Acquisition international October 2013 by AI Global Media

October 2013 /

IN THIS ISSUE/

12 OPPORTUNITY ABOUNDS IN SECONDARIES MARKET

FOR PRIVATE EQUITY IN ORTHOPAEDIC DEVICES: A.I. speaks to Anthony G. Viscogliosi of Viscogliosi Bros. LLC. 48 THE IMPACT OF THE ALTERNATIVE INVESTMENT FUND MANAGER’S DIRECTIVE: Leading players in the AIFMD arena discuss their thoughts. 70 GETTING TO GRIPS WITH MERGER CONTROL: Acquisition International speaks to ELIG Attorneys at Law, Goodrich Riquelme y Asociados & Sayenko Kharenko to learn more.

POWER GRAB AMP CAPITAL’S ACQUISITION OF POWERCO STAKE

— Michael Cummings, Investment Director within AMP Capital’s Infrastructure business, discusses the firm’s recent experience with its successful bid for a strategic stake in Powerco New Zealand, owner of the country’s second largest electricity and gas distribution network. / 8 www. ACQUISITION-INTL .com

RADIUS SYSTEMS ACQUISITION OF AEON GROUP HOLDINGS

— Acquisition International speaks to Radius Systems to learn more about the company and its acquisition of Aeon Group Holdings. / 10

FASTPRINT HK ACQUIRES EXCEPTION’S PCB SOLUTIONS BUSINESS

— In January 2013, eXception accepted an offer from FastPrint HK to acquire 100% of the PCB Solutions division of eXception Group Ltd. located in Tewkesbury and Calne, United Kingdom and Penang, Malaysia. / 11

CONTENTS:

October 2013

Editors Comment Welcome to the October issue of Acquisition International. In this month’s main cover story, Michael Cummings, Investment Director within AMP Capital’s Infrastructure business, discusses the firm’s recent experience with its successful bid for a strategic stake in Powerco New Zealand, owner of the country’s second largest electricity and gas distribution network. Turn to page 8 to learn more.

CONTENTS — October 2013

Our Industrials Deal of the Month feature, found on page 10, investigates Radius Systems’ acquisition of Aeon Group Holdings. The acquisition of Aeon one of the leading manufacturers and suppliers of valves to the fire protection, gas, water and oil exploration and transportation sectors, reinforces Radius Systems’ strategy to complement its core pipeline systems offering. October’s Dealmaker of the Month is Mr NL Lam, Director of D&G Accounting Consultancy Company Limited, a Hong Kong-based private company, which provides a wide range of services including merger and acquisition services. We speak to Mr Lam to discuss the role he played in Fastprint HK’s acquisition of eXception’s PCB Solutions business on page 11. In Getting to Grips with Merger Control (page 70), we speak to leading experts to examine the merger control and competition regulations in a number of jurisdictions and to discuss how best to navigate them. This month’s comprehensive features also include the continuation of our Q3 review (page 75) and our investigation of the AIFMD (page 48), as well as a review of the evolution of the relocation process in a variety of jurisdictions (page 42) and a look at some of the key jurisdictions for investment in the oil and gas sector (page 38). Enjoy the issue, Phil Grainger, Editor phil.grainger@acquisition-intl.com

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

ON THE COVER – POWER GRAB - AMP CAPITAL’S ACQUISITION OF POWERCO STAKE / 8

The Latest News Stories From Around The World.

SECTOR TALK: /7 Powered by Zephyr/ Bureau van Dijk

DEALMAKER OF THE MONTH: /11

ACQUISITION INTERNATIONAL

12/ 13/ 14/ 15/ 16/

18/ 26/ 28/ 32/ 34/

Fastprint HK acquires eXception’s PCB Solutions business.

36/ 38/ 40/ 42/ 46/

Q3 REVIEW: /75

48/

Acquisition International’s Third Quarterly Review of 2013.

DEAL DIARY: /84 @acquisition-int

10/

Introduced by Zephyr/ Bureau van Dijk.

58/ 60/ 62/ 64/ 66/ 67/ 70/ 72/ 82/ 95/

Industrials Deal of the Month: Radius Systems Opportunity Abounds in Secondaries Market for Private Equity in Orthopaedic Devices Ship Registration The Impact of White-Collar Crime in Today’s Market Joint Ventures and Strategic Alliances: An Attractive Alternative to M&A What would be the consequences of banning derivatives from the asset management industry? Global Expertise Panel China: Strengthening the Economy The New Rising Stars M&A Awards Switzerland: Experienced, Growing and Welcoming Investment Driving FDI Hot-Spots for Oil & Gas Investment Dealing with Risks in Cross Border M&A Streamlining the Relocation Process The Power of Immigration to Boost Economic Recovery The Impact of the Alternative Investment Fund Manager’s Directive Forming & Structuring Private Funds Real Estate and REITs: An Asset Class with Sustainable Returns Insolvency, Turnaround, and Restructuring Mediation: A Real Alternative Save Time, Money & Resources: Outsource your Debts Strategy vs. Risk: Managing Corporate Tax Getting to Grips with Merger Control Implementing Pre-Emptive Forensic Strategy Global Experts Directory playHARD

