPOTLIGHT: Mediation: A Real Alternative Mr Liddle was recently involved in a mediation for a large organisation that was formed through the merger of three companies. He was working with a team that had been through the rationalisation process, but some of the key cultural differences had not been addressed. “They’d addressed the headcount and resources issues, but they hadn’t addressed some of the different working practices and the culture of these different teams coming together,” he explained. “I came in post the rationalisation exercise to mediate within the team. The team was in what would be called the ‘storming phase’ of team development, so there was a lot of conflict. It was a pretty heated environment; it didn’t have the basic boundaries in place to help them to address their conflicts constructively and the quarrelling could have really knocked this merger off course.” The mediation conducted by Mr Liddle involved a number of steps. The first step was to meet the organisation’s Head of HR to get the brief, to understand the context, values and the needs of the organisation and to get clear expectations of what the business was looking for as an outcome from the mediation. He then met each of the individual team members separately to understand their needs and goals, as well as to assess and understand the impact of the merger and the conflict. Next, he ran a mediation process between two of the key parties. “There was an inner circle of two very strong charismatic parties who were in dispute with each other,” continued Mr Liddle. “I brought them together and helped them to air their grievances and to find a remedy to the dispute. I helped them to forge an agreement which helped them to communicate and to share information between themselves more effectively in the future.”
“I worked with them to align what they were doing with the new organisation and that was really powerful,” Mr Liddle enthused. “They really started to feel like they fitted into this new structure that they found themselves within. It turned out that the team had been formed but hadn’t really been given a sense of its clear purpose, so I was able to help them to develop a common purpose and align that to the organisation’s strategy, vision and values.”
mediator, and he anticipates real growth of the role that mediation is playing. He predicts that human resources professionals, employment lawyers, business leaders and others will be using mediation: its mind set, skills and processes to develop strong, high performing teams and potentially to unlock creativity and the potential for economic growth. “We always look to the US and Australia and New Zealand and elsewhere for inspiration, but for me we’re doing some very special things here in the UK.I think that the UK model of dispute resolution could and should be seen as a benchmark standard for the rest of the world. One of my personal drivers is to make that happen, for the UK to become an international hub of effective dispute resolution practice,” he concluded.
“It’s taken a long time but mediation is now widely recognised as a powerful remedy to often intransigent and challenging disputes.”
The next step was to bring the entire team together for a conference that lasted a full day. The session was broken into two halves, the first of which explored the history to the conflict: what had happened; why it had gone wrong; and what impact it had. “This wasn’t from the point of view of finding fault and blame, but from a perspective of trying to learn and understand from the past in order to be able to build and secure a stronger future,” Mr Liddle elaborated. The second half of the day was focused on problem solving for the future: what kind of team they wanted to be; what systems, process and rules needed to be in place; what behaviour they wanted to exhibit as a team; and what the team’s purpose was.
“The final stage was to take that back into the organisation and to provide support to that team in terms of the role they play within the newly merged organisation. That involved helping the HR director to avoid formal grievances using more of a coaching philosophy within the team. It’s working really well, I’ve got some great feedback, and the organisation is really happy with the team now. “I was really proud of that piece of work and feel that it’s made a contribution to the individuals’ working life and to the team’s effectiveness. It’s also unblocked a barrier to this new organisation functioning to the level that it can potentially achieve.” Mr Liddle believes that it’s a great time to be a
Company: The TCM Group Name: David Liddle Email: david.liddle@thetcmgroup.com Web: www.thetcmgroup.com Address: Ground and first floors, New House, 67-68 Hatton Garden, London, EC1N 8JY, UK Telephone: +44 (0) 20 7092 3180
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SECTOR SPOTLIGHT: Mediation: A Real Alternative
The Netherlands
Haarlem / The Netherlands
Linda Reijerkerk is a Master in Dispute Resolution and a mediator since 1997. She is the director of the Centre for Conflict Management (CVC). As a mediator she mediates in business cases and complex, multiparty cases: intellectual property, labour disputes, business transactions, disputes between authorities and (large) firms. One of her cases included a dispute between a Waste Disposal Consortium with six other parties. The mediation was successfully closed and resulted in a prevention of financial losses of approximately €20 million. CVC was the first Dutch training institute for mediators and ADR specialists, established in 1993. It trains lawyers, civil servants, consultants, and other
Company: Centre for Conflict Management Name: Linda Reijerkerk Email: mediation@cvc.nl Web: www.cvc.nl Address: Nieuwe Gracht 74, 2011 NJ Haarlem Telephone: 023 5323196
professionals in conflict management, mediation, ADR and coaching both in the Netherlands and abroad. -------------------------------------------------------------Mediation in the Netherlands has seen huge growth. In 1998 approximately 100 mediations took place, by 2012 the number had increased to 50,000 making Holland one of the countries with the most mediation cases in Europe. A court-annexed mediation program has definitely contributed to this success rate. (CVC has trained most judges in court referral and conflict diagnosis techniques.) But there is room for more: in 2009 Tilburg University calculated that only 3% of the 2 million litigations per year are mediated. Success factors Trust and commitment are key factors for a successful mediation: trust in the mediator and the mediation process, and commitment to work towards a solution. It is the mediator’s task to guide clients through this process: to stimulate clients, to assist them in unfolding the conflict story, identify interests, facilitate deal-making and come to a settlement.
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To be effective the mediator needs to have the right attitude. Therefore, CVC focuses its training on developing that attitude, as well as the right skills. While the mediator is an expert in conflict resolution; the parties are experts in the content of the issues at stake. Mediation advocacy, where lawyers bring in expertise next to the mediator can be very helpful, provided the lawyer understands what the mediator is doing. CVC trains lawyers in mediation advocacy skills, so that they are able to provide maximum added value to their clients in the mediation. Preventing financial loss A Dutch ministry calculated the average costs of a labour dispute as being approximately €50,000 per dispute. CVC has trained multinationals and large governmental agencies and implemented conflict management systems. In the case of the Ministry of Justice this has led to a prevention of a loss of over €5.5 Million in just 2.5 years. In 2011 the EU compared the average costs of not using mediation in 26 EU member states. It found that a 75% mediation success rate in Belgium can save approximately 330 days of litigation and €5,000 per dispute; a 75% success rate in Italy can save 860 days and over €7,000 per dispute.
Al Kheraiji Law Office We base our practice on building long-term relationships with our clients who count on us to provide them with reliable legal counsel, guidance and assistance on their day-to-day operations and the most challenging deals when and where they need it.
Al Kheraiji Law Office is a leading Saudi law Office. We strive to deliver the best client-centered legal services across a broad range of industry sectors. Al Kheraiji Law Office offers prompt and effective legal services to clients and has a proactive and positive approach towards finding solutions to problems as they arise. Each member of the professional team at Al Kheraiji Law Office has a significant depth and breadth of appropriate experience in their field of expertise and a track record of achievement in assignments. The Office is committed in finding legal solutions that produce tangible and cost effective results for its clients and in our effort we have consciously nurtured and developed our strengths to be a multi-disciplinary law office. We feel our firm is uniquely to provide a professional and responsive legal interface which is suited to the dynamic needs of our clients.
Riyadh – Al Malaz – Ali ben Abi Taleb St. P.O. Box 25900 Riyadh 11476 Kingdom of Saudi Arabia Phone: + 966 1 4 7 6 6 9 3 9 Fax: + 966 1 4 7 8 0 5 4 4
info@alkheraiji.com
www.alkheraiji.com
SECTOR SPOTLIGHT: Arbitration seats
Arbitration seats
Singapore Skyline
Singapore Kent Phillips is a partner with Berwin Leighton Paisner LLP, based in the Singapore office. -------------------------------------------------------------Singapore’s increasing importance as an arbitration seat is likely to continue as a result of a combination of factors. A key advantage for Singapore is its common law background: having inherited a system of law based closely on that of England and Wales, many of the
Company: Berwin Leighton Paisner LLP Web Address: www.blplaw.com Name: Kent Phillips, Partner Email: kent.phillips@blplaw.com DID: +65 6571 6616 Name: Roger Milburn, Senior Associate Email: roger.milburn@blplaw.com DID: +65 6571 6631
features and principles of English legal practice have been adopted. Singapore has a fair, neutral and efficient judiciary which has a long tradition of support for arbitration and respect for awards. It also enjoys UNCITRAL Model Law based arbitration legislation and has implemented the New York Convention. Further, it has a legal market which is becoming increasingly specialised, and there is now a growing pool of dedicated arbitration lawyers resident in Singapore. Parties can also draw on a choice of experienced arbitrators operating in the jurisdiction. The local arbitration legislation is Model Law based, with some relatively minor departures. These include provision for one arbitrator (rather than 3 in the Model Law) in the absence of agreement as to number, and allowing fraud/corruption and breach of rules of natural justice in the making of the award (by which the rights of any party have been prejudiced) as additional grounds to set aside an award. A number of major international institutions are now represented in Singapore alongside the Singapore International Arbitration Centre (SIAC), Singapore’s own respected arbitral institution, which is fair and efficient, with a state of the art set of rules. SIAC received 235 new filings in 2012 valued at some S$3.61bn, having seen considerable increases in caseload over five years (there were 86 new filings in 2008). The size and complexity of claims being handled is also increasing, with 2012 seeing one claim for S$1.5bn. Although the majority of
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parties are from India, Indonesia and China, filings in 2012 involved parties from 39 jurisdictions, including the USA, UK, France and Switzerland. SIAC has been at the leading edge of innovations such as emergency arbitrators (with more than 25 applications so far) and expedited procedures. The scope of disputes commonly resolved in Singapore is broadening, taking in corporate, commercial, trade, shipping and construction disputes, amongst others. Mr Phillips said: “We predict further growth in Singapore’s arbitration caseload, given the enforcement advantages of arbitration, increase in international trade with and within the region, and with the use of SIAC arbitration clauses now widespread in the region. This includes some of the emerging jurisdictions, such as Myanmar, where Singapore arbitration clauses are now in use. The scope of disputes is likely to continue to move beyond its traditional shipping/commodities base, into areas such as finance where arbitration is increasingly used by financial institutions.” Berwin Leighton Paisner LLP is an international law firm with a specialist arbitration capability in Singapore, conducting all stages of arbitration in the region to the highest international standards. It draws on in-depth sector and jurisdiction experience and an innovative approach to disputes. One of its partners - Stuart Isaacs QC – was the first London QC to be permitted to practice as a foreign lawyer in Singapore.
SECTOR SPOTLIGHT: Arbitration seats
Canada Murray H. Miskin, a lawyer and arbitrator, has been the principal trainer of arbitrators in Ontario, Canada since 1985. He is based in Peterborough between the national capital, Ottawa, and Canada’s largest city and business capital Toronto. Mr Miskin has been a leader in Canadian Bar Association and ADR Institute of Canada. He belongs to the Inter American Bar Association and various mediation and arbitration organizations. Mr Miskin is available to conduct arbitrations anywhere in Canada and across the globe. He uses modern technology to provide online arbitration services where appropriate providing services via www.online-arbitration.com. His primary ADR website is www.adrworks.ca. -------------------------------------------------------------Canada is often viewed as a remote northern country but, in fact, most of Canada’s population is in urban centres which are close to and have the same climate as major USA cities. Canadian cities are easily accessible by direct flights from all over the world with highly competitive air fares and high quality, reasonable cost accommodation and facilities for arbitration. Prices are generally lower in Canadian cities than in the USA or other world cities. There is a strong multicultural character to Canadian cities especially Toronto and Montreal.
Ecuador
Hernán Pérez Loose is one of the founding partners of Coronel & Perez. Based in Guayaquil, Ecuador’s largest economic and financial centre, the firm has offices also in Quito, the nation’s capital. ---------------------------------------------------------------------Arbitration in Ecuador has been on the rise for the past 16 years, since the country enacted its Arbitration and Mediation Law (AML). AML covers domestic and international commercial arbitrations, and the enforcement of foreign commercial awards in Ecuador. It follows in the steps of the UNCITRAL Model Law, including the annulment grounds and the recognition and enforcement of international arbitration awards. Ecuador has been member of the New York Convention since 1962. The AML specifies that only trade unions, chambers of commerce, or non-profit organisations can organise arbitration and mediation centres. Mr Perez Loose said: “Ecuador’s constitution has
Vancouver is a beautiful Pacific city with a strong Asian influence. Canada is mostly an Englishspeaking country with French being readily available as an alternate official language. In Quebec Province the French language is primary, with English being commonly spoken only in the Montreal area. In 1986, Canada became the first country in the world to adopt arbitral legislation based on the UNCITRAL Model Law. As the Canadian Provinces are constitutionally responsible for the law of contract, every Province then adopted the Model Law in its own legislation. At the same time Canada and its Provinces adopted the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This was followed by the passage of domestic arbitration acts based on the Model Law. These modern arbitration statutes put Canada and its Provinces into the arbitral forefront of industrial nations. Canada is highly developed technologically and in transportation and communications. It is a country rich in natural resources and is politically and financially stable. Visitors always remark on Canada being a clean and safe place. There are numerous facilities and court reporters as needed for arbitration proceedings in Canada’s major cities as well as readily available translation services.
The Canadian judicial system is respected and based on British common law with an American influence but there is also a civil law system applicable in Quebec. Canadian courts are arbitration friendly, respecting the choice of arbitration. Courts intervene only to assist and support the arbitration process. Canada is seen as an independent British Commonwealth country mostly influenced by the USA but with strong ties to Britain, Europe and Asia. Canada has many respected and experienced international arbitrators well suited to international business disputes. There are established, respected ADR organizations in Canada which provide ongoing professional development to members and ensure high standards of practice.
Name: Murray H. Miskin Web Address: www.adrworks.ca Address: 263-380 Armour Rd., Peterborough Ontario, Canada, K9H 7L7 Telephone: 1-416-492-0989
night scene on malecon 2000 guayaquil ecuador south america
recognized arbitration as a legitimate system to settle disputes. As a result, courts and tribunals have become friendlier toward commercial arbitration. Arbitral commercial awards are rarely annulled by ordinary courts. “There are now several arbitration centres in Ecuador. The chambers of commerce of Guayaquil and Quito are the most important but other institutions are very active in arbitration. As you would expect, the secretarial services of these centres are well equipped.” As a result of the AML, Ecuador’s reputation as an arbitration-friendly country is increasing. “Among private attorneys commercial arbitration has become the only method to solve commercial disputes,” said Mr Perez Loose. Investment into Ecuador’s transport infrastructure, including a new airport at Quito, means the country is well-connected, with several major airlines offering it as a destination. Between 2007 and 2012 average growth of 4.3% meant its economy performed above
the Latin America-Caribbean average of 3.5%. Looking ahead to 2014, Mr Loose predicts that international commercial arbitration will continue to rise. Coronel & Perez provides a wide range of legal services with special emphasis in international complex litigation and matters connected with foreign investment.
Company: Coronel & Perez Name: Hernán Pérez Loose Email: info@coronelyperez.com Web Address: www.coronelyperez.com Address: La Previsora Building, 9 de Octubre 100 y Malecón Telephone: 593-4-2519900
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SECTOR SPOTLIGHT: Arbitration seats
Germany
has increased substantially since the 10th Book of German Code of Civil Procedure was reformed by adopting the UNCITRAL Model Law in 1998.
Prof. Dr. Rolf Trittmann is partner at Freshfields Bruckhaus Deringer. His recent arbitration highlights include representing different leading automotive companies in three-digit damage claim cases. He is member of the ICC Court of Arbitration representing Germany and heads the Advisory Board of the German Institution of Arbitration.
Germany offers an efficient legal framework and a neutral and impartial judiciary at the highest level with its arbitration friendly, civil law jurisdiction. German case law of recent years shows a clear tendency of the German state courts to respect and enforce the choice of parties to opt out of the judicial system in favour of arbitration. Decisions of the state courts reflect the readiness to support arbitral tribunal in their findings.
The international arbitration group at Freshfields Bruckhaus Deringer is widely recognised as the world’s leading practice in investment-protection disputes and commercial disputes. Usually, the lawyers have an international legal education, speak at least two languages fluently and are admitted to practice in more than one jurisdiction. -------------------------------------------------------------Sophisticated community The number of arbitrations related to Germany
Experienced and competent institutions In Germany arbitrations are either conducted on an ad hoc basis or are organised by an arbitration institute. The leading German arbitration institution DIS is efficient and professional in administering cases, making it well-regarded internationally and the default choice for most German corporations. Court decisions in general, and those related to arbitration in particular, are easily and freely accessible on the German Institution of Arbitration’s excellent database where the full text of nearly all arbitration-related court decisions can be found. For the most relevant cases English abstracts can be accessed via the DIS website.
Company: Freshfields Bruckhaus Deringer Name: Prof. Dr. Rolf Trittmann Web Address: www.freshfields.com
Hong Kong Ms Chiann Bao is the Secretary-General of the Hong Kong International Arbitration Centre (the HKIAC). Established in 1985, the HKIAC is one of the longest-standing arbitral institutions within Asia. ----------------------------------------------------------------In 1990 Hong Kong became the first country in Asia to adopt the UNCITRAL Model Law and it maintains a robust legal system with qualities that make it an attractive seat. Hong Kong is similar to the ‘big four’ seats in that it provides an attractive legislative framework that is supportive of arbitration and its judiciary maintains international best standards on enforcement and setting aside awards.
Swift proceedings State court intervention has been mainly supportive, restricting the scope of judicial Hong Kong has also taken great steps to maintain a state-of-the-art arbitral framework with the 2011 Arbitration Ordinance which follows the UNCITRAL Model Law and its recent amendments of 2013 which allow for all emergency arbitrator orders to be enforceable in the HK courts. Ms Bao said: “Although Hong Kong is a territorial part of China, its impartiality and neutrality as an international arbitration seat is well established. This is because Hong Kong is a special administrative region that operates on a ‘one country two systems model’; consequently, it has a separate political and legal system from China. “Hong Kong follows the British Common Law System which is different from China’s Civil law system. Judicial impartiality is well exhibited as senior judges from Commonwealth jurisdictions sit on the Hong Kong Court of Final Appeal.”
Court proceedings in support and supervision of arbitration are regulated to ensure they are conducted in a fast and efficient manner. They are usually limited to one instance, except in actions relating to the admissibility or non-admissibility of arbitral proceedings or the determination of the tribunal’s jurisdictions. Arbitrations are usually conducted in a typical civil law style with an emphasis on documents as a means of evidence and a tight control of the proceedings by the tribunal. Arbitrators may suggest settlement terms for the parties’ consideration. In practice, arbitration proceedings in Germany are quite efficient and be generally less expensive than common law style arbitration proceedings. Easy enforcement Arbitral awards in Germany are easily enforceable domestically as well as abroad since Germany is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, with its 142 member states and robust enforcing mechanism. Enforcement proceedings are generally quick and efficient.
provisions will allow Hong Kong courts to enforce relief granted by an emergency arbitrator, whether made in or outside Hong Kong. The courts in Hong Kong adopt a pro-enforcement bias under the New York Convention which is testament to Hong Kong’s commitment to the recognition and enforcement of foreign arbitral awards. Emerging trends include the rising number of complex arbitrations involving multi-party and multi-contract scenarios and the growing diversity within parties’ profiles both in terms of nationalities and industries. The HKIAC has established strong business connections with the arbitration community in Latin America and foresees a potential growth in parties from that region.
Ms Bao believes that Hong Kong’s arbitration friendliness is reflected by its modern arbitration law that is consistent with international best practice and the latest developments in the field of arbitration.