October 2013 /

NEWS:

from around the world

NEWS

BOOM TIME FOR ACCOUNTANTS AS M&AS FUEL JOBS GROWTH AND BONUSES Accountancy is facing a hiring boom with 11,494 new roles projected over the course of 2013 according to specialist accountancy recruiter Marks Sattin. A third of accountants (33%) questioned said they expected their firm to increase headcount this year which would equate to 11,474 new roles assuming each of these firms hires just one new role.* EY have recently announced 2,000 new jobs and other large firms are expected to follow suit. In the five years since the start of the economic downturn, accountancy and related professions have been fairly recession proof, with net growth of 19,000 roles between 2008 and 2012. This is an increase of 8.64%, compared with a difference of -0.15% in employment numbers as a whole.

Dave Way, Managing Director of Marks Sattin said: “People will always need accountants – in the bad times, being able to balance the books is more important than ever and in the good times, a firm grasp of the numbers is vital when looking to expand. There is a growing feeling the economy has turned the corner which is great news for accountants. There are big headcount increases on the way, and opportunities for promotions and pay rises.” Corporate Finance One source of confidence particularly among corporate finance professionals is an increase in M&A activity which rose to its highest level since 2011 in the first half of this year. The £4.824bn seen in H1 is a 128% increase on the same period in 2012 and falls only slightly short of the £4.846bn seen in H1 2011.**

Consequently two thirds of corporate finance professionals expect a pay rise this year. Total remuneration rose £14,777 between 2012 and 2013 (16.3%) from £90,391 in 2012 to £105,168 in 2013. The average bonus rose from £20,918 in 2012 to £29,973 in 2013 - an increase of 43.2%. Laura Wilson - Director, Corporate Finance of Marks Sattin said: “Strong M&A and corporate finance activity are really healthy signs for the economy and for those professionals working in this area, the benefits are huge. Pay is increasing as their skills are more in demand. At the moment, this is manifesting itself in bonuses, but I’d expect to see this translate into strong hiring in the year ahead as the salary pot increases and new hires can be made.”

OPTIMISM SURGES IN FINANCIAL SERVICES SECTOR – CBI/PWC Optimism in the financial services sector surged in the three months to September, as firms reported they were the most upbeat about their overall business situation for almost 17 years. That’s according to the latest CBI/PwC Financial Services Survey. Employment also grew, although at varying rates across different sub-sectors. But business volumes fell unexpectedly, mainly in the banking sector.

majority of sub-sectors, including banking. Looking ahead, business volumes are expected to recover strongly in the next quarter and, with costs likely to fall, profitability is set to increase further. Financial services firms also expect to add more jobs in the next three months, although at a slower rate than in this quarter. Stronger demand, changing business strategies and regulatory compliance were identified as major drivers of recruitment.

The headline fall in volumes was driven by falling business with industrial and commercial companies and overseas customers. Volumes were stable with private individuals, which was disappointing given expectations of growth, while business with financial institutions was the only area to grow.

Stephen Gifford, CBI Director of Economics, said: “With optimism rising and jobs and profitability growing, this is an encouraging quarter for the financial services sector, despite a fall in business volumes in banking.

Nevertheless, profitability rose for the fourth consecutive quarter, as companies managed to offset the fall in business volumes by widening spreads. This reflected gains in a

“Firms are expecting positive momentum to carry into the next three months, alongside a strong recovery in business volumes, which will boost profits further.

/ October 2013

“Financial services companies are less worried than they were about a potential lack of demand, but dealing with regulation is increasingly weighing on plans for business expansion.” Commenting on the banking sector, Kevin Burrowes, PwC’s UK financial services leader said: “Banks’ optimism is increasingly buoyant despite seeing a slight seasonal blip in commercial and industrial volumes. Activity and profitability are expected to grow as the economy recovers, and investment in new products and infrastructure is increasing. A reduction in industrial and commercial business down to the quiet summer was expected and is not an indication of a long-term trend. Regulation continues to be the sector’s greatest source of uncertainty, particularly as UK macroeconomic concerns start to fall away. “We expect the full effect of the UK’s economic recovery to be reflected in bank performance in the coming months, and their solid profitability is supported by predicted cost reductions and increasing focus on growth.”

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NEWS:

from around the world

DELOITTE CFO SURVEY: EXPANSION IS BACK Chief Financial Officers (CFOs) of big businesses are turning decisively toward expansion and growth according to the latest Deloitte CFO Survey. The third quarter 2013 CFO Survey, which gauged the views of 116 CFOs, including FTSE 100 companies and FTSE 250 companies, shows that optimism is close to a three year high.

62% of CFOs say that their business faces a high level of financial and economic uncertainty, down from a high of 97% in Q4 2011. CFOs see just an 8% probability of a country leaving the euro, down from 37% in Q4 2011.

For the first time since 2011 expansion is a higher priority for CFOs than cutting costs and building up cash.

CFOs are expecting growth in the UK and euro area to provide a boost to their investment plans. CFOs cited growth in the UK as one of the main factors supporting investment in the coming 12 months, ahead of growth in emerging markets or in the US and Asia.

29% of CFOs said that reducing costs is a strong priority for their business, with 35% saying the same about increasing cash flow, down from a peak of 49% in Q4 2012.

82% of CFOs expect UK interest rates to rise by 2015. CFOs are sceptical that the Bank of England’s new forward guidance policy will keep interest rates on hold well into 2016.

40% of CFOs say that introducing new products and services or expanding into new markets is a strong priority while expectations for hiring, capital expenditure and discretionary spending in the coming 12 months are also at a three-year high.

Ian Stewart, chief economist at Deloitte, said: “A new mood of confidence pervades the third quarter CFO Survey. Chief Financial Officers see fewer risks in the global economy and greater opportunities for expansion.

54% of CFOs said that now is a good time to take risk on their balance sheets, up from 45% in Q2 and the highest level recorded in six years.

“The defensive strategies of cost cutting and cash accumulation that saw corporates through the global financial crisis are increasingly out of favour. The priority

now is expansion and the balance-sheet cycle has turned decisively towards growth. “CFOs have become markedly more positive on prospects for growth in the developed world. There’s greater confidence too, that the euro will hold together. “Emerging markets are a vital source of demand but CFOs are also looking to Europe for expansion. In a reversal of the situation six months ago, CFOs believe that UK growth will have a more positive effect on their investment plans in the next year than growth in emerging markets or in the US, Japan and Asia Pacific. ”A record 54% of CFOs say that now is a good time to take risk onto their balance sheet. High levels of corporate cash and favourable credit conditions suggest that major corporates have the firepower to invest. “The mood among corporates has been transformed in the last year. This quarter’s survey reveals a broad-based optimism and a new focus on growth among the UK’s largest businesses.”

DEPOSITS GROWING AND LENDING SET TO RECOVER BUT AQR LOOMS LARGE FOR EUROZONE The return to growth in the Eurozone economy is fuelling a recovery in key drivers of profitability for financial services, with companies looking to borrow again and cash flow for households and businesses improving. But the road ahead is not without obstacles according to The EY Eurozone Financial Services Forecast (EEFSF). In particular, the upcoming Asset Quality Review (AQR) and the insurance industry’s vulnerability to changes in interest rates present challenges. Marie Diron, Senior Economic Adviser to the EEFSF, says: “The Eurozone has emerged from its longest recession in at least three decades and, although GDP is expected to fall by 0.5% this year, activity will gradually pick up. As a result the growth in supply and demand for financial services is starting to return.”

Andy Baldwin, Global Head of Financial Services at EY, adds: “Over the summer we saw signs that a sustainable economic recovery in the Eurozone may finally be underway. But a number of challenges remain before we will see a return to profitability and, more importantly, stability in financial services. Not least the unintended consequences and legacy of well-intentioned regulation.” After contracting for seven consecutive quarters, business investment is expected to pick up again this year. Improving GDP growth and credit conditions are gradually feeding an increased willingness to borrow. After a contraction of 2% in 2013, Eurozone banks are forecast to lend €4.6t to business in 2014 – 3.8% more than in 2012. Growth in business lending is forecast across all the major Eurozone economies in 2014. In Italy it is forecast to grow 3.8%, in Spain it will

grow 3.2% and in France and the Netherlands it is predicted to grow 2.7%. Signs that exports are at last beginning to revive will drive particularly strong growth in lending in Germany - 5% in 2014. Consumer credit conditions eased in Q2 2013 for the first time since 2007. Consumer lending is predicted to grow by 1.7% overall in 2013, but this growth will be centred in Germany and France, where lending will increase by 3% and 2.6% respectively. In Italy, Spain and the Netherlands lending to consumers will not start to grow until 2015. Residential mortgage lending is already expanding again this year in Germany, France and the Netherlands but not until 2014 in Italy and 2015 in Spain.

HEDGE FUNDS BACK IN THE BLACK WITH 1.05% GAIN, ON UPWARD TREND Hedge funds were back in the black in September as global markets trended upwards during the month. The Eurekahedge Hedge Fund Index was up 1.05% while global stock indices outperformed as the MSCI World Index gained 3.87% in September. Key highlights for September 2013: • Total assets in the hedge fund industry stand at US$1.91 trillion, set to cross the highest level on record by end2013 • Assets in long/short equity hedge funds crossed the US$600 billion mark for the first time since 2008 • Asia ex-Japan hedge funds have outperformed the underlying markets by more than 7% September yearto-date • Greater China focused hedge funds witnessed 3 months of positive returns, up 6.22% in the third quarter of 2013 • Distressed debt investing remains the best performing strategy in 2013, up 11.25% September year-to-date