The HKIAC is the default appointing authority under the Ordinance to appoint arbitrators and determine the number of arbitrators where the parties don’t agree. The HKIAC administers international arbitrations under its institutional rules and under the UNCITRAL Rules for the legal fraternity and business community. Hong Kong has the largest pool of arbitrators in Asia which showcases its strengths as a ‘go to’ destination for international arbitration.
The Legislative Council of Hong Kong has recently passed the Arbitration (Amendment) Bill 2013 and adopted several major improvements. New
One aspect that users find favourable about the HKIAC is the high-quality service it provides at relatively economical costs.
One notable feature of the Hong Kong Arbitration Ordinance Cap 609 is the inclusion of an express duty of confidentiality.
Company: Hong Kong International Arbitration Centre Name: Chiann Bao Email: chiann@hkiac.org Web Address: www.hkiac.org Address: 38th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong SAR, China Telephone: +852 2525 2381
control. The jurisdiction for all arbitration-related proceedings is concentrated at the Higher Regional Courts (Oberlandesgerichte) and handled by dedicated chambers. German courts have been very cautious in making use of the few supervisory powers granted to them.
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SECTOR SPOTLIGHT: Arbitration seats
Russia
Dmitry Romanenko is managing partner of CDR. Litigation boutique, Moscow ------------------------------------------------------------------Despite not being one of the ‘big four’ arbitration seats, Russia is home to one of the oldest arbitration courts in Europe. The International Commercial Arbitration Court (ICAC) at the Russian Federation Chamber of Commerce and Industry is the successor to the Foreign Trade Arbitration Commission, which was founded in 1932. Over the past 70 years it has become one of the largest and most authoritative arbitration centres in the world. The number of cases it handles each year is increasing consistently. For example, 41 companies from foreign states were parties to disputes in the ICAC in 2005, by 2012 this had risen to 241 companies from 47 countries.
Senegal Dr. Aboubacar Fall practices admiralty, maritime, shipping, commercial, banking and arbitration law in Dakar, Senegal, and is the founder of Fall and Co Law Offices, Dakar. He is a former President of the Senegalese Maritime Law Association and a Titulary Member of the Comité Maritime International. He has published extensively on domestic and international commercial arbitration. ----------------------------------------------------------------Senegal established the Dakar Center for Arbitration and Mediation in 1998, following ratification of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the 1965 Washington Convention for the Settlement of Investment Disputes. Dr Fall said: “It is fair to say that it has not been easy to develop an arbitration culture as we are still in the early days of the creation of the Center. But owing to strong awareness-raising campaigns, especially among private sector actors, the Center has gained nationwide and region-wide popularity after just over a decade of existence.” The roots of Senegal’s growing popularity can be found in convenience and impartiality. A West African, Francophone country Senegal is a convenient venue for arbitration owing to the availability of a modern legal infrastructure, based
Given Russian companies’ increasing focus on global markets, the increase in activity is unsurprising.
“The number of cases is increasing consistently. Arbitration at the ICAC Russia is one of the main areas of practice for CDR. Litigation boutique.”
Mr Romanenko describes Russia as being very friendly for arbitration. It has been a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) since 1960, making it one of the earliest countries to sign up to the instrument. “This means that an award from the ICAC Russia may be executed all over the world and foreign awards may be executed in Russia too.” The main cost considerations when using Russia as an arbitration seat are law firms’ fees, arbitrators’ honorariums and duties to the arbitration institution. Mr Romanenko says: “It’s important to underline that Law of the Russian Federation on International Commercial Arbitration was created on the base of UNCITRAL Model Law.
on civil law, as well as competent and experienced national and international arbitrators and experts. It is also an impartial venue based on the Rules of Ethics which govern the mission of arbitrators. Another feature is the culture of the national court not interfering with the arbitration process, except in instances expressly spelled out in the Arbitration Act. The process of enforcement of arbitral awards is conducted fairly easily by virtue of an exequatur order awarded by the competent local court. Costs are based on the amount of the claim in dispute and include not only the arbitrators’ fees but also the administrative costs in relation to the organisation and conduct of the arbitration process by the Center. The Senegalese Arbitration Act has been partly modelled on the UNCITRAL Model Law on International Commercial Arbitration together with the French code of Civil Procedure (articles 1442 to 1491). In addition, Senegal is a member of an international treaty which has created the Organisation for the Harmonization of Business Law in Africa, whose French acronym is OHADA. The Organisation is comprised of 17 Francophone African states, including Senegal, and operates by way of Uniform Acts that are directly applicable in its member countries.
Company: CDR. Litigation boutique. Name: Dmitry Romanenko Email: rdmu@litigationboutique.ru Web Address: http://litigationboutique.ru/en/ Address: Russia, Moscow region, Khimki, Leningradskaya street, 29 Telephone: +7-499-714-63-28
Dr Fall considers that Senegal’s role as a seat of arbitration is likely to expand in 2014. “With the recent developments in the volume of investments in the natural resources sector, such as mining, oil and gas, it could be reasonably expected there will be a significant growth in the use of the Dakar Center as an arbitration seat for the resolution of small and medium size disputes,” he said. Established in 1990, Fall and Co is one of the leading law firms in Senegal. Fall and Co Lawyers are graduates from the best universities in Africa, Europe and the USA and have accumulated significant international experience from major law firms in France, UK, and the USA. They speak local Senegalese languages as well as French, English and Spanish.
FALL & Co Law Offices Company: Fall and Co Law Offices Name: Dr Aboubacar Fall Email: fall_aboubacar@yahoo.fr Address: Villa 5031 Liberte 4, PO Box 17295, Dakar-Liberte, DAKAR (Senegal) Telephone: + (221) 33 864 05 78
Acquisition International | November 2013 | 95
Blue Cross Insurance Inc. Blue Cross Insurance Inc. is a Liberian Lebanese Composite insurance company established in the year 2001. We are located at the Midtown Plaza Building on Carey Street, Monrovia, Liberia. Our commitment is to maintain leadership position in the area of insurance by providing professional underwriting and excellent customer services through our experience and potential work force. We believe in the value of contract. We believe in what we write. Your premium is our commitment.
Blue Cross Insurance provides you with protection.
Telephone: +231 (0) 886510522 / 886544985
SECTOR SPOTLIGHT: Arbitration seats
Switzerland
Martin Wepfer is managing partner of the law firm Mathys Schmid Partner, Rittergasse 12, CH-4051 Basel, Switzerland -------------------------------------------------------------Mr Wepfer considers that Switzerland’s history as a reliable, neutral and politically stable country is reflected in its present-day popularity as an arbitration seat. Its reputation for impartiality is coupled with the convenience of its central location and excellent infrastructure such as arbitration venues and transportation. “Switzerland hosts many international organisations and dispute settlement institutions,” says Mr Wepfer. “Swiss law provides for a liberal, predictable and reliable legal framework. This is evidenced by the fact that foreign parties frequently choose Swiss law as a neutral law to govern international contracts. Usually, such contracts also provide for arbitration in Switzerland. Last, but not least, Switzerland has a high number of skilled and experienced arbitrators and counsels.”
UK Damian Hickman is the managing director of The International Dispute Resolution Centre. ---------------------------------------------------------------English law is renowned for its combination of predictability and flexibility, impartiality and integrity. As a result, it is appealing to contractual parties from around the world. London has a 2,000-year history as a trading centre and, consequently, its history of dealing with contractual disputes probably isn’t much younger. The foundation of modern-day arbitration is usually considered to be the Jay Treaty of 1794, which dealt with claims from the American Revolution. The UK was one of two signatories, the other being the USA. London’s position as a centre for world trade meant the City of London first identified the need for a court of arbitration in 1883. Nine years later – the delay was partly due to the desire to pass an Arbitration Act – and the chamber was formally inaugurated. More than 100 years later and London has a unique combination of experienced lawyers, specialist business and financial professionals and
He adds that although Chapter 12 of the Federal Statute on Private International Law (PIL) that governs international arbitration in Switzerland was developed independently of the UNCITRAL Model Law, there are no major differences between the two. The revised Swiss Rules on International Arbitration, introduced in 2012, are mainly based on the UNCITRAL Model Law and reflect at the same time the developments in international arbitration of the last years. Although Switzerland faces competition from other places of arbitration and arbitration rules, thanks to its stable political system, the business-friendly environment and its modern infrastructure and legal framework, Mr Wepfer believes it is fit to face such competition. In fact, changes to the arbitration system could well enhance its attractiveness in 2014 and beyond. “The revised Swiss Rules allow for very flexible and efficient arbitration proceedings,” he explains.
experts – often within a short walk of each other. Many international law firms have a presence in London, adding to the available expertise. The UK is also home to many organisations that offer arbitration, mediation and alternative dispute resolution. As well as being home to the Chartered Institute of Arbitrators, the UK also has specialist arbitrators’ societies for the maritime and construction industries. Excellent international transport connectivity coupled with London’s position between the time zones of the Far East and the US have all added to the UK’s reputation and its position as one of the ‘big four’ seats of arbitration. But the UK is not resting on its historical and geographical laurels. The government is working closely with TheCityUK, UK Trade & Investment, the Bar Council and the Law Society to promote the UK as the global centre of legal dispute resolution and as a provider of high quality commercial and financial legal services. Personal expertise is backed up by practical facilities. Mr Hickman says: “The IDRC is the World’s ‘s leading facility at which to conduct arbitrations and other forms of alternative dispute resolution, whilst also providing rooms and support services for meetings, training courses and seminars.
Mathys Schmid Partner is an established firm of attorneys and notaries of Basel, Switzerland, with offices at Rittergasse 12, close to the Basel Museum of Art, in the heart of Basel, the international business centre. We have gained a reputation amongst a demanding Swiss and international clientele for quality, competence and efficiency. The partnership’s legal consultancy services are marked by independence, creativity and entrepreneurial thinking and action. We are a team of experienced and dynamic lawyers who are licensed to represent clients before all courts of Switzerland. Our professional services are marked by a willingness to serve and by our sincere personal commitment. Our firm ensures the adequate availability of professionals in all cases. Our main areas of practice are Corporate/M&A, Contract Law, Dispute Resolution and Arbitration, Intellectual Property, Life Sciences, Notarial Services and Restructuring and Insolvency.
Company: Mathys Schmid Partner Name: Martin Wepfer Email: martin.wepfer@msp-law.ch Web Address: www.msp-law.ch Address: Rittergasse 12, CH-4051 Basel, Switzerland Telephone: +41 (0)61 270 99 00
“We offer over 50 rooms of varying sizes which can be configured to provide comfortable and state-of-the-art hearing suites and meeting rooms for any proceeding, small or large. “We deliver a full range of support services- from court reporting to catering, internet to interpreters and voicemail to video conferencing. Whether it is for large multi-party arbitrations, mediations, public enquiries, training courses or seminars- all are delivered in an efficient and professional manner. “We also have our brand new Premier Suite which offers the full use of a built-in PA system and live audio visual feed, video-conferencing and e-bundle display, as well as a translation booth and access to unique idr-desks.”
Company: International Dispute Resolution Centre Name: Damian Hickman Email: info@idrc.co.uk Web Address: www.idrc.co.uk Address: 70 Fleet Street, London. EC4 Y 1EU Telephone: +44 20 7936 7000
Acquisition International | November 2013 | 97
SECTOR SPOTLIGHT: Protecting and Patenting your Business Ideas
Protecting and patenting your business ideas Italy According to the International Monetary Fund and the World Bank, actually Italy is the ninth-largest economy in the world, the fourth-largest in Europe. Very attractive for investors. But with the European
Company: Biesse S.r.l. Name: Matteo PES Email: m.pes@biessebrevetti.it Web Address: www.biessebrevetti.it Address: via Corf첫 71, 25124,Brescia (BS),ITALY Telephone: +39 030 41586
market substantially open to items produced in Asia, entrepreneurs who manufacture or sell in Italy, and spend time and money to constantly innovate their products, do deserve a defence against those who manufacture copies at lower price.
The Italian IP firm Biesse was established in 2001. So far it has filed hundreds of patent and trademark applications in more than 70 Countries. This year it has handled litigations in Italy, California and in Germany, before the Dusseldorf Court and before the Federal Patent Court in Munich.
In this respect an IP portfolio may constitute an effective defence against those competitors that take advantage of the working conditions in foreign countries. IP rights also serve to boost the business, as they may be licensed. License agreements can be very flexible, as the owner may decide to grant a license to one or more parties, in one or more territories or jurisdictions.
Attorneys at Biesse are committed to understanding clients, their needs, and creating synergy in any circumstance, from the definition of the best strategy to protect ideas in Italy and abroad, to the drafting of the application and its prosecution worldwide, until the enforcement of the IP rights. As Italy did not join the new European Unitary Patent system that will soon enter into force, in order to protect ideas in Italy it is fundamental to rely on expert Italian IP attorneys.
But building a strong and profitable IP portfolio is not an easy task, and requires complete understanding between the IP attorney and the entrepreneur and, of course, requires expertise.
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Matteo Pes is the managing director of the firm Biesse.
SECTOR SPOTLIGHT: Protecting and Patenting your Business Ideas
UK: look before you leap Every business generates intellectual property (IP) and stopping to recognise the role it can play in the success of your business is an important first step before jumping to file patent, trade mark or design applications. Without looking before you leap, you may find yourself falling further and faster than you intended. Intellectual Property Audits An IP Audit is a review to look into the existing IP assets of your business and provide guidance towards identifying and maximising the value of that IP. It is also intended to help you ensure that potential future IP assets are identified and properly managed.
Tanzania Ms Lea Mkono is an Associate with Mkono & Co Advocates, the leading Law firm in Tanzania. She specializes in Intellectual Property. ----------------------------------------------------------------A company’s intellectual properties are often more valuable and also proprietary than the company’s tangible properties. A company must take a positive approach in protecting its intellectual properties. Regrettably, many companies do not realize the worth of protecting their intellectual property until they face its loss. Protecting a company’s intellectual property aims to guarantee its continued income from technology. A company must always be diligent about disclosing new ideas, particularly those covering new processes and products. It should be company practice to apply for patents covering any inventions made as a result of research development so that the company sustains its top competitive position.
Korea Mr Jay Kim is the senior partner of YP Lee, Mock & Partners in Seoul, Korea. ----------------------------------------------------------------In knowledge-based economies, innovation is a must for surviving in business. So a good IP portfolio is required not just for the protection of IP but also for creation and commercialization. Accordingly we believe that IP boutique firms should be able to provide highly businessand strategy-oriented services beyond legal matters. We anticipate the IP market in Korea will be more challenging in 2014 due to the long-term recession. However, new types of IP-related services (IP valuation, securitization and consulting service) will grow – as will the numbers of global IP service providers. We provide an A-to-Z service for prosecuting patent applications. For domestic clients, we usually start our service by reviewing a few page-length invention
An IP Audit will typically cover a wide range of areas, such as current and future IP assets of your business and whether they warrant protection, as well as exploring potential issues involving ownership of IP that is being generated and risks associated with other people’s IP. The Audit can help you to decide where to focus your efforts in relation to IP protection, focussing on the IP assets that give you an edge over the competition, taking account also of your (actual or potential) revenue streams associated with the IP. Mewburn Ellis & IP Audits At Mewburn Ellis LLP we have a wealth of experience in obtaining European patents, trade marks and designs for our clients, undertake a considerable amount of “IP due diligence” work and a substantial number of patent and trade mark opposition and appeal proceedings.
The key benefits of licensing intellectual property apply to all sorts of industries. It should also be noted that companies can gain substantial amount of income from licensing. Due to the worldwide importance of patents we believe there will be an increase in patent filings in East Africa in 2014. Mkono & Co Advocates is the most successful firm operating in the Tanzanian legal market; over the last 12 months we have won some of the most desirable deals in East-Africa. We have a competitive edge and a close association with international law firms which puts us in a dominant market position. Our intellectual property team can assist clients with preparation, filing, prosecuting and maintenance of patent applications in Tanzania, Zanzibar and Burundi. We also have expertise in advising on validity of patents and defending against infringement claims. We assist clients with applications that have been refused by the patent Examiner and prosecution during subsequent opposition.
reports. After interviews with inventors and analysis of prior arts, we make out several tens-of-pages drafts for domestic filings and thereafter related versions in English for foreign filings as well.
We apply this expertise when conducting IP audits and will work with you to learn about your business and help you understand your IP position and how to apply it to best advantage your business, offering clear, creative and practical advice. We would be very happy to help you look before you leap.
Company: Mewburn Ellis LLP – A Legal 500 Top Tier Firm Name: Stephen Carter Email: stephen.carter@mewburn.com Web Address: www.mewburn.com
Our firm works with clients locally and internationally, representing clients from many different fields, including corporations, consumer goods industries as well as other law firms located around the globe. We pride ourselves on expeditious filing of patent applications in Tanzania, Zanzibar and Burundi. The firm has been ranked in Tier one by Chambers Global since 2000 and remains at the top level in the 2013 edition
Company: Mkono & Co. Advocates Name: Lea Mkono Leah.mkono@mkono.com Email: info@mkono.com Web Address: www.mkono.com Address 8th Floor, Exim Tower, Ghana Avenue P.O Box 4369, Dar-Es-Salaam, Tanzania, East Africa Telephone: (+255 22) 219 4200
patent attorneys providing services on all IP-related matters. We are noted to be highly experienced in foreign filings (nearly 5,000 filings in 2012) in addition to the usual domestic filings (over 4,100 filings in 2012).
For foreign clients, we usually start by reviewing applications. As instructed by the client, we make some amendments to fit the Korean IP system. Our plentiful experience and knowledge of the prosecutions in the area where our foreign clients’ cases come from further guarantees our quality service in handling foreign clients’ cases. Amendments of patents happen a lot both for domestic filings and foreign filings. It mostly happens in response to office actions (monthly 400 OAs for domestic and 1,100 OAs for overseas filings). Amendments may be made in preliminary reviews for filings. Our principle is ‘to do in proactive ways’. Founded in 1985, YP Lee, Mock & Partners has grown to be a leading IP law firm in Korea, having over 130
Company: Y.P.Lee, Mock & Partners Name: Jay Jeyhun Kim (Senior Partner) Email: jhk@leemock.com iplaw@leemock.com Web Address: http://www.leemock.com Address: 12F Daelim Acrotel, 13 Eonju-ro 30-gil (Dogok-dong) Gangnam-gu, Seoul, 135-971, Korea Telephone: +82 2 588 8585
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SECTOR SPOTLIGHT: The Impact of the Alternative Investment Fund Manager’s Directive
The impact of the Alternative Investment Fund Manager’s Directive
Martin Engdal is the Market Strategist and Director of Solution Marketing at Advent EMEA. In this role, he has responsibility for strategic positioning of Advent’s solutions in EMEA and for driving Business Development efforts in Europe, Middle East and Africa. Acquisition International asked him for his thoughts on the Alternative Investment Fund Manager’s Directive (AIFMD) ----------------------------------------------------------------The AIFMD is a complex regulation that impacts many areas within the investment process in the non-UCITS fund world. Seemingly overnight fund administrators have had to deal with the complexities of enhanced regulation at a level never before seen in the industry. In Europe, this has taken root in the form of the AIFM Directive, introduced this July. Next year, swap regulation under EMIR will follow the lead of the Dodd-Frank Act in the US. At the heart of this issue is data. Not merely the volume of data that administrators must now deal with, but the quality of that data, its accuracy, and how it can be properly utilised to keep on top of compliance management and provide accurate riskfree reporting to clients. Advent Software is well aware of these complexities. As an industry leader in the field of data management it is well placed to provide
Company: Advent Software Name: Martin Engdal Email: martin.engdal@advent.com Web Address: www.advent.com
a series of solutions. But being an expert in data management is not enough today. The workflow component is just as important. What Advent has done is to develop a framework that ties data and workflow management together with all of our solutions. That was the driver behind our new infrastructure, Advent Direct, which Advent created in collaboration with industry experts across the technology and financial services industries. This is tied to the fact that a chosen depository will be required under the Directive to perform three core tasks: - safekeeping of assets of an Alternative Investment Fund (AIF), - cash monitoring, - general operational oversight of the AIF. Having reliable data that has been fully normalised to carry out these functions has never been more important. The role of any technology vendor like Advent is to ensure that the data set is correct. This is what its clients depend on – without the ability to access and utilise data the right way, custodians and fund administrators expose themselves to regulatory risk. The process of data acquisition, normalisation, and enrichment to detailed filing (which will be different in each country) is very complex. This can best be illustrated by considering that there remain a lot of unknowns as to how individual EU Member States will implement the AIFM Directive. In all likelihood, fund administrators will need to ensure that they have the ability to provide reporting services to their clients in the local language of each market in which funds are passported. Workflow management and data management are both part of the same story. Both are completely dependent on clean, normalised data.