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• Japanese hedge funds remained ahead of other regions, up 21.25% September year-to-date Regional Indices Global markets remained in headline-following mode during the month, rising in the first few weeks as the risk of a US strike on Syria declined. Positive macroeconomic data from Europe and China also pushed up market indices and the decision of the US Federal Reserve to maintain the pace of asset-purchase, added further strength to the rally. Markets declined in the latter half of the month as investor focus turned to the budget impasse in the US Congress. All regions posted positive returns for the month with emerging markets focused funds posting the strongest gains. Eastern Europe & Russia investing managers were up 5.2% in September while Asia ex-Japan managers gained 2.81%. Eastern European markets posted a remarkable 5.88% during the month while Asia ex-Japan markets also posted

excellent returns. The Hang Seng Index gained 5.19% in September, the Shanghai Composite grew 3.64% while in Indian the BSE Sensex gained 4.08%. For most of the year. the Eurekahedge Asia ex-Japan Hedge Fund Index has outperformed underlying markets and is up 5.90% September year-to-date, while the MSCI Asia Pacific exJapan is down 1.14% over the same period. Japanese hedge funds also posted strong returns in September, up 2.69% as the Nikkei 225 - after four months of negative returns - witnessed a strong rally during September, fueled by global trends as well as Tokyo’s winning bid to host the 2020 Summer Olympics. The Eurekahedge Japan Hedge Fund Index is up 21.25% September year-to-date. European, Latin American and North American funds were all up 1.43% on average in September.

October 2013 /

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SECTOR TALK:

Telecommunications The telecommunications sector looks to be on the up after ending the first half of 2013 with its third consecutive period of growth. There were a total of 626 transactions worth a combined USD 109,841 million during the six months. In spite of the increase in deal values for telecommunications targets in the opening half of 2013, volume was not so promising, declining by 11 per cent from 702 in H2 2012 to 626, according to Zephyr, the M&A database published by Bureau van Dijk. Interestingly, while values have steadily climbed for the last three six monthly periods, volume has fallen since H1 2012, when they reached 786. This suggests individual valuations are increasing. Indeed, the telecommunications sectorâ&#x20AC;&#x2122;s USD 109,841 million for the first half of 2013 represents the best half year result since the opening of 2010 (723 transactions worth USD 113,639 million). The increasing values/declining volumes trend which has been evident for the last few periods under review looks set to continue in H2 2013. Although we are only now at the mid-point of the six monthly period, value results from H1 have already been surpassed. In spite of this, volume is at less than half of those recorded in the first half of the year. So far there have been 282

NUMBER AND AGGREGATE VALUE (MIL USD) OF TELECOMS DEALS GLOBALLY: 2006 - 2013 YTD (as at 30 September 2013) Number Aggregate deal DEAL HALF of deals value (mil USD) 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 TD

1,116 1,077 1,145 1,099 991 843 764 745 723 711 671 624 786 702 626 282

186,258 138,893 168,976 80,231 185,467 59,633 62,153 77,502 113,639 75,135 82,832 48,624 55,936 87,092 109,841 167,460

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deals with an aggregate value of USD 167,460 million. If considerations continue to increase at this trajectory, H2 2013 could have the highest total value for a six monthly period of the last eight years, even surpassing H1 2006 (USD 186,258 million across 1,116 deals). Given the rapid growth in deal values, it is unsurprising that the largest transaction of 2013 to date was announced in early September and came some way ahead of its nearest rivals. New York-based telecoms operator Verizon agreed to purchase the remaining 45 per cent share of Verizon Wireless, the US mobile joint venture it owns with UK peer Vodafone. The company will pay around USD 130,040 million for the business, although this will take the form of cash, stock, notes and an interest in Vodafone Omnitel. The deal, which remains subject to regulatory and shareholder approvals, accounts for 78 per cent of the total value recorded in H2 2013 to date and is also notable for being the fourth-highest valued completed or announced deal ever recorded by Zephyr.

Consequently, North America has been the main target of investment in 2013 to date. Thus far the region has secured USD 195,026 million, and again the majority of this is attributable to the Verizon Wireless deal. This has resulted in the region bringing in close to four times as much investment as its nearest rival (Western Europe with USD 53,070 million). The effect of the Verizon Wireless transaction is further highlighted by the fact that North America was only placed fourth in terms of volume with 117 deals recorded, behind Western Europe, the Far East and Central Asia and Eastern Europe on 274, 269 and 121, respectively. To conclude, it looks like investors are beginning to dig deep and considerations are increasing as a result. This has made up for declining volumes, but is largely reliant on a single large deal. Only time will tell if blockbuster transactions will be able to continue propping up results and possibly masking a slowdown by volume over the coming years.