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For depositories, the concept of monitoring and tracking various steps in a daily trade or process is a key to a lot of today’s regulatory regimes, as is cash management. This requires customised workflows and internal processes that give depositories as clear a picture as possible on the status of the data they are monitoring. By having a customised toolkit the depository can add multiple steps to a daily NAV process, monitor the state of a fund and its cash reconciliations. This high level of customisation is being incorporated into the new compliance module from Advent. The cash monitoring role of depositories under AIFMD is both logical and understandable given the risks and liabilities that they must assume. Mitigating risk lies at the heart of the matter; the better the workflow management, the less likely it is that mistakes will be made when performing the cash monitoring and general oversight function of a fund’s activities. The fear among depositories is that, currently, their internal processes simply aren’t robust enough to deal with regulation. They need to be sure that the risk is low enough to release the data and that they can stand by the numbers. A lot of depositories right now simply don’t have the internal controls. Many have built internal processes piecemeal over a number of years and aren’t able to tie everything together. At Advent we see that. We understand these issues. That’s why we’ve built a framework that can tie all this together through Advent Direct. The framework’s creation was not simply a knee-jerk reaction to regulation, but has been driven by client demand as well as regulatory change. Due to the size of our client base, we need to be best-in-class. With Advent Direct, Advent can now support them across the three core tenets of data management, workflow management and reporting.
SECTOR SPOTLIGHT: Pensions issues in M&As
Pensions issues in M&As Deal or no deal: Will a pension scheme stop yours? We give a brief overview of the impact that UK Defined Benefit Pension Schemes are having on deals. ---------------------------------------------------------------A transaction can weaken the support offered to a pension scheme. In such circumstances the UK Pensions Regulator will support the trustees of a defined benefit scheme in seeking mitigation for the detriment – and this will have an impact on the dynamics of a deal. Nonetheless, although UK deal completions have been at their lowest level since the financial crisis, we have been seeing an increasing number of parties willing to tackle complex defined benefit pension scheme problems to achieve a deal. As a result, despite a relatively low level of transactions in the market, there are still opportunities. Many purchasers are demonstrating increased risk appetite together with an openness to explore
creative options. We are also seeing savvy pension trustee boards taking a more pragmatic view of deals, mindful that by being commercial they may assist in a deal that ultimately improves the security of their members’ benefits and employer covenant. There is also greater appetite from the UK Pensions Regulator to listen to ideas which help to reduce or manage the future exposure of the UK Pension Protection Fund and minimise potential reductions in members’ benefits. For the largest deals, the Takeover Panel has recently made a number of amendments to the Takeover Code that will give pension scheme trustees a louder voice in a listed transaction. In particular they now have the right to publish their opinions on a transaction in the offer circular. This is likely to raise the profile of the scheme with key stakeholders, and will need to be carefully managed to avoid unwittingly complicating negotiations and destabilising a deal that both corporate and scheme want to proceed.
For further detail, please go to www.pwc.co.uk/psi and www.pwc.co.uk/deals
Company: PwC Name: Alex Wilson Name: James Berkley Web Address: www.pwc.co.uk/psi www.pwc.co.uk/deals
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SECTOR SPOTLIGHT: Real Estate and REITs: An Asset Class with Sustainable Returns
Real Estate and REITs: An Asset Class with Sustainable Returns
US Ben Eaton is a tax partner in Goodwin Procter’s London office. His focus is on matters involving investment funds and real estate transactions. --------------------------------------------------------------There is a resurgence in appetite for investment in European real estate. Regulatory pressures on European banks and insurance companies are contributing to transaction volumes as these institutions reduce their allocation to real estate. According to CBRE, the total value of commercial real estate investment activity in Europe in Q2 2013 showed a 22% increase on Q2 2012, and at €32.6 billion was the highest Q2 total since 2007. Much of this interest comes from outside Europe, with North American buyers accounting for a steadily increasing share of the market.
Company: Goodwin Proctor Name: Ben Eaton Web: www.goodwinprocter.com
What are the tax pitfalls associated with investment in European real estate for the American investor? The answer to that question depends on which country the asset is located in and on the tax status of the investor in the US.
and tax rules, eg company or trust, locally incorporated or offshore? This facilitates debt financing and may act as a ‘liability blocker’. The use of such ‘wrappers’ may also mitigate some of the tax issues referred to above.
The country in which the asset is located will determine what level of stamp duty or transfer tax is applicable on acquisition and whether the asset can be acquired within a ‘wrapper’ free of this tax. Rental income will normally be taxed in the country where the asset is situated, but is often sheltered from tax to a large extent by debt financing the acquisition with a combination of third party borrowings and shareholder loans.
Regarding the investor, US taxable investors, including US REITs, will normally prefer to acquire assets through a structure that is transparent for US federal tax purposes. Where the asset is held through some form of intermediate vehicle, it is important that the form of the vehicle will allow this US tax treatment, either automatically or through the making of a ‘check-the-box’ election.
Many countries (with the notable exception of the UK) will subject profit on exit to tax even where it arises to an investor who is resident elsewhere. Finally, value added tax needs to be considered, although it is unusual for it to be payable on a simple acquisition unless there is more to the transaction, eg a sale and leaseback. Large investment assets are frequently held in intermediate holding companies or other vehicles, often referred to as ‘wrappers’. The choice of entity will depend on local market practice
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US tax exempt investors will normally prefer to invest through a vehicle that is regarded as opaque for US federal tax purposes so they are not exposed to ‘unrelated business taxable income’ arising on the underlying investment. Where both US tax exempt and US taxable investors wish to co-invest in the same asset, their objectives will often conflict. Their different tax strategies normally require adding layers to the holding structure so investors can choose the vehicle that best suits them.
SECTOR SPOTLIGHT: Real Estate and REITs: An Asset Class with Sustainable Returns
International Real Estate: time for a closer look The virtues of International Real Estate in a multi-asset portfolio Among the changes we have seen since the financial crisis, one of the most notable is the growing popularity of real estate as an asset class. There are good reasons for this. Real estate today offers a competitive return potential against other investments. We expect core real estate in mature markets to deliver annual returns between 3.5% and 5.5% over inflation on an unlevered basis, putting it somewhere between bonds and equities. Historically real estate has had a low correlation to other asset classes, providing real diversification potential to a portfolio. It has also been less volatile than riskier investments such as equities, an appealing prospect for many considering the dramatic swings in today’s markets. Based on physical, income-generating assets, real estate offers investors a relatively stable income stream. This is an advantage in the current environment where yields on other asset classes are expected to remain low for an extended period. Finally, real estate provides investors a wide choice of risk/return profiles, from relatively low-risk and predictable return investments to more risky and potentially more rewarding ones. Going international While these advantages have helped increase interest in real estate among investors in their home markets, many remain hesitant to invest in the international arena. But if we take a closer look, we see that the virtues of real estate outlined above are only compounded when considered in a global context.
International real estate offers investors a wider opportunity set. In smaller markets the amount of available real estate stock is limited. If demand is high it can drive up prices and make it harder to find an appropriate investment. As correlations between real estate markets in different regions tend to be low, international real estate can bring added diversification benefits, reducing volatility even further and increasing risk-adjusted returns. Real estate also has good inflationary protection characteristics, with investors able to pick up inflation-linked returns. This is particularly pertinent for those worried that central banks may be too slow in withdrawing monetary stimulus when economic growth picks up, leading to an outbreak of inflation. Choosing how to invest This is not to say that investing in real estate doesn’t have its challenges. The asset class is by its nature less liquid than most others. When investing internationally, currency and tax risk must also be thoroughly understood. International real estate investors should therefore carefully consider not just the region but also the type of real estate investment they would like to make. Direct investment in properties gives the investor complete control along with undiluted returns (there are no management fees to pay), but often requires large sums, a great deal of expertise, and significant time commitment, while offering low liquidity.
At the other end of the spectrum, publicly traded real estate company shares and Real Estate Investment Trusts provide a low-cost route to diversified real estate exposure along with expert management and higher liquidity. They can, however, be volatile, with characteristics more like equities. Between these two extremes we find unlisted funds. Investors can choose between different strategies and markets, access expert management, and benefit from international diversification. Such funds also offer a balance between volatility and liquidity. As one of the world’s leading real estate investment managers with over 70 years’ experience – including an award-winning global multi-manager business – we at UBS can attest not only to the effectiveness of such an approach, but to its growing popularity among our clients. No matter which route an investor takes, there is no doubt that real estate can make a valuable contribution to a multi-asset portfolio. Internationally oriented real estate investments can make that contribution all the more valuable.
Company: UBS Global Asset Management Name: David Roberts Web Address: www.ubs.com/realestate
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SECTOR SPOTLIGHT: Streamlining relocation
Streamlining relocation
Moving house is a stressful business, often blighted by removal firms’ losing or breaking items, or turning up late. The challenges only multiply when the move is abroad, or commercially lucrative, and this is why you need a firm you know you can trust to ensure it all goes smoothly.
Company: John Mason International Email: sales@johnmason.com Web: www.johnmason.com
Many moons ago, on the Victorian streets of Liverpool, a horse and cart would be a familiar sight with a lone man trudging through all weathers, battling to ensure that his goods are delivered safely. And, although the transport methods have changed, little else has... Founded in 1884 by Mary Mason of Wavetree, John Mason International relocations has come a long way from being a single horse and cart operation, delivering only to the local Liverpool area. Now a global enterprise, with service centres in Liverpool and London, the prestigious relocations firm facilitates more than 8,000 relocations each and every year, with commercial and household moves being at the core of the business.
Despite being internationally renowned, family values are still very much at the heart of the company and John Mason offers flexibility and commitment to customers’ needs, as well as an unswerving loyalty to its employees. Having operated for more than 100 years, survived two world wars and weathered both economic and political storms, John Mason International relocations has stood the test of time. With a prestigious clientele stretching back over the decades, including the Anglo American Oil Company (which later became Esso), the Cheshire Lines Railway Company, the English Margarine Works,and the Royal Liverpool Philharmonic Orchestra, the business is still run by the Mason family today and, although the original founders John and Mary may no longer be with us, their incredible legacy lives on.
Mr Rahul Pillai is Interem Relocations Regional Director India & Middle East.
Culturally the West isn’t aligned with India and the Middle East.
in is very different from the other regions in the world.
Interem has positioned itself as a total relocation management company. We offer our customers a one-stop solution for all their relocation needs.
To help our clients we have tried to make Interem multi-cultural in the markets in which we operate by having team members from different nationalities. This helps immensely when a family or an individual relocates into our region as it gives better comfort and ease context to the transferee/his family. This helps them to relate better with someone from our team. For example, we have a German team member assisting German families when they move into our region. This is Interem’s biggest USP.
Market growth An economic boom has seen an uptrend in movements to the Middle East, with the import business growing greater than the export business. More people have moved in compared to the past three years and we believe that is also due to the economic boom. The Indian economy has grown less compared to last year but there may be a chance of more expats coming into India as the government has now relaxed the minimum salary requirements for expats. We are also predicting higher rentals in the UAE due to an ongoing boom and the new government policy. Growth over the past year has been more than 10 % on volume and revenue, although costs too have grown up significantly. We are forecasting a double digit growth over the next 12 months.
Most relocations to our operating regions of India and the Middle East are from the West.
Interem Relocations Company: Interem Relocations Name: Rahul Pillai Web: www.freightsystems.com
To sensitise our customers and exceed their expectations is our biggest challenge. As we operate in a different market, the procedure for shipment handling, clearance as well as settling
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SECTOR SPOTLIGHT: Streamlining relocation
Quintessential Relocation Consultants (QRC) provides bespoke relocation solutions for private individuals and companies seeking to move their home, staff or business to Jersey or Guernsey. Local housing regulations can be a minefield for clients, and as they differ slightly on each island, QRC has an office in both locations in order to deliver high quality, local expertise. QRC has a varied client base. We work with local businesses recruiting new staff, international RMCs, and increasingly, private clients and HNWIs. Although the service each client requires may be completely different, our approach, attention to detail and desire to ensure that each move is professionally managed does not alter. In order to streamline the relocation process for businesses, QRC offers a choice of packages with a selection of add-ons. Just as each client is unique, our menu of services allows a fully flexible and individual solution. Corporate clients have the security of fixing a budget, whilst their staff enjoy the freedom of selecting those items on the menu that they find most helpful or relevant. One of the biggest challenges facing corporate clients and RMCs is budget. The bottom line is a key concern, and often results in reducing what
we believe to be one of the most crucial aspects of a successful relocation – the settling-in. A successful assignment relies on so much more than simply finding an appropriate place to live. Our main concern is to ensure that assignees assimilate quickly and happily into their new location, that family life continues without disruption and that the productivity of key members of staff is maintained. However, where settling-in services fall outside of the relocation budget, we do not leave our clients high and dry. QRC has developed a library of information sheets in addition to the traditional ‘welcome pack’. This resource consists of extremely detailed information about all aspects of island life including sat nav codes for supermarkets and government offices as well as guidance on how to complete forms and the legal formalities that need to be taken care of. Of course, QRC would prefer to provide a full and comprehensive settling-in service for all clients in person, but where this is not possible, our information sheets and three month telephone helpline service go some way to bridging the gap. The enviable work/life balance offered by the Channel Islands ensures that they continue to
be a popular destination for entrepreneurs and HNWIs. A steady increase in enquiries from private clients requiring expert guidance on the legalities of relocating to one of the islands proves that the allure of a higher quality of life is tempting successful professionals away from London and other global cities. Our discreet, professional service package for private clients not only includes home-finding, but, where required, a complete turn-key experience including champagne in the fridge, a week’s shopping in the larder and freshly-made beds! Recommending tax advisors, accompanied school searches, interior design advice and recruiting domestic staff are just some of the additional services we can organise on a client’s behalf.
Company: Quintessential Relocation Consultants Ltd. Name: Jo Stoddart Email: info@qrcci.com Website: www.qrcci.com Tel: (+44) 01481 257200 (Guernsey) (+44) 01534 854574 (Jersey)
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SECTOR SPOTLIGHT: The Power of Immigration to Boost Economic Recovery
The power of immigration to boost economic recovery
Hong Kong In my opinion, savvy professionals as skilled migrants can boost Hong Kong’s competitive advantage and strengthen its position as the top
Company: John Hu Migration Consulting Name: John Hu Email: johnhu@johnhu.com.hk Web: www.yimin-visa.com Address: Flat A&B, 7/F Lucky Plaza, 315 Lockhart Road, Wanchai, Hong Kong Telephone: +852 3568 1436
US Immigrants are a critical part of the engine of the US economy. Study after study from reputable, nonpartisan sources have shown that immigrants are responsible for creating tens of thousands of US jobs annually.
Company: Katona & Mir LLP Name: David Katona Email: dkatona@katonamir.com Web Address: www.katonamir.com Address: 49 West 37 Street, 7 Floor, New York, NY 10018 Telephone: (212)944-1529
financial hub in Asia. Additionally, entrepreneurs who establish their business here will create more job opportunities and improve the skills level of our workforce. These business migrants can substantially contribute to Hong Kong’s prosperity and increase its cultural diversity as an international city. According to Immigration Department statistics, 28,625 visas were issued under the General Employment Policy in 2012, of which 475 were foreign investors. In the same year, 10,304 entry permits were processed under the Admission Scheme for Mainland Talents and Professionals. A total of 18,622 applications under the Capital Investment Entrant Scheme have been approved as at 30 June 2013. The successful applicants, 87% of whom are Chinese nationals with overseas permanent residence, have to invest HK$6m or more in properties or HK$10m or more in designated financial assets in Hong Kong. These passive investments have inflated our property prices but may not help boost our economy. This is because immigrants with solid work ethics come to the US hungry to build a new life, and many start new businesses that eventually may employ American workers. Others fill gaps in our unskilled labor markets. Yet others, some of the best and brightest immigrants from all over the world come to our schools, supporting and benefitting from our excellent educational system. By creating a fair immigration system that is responsive to the demands of our economy and globalization, the US can compete to attract top talent in areas where our labor force is deficient. For example, the US government recognizes that our country has a shortage of skilled workers in the STEM (Sciences, Technology, Engineering, and Mathematics) fields. Many countries focus their educational systems in these areas and produce talented professionals. Enhancing our system to permit lawful immigration of these types of professionals would greatly help US competitiveness.
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In summary, our Hong Kong government should formulate and implement a more selective and targeted immigration policy which attracts more qualified international investors, entrepreneurs and professionals, thus filling our skills shortage as well as increasing foreign direct investments in specific industries which require stimulated growth, eg high technology and innovation. John Hu Migration Consulting was the first professional immigration firm to win the Hong Kong Most Valuable Company Award 2013 due to its commitment to deliver the best customer values and service quality to its clients. It was founded by John Hu, a registered Australia migration agent and a licensed New Zealand immigration adviser. John Hu Migration Consulting in Hong Kong (www.yiminvisa.com), assists clients to emigrate to Hong Kong, Australia, New Zealand, the UK, the US and Canada.
While improving the US immigration system is vital, it is important to continue to protect job security for Americans and against abuse of the system. Such protection can be ensured through smart system reforms and compliance measures. For example, the system could tie residency sponsorship to immigrants’ skills. Furthermore, we could greatly enhance compliance by further embracing advanced technology, something the US immigration service has been very slow to do. David Katona is a co-founding partner of Katona & Mir LLP and manages the firm’s immigration practice. He practises exclusively in the area of US immigration and nationality law and has nearly 15 years’ experience representing business of all sizes, from start-ups to large multinational entities, in all types of industries, as well as individuals from all over the world in various family immigration matters, such as residency (green card), naturalization/citizenship, appellate and removal (deportation) matters.
SECTOR SPOTLIGHT: Trusteeship & Irish Pension Funds & Corporate Finance & Exit Strategies
Trusteeship & Irish pension funds By James Kavanagh -------------------------------------------------------------How responsible is being a trustee? Being a trustee is an onerous task and conflicts of interest should be managed. Trustees have a fiduciary duty to look after the assets of a pension scheme. This requires time, effort and patience as well as many hours evaluating and reviewing trustee papers (all of which should happen ahead of trustee board meetings). What do you think of lay trustees? There are many lay trustees who I believe deserve huge respect in fulfilling this role – not least because many are not remunerated for their work despite this being a very serious and responsible position to hold. What do you define as good pensions governance?
Trustees should have a clear stated operations policy and management modus operandi. Trustee boards can achieve this by ensuring successful management of key core areas to do with risk management, time horizon, innovation, clarity of mission and managing agents.
requirements and investment markets while understanding how to balance risk with expected returns. Trustees need to mandate their advisers with clear unambiguous objectives and ensure they operate unhindered by any conflict of interest.
How important is impartiality as a Trustee? It is imperative that trustees govern in an impartial manner as well as being knowledgeable, robust and professional. It is not simply about ‘ticking the boxes’ of the regulator or revenue authorities. It is aiming to excel best practice! Final comment? In short, being a trustee of a pension scheme is a significant responsibility, which requires expertise and industry experience. Therefore, it is vital that they are cognisant of regulatory
Company: Trustee Decisions Name: James Kavanagh, Managing Director Email: james.kavanagh@trusteedecisions.com Website: www.trusteedecisions.com Address: Fitzwilliam Hall, Fitzwilliam Place, Dublin 2 Tel: (01) 806 2750
Corporate finance and exit strategies: when and where to start? by Arthur’s Legal B.V., Amsterdam -------------------------------------------------------------Whether SmallCap, MidCap or LargeCap, each ambitious company has, or should have in one way or another, a clear mission and vision of the future about its business, its company and its stakeholders. Although at first it may seem premature, it has been proven that involving your legal counsel in considering and helping structuring you mid- and long-term mission leads to more success, and fewer negative challenges along the way. “Timely communication, commitment and keeping people involved are vital elements for a successful project. Otherwise, one might need to hire a lawyer to try to extinguish an already burning and critical fire, and to minimize damage. This reactive approach is always highly unsatisfactory and costly,” said Arthur van der Wees, attorney and managing partner of Arthur’s Legal, an internationally operating law firm, founded in 2001, with its headquarters in Amsterdam. “Therefore, have a methodical, proactive, disciplined and hands-on attitude, just as Arthur’s Legal does. Be a step ahead,” he adds. Arthur’s Legal advises those companies at their strategic legal counsel about these mid- and long-term missions, such as: 1. Path to controlled growth, while either staying independent or seeking strategic partnerships;
2. Assessing, preparing for, and arranging for venture, growth or mezzanine financing, with proportionally sharing the risks and rewards; 3. Assessing, preparing for, and executing an acquisition or other purchase of businesses or assets; 4. Assessing, preparing for, and executing a trade sale, merger, acquisition, joint venture, initial buyout, secondary buyout or IPO, and; 5. Assessing, preparing for, and establishing several exit scenarios, to generate leverage for the big landing/exit, or a transition within the family, family-office style. “As good preparation equals success and protection, Arthur’s Legal helps out well in advance, and continuously, to help out and work to the goal our clients wish for,” Van der Wees continues. “Therefore, have a process-oriented, proactive, cost-disciplined and hands-on attitude, just as we have.” On average, Arthur’s Legal processes and closes a corporate finance related transaction every calendar month, from pre-seed and start-up venture capital investments, through mezzanines – which Arthur’s Legal finds a trending financing method in the current market where banks presently are not willing or able to act – up to M&A transactions and IPO’s. “Every business is unique, and getting pure legal advice is mostly not what any company
is looking for. Therefore, Arthur’s Legal combines pure, tier one legal knowledge, global experience and hands-on advice with (i) relevant market knowledge, (ii) knowledge of the customer’s competitors (iii) commercial acumen, and (iv) state-of-the-art technology, such as customized document generation and workflow management by Zapplied Legal, a Salesforce platform SaaS application that is also being deployed for corporate finance and related transactions in order to further expedite transactions and minimize transaction costs,” Van der Wees concludes. “If the legal challenges ahead on the road of corporate finance and exit strategies are not identified and not either prepared or addressed well in advance, and tool kit ‘law’ is not implemented and used in the adequate way which suits the legitimate needs of the customer in the real world, what’s the use?”
Company: Arthur’s Legal B.V., Amsterdam Name: Arthur van der Wees, Managing Partner Email: vanderwees@arthurslegal.com Web Address: www.arthurslegal.com Telephone: +31 20 – 305 49 50
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SECTOR SPOTLIGHT: 2013 Q3 Review
2013 Q3 Review
Jean-Francois Alandry, Managing Partner of Eurohold Corporate Finance, assesses Q3 2013 in Spain. -------------------------------------------------------------Spain seems to be interesting again for foreign investors, both financial and industrial, due to economic stabilization, attractive valuations and closer recovery. From a deal volume perspective 2013 started very slowly but the market was very active in terms of generating opportunities and ongoing negotiations. Starting from May the trend has changed towards closings. Currently attitudes are optimistic based on a very good deal flow and the overall feeling that
eurohold Corporate Finance since 1989
Company: EUROHOLD, S.L. Name: JEAN-FRANÇOIS ALANDRY Email: info@eurohold.com Web Address: www.eurohold.com Address: Av. Diagonal, 361, 2-2, 08037 Barcelona, Spain Telephone: 00 34 93 457 8980
2013 is a secure period for good purchase prices, meanwhile, 2014 should see higher multiples. Q3 has experienced growth in line with Q2 but as a result of the feeling that 2013 is the best year to buy, Q4 is expected to be busy due to the perception that time is running out. After a six-year economic crisis (2008-2013) economic stabilization, strong decrease of risk premium, good Latham results and low multiples have helped improve the ease of doing business a lot. Moreover it seems to be that after such a long crisis foreign investors have had time to decide whether they want to remain in Spain or not. If so they have decided to take advantage of the situation to purchase and if not they normally have already planned to go out. Both of these trends are positive for M&A market. The most active sectors have been Real Estate, Technology, Internet, Health and Consumer Goods. Most of the significant deals should arise in Q4 but Q3 has registered several interesting transactions in Real Estate (Banks and Savings Banks selling their Real Estate divisions) that should be followed by others. Several LBO refinancings have also taken place. Some important transactions have been closed in the Health business (hospitals mainly).
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The progressive abandon of subventions in the renewable energy sector will definitely oblige the sector to concentrate and that process should begin soon. Some other interesting trends are emerging: Spanish companies that traditionally purchased companies in Latham and the north of Africa are starting strongly to invest above the Pyrenees in order to diversify their European position. This will generate a new deal flow for Spanish corporate finance advisors if they are to attend this demand. Also the emerging economies (BRIC, basically) are everyday becoming more present in the European M&A market. This trend obliges corporate finance advisors to improve their international network in order to be able to answer this new demand. -------------------------------------------------------------As co-founder of Eurohold CF, Jean-Francois has been working in the corporate finance industry for nearly 25 years. Eurohold is a leading Spanish corporate finance company, employing 25 persons and specializing in Technology, Lifesciences, B2B Services, Consumer Goods, Distribution & Retail and Environment. It has offices in Barcelona, Madrid, Paris, Geneva, Istanbul, Munich and Moscow.
SECTOR SPOTLIGHT: Global Expertise Directory
Global Expertise Directory Climate Shipping & Trading
Crawford Bayley & Co
Climate Shipping & Trading was established in 2002 and is now the second leading shipping agent in Ghana. It also carries out clearing and forwarding.
Crawford Bayley & Co is one of India’s oldest and best known law firms, with rich and wellendowed experience in several practice areas. The partners and several of the assistants have decades of extensive legal expertise and have advised various leading Indian and foreign companies on a vast variety of matters. The firm is consistently engaged by India’s biggest corporate houses as well as major multinational corporations on several complex matters, requiring advice on company laws, securities laws, revenue / taxation laws, dispute resolution, labour laws, foreign exchange laws and pharmaceutical laws to name a few. We are also actively involved in representing our clients on a multitude of matters before various Indian courts, tribunals, forums and regulatory authorities.
Much of the company’s business comes via the Dubai-Ghana route and it has opened a branch in Dubai to facilitate this work. Climate Shipping & Trading prides itself on the professionalism of its workers who work hard to meet the company’s vision of making shipping easier for everyone. Door-to-door service and highly competitive rates are on offer and the team at Climate Shipping & Trading look forward to working with shipping lines and importers, particularly those who want to use their Dubai-Ghana route experience. Company: Climate Shipping & Trading Address: PO Box 198 Teshie, Accra, Ghana Telephone: +233 (21) 778025 Fax: +233 (21) 223019
Company: Crawford Bayley & Co Address: 4th Floor, State Bank Building, Hutatma Chowk (Flora Fountain), Mumbai, MH 400023, India Telephone: +91 22 2266 3713
K-SAN LAW FIRM uses a multi-disciplinary approach to legal practice. With a substantial corporate client base the firm is committed to the protection of the interests of its clients. We advise corporate clients on a variety of issues in a wide range of areas of law. Our practice areas range from corporate law and political consulting to the legal consequences of investments and the legal conflicts that can arise from cross-border activities. K-SAN is setting the model and structures for modern legal practice in Ghana that other serious members of the profession will use as the benchmark for their own practices. Company: K-SAN Law Firm Email: info@k-sanchambers.com Web: www.k-sanchambers.com Address: Anona House, C125 Subukwe Close, Off Farrar Avenue, Adabraka, Accra P. O. Box GP21820, Accra Telephone: +233 (0)30 222 4301
Kirunda & Wasige Advocates MIHOSO International Foundation (Here in after called Mission of Hope) is a reputable organization committed to providing public health, social and organizational development interventions to communities through evidence-based research, advocacy, capacity building training, sharing of resources, and provision of livelihood empowerment programmes to target women, youth and children in Ghana, especially in marginalized and deprived areas to bring local economic development and meaningful life style. MIHOSO has a board of trustees. They formulate policies for implementation by the national secretariat headed by the president and CEO. The organization has fully functional child protection, gender, human resource, finance and administrative policies. Additionally, the organisation has a comprehensive five-year strategic plan and a monitoring and evaluation policy. Company: MIHOSO International Foundation Web: http://mihoso.org
Reliable International Migration Services (RIMS) is one of the leading immigration and student visa consultants with our Head Quarters in Gujarat, India and branch offices in United Kingdom, Canada and Australia. Established in the year 2000, we have now served hundreds of clients in fulfilling their dreams of migrating to a new country - be it as a skilled worker, investor/business purpose, spouse, student and all other applicable categories. Our clients have successfully settled in countries including Australia, New Zealand, United Kingdom, USA, Singapore and Dubai. We provide a personalized service to all our clients and ensure that we provide them with ample knowledge and information about the country of their choice along with the laws of those countries, thereby helping them to make sound decisions. Company: Reliable International Migration Services Email: reliablemigration@hotmail.com info@reliablemigration.com Web: www.reliablemigration.com Address: 1/A-2, Arjun Tower, 1st Floor, Shivranjani Char Rasta,Satellite, AHMEDABAD -380015 Telephone: +91 79 26765171
Uganda’s fully liberalised economy, with a current growth rate of over 5%, is attracting increasing numbers of foreign investors. The country’s law fully protects foreign investment and allows for repatriation of profits and capital. There has been a deliberate effort to promote and protect foreign investment along with developing mechanisms for speedy resolution of commercial disputes. Investors can find the greatest opportunities in oil exploration and mining, although ICT is also receiving considerable investment. The rise in the number of investors coming to Uganda has led to better infrastructure and improved accommodation in the form of hotels and real estate. Using a domestic law firm in Uganda rather than opting for a US or UK firm to lead a transaction has the advantages of cheaper costs of labour and many foreign-trained Ugandans have returned home to participate in its development. Company: Kirunda & Wasige Advocates
Acquisition International | November 2013 | 109
DEAL DIARY: M&A from around the world
Deal Diary
CONSUMER 112
AL HAMD FOODS
112
BETTY BLUE
112
CARRE BLANC
113
DEUTEK
113
DOUGLAS GILL
113 PENNYSAVER
FINANCIAL SERVICES
114
DIRECT LINE
114
GENESIS KENYA
114 PAYLIFE HEALTHCARE 115 EUROMEDIC 115 SPYROGEN 115
TRIUS THERAPEUTICS
INDUSTRIAL 116 AKZNOBEL
Welcome to November’s Deal Diary, Acquisition International’s roundup of recent M&A activity. Once again, we feature a range of transactions in various sectors. In Financial Services we have Centum Investment’s intended acquisition of a controlling interest in Genesis Kenya Investment Management Ltd (page 112). In healthcare there is the $704 million deal in which Cubist Pharmaceuticals acquired Trius Therapeutics (page 113), while industrials saw Acceleris advise and secure the funding to acquire 100% of the equity and provide initial working capital for Whitham Mills Engineering (page 115).
116
BROMFORD INDUSTRIES
116
ECRONOVA POLYMER GMBH
117
WITHAM MILLS
117 XEIKON 117 ZYVAX
REAL ESTATE
118
ALBEDO
118 ARROWHEAD 118
PUERTO VENECIA
Real estate deals see activity in Malaysia, South Africa and Spain (page 116) while support services deals saw KKR invest approximately $200 million in a substantial minority equity stake in Weststar Aviation Services (page 117).
SUPPORT SERVICES
119
ARMSTRONG WATSON
119
AVIA HEALTH INFORMATICS PLC
In the TMT sector OIA Global has purchased majority control of Belville International, a London-based global provider of freight forwarding and logistics services (page 118). On the same page you can find details of Royal KPN NV’s sale of its German mobile telecommunications business E-Plus to Telefonica Deutschland Holding AG.
119
WESTSTAR AVIATION SERVICES
Meanwhile, Forum Media Group is heading down under with its acquisition of the Australian Next Media Group (page 119). Have you done a deal recently? If so, we want to hear from you – head to our website www.acquisition-intl.com and submit the details.
110 | Acquisition International | November 2013
TMT 120 BELLVILLE 120 DNS:NET 120
E-PLUS
121
EXCLUSIVE NETWORKS GROUPS
121
NEXT MEDIA
121
TAPASTREET
DEAL DIARY: M&A from around the world
Acquisition International’s round up of recent M&A activity in the Consumer sector, with data from Zephyr, published by Bureau van Dijk Mergers and acquisitions in the consumer sector declined in terms of both volume and value in the first half of 2013, according to Zephyr, the M&A database published by Bureau van Dijk. In total there were 2,012 deals worth an aggregate USD 93,310 million, as volume declined by 10 per cent and value at a slower rate of 8 per cent. Unfortunately, the situation does not look likely to improve in H2 2013, as results struggle to even reach the same heights as in this year’s opening six months. Values look to have been on the slide since the first half of 2012 (H1 2012: USD 103,924 million, H2 2012: USD 101,465 million, H1 2013: USD 93,310 million). With just over a month to go until the end of 2013, time is running out if results are to reach a level comparable to H1. To date there have been 1,326 transactions worth a combined USD 67,303 million in the months from July to the end of October. The most commonly targeted region in consumer deals in 2013 to date has been Western Europe, with 1,089 transactions. This was followed by the Far East and Central Asia with 1,010, while Eastern Europe, North America and South and Central America came next with 513, 392 and 150, respectively. The same two regions topped the bill by value, as Western Europe was targeted in dealmaking worth USD 52,994 million and USD 43,724 million was attributable to the Far East and Central Asia. North America placed third with USD 38,912 million. To sum up, the consumer sector appears to be in a state of decline in terms of deal values, and some way behind the USD 163,183 million recorded in H2 2008. There are still around six weeks until the end of the year, meaning there is not much time for the industry to make up the difference between the USD 93,310 million posted in H1 2013 and the USD 67,303 million in H2 to date. Nevertheless, there is always the possibility that a few big deals could push the sector towards previous levels.
NUMBER AND AGGREGATE VALUE (MIL USD) OF CONSUMER SECTOR DEALS GLOBALLY: 2006 - 2013 YTD (AS AT 31 OCTOBER 2013) Deal half yearly value (Announced date) 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 H2 2013
Number of Number of deals deals with known values 2,114 1,170 2,125 1,165 2,456 1,415 2,296 1,377 2,288 1,276 2,040 1,193 2,294 1,397 2,561 1,591 2,301 1,405 2,206 1,366 2,206 1,375 2,114 1,335 2,074 1,195 2,233 1,412 2,012 1,226 1,326 819
Aggregate deal value (mil USD) 63,536 91,817 158,596 146,109 154,406 163,183 65,869 98,994 90,110 92,284 110,773 83,154 103,924 101,465 93,310 67,303
Acquisition International | November 2013 | 111
DEAL DIARY: Consumer Deals
CONSUMER
AL HAMD FOODS
BETTY BLUE
CARRÉ BLANC
l Fauji Fertilizer Company Limited (FFC), the biggest fertilizer company in Pakistan with a market share of 51%, acquired Al Hamd Foods limited (AHFL) as a wholly owned subsidiary on 3 October 2013.
l Trilantic Capital Partners Europe has agreed to acquire a minority equity shareholding in Betty Blue SpA, an Italian company that operates in the luxury premium fashion and accessories market under the brand names Elisabetta Franchi and Betty Blue.
l NiXEN and the management, in association with Bpifrance and Crédit Agricole Régions Investissement, have announced their acquisition of a majority interest in Carré Blanc.
The complex acquisition deal was led and executed by MCB Bank Limited. Its team structured, arranged and advised on the entire financing arrangement of the PKR 1.6B longterm loan that facilitated the acquisition of AHFL.
Sin&rgetica acted as sole financial advisor to Betty Blue SpA, with managing partner Federico Giammarusto leading the transaction, assisted by Martina Visigalli. Sin&rgetica began working with Betty Blue two years ago.
AHFL was incorporated on 6 October 2006 as a food processing and storage facility for frozen fruit, vegetables, cooked and semi-cooked food and fresh meat, with a total production capacity of 27,000 tons per annum. It established Pakistan’s first state-of-the-art Individually Quick Frozen (IQF) fruits and vegetables plant and later expanded to produce ready-to-eat meals, a chicken abattoir and controlled atmosphere stores. Acquiring it enables FFC to capitalise on its existing nationwide farmers’ network. The financing was arranged by the Corporate BankingNorth Team of MCB Bank, which has a long-standing relationship with FFC. The Bank’s team was led by Natasha Ahmed and Syed Faheem Ahmed and comprised Asma Saleem and Aadil Babar. Ms Ahmed said: “The company’s requirement was to obtain funding in domestic currency from local financial institutions in the shortest possible time – three weeks. MCB Bank Limited has arranged the financing in record time and the deal has fully met the client’s objectives and timelines.” As well as structuring the deal to meet the record-breaking time frame, the MCB team’s activities also included: arranging all required approvals; finalising legal documentation and structure, and providing a firm commitment to the existing lender to take over their loan which facilitated the smooth acquisition. Mr Ahmed added: “The MCB team was fully geared towards actively participating and providing solutions for the successful arrangement of funds in the shortest possible time. This included structuring the takeover modalities and linking the acquisition structure with the financing facility.”
FFC ACQUIRES AL HAMD FOODS LTD.
DRV Corporate Finance
Sin&rgetica is a leading strategic management consulting and corporate finance advisory firm in Italy with more than 40 years’ consolidated experience. Federico Giammarusto acted as financial advisor to the Italian economic development Ministry for Ittierre Group (Ittierre, Gianfranco Ferrè and Malo) restructuring procedure in 2010. federico.giammarusto@sinergetica.net martina.visigalli@sinergetica.net
Carré Blanc is a leading brand in the household linen segment and, with a network of 240 points of sale in France and abroad, generated over €75 million of own-brand revenue in 2012. NiXEN is using its thorough knowledge of the market sector and historic links with the Carré Blanc management team to organise a majority LBO of the group, formerly owned by Qualium Investissement and MML. Commerical due diligence for NiXEN was carried out by a team from Dia-Mart Consulting, led by director Isabelle Mayneris.