NUMBER AND AGGREGATE VALUE (MIL USD) OF TELECOMS DEALS GLOBALLY BY DEAL TYPE: 2006-2013 TO DATE (as at 30 September 2013) Deal type

Number of deals

Aggregate deal value (mil USD)

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

6,001 6,462 296 28 58 77 2

1,053,064 491,330 122,463 38,793 958 2 0

NUMBER AND AGGREGATE VALUE (MIL USD) OF TELECOMS DEALS BY SECTOR: 2006-2013 YTD (as at 30 September 2013) Zephus classification (target)

Number of deals Aggregate deal value (mil USD)

Communications Computer, IT and Internet services Industrial, Electric & Electronic Machinery Retailing Personal, Leisure & Business Services Wholesaling Banking, Insurance & Financial Services Construction Utilities Transport, Freight, Storage & Travel Services Printing & Publishing Property Services

8,903 4,054 892 446 1,146 2,043 338 271 191 42 72 92

1,592,585 376,056 138,050 90,383 82,191 51,073 49,116 15,825 10,864 7,886 4,838 3,660

October 2013 /

ON THE COVER:

Power Grab - AMP Capital’s acquisition of Powerco stake

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Michael Cummings, Investment Director within AMP Capital’s Infrastructure business, discusses the firm’s recent experience with its successful bid for a strategic stake in Powerco New Zealand, owner of the country’s second largest electricity and gas distribution network. As a prior Director on the Powerco Board, and with over 23 years of global experience in the infrastructure sector, Michael was in a unique position to guide the bid process, but he argues that the critical success factors behind the bid outcome and the insights drawn through the process stretched far deeper. ------------------------------------------------------------------------

AMP Capital AMP Capital has a heritage that spans over 160 years with the AMP group, a leading independent wealth management company in Australia and New Zealand. Through its network of international offices, AMP Capital has developed a platform for identifying and sourcing some of the best investment opportunities within the infrastructure space. “We apply our local knowledge to finding the opportunities, conducting detailed assessments on the asset and then if the opportunity stacks up and we identify a competitive angle, proceeding to arrange a consortium of investors; via our pooled fund vehicles and customised accounts,” said Mr Cummings. “Like many of our clients, we are longterm investors in infrastructure and remain committed to investing in core infrastructure assets, leveraging our internal deep sector knowledge, and realising investments at the right time in their life cycle. To do this successfully requires a long-term mindset that is balanced against ongoing scrutiny of the asset’s management and strategic direction - something that really comes with time in the market.” AMP Capital began investing and managing infrastructure assets in the late 1980s, when it participated in the building of the Sydney Harbour Tunnel. Since then, the firm has

/ October 2013

made over 100 infrastructure equity and debt investments throughout Europe, Asia, North America, Australia and New Zealand. AMP Capital has one of the largest infrastructure investment teams in the world, with over 60 infrastructure investment professionals with technical expertise in areas such as project finance, due diligence, portfolio construction and asset management, accompanied by sector and industry knowledge across multiple regions. Although infrastructure assets have some common characteristics, Mr Cummings explained that they span a very broad range of industries and sectors which requires specific expertise. He noted that the idiosyncrasies of operating an airport, for example, are very different to those associated with operating an electricity transmission and distribution business. “It is therefore crucial that an infrastructure manager employs industry experts with the experience and specialist knowledge of relevant industries,” he observed. “In addition, the AMP Capital team is supported by a strong group of structuring and operating specialists with legal, tax, debt advisory, fund accounting and investor relations expertise.” For Mr Cummings, one of AMP Capital’s standout factors is the company’s approach to forming true partnerships with its clients and engaging them throughout each stage of the investment lifecycle. “In addition to sourcing assets and developing the investment thesis, we advise on structuring, and we move early to form focused consortia,” he continued. “Postacquisition, we typically take a very hands-on approach to directing and managing the assets, usually with seats on the Board and at least negative control. This gives us the required degree of influence our clients seek in making long-term strategic investments.”

The Powerco acquisition In July 2013, AMP Capital entered into an agreement to acquire 42% of New Zealand’s second largest electricity and gas distribution company, Powerco NZ Holdings Limited, from Brookfield Infrastructure Partners for NZ$525 million, representing an enterprise value of approximately NZ$1 billion. Discussing the strategic reasoning behind the acquisition, Mr Cummings stated that AMP Capital is an experienced asset manager of critical infrastructure assets and has a long-term strategy to manage and improve the assets under its management. “We see significant opportunity for further growth in the business, with Powerco supplying key population growth regions in New Zealand,” he commented. “The utility is New Zealand’s second largest in the electricity and gas distribution sector, servicing more than 426,000 connections including 40% of the country’s total gas connections. And with nearly 30 small electricity lines businesses servicing around 2 million consumers, we see real opportunities for further industry consolidation – with Powerco at the forefront. “The strength of the Powerco business and the New Zealand economy makes this an attractive investment for our managed funds and clients. This transaction offers them exposure to a geographically diversified quality asset in the core regulated utility sector.” Mr Cummings stated that AMP Capital worked to a “pretty tight timeframe” for the deal, with the process starting in March and closing in June. That said, he noted that there was a significant amount of preparatory work that took place in the lead-up, as the company knew the market well and began to anticipate a sale during late 2012. “There are many fundamental aspects of the business that we saw as attractive and a strong fit with what our clients are looking for from infrastructure investments, so we had strong motivations from the start,” he explained.