Elisabetta Franchi has built one of the fastest growing premium womenswear brands in Italy since founding her company in 1998. She operates in Italy and international markets through a network of 80 mono-brand stores and over 1,100 multibrand stores. In geographical terms, the Italian market accounts for 65% of sales, while major international markets for the brand include Russia, the Middle East and Asia. Betty Blue SpA, based in Bologna, had revenues of approximately €105 million in 2012 and an EBITDA of approximately €26 million. The company forecasts further growth in 2013. Trilantic’s investment underlines its strategy of focusing on growth companies with further international expansion opportunities. Trilantic Europe’s local knowledge in Italy coupled with its international capabilities will enable it to work with Elisabetta Franchi to embark on the next phase of the company’s growth strategy. Elisabetta Franchi said: “The entry of Trilantic is based on a shared development plan, which will allow the company and the brand Elisabetta Franchi to significantly accelerate growth in international markets with particular reference to the markets of Southeast Asia.” Vittorio Pignatti Morano, Founder and European Chairman of Trilantic, says, “The company’s combination of creativity, professionalism and efficiency has convinced us to invest in this project. We are delighted to partner with her to embark on the company’s international growth plans into markets attracted by products which are ‘made in Italy’.”
TRILANTIC EYES UP BETTY BLUE
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Debt Providers
Financial Adviser to the Vendor
Cédric Ducrocq
Dia-Mart’s CEO Cédric Ducrocq explained that the challenges of the project were not confined to the risk assessment arena. “Carré Blanc has proven an uncommon ability to deliver a high and constant EBITDA,” he said. “The challenging part was the growth potential: Carré Blanc is at a crossroads in terms of collections, channels and store formats, with several major initiatives still too recent to show proven results.
“We helped NiXEN overcome this thanks to our sectorial expertise. Dia-Mart Consulting is a strategic consulting company dedicated to retail: for more than 20 years, we have been working daily with retailers, defining tomorrow’s formats and improving today’s performances.” In a highly fragmented competitive environment, Carré Blanc Group aims to speed up its development by actively deploying a new store concept specially designed for edgeof-town sales, pursuing its cross-channel strategy to serve customers and franchisees and develop faster in the international arena via master franchise contracts or targeted external growth operations. Pierre Rispoli, CEO of NiXEN Partners, said: “We were closely monitoring the possible options for developing Carré Blanc Group’s shareholding and, at the start of 2013, the opportunity arose to work on the outlines of an ambitious operation to offer the group the means to speed up its development. With our track record in specialised retailing with companies like Maisons du Monde and La Grande Récré we very quickly identified the basis of a growth path for Carré Blanc.”
CARRÉ BLANC BRAND APPEALS TO NIXEN
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Mohsin Tayebaly & Co. 112 | Acquisition International | November 2013
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DEAL DIARY: Consumer Deals DOUGLAS GILL
l Advent International, one of the world’s leading firms dedicated solely to private equity, has sold Deutek, Romania’s largest manufacturer of decorative paints and coatings, to Emerging Europe Accession Fund (EEAF), the third private equity fund managed by Axxess Capital. The value of the transaction was undisclosed.
l YFM Equity Partners has backed the management buy-out of Douglas Gill International (Gill), the Nottingham based manufacturer of technical sailing clothing and accessories, for an undisclosed sum following a sales process led by Clearwater Corporate Finance. Yorkshire Bank provided debt funding and working capital facilities to support the deal.
Founded in 1993, Deutek originally imported its paints from Germany, switching to local production in 1998. Since then, leading brands such as Danke!, Oskar and Superweiss continuously imposed new quality standards driven by innovative research and the latest technological updates.
Gill was founded in 1975 by Nick Gill, who will continue as a non-executive director. Nick began designing and making technical sailing clothing from his father’s lace factory in Nottingham. Today the company has revenues of £12m and employs 44 people at its Long Eaton site.
Through Deutek’s distribution systems, which are some of the most efficient in the industry, these leading brands are now widely available to any Romanian consumer in more than 3,500 modern and traditional retail outlets or delivered direct to construction sites. Gabriel Enache, Chief Executive Officer of Deutek, said: “Advent International has provided us with continuous support since their investment in 2005 and played a key role in the success and growth of our company during this time. We look forward to building on this progress and securing a market-leading position under the new ownership of Axxess Capital.”
It manufactures a wide range of sailing clothing and accessories which it exports to over 35 countries and it is the official technical clothing sponsor for the internationally renowned Aberdeen Assets Cowes Week Regatta. Last year Gill won the Queen’s Award for Enterprise: International Trade with exports reaching over 70% of turnover. Commercial due diligence for YFM Equity Partners was conducted by Carlton Strategy Advisors Limited (CSA).
Commenting on the sale of the business, Sebastian Tcaciuc, Director, Advent International said: “We have enjoyed our partnership with the management team of Deutek, working with them to establish the recognised brand that the company has become today. The business is now well-positioned to take advantage of the many opportunities in the Romanian market and to continue to pursue its growth strategy.” Alexander Gross, Director at Merrill DataSite, supported EMERGING FUND (EEAF) provision of theEUROPE virtual dataACCESSION room used throughout the due diligence ACQUISITION phase of this deal.OF He DEUTEK was brought into the project by Raiffeisen Romania, with whom he has a long standing relationship. This project involved English speaking Merrill DataSite project managers who supported the deal team whenever required. Bidders were able to review critical company information in the DataSite, facilitating a successful and speedy conclusion to this international Alexander Gross transaction.
EMERGING EUROPE ACCESSION FUND (EEAF)
ACQUISITION OF DEUTEK DRV Corporate Finance
PENNYSAVER
David McClelland
CSA director David McClelland said: “CSA’s mandate was to provide commercial insight on identified business and market issues. Consequently, our commercial due diligence examined the Gill business plan, prepared by company management.
“A key feature of the plan was the business’s ability to further develop its position as a leading wholesale and retail brand in the international technical sailing clothing and accessories marketplace. “The outcome was a report and opinion given about levels of market attractiveness and key risks/opportunities. CSA due diligence assessed Gill as a company and brand which, according to CSA’s interpretation, could develop its business model and successfully grow sales over the coming years.”
YFM EQUITY PARTNERS SET SAIL WITH GILL
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l OpenGate Capital, a global private buyout firm, completed the acquisition of PennySaver USA on September 27, a week after announcing it had signed an agreement to acquire the business. The purchase comprised the Shoppers and PennySaver assets from Harte-Hanks, Inc (NYSE: HHS). PennySaver USA, headquartered in Brea, California, represents the first California-based acquisition for OpenGate Capital, and it joins a portfolio of 12 other leading enterprises with operations throughout North America, Latin America and Europe. PennySaver USA provides print and digital, hyper-local marketing and advertising services to California-based and nationwide customers. It is one of the largest and most well-recognized weekly local advertising publications in North America and is the number one Hispanic marketing publication in the US. The business serves more than 9,000 unique advertising customers, distributes 85 million inserts, and reaches more than nine million households. The digital division of PennySaver USA provides marketing products and services via online and mobile applications. The online classifieds, coupons and business directory website, PennySaverUSA.com, hosts nearly 4.4 million listings nationwide and offers several advertising options. The digital division also supports small and medium sized businesses by providing digital marketing services including PowerSites and PowerClicks. PowerSites provides full-service website hosting, creation, and maintenance solutions. PowerClicks offers qualified lead generation via search engine marketing and online display advertising. Andrew Nikou, OpenGate Capital’s founder, Managing Partner and CEO stated, “PennySaver USA is is profitable and very stable, has tremendous brand recognition, and provides advertising products and services to its clients with incredible reach and frequency. We’re excited to leverage all of these strengths and create even more value for both the readers and advertisers. “As proven by our success with TV Guide Magazine, we are really enthusiastic about media, publishing and advertising businesses in the US and know that there is a lot of hidden potential inside PennySaver USA.” OpenGate Capital acquired TV Guide Magazine in 2008 and within 18 months turned the business around making it more profitable, stable and diverse. OpenGate Capital also owns Fleurus Presse, a French publisher of magazines providing a wide range of reading subjects and materials.
PENNYSAVER FOR OPENGATE
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Acquisition International | November 2013 | 113
CONSUMER
DEUTEK
DEAL DIARY: Financial Services Deals DIRECT LINE
GENESIS KENYA
PAYLIFE
l Chesnara has agreed to acquire the entire issued share capital of Direct Line Life Insurance Company Limited, for a total consideration of £39.3 million, payable in cash on completion. The acquisition will be financed from a combination of existing cash resources and a new bank facility.
l Centum Investment Company Limited has announced its intended acquisition of a controlling interest of up to 73.35% shareholding in Genesis Kenya Investment Management Limited (“Genesis”).
l SIX, which operates the infrastructure underpinning the Swiss financial sector, has boosted its ambitions to become one of Europe’s leading providers for card-based payment services by acquiring PayLife GmbH.
Direct Line Life is a UK-based life insurance company and wholly-owned subsidiary of Direct Line Group. It became substantially closed to new business on 5 July 2011 and since then has focused on managing the existing portfolio in line with the run-off plan agreed at the time with the then FSA.
FINANCIAL SERVICES
Before closing to new business, Direct Line Life predominantly offered non-linked products including mortgage life cover, fixed term life cover (both with and without critical illness cover) and over 50’s life cover to UK customers distributed under both its own brand and on a white label basis. Direct Line Life is being acquired at an effective 74.7% of Chesnara directors’ estimate of the residual embedded value of £52.6 million as at 30 June 2013, adjusted to reflect a capital extraction of £23.0 million by the seller immediately at completion.
The acquisition is subject to receiving statutory and regulatory approvals from the Competition Authority of Kenya, the Capital Markets Authority, the Retirement Benefits Authority and fulfilment of other customary closing conditions. Genesis was established in 1996 with the aim of providing high quality investment management services to institutional investors. Currently, Genesis manages funds worth over Kes.100 billion belonging to clients within and outside Kenya. Genesis is licensed in Kenya as a fund manager by the Capital Markets Authority and the Retirement Benefits Authority. In Uganda, it is licensed by the Capital Markets Authority – Uganda as a Fund Manager and Investment Advisor. Centum seeks to provide investors with access to a portfolio of otherwise inaccessible, quality and diversified investments through the firm’s Private Equity, Real Estate & Infrastructure and Quoted Private Equity business lines. Centum has maintained a strong track record of consistently delivering market beating returns, recording an average return of 29% over the last four years and has grown shareholder wealth by Kes.10.25 billion; a cumulative growth of 175%.
The effect of this capital extraction is that Chesnara will acquire the business with a lower solvency margin than its long term target of 150%, and will therefore immediately on completion inject capital, estimated at £10.4 million. This increased funding requirement is temporary and is expected to be released by the end of 2014. For more than 15 years Intralinks ® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace TM. 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
DIRECT LINE LIFE FOR CHESNARA
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Mugambi Nandi
Victor Onyango
KN Associates LLP represented Centum Investment Company Limited on the deal, led by Mugambi Nandi, Managing Partner. The team included Victor A Onyango, Senior Associate. KN Associates LLP has had a working relationship with Centum Investment Company Limited for two years. Mr Nandi commented: “We had to burn the midnight oil to complete the legal due diligence and to produce draft Agreements within the timelines agreed between the parties. Our task was made lighter by the fact that the parties were very understanding, responsive and accommodating. I would attribute our success to the positive attitude of the parties, and their good faith in negotiating.” Nandi@knassociates.co.ke www.knassociates.co.ke
CENTUM INVESTMENT COMPANY ACQUISITION OF STAKE IN GENESIS KENYA
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PayLife is the Austrian market leader in the field of cashless payment and SIX is acquiring it from a group of Austrian banks. The sale of 100% of the shares in PayLife Bank to SIX was approved by the Austrian Cartel Court and completed on 19 September with retroactive effect from 1 January 2013. The parties agreed not to disclose the acquisition price. The sale process of PayLife to SIX by Austrian banks including Bank Austria, BAWAG, Erste Bank, Raiffeisen and ÖVAG has lasted around 18 months. During the next few months PayLife is to be incorporated into SIX’s Payment Services Division. The acquisition allows SIX to put its collaboration with PayLife, which has been ongoing and steadily growing since 2004, on a new footing. As PayLife’s central processing partner, SIX already ensures that transactions between card holders, card issuers and traders are efficient and secure, thanks to its cutting-edge IT infrastructure. In future, PayLife clients will benefit directly from SIX’s international experience throughout Europe and from innovative solutions along the entire value chain for cashless payments. Both companies’ clients will benefit from greater competitiveness and enhanced presence in 33 European countries. The increased focus on industry solutions (retail, hospitality, self-service and above all e-commerce) offers potential for organic growth, for SIX expects to generate strong growth with its expertise and all-in-one approach. For more than 15 years Intralinks ® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace TM. 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
SIX PUSHES CASHLESS AMBITIONS
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114 | Acquisition International | November 2013
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DEAL DIARY: Healthcare Deals EUROMEDIC
SPIROGEN
l Alpha Medical, a portfolio company of Mid Europa and a leading provider of laboratory testing services in the Czech Republic and Slovakia, announced that it has entered into an agreement to acquire Euromedic’s laboratories in the Czech Republic.
l AstraZeneca announced on 15 October that MedImmune, its global biologics research and development arm, has acquired Spirogen, a privatelyheld biotech company focused on antibody-drug conjugate technology for use in oncology.
l Cubist Pharmaceuticals Inc (NASDAQ: CBST) has acquired Trius Therapeutics Inc for an aggregate upfront cash consideration of approximately $704 million.
No financial terms were disclosed for the transaction, which is subject to usual closing conditions and is expected to close in the first quarter of 2014. Deloitte, Kinstellar and Weil Gotshal & Manges served as advisors for the deal.
MedImmune has also entered into a collaboration agreement with ADC Therapeutics to jointly develop two of ADC Therapeutics’ antibody-drug conjugate programmes in preclinical development. MedImmune will also make an equity investment in ADC Therapeutics, which has an existing licensing agreement with Spirogen.
In addition to the upfront cash payment, each Trius stockholder will receive one Contingent Value Right (CVR), entitling the holder to receive an additional cash payment of up to $2.00 for each share they own if certain commercial sales milestones are achieved. The total transaction is valued at up to $818 million on a fully diluted basis.
Euromedic Labs operates six state-of-the-art laboratories and 15 collection points, offering a full spectrum of routine and specialised tests in the areas of biochemistry, microbiology, immunology, haematology and pathology. In 2013, the company is expected to perform over 7 million tests.
MedImmune will acquire 100 per cent of Spirogen’s shares for an initial consideration of $200 million and deferred consideration of up to $240 million based on reaching predetermined development milestones. Existing out-licensing agreements and associated revenue streams are excluded from this acquisition.
The importance of the deal was explained by Matthew Strassberg, senior partner of Mid Europa who leads the healthcare investments. “The acquisition of Euromedic Labs is an important step in our strategy to consolidate the Central European laboratory market,” he said.
MedImmune will also pay $20 million for an equity investment in ADC Therapeutics, which will be matched by Auven Therapeutics, the majority shareholder in both ADC Therapeutics and Spirogen.
Peter Lednicky, CEO of Alpha Medical, added: “We are impressed by Euromedic Labs’ operational excellence and quality standards. The addition of the company’s state-ofthe-art laboratories to Alpha Medical will further enhance the quality of service we provide to our clients while reducing turn-around times.” Commenting on the transaction, Dimitris Moulavasilis, CEO of Euromedic, said: “We are very proud of what we have built up in the labs services space. This transaction is testimony to the tremendous skills and high quality of our labs’ employees and the impeccable service afforded to our patients. We believe that Alpha Medical will be an excellent home for the Czech labs and will enable Euromedic to build on its current strength and continue its longstanding track record of success.”
EUROMEDIC LABS JOINS ALPHA MEDICAL
DRV Corporate Finance
The collaboration agreement will include an upfront payment with predetermined development milestones for two programmes from a defined list and a cost- and profitsharing arrangement with MedImmune representing the majority share. ADC Therapeutics will also have the option to co-promote one of the products in the US. Antibody-drug conjugates are a clinically-validated cancer drug technology that offers both high potency and selective targeting of cancer cells. Spirogen’s proprietary technology attaches highly potent cytotoxic agents, or ‘warheads’ to specific cancer-targeting antibodies using biodegradable ‘linkers’. This targeting optimises the delivery of the cancer drug to the tumour cells only and provides the greatest degree of tumour killing while minimising the toxicity to the patient. Mewburn Ellis LLP, one of the UK’s leading IP attorney firms, has been Spirogen’s sole patent attorney since their foundation in August 2000, having drafted the patent applications which were used in the initial fundraising.
Robert Watson
With a team led by partner, Robert Watson, Mewburn Ellis LLP has advised Spirogen through taking a product into clinical trials, various fund-raising rounds, deals with Ipsen and Celtic Therapeutics, and their more recent numerous evaluations and collaborations in the Antibody drug conjugate field. Throughout the acquisition process, Mewburn Ellis LLP has provided information on their IP portfolio and existing agreements to the parties involved.
SPIROGEN BOOSTS ASTRAZENECA’S
ONCOLOGY PORTFOLIO DRV Corporate Finance
Virtual Data Room Provider
Commercial Due Diligence Provider / Tax Adviser / Financial Adviser to the Vendor / Vendor Due Diligence Provider / Risk & Insurance Due Diligence Provider
Trius brings to Cubist a highly complementary, late-stage antibiotic candidate, tedizolid phosphate (TR-701), as well as several pre-clinical antibiotic programs. Tedizolid phosphate is an IV and orally administered second generation oxazolidinone in development for the potential treatment of certain Gram-positive infections, including methicillinresistant Staphylococcus aureus (MRSA). Tedizolid phosphate met all primary and secondary endpoints in two Phase Three clinical trials studying patients with acute bacterial skin and skin structure infections (ABSSSI). Trius has partnered with Bayer Pharma AG for the development and commercialization of tedizolid phosphate outside of the US, Canada and the European Union. It is currently expected that a New Drug Application for tedizolid phosphate seeking approval for an indication in ABSSSI will be submitted to the US Food and Drug Administration during the second half of 2013 and a Marketing Authorization Application will be submitted to the European Medicines Agency in the first half of 2014. “We are very pleased to complete this acquisition and welcome the Trius team to Cubist,” said Cubist CEO Michael Bonney. “Trius is an excellent strategic fit, and its lead product candidate, tedizolid phosphate, has the potential to be an important new treatment in the fight against resistant infections. The need for new treatments to combat drug resistant bacteria is growing, and we will work diligently to bring this antibiotic product candidate to market in order to help hospitals and their patients combat these infections. “This transaction is also an important step towards achieving Cubist’s Building Blocks of Growth and continuing our track record of driving shareholder value over the long term.”
TRIUS JOINS CUBIST
DRV Corporate Finance
Virtual Data Room Provider IP Adviser Financial Adviser to the Purchaser
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Acquisition International | November 2013 | 115
HEALTHCARE
“Since our initial investment in Diagnostyka in Poland, Mid Europa’s laboratory portfolio has expanded from one company performing 20 million tests annually to a threecountry platform offering unparalleled levels of patient service and a combined test volume of over 90 million per annum.”