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ON THE COVER:

Power Grab - AMP Capital’s acquisition of Powerco stake “We felt it was important to have local advisors, so we moved early on to sign up the strongest team of technical, regulatory and legal specialists on an exclusive basis which was another important factor. We also assembled a strong deal team within our business to ensure we had the right minds ploughing through due diligence from different angles. So once the official process was launched we were able to hit the ground running.”

Mount Manganui, Bay of Plenty, NZ

Indicative bids were submitted in April, detailed due diligence started in May and ran through to mid-June, with final bids submitted at the end of June. The deal was closed shortly thereafter, and AMP Capital expects to receive regulatory approval from the New Zealand Overseas Investment Office before the end of the year. “Our long term experience with infrastructure and property assets in New Zealand and AMP Capital’s strong presence in this market ensured that transaction risks would be minimised from the perspective of the vendor, when compared with other international competitors,” added Mr Cummings. Challenges in the deal Media reports indicated that there were a number of strong international competitors interested in the Powerco stake, which was something AMP Capital expected for an asset of this nature. As with most competitive tenders, the company came up against interested parties from various jurisdictions and with differing motivations. AMP Capital was primarily focussed on forming an in-depth view of the business (both in terms of risk and upside potential) and submitted what it felt was a fair price. “Price is obviously a motivating factor for any seller, but there are other aspects of our bid that came into play,” said Mr Cummings. “AMP Capital is very much a local investor with a long track record of investing in New Zealand. We’re majority owned by a locally-listed public company with strong credentials in both Australia and New Zealand. In the end, we were one of the short-listed bidders and to our knowledge the only entity with a substantial local presence. We also knew that intricate knowledge of the business operations and the vendor would be critical to success in the bidding process. “Having people like Richard Krogh, the previous CEO of the company and a seasoned leader in the sector, to complement my experience as a former Powerco Board member placed our deal team at a distinct advantage. So the typical challenges with any competitive process were somewhat offset by the unique insights embedded in our proposal for the acquisition.” Factors for success Mr Cummings stated that AMP Capital’s success in securing this opportunity came down to a team effort. He believes that many aspects, including AMP Capital’s size, depth of experience in major infrastructure transactions and intimate knowledge of the sector were all critical success factors in securing this landmark asset. AMP Capital’s deal origination team played a pivotal role through each stage of the bid process. Scott Markwick and Jiren Zhou are two seasoned professionals who have been through a significant number of origination processes. Mr Cummings also highlighted the valuable contributions made by AMP Capital’s Tax, Legal and Debt Advisory teams, given their experience in both the infrastructure and property sectors. “Powerco runs a well-diversified balance sheet, so we needed to have a well-rounded view of the capital structure and the inherent opportunities or challenges this may present,” he added. AMP Capital moved early to secure the exclusive services of local New Zealand technical advisers (SKM), regulatory advisers (Sapare) and legal advisers (Minter Ellison), ensuring that the company was well planned and prepared when the process formally commenced in late March 2013.

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AMP Capital also engaged the former CEO of Powerco, Richard Krogh, who provided valuable insights into the business and its growth opportunities within what is a highly fragmented New Zealand energy sector. “The various comprehensive iterations we went through, which are quite typical for a high profile asset such as this, underscores the importance of having in-house expertise and the ability to assess deals from multiple perspectives,” observed Mr Cummings. “Due to AMP Capital’s depth of knowledge and experience in the sector, we decided not to appoint external financial advisers for this deal. Indeed, this feature of our bid enabled us to focus clearly and move quickly, which also gave our co-invested clients a high degree of confidence. So this deal really came together through the synergies inherent in our business model and the unique insights we were able to draw upon.” Looking ahead From a shareholder’s perspective, AMP Capital is “very excited by the acquisition”. Mr Cummings believes that being one of the two major shareholders places the company in a strong position to act on the opportunities it sees in the market with the right amount of influence in directing the company’s growth. “There is a very capable management team in place, and we’ll be working closely with them to bring forth our insights and experience with investing in core utilities, marrying that up with the operational expertise of this leadership team,” he added. AMP Capital’s immediate focus is to bed-down the acquisition and work closely with the OIO to see through the regulatory approval process. From there, the company will be closely monitoring delivery metrics and the degree of alignment between its investment case and the actual operating performance. “That’s what you seek to validate in the early stages of an investment,” explained Mr Cummings. “In business, no one likes surprises, and this is especially true for infrastructure projects. So, for me, validating the operating performance with our thesis and proactively collaborating with management teams and our clients forms a critical factor in determining success. Considering the extensive work undertaken prior to, and during, the bid process I’m confident that this will play out in accordance with our expectations.”

Mr Cummings highlighted the many transient factors that come into play with infrastructure assets, in spite of their extensive life span. He noted that investment capital is a transient and cyclical commodity, which heavily influences what is built, where it is built and how it generates cash. Regulatory regimes also display a degree of cyclicality and are influenced by politics and governance structures. “In looking at Powerco, we took a view on the improving stability of New Zealand’s network regulatory regime, which at present appears to be heading in a more certain direction than in Australia,” he remarked. “These factors play into the strategic decisions that need to be in relation to how we invest in the network and look at synergies that we can bring to the business, either organically or through acquisitions.” Further acquisitions AMP Capital will definitely be looking for further acquisitions in the near term. The company’s clients have a strong appetite for core, operational infrastructure assets such as Powerco, and consequently it is actively looking for opportunities across a range of sectors – not just in Australia and New Zealand, but around the globe. For example, AMP Capital recently acquired a 49% stake in Newcastle Airport in the UK. The company also recently made a significant investment on behalf of a client in a portfolio of operational wind assets in the United States. Dylan Foo, Senior Vice President, Infrastructure, based in AMP Capital’s New York office, noted that AMP Capital is actively sourcing and investing in opportunities in North America across a number of sectors including energy and telecommunications, reflecting strong client demand for yield and stable, long term cash flows.

Company: AMP Capital Investors Name: Michael Cummings Title: Investment Director

October 2013 /

ON THE COVER:

Industrials Deal of the Month - Radius Systems acquisition of Aeon Group Holdings

Radius Systems acquisition of Aeon Group Holdings

Industrials Deal of the Month

In August 2013, Radius Systems acquired 100% of the issued share capital of Aeon Group Holdings Ltd. Aeon, one of the leading manufacturers and suppliers of valves to the fire protection, gas, water and oil exploration and transportation sectors, operates from three facilities in the United Arab Emirates (Dubai), Poland and the UK. The acquisition reinforces Radius Systems’ strategy to complement its core pipeline systems offering. The technology that comes with the extensive range of valves supplied by Aeon will help Radius supply a complete package of pipeline systems solutions and extend their customer base. “After the acquisition of the Subterra brand in June, Aeon is our second acquisition following the purchase of Radius Systems by POLYPLASTIC Group in February this year,” said Mr Taylor. “Our new owners have had no hesitation in supporting this transaction which keeps us on course with our agreed strategy to complement our core pipe and fittings business with closely associated products, services and technologies and in doing so enhancing our value added to our customer base. We are extremely pleased to add the Aeon brand and technologies to our portfolio and look forward to welcoming a skilled and dedicated workforce into the Radius/POLYPLASTIC family.”

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Acquisition International speaks to Radius Systems to learn more about the company and its acquisition of Aeon Group Holdings. ------------------------------------------------------------------------

Radius Systems is one of the UK leading providers of pipe and fitting solutions spanning the entire pipe lifecycle. The core element of the company’s business has been the development and manufacture of plastic pipes and fittings for the gas, water and wastewater sectors, and producing solutions for the telecoms market. Radius System’s products are lightweight and simple to install, optimised for new and replacement infrastructure, and provide confidence of a long system’s lifetime for asset owners. Working closely with its customers, the company is committed to finding solutions for today and tomorrow’s pipeline challenges across each of its core business areas. Safety and quality are the company’s top priority, whether it is manufacture, delivery, installation or recycling of its products. POLYPLASTIC Group’s acquisition of Radius Systems in February 2013 brought the company new levels of stability and financial security. POLYPLASTIC Group was founded in 1991 and is today the leading European supplier of thermoplastic compounds and polyethylene piping solutions for infrastructure markets, with modern production plants in Russia, Ukraine, Belarus and Kazakhstan. A strong emphasis on investment in technology, underpinned by a focus on quality, research and development, has resulted in a product portfolio spanning gas and water utilities, sewer systems and district heating. With the Radius acquisition, the new group now forms the fourth largest pipe and fittings producer in Europe.

/ October 2013

Andy Taylor, Radius Systems’ CEO, commented: “With the security that comes with being part of a substantial international group rather than a standalone business, we are looking at how we can bring benefits to our customers with the manufacturing technologies, product innovation and product portfolio the new group offers, in conjunction with our own local expertise. We’re listening very carefully to what our customers are asking us for and we are striving for maximum efficiency and cost-effectiveness. “Radius has always been at the forefront of innovation in the utility and construction industry. A lot of consolidation has gone on in the industry, and where it hasn’t, some smaller operators are struggling to provide the capacity, security of supply, short lead times and quality of manufacturing and product support that customers want and expect. This company offers all of these benefits, and it will get even better as work is being carried out on being leaner and more cost-efficient.” Subterra was Radius Systems’ first acquisition following the purchase of the business by POLYPLASTIC Group. This acquisition has added a portfolio of products and services to the Radius Group that include production of epoxy and polyurethane resins, spray coating of metallic pipes, together with the polyethylene pipe renovation technologies known commonly as Subline and Rolldown. Derek Muckle, Director of RadiusPLUS, commented: “Subterra is a company with a strong reputation for innovation particularly in the UK water utility markets. This acquisition has brought a range of technologies which are a good fit to our business and allow us to offer a range of attractive services to our utility and contractor partners both here in the UK and in the emerging Russian and CIS markets.”