TRIUS THERAPEUTICS
DEAL DIARY: Industrial Deals AKZONOBEL l Sika completed the acquisition of AkzoNobel’s Building Adhesives business on 1 October 2013. The deal was announced on 8 August 2013. With annual sales of CHF 228 million, AkzoNobel Building Adhesives is a top-three player in its core European markets and employs 550 people. With this acquisition, Sika will increase its product offering for interior finishing in its flooring, sealing & bonding and refurbishment markets and particularly be able to target the professional craftsman. The Building Adhesives business of AkzoNobel has a strong focus on the top quality segment through its leading brands Schönox, Cégécol, Casco, Synteko and EriKeeper. With two production sites in Germany and France and a pan-European distribution network, it supplies its customers with successful and innovative products. Sika benefits from a complementary product portfolio which is well established within important European countries such as Germany, France, the Netherlands and the Nordics. About 65% of the acquired business is related to the renovation and refurbishment market. Main technologies are gypsum and cement-based formulations for floor levelling compounds and water borne floor and tile adhesives. Furthermore, Sika will expand its position in the sealing and bonding market that sees growing demand due to a focus on energy efficient buildings, the ever greater variety of materials used in construction, increasing high-rise projects due to urbanisation, and the growing significance of low emitting materials for good indoor air quality.
INDUSTRIAL
For more than 15 years Intralinks ® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace TM. 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
SIKA BONDS WITH AKZONOBEL
DRV Corporate Finance
BROMFORD INDUSTRIES
ECRONOVA POLYMER GMBH
l Leumi ABL and Bank Leumi (UK) plc have worked together to provide a flexible finance package to Birmingham-headquartered Bromford Industries. Bromford Industries specialises in precision engineered components for the aerospace and industrial power sectors.
l Michelman has acquired Recklinghausen, Germany based Ecronova Polymer GmbH, a manufacturer of water-based polymers used in the production of paints and lacquers. The purchase includes all assets, technology and manufacturing facilities. The name Ecronova Polymer will continue to be used for business operations and all current Ecronova Polymer products will remain unchanged in name and formulation.
This deal was a refinance of a private equity portfolio business looking for a more flexible funding package to support growth and potential acquisition opportunities. The total funding facility of £20m included invoice discounting, stock finance, a plant & machinery facility, and a cashflow line from Bank Leumi (UK). Provision of the facility required a detailed understanding of the aerospace sector and its buying patterns. The Leumi ABL team worked closely with the management team of Bromford Industries through an involved diligence, refinancing and legal process to ensure that the facility met all future working capital requirements. Both parties were advised by director Elaine Shelley and Ian Dyer from GoIndustry Dovebid. Ms Shelley explained: “The deal’s key challenges included understanding asset value across all asset classes and, in conjunction with Bromford’s management, liaising with all interested parties.” Mike Smith, Bromford Industries CEO, said: “Since the company was acquired in 2009 we have continued the transition of the business, improved its image and reputation and responded to ever changing business demands. “As we enter the next phase of our development it is essential the business is structured to take best advantage of future opportunities and one of the key considerations was our debt facilities.” Martin Risman, Leumi ABL Regional Sales Director, added: “Leumi ABL is delighted to provide a £20 million senior debt and asset based lending package that facilitates the specific working capital requirements and supports the growth aspirations of Bromford Industries. “We recognise that a business of the quality and reputation of Bromford needs a commercial and responsive funding partner with detailed sector knowledge. We very much look forward to working with their highly committed management team to achieve their goals in the future.”
FLEXIBLE FINANCE
FOR BROMFORD INDUSTRIES DRV Corporate Finance
Virtual Data Room Provider
Asset valuation appraisals
Ecronova Polymers was owned by the company’s Managing Directors, Mr Peter Montag and Mr Anton Solich, and funds managed by Aheim Capital, a private equity investment firm. Mr Montag and Mr Solich will continue in their roles as Managing Directors and will be joined by Mr Jean-Marc Verhaeghe, currently Michelman’s Managing Director, EMEA. Mr Verhaeghe will assume overall operational responsibilities. Ecronova Polymer’s customers will see no interruption in their service and will continue to work with their current Ecronova contacts. According to Mr Steven Shifman, Michelman President and CEO, “Ecronova Polymer manufactures exceptionally high quality products that are complementary to the solutions we currently offer our paint and coatings customers. However, the addition of their product lines, their people, as well as their innovative manufacturing processes, gives us greater technical capabilities that will be strategically utilised beyond just our paint and coatings business. With this key acquisition, we have enhanced our ability to develop powerful new solutions, and more importantly, new opportunities, for all customers who are using or developing water-based additives and coatings.” Ecronova Polymer’s lines of water-based polymers include styrene acrylics, pure acrylic emulsions, vinyl acetate copolymers and polyurethane dispersions. “Like us, Michelman offers a variety of well-known brands, but has also emphasised flexibility and development of customised solutions, said Mr Montag. Bringing the two companies together is going to solidify our position as the company that is truly capable of helping our customers win and grow.”
MICHELMAN ACQUIRES
ECRONOVAFinance POLYMER GMBH DRV Corporate Advisers to Michelman
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116 | Acquisition International | November 2013
DEAL DIARY: Industrial Deals
l Acceleris has advised and secured the funding to acquire 100% of the equity of, and provide initial working capital for, the business of Whitham Mills Engineering Ltd (WME). The funding was provided by private investors sourced by Acceleris and incoming management. Ben Smart has led the acquisition and will take up the position of managing director of the new company. Terry Donovan, the ex-CEO of Pinacl Systems Limited, will act as chairman. Mr Smart said: “Following extensive discussions with the previous owners, I am pleased to lead the new management team within a very innovative and highly respected business. As landfill capacity disappears and legislative requirements on companies and local authorities to recover more re-useable waste increase, the value of the waste management market increases. Growth in the value of the waste management market, coupled with increasing waste volumes recovered, is indicative of growth in demand for waste recovery and baling infrastructure.” Norman Molyneux, chief executive of Acceleris, said: “We are delighted to have funded the buy-out of WME. The business is cash-generative and has a full order book and healthy enquiries. New management has an exciting plan to deliver substantial growth over the next three to five years.”
Peter Cheetham
Patrick Morris
Financial due diligence and tax advice was provided by Fairhurst Accountants. Lead partner, Peter Cheetham, and senior manager, Andrea Gerring, were asked to carry out the financial due diligence and report back within 7 days. The above have subsequently reported on the Completion Accounts and the firm are assisting with the implementation of new accounting systems and controls. Fairhurst Tax partner Patrick Morris provided advice in respect of fund raising in order to secure EIS Income tax relief for certain investors in respect of certain funds raised. info@fairhurstaccountants.com www.fairhurstaccountants.com
Legal advice was provided by Lupton Fawcett Lee & Priestly, and Baxter Caulfield, and financial advice to the vendor was provided by Henley Business Group.
ACCELERIS ENGINEERS
WHITHAM MILLS DEAL DRV Corporate Finance
XEIKON
ZYVAX
l XBC BV, a company controlled by Bencis and in which Gimv-XL indirectly holds a minority stake of approximately 20%, completed the acquisition of 65.68% of the share capital of Xeikon NV from Punch International nv on 20 September. XBC has paid a purchase price of €5.85 per share. The total purchase price paid for the 18,856,298 shares is €110,309,343.30. The conditions the transaction had to meet, including the disentanglement of Accentis nv and the unconditional approval of the transaction by the German competition authority, have been satisfied. In line with Dutch legislation Bencis (through XBC) launched a mandatory public offer at a price of €5.85 per share shortly after completion of the repurchase of own shares by Xeikon. After the application period for the mandatory public offer, Bencis (through XBC) intends to launch a squeeze out of the remaining Xeikon shares, if possible. Bencis and XBC have attracted committed financing to fully finance payment of the purchase price for the mandatory public offer. They will finance the mandatory public offer through a combination of fully committed equity and (senior and mezzanine) debt financing. The equity will primarily be funded by Bencis and Gimv-XL, the mezzanine debt financing will primarily be funded by Belgian mezzanine providers and the senior debt financing will be received from a consortium of initially four reputable European financial institutions. The senior and mezzanine debt financing is subject to customary conditions. ING was delighted to be able to help Bencis and GimvXL, both long-standing relations, and Xeikon with this important deal for all parties. The team who made it happen within ING Belgium, as joint-coordinator and MLA, consisted of Kristien de Clercq (vice president), An Coenen (vice president) and Bart Schenk ( associate), members of the Acquisition and Leveraged Finance team headed by Philip Wietendaele (managing director).
XBC COMPLETES XEIKON ACQUISITION
DRV Corporate Finance
l Chem-Trend, a global leader in specialty release agent solutions across multiple industries and applications, has acquired the Zyvax business allowing them to offer customers and distributors an expanded portfolio of product technologies for use in FRP (Fiber-Reinforced Plastic) and the growing advanced composites markets. “Today’s move will result in synergies derived from the innovation capabilities in release agent technology and composites industry expertise of both companies, which will help us further enhance the product and service offering to our customers,” said Chem-Trend President and CEO Devanir Moraes. “With the acquisition of the Zyvax business, Chem-Trend will provide end users and distributors with release systems and complementary molding process aids that create even greater value, efficiency and productivity in the development and manufacturing of FRP and advanced composite components.” Analysts expect the use of advanced composite materials to increase at a double-digit rate as companies seek to gain efficiencies through reducing overall product weight. Significantly lighter than metal, composite components can help shed pounds while maintaining, or even strengthening, a part’s structural integrity. Zyvax, a recognised and respected maker of moulding process systems, was founded in 1985 by Nancy Layman, who was an early leader in, and dedicated most of her career to, developing specialty release systems for the composites industry. It has always been Layman’s vision to drive innovation globally with the most efficient products for use in advanced composites manufacturing. Layman is confident that having Zyvax becoming part of Chem-Trend will benefit the entire market going forward and will continue her vision of strengthening and expanding the Zyvax brand throughout the world. She will actively support this transition process, working with Chem-Trend and Zyvax customers for a successful integration of the Zyvax productline as an integral part of the Chem-Trend portfolio.
CHEM-TREND ACQUIRES ZYVAX
DRV Corporate Finance
Virtual Data Room Provider Financial Due Diligence Provider & Tax Adviser
Debt Providers Financial Due Diligence Provider
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Acquisition International | November 2013 | 117
INDUSTRIAL
WHITHAM MILLS ENGINEERING
DEAL DIARY: Real Estate Deals ALBEDO
ARROWHEAD
l Singapore-based steel trading firm Albedo Limited has agreed to a $774.14 million reverse takeover (RTO) with a company majority owned by Malaysian tycoon Tan Sri Dato’ Danny Tan that will see Albedo transformed into a major property developer in Iskandar, Malaysia’s special economic zone in the southern state of Johor.
l Arrowhead Properties has agreed to acquire a residential property portfolio at an aggregate purchase consideration of R406 million payable in cash from Jika Properties. Comprising 1,089 affordable housing units in 36 properties with a gross lettable area of just over 79,000 million square feet, the portfolio is spread across Johannesburg.
Albedo, listed on the Catalist board of the Singapore Exchange, said it had entered into a conditional sale and purchase agreement with Infinite Rewards Inc. to buy its wholly-owned subsidiary, Reflections Oasis Inc. The latter has acquired or is in the process of acquiring an aggregate of seven parcels of land in Gelang Patah, Johor, with a total area of 662.7 acres. Ms Ong Beng Hong and Ms Tan Swee Gek, both directors in Wong Tan & Molly Lim LLC (WTL)’s Corporate Finance & Securities Department, led the team representing Albedo Limited in this deal. “WTL has been Albedo’s legal adviser since its listing on the Singapore Exchange and had assisted them in their IPO in 2006 as well as other M&A deals in the past,” explained Ms Tan. “This transaction with Infinite Rewards Inc. is currently one of the larger deals on Catalist and, if completed, would turn Albedo into a prominent property player in the Iskandar region.” Explaining the rationale for the RTO, Albedo said it expects its existing core steel trading business to remain challenging as increased competition and softening demand for steel related raw materials continue to erode profitability. The proposed acquisition provides an opportunity for the company to participate in the growth of Iskandar.
Theuns Behrens, director, Real Insight (Pty) Ltd (RIS), represented Arrowhead Properties. Their relationship has developed in line with Arrowhead’s appetite for new acquisitions.
Theuns Behrens
He explained the challenges the deal faced: “As is the case with all high density residential portfolios, they need to be expertly managed and the buildings must be adequately maintained.”
“It is thus vital to identify any potential problems early as they will impact the financial performance of the portfolio. It is always a challenge identifying imperfections as they don’t always present themselves in an obvious manner.” Mark Kaplan, COO of Arrowhead said: “This transaction is in line with Arrowhead’s low risk and high yield investment benchmark. Furthermore, it expands our investment strategy, as it provides growth opportunities and great diversification for the fund.”
Albedo will pay for the $774.14 million acquisition by issuing 34.55 billion new shares representing about 95% of the enlarged issued capital of the company at around 2.24 Singapore cents per share.
Gerald Leissner, CEO of Arrowhead added: “To date no one party has acquired a residential portfolio suitable for listing. Residential property comprises less than 1% of the listed property sector in South Africa unlike 15% in the USA. Purchasing these assets paves the way for Arrowhead to start developing its residential offering and enhancing its asset base.”
The parcels of land to be acquired are earmarked for conversion into commercial, industrial and/or residential usage. Based on valuation by Knight Frank Malaysia Sdn Bhd, the aggregate market value of the properties is about RM2.71 billion as at 30 August 2013.
“Since announcing this transaction in July, we have been approached with about R5 billion worth of pipeline opportunities. This is not to say that we will conclude any of these deals, but doors are opening and our competitive edge is growing,” said Imraan Suleman, Arrowhead CFO.
Albedo and Infinite Rewards are also negotiating for the inclusion of two parcels of land of about 233.04 acres to be included in the transaction.
The portfolio will be managed by Jika Properties for two years and receive a guaranteed return of not less than 10% in year one and 10.8% in year two. The transaction, which was concluded on 16 October, is subject to due diligence and approval by the Competition Commission.
Email address: office@wtl.com.sg Web address: www.wtl.com.sg
REAL ESTATE
ACQUISITION BY ALBEDO
OF REFLECTIONS DRV Corporate FinanceOASIS
Legal Adviser to the Purchaser
ARROWHEAD EXPANDS
RESIDENTIAL PORTFOLIO DRV Corporate Finance Property Valuer / Management Team & Commercial Due Diligence Provider Due Diligence Provider
PUERTO VENECIA l Paris and London-based private equity group Orion Capital Managers has paid €144.5m to buy the 50% it did not already own in the Puerto Venecia shopping centre and retail park in Zaragoza, Spain, from UK REIT British Land. The stake was bought by Orion’s fund European Real Estate III C.V. Puerto Venecia comprises an 82,600 square metre. retail park which opened in 2008 and a 130,000 square metre fashion and leisure phase which opened in October 2012. Environmental due diligence for Orion Capital Managers was provided by Ambiente International LLP whose team was led by managing partner Allan Busse and supported by Almudena Thomas-Vela, associate of Ambiente in Spain. Allan Busse
Mr Busse explained: “The main challenge was the size and the complexity of the retail park which also included a boating lake and an ice rink. As the retail park was only developed recently relevant documentation was relatively accessible to provide us with the information we required for our assessment.” Anchored by leading department store El Corte Inglés, Puerto Venecia is the only centre in Spain which boasts all nine of Inditex group brands. Other leading retailers include Primark, Apple, Hollister, Desigual, C&A, H&M and Mango. A 3D cinema and family entertainment centre, was augmented this spring by a double static surf wave and an outdoor adventure park. As well as the ice rink and lake, its leisure offering includes a new indoor triple height climbing concept and a range of restaurants, cafes and bars. Aref Lahham, founding partner and MD of Orion Capital Managers, said: “Puerto Venecia has traded incredibly well since it opened, with more than 16 million shoppers passing through its doors in its first year. We firmly believe that consolidation of the retail property market is under way in Spain and that major regional centres will continue to perform and improve as the country comes out of recession.” The acquisition of the stake, giving the Orion fund full ownership, provides the opportunity to add to strategic investments in prime regional Spanish centres, and follows the 2009 acquisition of Plenilunio Shopping Centre in Madrid.
ORION CAPITAL COMPLETES HUNT
FOR PUERTO VENECIA DRV Corporate Finance
Environmental Due Diligence Provider
WTL WONG TAN & MOLLY LIM LLC ADVOCATES & SOLICITORS . NOTARIES PUBLIC . COMMISSIONERS FOR OATHS
Legal Adviser to the Purchaser Financial Due Diligence Provider
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Property Valuer Property Valuer
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Debt Providers
118 | Acquisition International | November 2013
Virtual Data Room Provider
DEAL DIARY: Support Services Deals
l Northallerton-based Hanby & Co merged with Armstrong Watson Chartered Accountants on 1 October 2013. This now makes Armstrong Watson one of the largest independent chartered accountants and financial advisers in the region. The group established itself 146 years ago and now has 15 offices in the North of England and South West Scotland and has a combined turnover in excess of £20m. Marie Nicholl, relationship director profession sector, Natwest Commercial Bank, represented Armstrong Watson. “This is a long standing customer who we are delighted to be associated with,” she said. “We are pleased to be able to support them with their growth aspiraMarie Nicholl tions, this being one of several acquisitions they have made over the last 12 months.” Marie.nicholl@natwest.com The existing Northallerton Armstrong Watson office was looking to expand its service offering and found in Hanby & Co a very similar ethos to client care and service. The combined team will be headed up by Armstrong Watson’s lead partner Peter Molyneux, and supported by Hanby & Co partners Ian Cartwright and Peter Brierley. Armstrong Watson’s managing partner Paul Dickson said: “Hanby & Co is a well-respected firm in Northallerton and both Ian and Peter have run a good practice with a very loyal client following. The combined knowledge from both offices will help in continuing to develop Armstrong Watson’s position in Northallerton and the Yorkshire region, and I know we will have a strengthened team focused on providing private individuals, fast growing start-ups and established businesses with the right financial advice.” Peter Molyneux added: “Both firms have built up strong and professional reputations in Northallerton. Now as one office I feel confident that existing clients will gain an even wider level of advice under the Armstrong Watson banner across both accountancy and financial planning services.”
AVIA HEALTH INFORMATICS PLC
WESTSTAR AVIATION SERVICES
l Advanced Computer Software Group plc (AIM: ASW), a leading provider of software and IT services to the healthcare and commercial sectors, has purchased the business of Avia Health Informatics PLC (AIM: AVIA), the developer and provider of clinical decision support and referral facilitation software.
l KKR has invested approximately US$200 million for a substantial minority equity stake in Weststar Aviation Services Sdn Bhd in what is KKR’s first investment in Malaysia. Additional terms of the transaction were not disclosed.
The purchase consists of the acquisition by Advanced of 100% of the share capital of Avia’s trading subsidiary, Plain Healthcare Limited, in consideration for the assignment and novation of the Mark Andrew obligations of Avia under the £350,000 convertible loan note owed to a subsidiary of Advanced following its investment in Avia in September 2012. Julian Harvey and Mark Andrew, both corporate partners at Mundays LLP, led the team acting on Julian Harvey behalf of Advanced. Highlights of the acquisition for Advanced are: • Strategic product acquisition for the group’s Advanced Health and Care division, supporting Advanced’s penetration of the NHS • Plain’s Pathfinder referral facilitation and Odyssey clinical decision support systems are used by over 100 NHS customers and it is already a long-term partner of Advanced Health & Care. The acquisition is expected to be earnings enhancing in its first year.
Hanby & Co partner Ian Cartwright agrees “the merger of the two businesses should bring to Northallerton a level of expertise and service that will be extremely beneficial to the town.”
ARMSTRONG WATSON EXPANSION
DRV Corporate Finance Financial Adviser
Founded in 2003, Weststar is a leading provider of offshore helicopter transportation services to the oil and gas industry. With a large and modern fleet of world-class helicopters and a stable of blue chip oil and gas companies as customers, Weststar focuses on providing quality offshore helicopter services and is the largest of such providers in Southeast Asia. In seeking to provide the highest standard of engineering, flight safety and reliable operations, Weststar provides personalized and efficient services by adopting sound planning processes, utilizing state of the art aircraft, systems and equipment. KKR is a leading global investment firm with more than US$83.5 billion in assets under management. It has invested nearly US$1.5 billion in companies based in this region since 2005. KKR’s investment in Weststar represents its first investment from the KKR Asian Fund II, the recently-closed US$6 billion fund dedicated to pan-Asian private equity transactions. “With KKR, we have a value-added partner who shares our vision of growing the company into one of the world’s leading offshore helicopter services companies,” said Tan Sri Syed Azman Syed Ibrahim, Weststar Group managing director. D Azmi Mohd Ali “Established in Malaysia, Weststar has fast become a key player in the offshore aviation industry in this region. This partnership will enable Weststar to expand its reach overseas and to continue to set a new benchmark for quality in global offshore aviation,” he added.
R Mohd Salleh
N Abd Bahrin
HEALTHCARE SOFTWARE ACQUISITION
DRV Corporate Finance
Legal Adviser to the Purchaser
Legal Adviser to the Vendor
Legal advice to Weststar was provided by a team from Azmi & Associates (A&A), led by senior partner Dato Azmi Mohd Ali and partners Rosinah Mohd Salleh and Norhisham Abd Bahrin from the Mergers, Acquisitions & Corporate practice group. It was the first time A&A had worked with Weststar Ms Mohd Salleh said: “The main challenge was the short timeline between the start of negotiations to closing. It also involved a multi-jurisdictional group of principals and lawyers. A team of associates was assigned to assist the three partners.”
FIRST MALAYSIAN INVESTMENT FOR KKR
DRV Corporate Finance
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Legal Adviser to the Purchaser
Financial Due Diligence Provider & Tax Adviser Legal Adviser Financial Adviser to the Vendor
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Acquisition International | November 2013 | 119
SUPPORT SERVICES
ARMSTRONG WATSON
DEAL DIARY: TMT Deals BELLVILLE l OIA Global, a leading worldwide transportation, supply chain management and packaging solutions provider, has purchased majority control of Bellville International Ltd, a London-based global provider of freight forwarding and logistics services. Bellville International is the holding company for Bellville Rodair International in Europe, USA, China and Brazil. It is an award winning international freight forwarder, with 22 locations worldwide. OIA is a leading worldwide transportation, supply chain management and packaging solutions provider, with a presence in 75 countries. The acquisition of Bellville will expand OIA’s network by 22 offices serving 14 additional countries, enabling it to extend its supply chain network across Europe, so offering broader geographic coverage to its major international clients. Yvonne Costello from Kerman & Co LLP advised on the deal, together with a team from EMC Corporate Finance, comprising Nik Askaroff, Michael Pay and Michael Gibbs.
Nik Askaroff
Mr Askaroff said: “With a global business operating in 21 jurisdictions, it was vital that everyone delivered to the timetable and that any delays were immediately caught up. The deal was completed within 90 days of the signing of the Letter of Intent and within 100 days of the initial contact with the buyer – a record in EMC’s 25 years of advising on transactions. The teams on both sides should take credit for this.
“Honest, transparent communication was the key as we constantly reviewed and managed the timetable and activities to ensure that all the milestones were met and, most importantly, ensured that both sides focused on the benefits of the transaction and didn’t get diverted by immaterial matters.” nik.askaroff@emcltd.co.uk www.emcltd.co.uk Kerman & Co’s award winning M&A teams handle a broad range of small and mid-market transactions, often cross- border, for public and private companies.
Yvonne Costello
Financial terms of the transaction were not disclosed. Yvonne.costello@kermanco.com www.kermanco.com
BELLVILLE ACQUISITION
EXTENDS OIA’S SUPPLY CHAIN DRV Corporate Finance
DNS:NET l Deutsche Beteiligungs AG (DBAG) and its managed DBAG Expansion Capital Fund has announced that they will invest in DNS:NET Internet Service GmbH (DNS:NET), a provider of telecommunications and IT services based on high-performance fibre-optic infrastructure. The initial €5 million in fresh equity capital is targeted at accelerating the company’s growth. DNS:NET was founded in 1998 and is headquartered in Berlin. In addition to large business clients, such as banks, technology and media companies, DNS:NET currently serves more than 5,000 private customers in Berlin and the state of Brandenburg. The company plans to expand its customer base by investing in high-speed fibre-optic networks – that is, in a sustainably accessible and rapidly expanding infrastructure capable of providing an attractive long-term source of income. Financial due diligence for DBAG was provided by Ebner Stolz whose team was led by Armand von Alberti, senior manager corporate finance. Ebner Stolz has acted for DBAG on previous deals. The contract that was now agreed provides for a capital increase and a silent partnership; DBAG will invest €2.1 million from its balance sheet. Another €2.9 million will come from the co-investing private equity fund for expansion financings. A 25% interest (thereof DBAG: 10.5%) will be acquired through the capital increase. Further funding will be invested as the company grows. DNS:NET (www.dns-net.de) generated revenues of nearly €13 million in 2012 and currently employs a staff of approximately 30. Until now, the sole shareowner has been Alexander Lucke, who founded and built the company. Since 2012, DNS:NET has also acted as a cable network operator and has accessed numerous new-build residences with its own fibre-optic network in Berlin. Here, DNS:NET predominantly delivers FTTH (fibre to the home). In addition to broadband internet access, the company also provides telephony and TV packages and therefore covers the complete value chain in this area. “DNS:NET has grown impressively in recent years and we now want to support the company in taking the next step in its development through our expansion capital,” said Torsten Grede, spokesman for DBAG’s board of management.
DBAG BOOSTS BROADBAND INVESTMENT
DRV Corporate Finance
Financial Due Diligence Provider
E-PLUS l Royal KPN NV shareholders have given the goahead to the agreement for Telefónica Deutschland Holding AG’s acquisition of KPN’s German mobile telecommunications business E-Plus. The transaction means that Telefónica Deutschland Holding AG will become a leading telecommunications company in Germany with a total of 43m customers and combined revenues of €8.6bn (as of end 2012). Telefónica Deutschland expects significant synergy effects in particular with respect to distribution, customer service and network, with incremental value from additional revenue and other synergies. The total value of synergies is estimated to be EUR 5.0 - 5.5bn net of integration costs. KPMG acted as Financial and Tax Due Diligence provider to Telefónica and advised on the tax structure of Telefónica’s acquisition. KPN will receive a cash consideration of €3.7bn and newly issued shares. The cash consideration payable to KPN is to be financed via a share capital increase of Telefónica Deutschland. Telefónica SA will subscribe the issued shares proportionately to its current shareholding in Telefónica Deutschland. The new shares to be issued to KPN as further contribution will arise from a capital increase in kind providing KPN with a stake of 24.9 % in Telefónica Deutschland after both capital increases. Subsequently, Telefónica SA will acquire shares amounting to 7.3 % in Telefónica Deutschland from KPN. This will finally result in a shareholding of Telefónica S.A. in Telefónica Deutschland of 65.0 % and KPN of 17.6 %. The execution of the transaction requires the approval of the general meeting of Telefónica Deutschland. Furthermore the transaction is subject to authority approvals and other customary closing conditions. The transaction is expected to be closed in mid 2014.
E-PLUS DEAL CREATES
LEADINGFinance TELECOMS CO DRV Corporate Adviser to Telefónica
Adviser
Advisers to Royal KPN NV
Systems Due Diligence Provider
Adviser
Systems Due Diligence Provider
TMT Legal Adviser to the Vendor
WEITNAUER 120 | Acquisition International | November 2013
DEAL DIARY: TMT Deals EXCLUSIVE NETWORKS GROUP l Exclusive Networks Group has confirmed a new package of substantial corporate investment across its international business as investors endorsed its business model. The group connects emerging and growing global technology vendors to pan-European markets through its ‘Super VAD’ – value-added distribution model. Exclusive Networks Group specialises in security, networking, infrastructure, and storage solutions for the ‘Smarter Social Enterprise’ and trades with over 4,200 reseller partners. Precise details of the funding are confidential, though it comprises existing investors Omnes Capital, Edmond Rothschild Investment Partners and Exclusive Networks’ management, with debt refinancing/financing through ICG (Intermediate Capital Group). The investment will fund group acquisition plans and corporate development for at least the next two years. “Our investors have again demonstrated their confidence in the direction of the business and in our strategy for further market scale and share,” said Olivier Breittmayer, CEO of Exclusive Networks Group. “The group’s goal to hit €1bn revenues by 2017 is further assured by successful closure of this funding package worth around €60m. It is particularly pleasing to see all our management team reinvesting and participating in the round, further demonstrating a collective belief in the potential of a major value-added distribution business strengthening its regional presence.”
“It was still being managed at retail bank level and they were maybe not so familiar nor so comfortable with the size of the deal envisaged. “Timing was the other key challenge, since some key strategic acquisitions were already in the pipeline and related negotiations had started. “However, I was struck by the speed of the process with ICG, its ability to quickly assess the business, its challenges and upsides, and moreover its ability to swiftly deliver a strong and firm commitment weeks, even months, ahead of traditional banks.” pgodillot@newroc.fr / www.newroc.fr
EXCLUSIVE REFINANCING
DRV Corporate Finance Financial Adviser
TAPASTREET
l Forum Media Group has established a presence down under with its acquisition of the Australian Next Media Group on 1 October 2014. The deal increases Forum’s expected annual sales in 2014 by 40%. The company acquired the shares of the Australian Next Media Group from private equity firm Wolseley, David Gardiner (CEO of Next Media) and Bruce Duncan (CFO Next Media). The deal follows Forum Media’s acquisitions in Russia and Hungary earlier in 2013. “We are present in many European countries, we have a subsidiary in China and we want to conquer other international markets,” explained Forum Media’s managing partner Ronald Herkert. “As part of our global expansion the Australian acquisition is a logical next step.” Next Media (www.nextmedia.com.au) emerged in the past five years through the merger of three specialist magazine publishers and further purchases of individual titles and licenses to become Australia’s fourth largest magazine publisher. It publishes 40 magazines for various target groups. The portfolio includes lifestyle, technology and sports media as well as magazines for children and motorsport fans. In addition, Next Media publishes books and digital media. Now in its 25th year, Forum Media Group wants to grow dynamically in Australia and in neighbouring Asian markets. It is also still looking for attractive additional purchase, investment and cooperation opportunities, both in Germany and worldwide. For more than 15 years Intralinks ® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace TM. 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
FORUM MEDIA HEADS DOWN UNDER
DRV Corporate Finance
l Kernel Capital has announced a €500k investment in Dublin-based Tapastreet Limited, a location-based photo and video discovery platform for mobile devices. The investment comprises a €250k investment by Kernel Capital through the Bank of Ireland Seed and Early Stage Equity Fund with the remainder of the funds provided by Enterprise Ireland. According to a recent eMarketer report, the number of worldwide social network users will climb to 1.73 billion this year and one in three or 2.55 billion people could be using social media networks by 2017. This exponential growth is driving the need for content-filtering solutions that accurately identify specific content in real-time. Founded in 2012 by ex-Intel engineer Joe Mitchell and ex-Googler Dave Johnson, Tapastreet unveiled its Android and iOS applications at TechCrunch Disrupt 2013 in San Francisco in September. Tapastreet enables users to see and share what is currently happening at any location worldwide by accessing real-time media uploaded to popular social networks. The company has developed a joint research project with Trinity College Dublin and The Institut National des Sciences Appliquées de Lyon (INSA) under the EU’s IndustryAcademia Partnerships and Pathways, Seventh Framework Programme (FP7). The project will develop advanced image synthesis techniques and powerful location-based artificial intelligence machine learning algorithms and integrate them into Tapastreet’s core product offering. Ger Goold, partner, Kernel Capital, said: “Tapastreet brings a unique proposition to the global market, enabling users to crowdsource media on social networks worldwide, thereby bringing them to the heart of their location or subject of choice. Kernel Capital is pleased to partner with this Irish startup as they continue their journey to building a more connected and informed global society.” Joe Mitchell, CEO, Tapastreet, said: “We are excited to partner with Kernel Capital and Enterprise Ireland to bring this technology to a wider audience.” Tapastreet were advised by Tony O’Rourke from Patrick F O’Reilly & Co Solicitors and Kernel Capital’s solicitor was Brian Allen from LK Shields & Co.
KERNEL CAPITAL DISCOVERS TAPASTREET
DRV Corporate Finance
Virtual Data Room Provider
Legal Adviser to Tapastreet Strategic VDD Adviser Legal Adviser to the Purchaser Financial VDD Adviser
Tax Adviser Legal Adviser to Kernel Capital Legal Adviser
Legal Adviser to the Vendor TMT
Pauline Godillot
Exclusive Networks was advised by Pauline Godillot, managing partner at NewRoc Partenaires, who explained some of the deal’s challenges: “The main challenge was the size of the company, which has over-performed so strongly over the past few years that it has grown from a small group to a corporate size group.
NEXT MEDIA
Acquisition International | November 2013 | 121
Deals of the Year: 2013 As 2013 draws to a close, it’s the time of the year when Acquisition International presents you with the Deals of the Year. They’re the deals that have captured the imagination, presented some of the best synergies and opportunities around, and have shown off some of the best business and professional skills worldwide.
Contents
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Metcash acquires Australian Truck & Auto Parts WorleyParsons acquires leading Norwegian firm Clover acquires German based Dematec Palamon and Sirius acquire Beauty Retail specialist, feelunique.com DPE invests in SLM Solutions GMBH Madison acquires Statoil Oslo for €52.5m Pond5 acquires Pixmac and expands international presence Silverfleet Capital backs £50million buyout of private equity fund administration business - IPES
DEALS OF THE YEAR: The Best Deals of 2013
Consumer Deal of the Year Asia Pacific l Metcash Limited acquired the assets and operations of national wholesale car and truck parts business Australian Truck and Auto Parts Group (ATAP), which specialise in brake, steering and suspension products. The acquisition also includes Auto Brake Service (ABS), a national franchise network of 53 brake and steering and auto repairs specialists. The businesses and related assets and operations were acquired by Australian Automotive Distribution Pty Limited ACN 163 280 279 (AAD), a newly incorporated subsidiary of Metcash Automotive Holdings Pty Limited, which, together with the Automotive Brands Group (ABG) will be part of Metcash’s growing hardware and automotive pillar. The assets and operations being acquired currently generate annual sales of circa $90m. The acquisition by AAD is both synergistic and strategic as it strengthens the national footprint and distribution network of the enlarged automotive group, including adding warehouses in NSW and SA. The acquisition provides scope for expansion of the ABS franchise network and buying synergies. The Herbert Smith Freehills team worked closely with Metcash’s legal team. It was led by M&A partners Martin Shakinovsky and Andrew Rich. Clarendon Lawyers advised ATAP on all aspects of the disposal, including vendor due diligence, restructuring, franchising aspects and on-going leasing and consultancy arrangements between ATAP and the purchaser. The team at Clarendon Lawyers was led by founding director, Tony Symons, who was supported by senior associate, Robert Josephs and solicitors, Billy Dwyer and Alexandra Gleed.
Tony Symons
Clarendon Lawyers is a specialist Corporate/M&A firm based in Melbourne, Australia.
tony.symons@clarendonlawyers.com.au www.clarendonlawyers.com.au
METCASH ACQUIRES AUSTRALIAN TRUCK & AUTO PARTS GROUP Legal Adviser to ATAP
Industrials Deal of the Year Europe
TMT Deal of the Year Europe
l WorleyParsons acquired 100% of the shares of Bergen Group Rosenberg AS (“Rosenberg”) for a cash consideration of NOK 1,088m (including more than NOK 200m of acquired cash). Rosenberg is a wholly-owned subsidiary of Bergen Group ASA, a listed Norwegian company. WorleyParsons’ CEO Andrew Wood said: “The impressive history, capability and depth of client relationships of Rosenberg provide the ideal platform for us to expand our presence in the Norwegian Continental Shelf offshore oil and gas market. I am excited that this acquisition will continue to strengthen and grow our ability to support our hydrocarbons clients in this region and globally particularly through our Improve offering and modular expertise.” Rosenberg CEO, Kristin Færøvik, said “We have been actively looking for a partner to help us grow our business and are very pleased that we now join the WorleyParsons group. We see that by combining the local Norwegian experience of Rosenberg with the global support of WorleyParsons, we can continue to expand our support to our clients.” Ernst & Young provided financial advice to Bergen Group ASA, led by Kjell Stenersen, Partner and Thomas Norheim, Senior Manager. “In the beginning we assisted Rosenberg (the target) on some minor deals. As our strategic input and relationship evolved, we started to look at efforts providing a bigger impact on Rosenberg’s growth aspirations, and found that that significant engineering resources would be needed to be accessed from outside of Norway. This prompted first a strategic coopKjell Stenersen eration agreement with Bergen Group which was the start of a strong working relationship as of today. As usual in a cross boarder transaction, the key challenge was to deal with the professional due diligence process of a large international buyer while continuing day to day operations.” kjell.stenersen@no.ey.com Thomas Norheim thomas.norheim@no.ey.com
WORLEYPARSONS ACQUIRES LEADING NORWEGIAN FIRM
Financial Adviser
l Clover Inc has acquired Dematec GmbH, Germany, which is a leading manufacturer of alternativ Kyocera products for the laser printer industry. Through years of experience the company has amassed considerable know-how in the production of high-quality reasonably priced compatibles. Its production prevents cartridges either ending up as refuse or being disposed of by means of an expensive thermal process. Since September 2006 it has been operating the only existing patented crushing and stripping facility for defective and non-re-usable laser cartridges. Board Advisors acted as the sole corporate finance advisors to the shareholders of Dematec GmbH. Friedrich Graf von Westphalen were appointed as legal advisors to the sellers. Stefan Gaiser, Lead Partner at Board Advisors, commented: “Board Advisors represented the Seller, Dematec GmbH, Germany. We did not have a long standing relationship with the sellers. However, we are known in the industry as we had already advised the sellers of K+U, which were active in a similar market segment (recycling of toner for laser printers). The transaction went very smooth and we were able to close the deal within less than 4 months. This is a testimony for our international reach. Germany and Switzerland has a wealth of well-run small and mid-sized companies. Although sometimes quite small in size, they are highly successful in marketing their products and services globally. However, they lack capital markets experience as they are mostly funded by founders’ money and possibly bank debt. To effectively execute an acquisition, US buyers on the other side require such expertise. Board Advisors closed that gap by providing capital markets experience such as M&A process and financial analysis and reporting know-how.” www.boardadvisors.eu contact@boardadvisors.eu
CLOVER ACQUIRES GERMAN BASED DEMATEC
Clover Holdings, Inc. USA
Has acquired Dematec GmbH, Germany
Sole Corporate Finance and M&A Advisor to Dematec GmbH Adviser to Metcash Legal Adviser Legal Advisors to Dematec GmbH
February 2013
Acquisition International | November 2013 | 123
DEALS OF THE YEAR: The Best Deals of 2013
Consumer Deal of the Year Europe
Industrials Deal of the Year Europe
l Palamon Capital Partners, a pan-European growth investor, led a transaction to acquire a majority interest in beauty e-commerce specialist feelunique.com, one of Europe’s fastest growing on-line beauty retailers. The transaction was agreed at a head-line enterprise value for feelunique of £26 million.
l Funds advised by DPE Deutsche Private Equity GmbH have acquired a majority of the shares in plant engineering specialist SLM Solutions GmbH.
feelunique is a leading on-line retailer of premium products in hair care, skincare, cosmetics and fragrances, selling full-permissioned stock from almost all of the major brands including Dior, Lancôme, Clarins, Guerlain, Yves Saint Laurent, Benefit and Kerastase. The company has built a strong reputation for its customer service and website editorial content, which is directed by Newby Hands, a beauty journalist and Harper’s Bazaar Beauty Director-at-Large. It was founded in 2005 and employs more than 125 staff at its headquarters and logistics centre in the Channel Islands.
SLM, headquartered in Lübeck, Germany, has more than 10 years’ experience in laser-based metal additive manufacturing (“Selective Laser Melting”) and is one of the pioneers in the development of this technology. In this manufacturing process, microscopically thin deposits of metal powder (e.g. titanium, steel, aluminium or gold) are successively welded together by high-precision lasers to create solid metal parts. Currently, the technology is mainly used for prototyping as well as single and zero series production of highly complex parts that cannot be manufactured by traditional methods.
Palamon will purchase a majority shareholding from the founders and earlier-stage investors and will provide further capital to support the company’s growth plan. Sirius Equity will invest alongside Palamon in the transaction. Following Palamon’s investment, Sirius co-founders Robert Bensoussan will join the Board of the Company as Chairman and Jim Sharp will join the Board as a Non-Executive Director. Mr Bensoussan also is Chairman of L K Bennett, a board member of Interparfums and former investor in and CEO of Jimmy Choo. Palamon’s and Sirius’ investment stems from the strong underlying growth in the on-line beauty retail segment driven by the increasing shift in consumer spend to on-line, as occurred in the fashion retail sector. feelunique is also taking significant market share by progressively expanding its product range and increasing loyalty through its customer-centric model. This has driven growth in company sales by more than 40% per year to more than £30 million of annual revenue. Javelin Group completed Commercial & Operational Due Diligence on feelunique.com for Palamon Capital Partners, led by Michael Fine, Director. Michael Fine
www.javelingroup.com
CEO H.J. Ihde and Commercial Director H. Schöneborn will remain significant shareholders in SLM and continue to lead the Company’s operations to ensure a continuous and sustainable development of the Company.
SLM introduced selective laser melting to the market in 2002. In 2006, SLM was the first company to use aluminium and titanium in this manufacturing process. Today, SLM is a global leader in the production of additive manufacturing production systems for prototypes and serial parts, as well as for vacuum and metal casting machines. FMG worked closely with SLM Solutions’ owners HansJoachim Idhe and Henner Schöneborn to define the company’s growth strategy and then design, launch and manage the capital raise, this included corporate finance strategy, valuation, preparation of the investment memorandum, investor communications and negotiations and due diligence. The process was jointly led by FMG Managing Directors Adrian Williams and David Schofield, who commenting on the transaction said, FMG were very pleased to be selected by SLM Solutions to be their adviser, they are clearly a leader in Additive Manufacturing and we expect that together with DPE they have a great future. www.futurematerialsgroup.com Adrian.williams@futurematerialsgroup.com David.schofield@futurematerialsgroup.com CMS Hasche Sigle advised SLM on all legal aspects of the investment by DPE via a team led by corporate law expert Dr Sebastian Orthmann.
PALAMON AND SIRIUS ACQUIRE BEAUTY RETAIL SPECIALIST, FEELUNIQUE.COM
DPE INVESTS IN SLM SOLUTIONS GMBH Financial Adviser to the Vendor
Commercial & Operational Due Diligence
Legal Adviser to the Purchaser Commercial Due Diligence
Real Estate Deal of the Year Europe l Madison International Realty (Madison), a New York based investment company, has completed the acquisition of Statoil complex in Oslo, Norway, for NOK 392m. The transaction represents the second largest single asset transaction in the Norwegian market in 2012. The nine storey, 65,768 m² Class A ‘headquarter style’ office building including 846 parking spaces is located in the Fornebu sub-market of Oslo, Norway. The property is 100% and long-term (15 years) leased to Statoil ASA. Developed by the internationally renowned architects, a-lab, the project won the “Future projects - Commercial” category prize at the World Architecture Festival in 2009 as well as the “Commercial Sector” category prize at the World Architecture News Awards in December 2012. As of October 2012, the property is fully occupied by the tenant and is in full operation. Oslo is one of the fastest growing and wealthiest major cities in Western Europe, and the Fornebu sub-market is the established corporate headquarter location in Oslo attracting domestic and international companies such as Accenture, Telenor, Aker Solutions, Norwegian Airshuttle, Evry, Alcatel and Hewlett Packard. Derek Jacobson, Managing Director at Madison International Realty in New York, commented: “Madison is an ideal partner for owners and developers seeking to monetize equity embedded in their assets. As real estate fundamentals in core markets continue to improve, owners, especially developers seek creative ways to extract capital from their existing portfolios in order to pursue other opportunities.”
Audun Frøland
Representing Arctic Securities were Deloitte, led by Audun Frøland, Partner and Trond Ivar Skar. afroland@deloitte.no
MADISON ACQUIRES STATOIL OSLO FOR €52.5M Financial Due Diligence Provider
Debt Provider & Financial Adviser
Financial Due Diligence Provider Environmental Due Diligence Provider Legal Due Diligence & Contract
Financial Due Diligence
Legal Adviser to the Vendor Financial Adviser to the Vendor
Commercial Due Diligence Provider
124 | Acquisition International | November 2013
DEALS OF THE YEAR: The Best Deals of 2013
TMT Deal of the Year Europe l Pond5 Inc. and Pixmac s.r.o. announced that they have reached a definitive agreement under which Pond5 will acquire the assets of Pixmac, a leading stock imagery network based in the Czech Republic. Jeanne Goulet and Solomon Packer led the team at Marks Paneth LLP. They are both Senior Consultants in the firm’s Tax Practice.
Jeanne Goulet
They commented: “We were representing Pond5. We assisted in the formation of the acquisition structure. We began serving them in 2012.”
They continued: “Pond5 wanted a firm who could put together a global team to assist them in setting up a foundation for their growing international business. The challenges involved creating and coordinating a worldwide team to bring the necessary expertise to bear on the tax and accounting matters at hand. Working with international attorneys and other member firms of our global Morison International network, Solomon Packer Jeanne and Solomon selected a global team that fully achieved Pond5’s goals. In addition, Jeanne and Solomon designed a structure that benefitted all stakeholders and resulted in a more competitive business model than the model that had previously existed. “Marks Paneth LLP is the 34th largest professional services firm in the United States. We offer a wide range of accounting, auditing, tax, consulting, restructuring, bankruptcy and advisory services as well as litigation and corporate financial advisory services to domestic and international clients. Marks Paneth LLP also has a strong track record supporting emerging growth companies, entrepreneurs, business owners and investors as they navigate the business life cycle. “The firm, whose origins date back to 1907, has a long history of providing attentive and responsive client service. Our services are provided by industry-focused, experienced practitioners. The most important element of our culture is our unrelenting client focus. We recognize that our success depends entirely on how well we serve our clients, and nothing takes precedence over our commitment to meet each client’s continuing need for effective, insightful, responsive and professional service.” www.markspaneth.com
POND5 ACQUIRES PIXMAC AND EXPANDS INTERNATIONAL PRESENCE
Support Services Deal of the Year - Europe l Silverfleet Capital, the European private equity firm has agreed to buy Ipes, one of Europe’s leading providers of fund administration and outsourcing services to the private equity industry, in a £50 million transaction, from RJD Partners. Completion is subject to obtaining regulatory clearances. Silverfleet Capital and management’s plans are to develop the business both organically and through acquisition with an emphasis on international expansion. Ipes was founded in Guernsey in 1998 and today employs 130 staff, administering in excess of $50 billion of assets from four European offices in Guernsey, Jersey, London and Luxembourg. Ipes has over 90 clients and administers 230 funds. Ipes provides a wide range of fund administration & outsourcing services to the closed ended asset class with a particular specialism in private equity. Ipes also supports clients with compliance, banking and the administration of carried interest, co-investment schemes as well as listed funds. Kinetic Partners was selected by Silverfleet, a long standing client, to carry out regulatory and compliance due diligence on Ipes across multiple jurisdictions, including Guernsey, Jersey and the UK. An experienced global team of ex-regulators and industry specialists, led by Monique Melis and Claire Simm, provided an in-depth assessment of the firm’s comMonique Melis pliance infrastructure, operations and controls. An assessment was also given of the firm’s understanding and preparedness for upcoming regulatory changes, including AIFMD and FATCA. With stricter regulation and increasingly aggressive regulatory regimes becoming more commonplace, regulatory and compliance due diligence is critical. This is particularly true when transacting in regulated entities in the financial services sector. Not only does this type of due diligence highlight potential regulatory red flags and associated costs, it also gives another view on the firm’s Senior Management and organisation-wide control environment culture. This is communicated as a clear risk to regulated firms from many global regulators, and also a key component of a strategy to grow any business. In the area of compliance risk, prevention is always cheaper than cure, said Ms Melis. www.kinetic-partners.com Monique.Melis@kinetic-partners.com claire.simm@kinetic-partners.com
SILVERFLEET CAPITAL BACKS £50 MILLION BUYOUT OF PRIVATE EQUITY FUND ADMINISTRATION BUSINESS - IPES Regulatory Adviser
Advisers Legal Adviser to the Equity Provider
Financial Adviser to the Equity Provider
Financial Due Diligence Provider
Legal Adviser to the Vendor Vendor Due Diligence Provider
Financial Adviser to the Vendor - Tax Adviser
Acquisition International | November 2013 | 125
A subsidiary of Abrempong Holdings, CIG Microfinance is currently one of Ghana’s fastest growing micro finance institutions with an inherent disposition to become the best in the industry. With over 130 highly motivated, well trained and passionate staff, eight state-of-the-art branches and still counting , CIG Microfinance continues to offer an assorted bouquet of tailor-made financial solutions to the economically active poor, the unbanked, smart individuals with unique financial needs and thrivings SME’s . Hence, our clientele base cuts across both the formal and informal sectors of the economy. While our primary goal is to ensure that the expectations of our clients are not only met but exceeded, CIG is also committed to delivering superior value to all stakeholders.
Address: Post Office Box GP21861, Accra Email: info@cigmicrofinancegh.com Telephone: 0249814990/ 0302982955
www.cigmicrofinancegh.com
playHARD The demands placed on today’s professionals are greater than ever, and when you work hard it’s important to play hard too. Acquisition International’s lifestyle section aims to provide you with a few examples of how to do just that. This month’s section provides a French twist (in the heart of England) as we head off to the rather splendid Le Manoir aux Quat’Saisons and take a look at its Belle Epoque offering. And, as it’s getting to the time of year when we think about taking a break, we’ve provided a contrast by visiting one of the UK’s most vibrant cities – Manchester – and its award-winning Lowry Hotel. If there’s anything you’d like to see in our Play Hard section, just drop the editor a line – Louise.Birkett@acquisition-intl.com
Hotel Review
playHARD
oir – n a M ! Le nifique g a M Le Amongst the twisty traditional country lanes of Great Milton, resides a hotel and restaurant whose reputation for perfection precedes itself, Le Manoir Aux Quat’Saisons – aka ‘Raymond Blanc’s Place’. When it opened in 1984 Le Manoir aux Quat’Saisons provided a new experience with its combination of breath-taking surroundings and gastronomic excellence. Raymond aimed to create a place where guests could relax and savour the surroundings. Working with some of the best interior designers in the UK, he transformed the rooms into stylish and unique palaces. The restaurant swiftly earned two Michelin stars, which it has held for a staggering 29 years. Stunning gardens are the envy of botanists worldwide. The Raymond Blanc Cookery School, opened in 1991, attracts a constant stream of budding chefs. Standing in the courtyard you can only be overwhelmed by the beauty of the hotel and while walking through the reception the only word that is relevant is “wow”. My bag magically disappeared and then reappeared in the Lavande, a superior suite that can only be described as an indulgent treat. The room consisted of solid oak, a woodburning fireplace, coupled with the light and spacious sitting area that includes a luxurious silk velvet sofa and all modern amenities. The prominent bay window offers beautiful views over the astounding lavender path. The Decouverte Experience Described as “a twist of imaginative genius”, Raymond Blanc’s dishes use the freshest, best quality ingredients. The two-acre kitchen garden produces 90 types of vegetable and 70 varieties of herb. Le Manoir’s wine cellar is home to around 1,000 different wines from around the world. Around 60% are of French provenance.
Sample Menu RAVIOLE D’HOMARD, POIREAUX ET CAVIAR Ravioli of lobster, leek and oscietra caviar ~ RISOTTO DE CHAMPIGNONS SAUVAGES, CRÈME DE TRUFFES Risotto of wild mushrooms, truffle cream ~ FOIE DE CANARD POÊLÉ, POMME ET TAMARIN Pan-seared Landais duck liver, compressed apple and tamarind ~ AMANDES SOLETTE POÊLEE, PURÉE DE CHOU-FLEUR, NOIX DE SAINT JACQUES ET Cornish sole, cauliflower purée, scallop and almonds ~ FILET DE BOEUF ANGUS, PURÉE DE POMMES DE TERRE FUMÉE, CÈPES, SAUCE AU VIN ROUGE jus Roasted fillet of Aberdeen Angus beef, smokey mash, ceps, red wine ~ COEUR DE FRANCHE-COMTÉ: LE COMTÉ of From Raymond Blanc’s native region, one cheese served in three stages maturation with a complimentary glass of Château Châlon 1999 Domaine Chevassu ~ POIRE POCHÉE AU CARAMEL, RÉGLISSE ET CRÈME CHIBOUST VANILLE Poached pear in caramel, liquorice and vanilla crème chiboust ~ GELEÉ DE FRUITS EXOTIQUES, JUS DE NOIX DE COCO ET FEUILLE DE KAFFIR Geleé of exotic fruit, kaffir lime and coconut jus ~ “OUR MILLIONAIRE SHORTBREAD” ice-cream Soft toffee with bitter chocolate on a crumbly shortbread, salted butter
La Belle Époque At Le Manoir it’s not just about pleasure – it is also about incorporating pleasure into everyday business life. La Belle Époque is the hotel’s private dining room, at the very heart of Le Manoir, which can be hired to dazzle clients with the very best in culinary cuisine, ambience and service. Got a big meeting? La Belle Époque can accommodate between 15 and 50 quests and hire includes a private reception room and an enchanting walled garden. In warm weather, guests can enjoy drinks on the terrace or croquet on the lawn. In winter, an open fire ensures a cosy welcome. Had a busy last quarter? Why not take the stress out of Christmas and book the whole clan in for a treat at Le Manoir aux Quat’Saisons before the stressful festivities begin. Think what you can discuss when you relax in the wonderful surroundings of La Belle Époque, Le Manoir’s private dining room, discussing what (or what not to get) members of the family so no one is disappointed come the big day. Or, if you’re not planning to celebrate Christmas, why not simply treat yourself and your family or colleagues? A booking at La Belle Époque includes room hire, glass of prosecco, mulled wine or a Christmas cocktail on arrival, canapés, three-course menu and coffee and petit fours for £110.00 per person. The offer includes flowers and crackers, printed menu cards and use of the 55” TV – just in case! Room hire is complimentary for this exclusive offer and usually costs £750. For reservations and more information visit www.manoir.com or telephone 0184427 8881
Hotel Review
playHARD
Hotel y r w Lo ester Manch The award-winning Lowry Hotel, Manchester’s most fashionable place to stay is ideally situated on the banks of the River Irwell in the recently-developed Chapel Wharf area on the Salford-Manchester boundary. The Lowry Hotel is the first five-star hotel in Greater Manchester and makes a bold contemporary architectural statement with its dramatic, curved, glass-fronted façade that creates a light and airy feel within the hotel interior. We received a very warm welcome upon arrival. The dedicated team at the Lowry Hotel ensured that our stay was first class from the start and kindly showed us to our deluxe room. Our bedroom was stylish, welcoming and more than comfortable as well as equipped with the latest facilities including a large flat screen TV, high-speed internet and included a well-stocked minibar. Our spacious and elegantly decorated room with unrivalled views of the River Irwell provided an ideal setting for our relaxing break. Next stop was a visit to the hotel spa for a much needed manicure in a luxurious and relaxing setting. The innovative urban spa right in the heart of Manchester combines the highest quality products with an unmatched expertise in service. The relaxation rooms, gym, sauna and full range of highly exclusive and unique treatments in a calming atmosphere provide a perfect setting for those needing to wind down. The very friendly and conscientious team at the spa could not do enough for me and ensured my time with them was a truly relaxing and enjoyable experience. We concluded the day with an all-important visit to the River Bar and Restaurant, a spectacular riverside restaurant combining contemporary and classic design. The stunning views, chic decor and delicious food make the River Bar and Restaurant a must-try dining destination – whatever the occasion. The recently revamped menu offers a Modern European range of dishes using the finest ingredients from the UK. The restaurant has a fresh, understated approach to top quality dining and the level of service we received was second to none. Our waiter Philippe was very knowledgeable of the wines and dishes on offer and helped to ensure a most enjoyable dining experience. Truly fabulous food in a truly beautiful setting! We will certainly visit the Lowry Hotel again and cannot wait to sample more of the delicious dishes on offer at the River Bar and Restaurant on our next visit to the city.
Heart of Jeddah (HOJ) is one of the key new development projects of Jeddah Development & Urban Regeneration Company (JDURC). HOJ will be Heart of Jeddah (HOJ) is a key new development within the old airport site in the city of Jeddah, Kingdom of Saudi Arabia. It offers a unique vision for developed within the old airport site in the city of Jeddah, Kingdom of Saudi Arabia. It offers a unique vision for the creation of a new destination within the creation of a new destination within the community on its 850,000 m². Heart of Jeddah will be a distinctive gathering place for residents and visitors the community on its 850,000 m². Heart of Jeddah will be a distinctive gathering place for residents and visitors of Jeddah and the Kingdom. of Jeddah and the Kingdom. Key features of this complete mixed-use development include a multi-modal transit hub (Muntalaq), multiple retail zones, family entertainment, Key features of this complete mixed-use development include a multi-modal transit hub (Muntalaq), multiple retail zones, family entertainment, a varia variety of food & beverage choices, convention center, commercial offices, hotels, medical center, and residential units and amenities of all types. ety of food & beverage choices, convention center, commercial offices, hotels, medical center, and residential units and amenities of all types. All of these All of these functions are organized around a world-class water feature and interactive fountain. Various districts within the project are linked together functions are organized around a world-class water feature and interactive fountain. Various districts within the project are linked together by a series by a series of canals and associated pedestrian paths that wind their way through the site. To serve this exceptional development, a superior of canals and associated pedestrian paths that wind their way through the site. To serve this exceptional development, a superior infrastructure is being infrastructure is being developed. developed. Once complete, Heart of Jeddah will play a major role in revitalizing the once lively area. The design approach is based on world-leading standards with Once complete, Heart of Jeddah will play a major role in revitalizing the once lively area. The design approach is based on world-leading standards with a touch of the authentic Saudi cultural heritage. The Heart of Jeddah development will provide an extraordinary place for people to live, work and play a touch of the authentic Saudi cultural heritage. The Heart of Jeddah development will provide an extraordinary place for people to live, work and play while acting as a catalyst for economic development in Saudi Arabia. while acting as a catalyst for economic development in Saudi Arabia.
Al Ma’adey Street, PO Box 3630, Jeddah 2148, Kingdom of Saudi Arabia Tel: +966 2 614 2166 Fax: +966 2 614 0642 Email: info@jdurc.com
www.jdurc.com
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