Derek Watson, AEON Group CEO, added: “I am delighted that Aeon is becoming part of a much larger group with wider geographical market access and a broader portfolio of products. As a result, the Aeon brand will not only become a core element in a comprehensive ‘value added’ offering to a much wider and more diverse target market but will seriously enhance its value to existing customers. This is a great opportunity for the Aeon team to make a tremendous contribution to the future success of the new group.” Radius Systems was advised by the Moscow office of CMS Cameron McKenna, with support from their UK, Poland and UAE offices. The CMS team was led by David Cranfield, Partner, with support from Gregor Kennedy. “This is the second transaction on which CMS has advised POLYPLASTIC Group,” said Mr Cranfield. “We are pleased to see that Radius Group, which POLYPLASTIC acquired in February 2013, is already transforming into an international operation through its own strategic acquisitions and CMS is delighted to support that process.”

Company: Radius Systems Ltd Email: sales@radius-systems.com Web: www.radius-systems.com Address: Radius House, Berristow Lane, South Normanton, Alfreton, Derbyshire, DE55 2JJ, UK Telephone: +44 (0) 1773 811112

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DEALMAKER OF THE MONTH:

Fastprint HK acquires eXception’s PCB Solutions business

DEALMAKER OF THE MONTH

THE DEALMAKER: Mr NL LAM, Director THE FIRM: D&G Accounting Consultancy Company Limited (D&G) THE CLIENT: Fastprint Hongkong Co., Limited (Fastprint HK) THE DEAL: Fastprint HK acquires eXception’s PCB Solutions business

Based on our past experiences in the similar cases, we made suggestions to help the client mitigate these risks to an acceptable level, and gave the client more comforts to complete the deal.

THE DETAILS: In January 2013, eXception accepted an offer from FastPrint HK to acquire 100% of the PCB Solutions division of eXception Group Ltd. located in Tewkesbury and Calne, United Kingdom and Penang, Malaysia. PCB Solutions will continue to trade as a UKregistered company with two legal entities, namely eXception PCB Ltd. (01338479) and eXception VAR Ltd. (01583316). eXception’s offshore supply chain structure will be strengthened by the addition of FastPrint’s new facility to support high-mix, lowvolume printed circuit boards (PCB) in Jiangsu Province, China. D&G Accounting Consultancy Company Limited (D&G) is a Hong Kong-based private company, which provides a wide range of services including merger and acquisition services, accounting and book-keeping services, company formation services, company secretarial services, internal control advisory services and tax advisory services mainly in Hong Kong and the mainland China. In this deal, the firm represented Fastprint HK, a Hong Kong-based private company and a wholly-owned subsidiary of Shenzhen Fastprint Circuit Tech Co., Ltd (Fastprint SZ). Fastprint SZ is a PRC-listed PCB manufacturer with a market capitalisation of RMB5.3 billion. Fastprint SZ offers original PCB design, PCB fabrication and PCB assembly services to customers worldwide. D&G has had a long-standing relationship with this client since 2010, when Fastprint HK acquired

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associated companies in Israel, Germany and Singapore. D&G acted as a buy side adviser for these acquisitions. D&G assisted the client in financial due diligence on the acquisition and an internal control exercise post transaction. The deal took approximately four months to complete. “During the financial due diligence exercise, we found certain risk areas which affect the price, integration post transaction, financial reporting, etc,” said Mr NL LAM. “Based on our past experiences in the similar cases, we made suggestions to help the client mitigate these risks to an acceptable level, and gave the client more comforts to complete the deal.”

Company: D&G Accounting Consultancy Company Limited Name: Mr NL LAM Email: info@dgacct.com.hk Web: www.dgacct.com.hk Address: Flat H9, 12/F, Kwai Shing Industrial Building (Phase II), Nos 42 - 46 Tai Lin Pai Road, Kwai Chung, Hong Kong Telephone: +852 6618 6345

October 2013 /

SECTOR SPOTLIGHT:

Opportunity Abounds in Secondaries Market for Private Equity in Orthopaedic Devices

Opportunity Abounds in Secondaries Market for Private Equity in Orthopaedic Devices 500 alone during the quarter ended 6/30/2013, according to Thomson Reuters. The secondaries market allows investors to take bitesize pieces of the more promising VC-backed entities and allowed the Limited Partners (LPs) to spread risk or consolidate portfolios. When LPs aren’t achieving sufficient liquidity from distributions, the secondaries market is now a good option for specialized funds. Sellers of private equity investments may sell not only the investments in the fund but also their remaining unfunded commitments to the funds. There are now many entities formed to purchase PE equity interests in the secondary market with upwards of $30 billion of capital available for such transactions. Also, major investment banking firms such as JP Morgan Chase, Goldman Sachs and Credit Suisse, have active secondary investment programs. This transition away from generalized private investing in VC and PE funds to individual companies with proven products or technologies staked by fatigued investors, is far from being an ‘alternative’ investment. According to market data firm, Preqin, secondary buyouts now account for 30% of global deal flow. Preqin reports an upsurge in secondary buyouts worth an in the region of $50-60 bn annually during the past three years.

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Anthony G. Viscogliosi is the Founder & Principal of Viscogliosi Bros. LLC, New York. ------------------------------------------------------------------------

Although stocks in the global $40 billion market for orthopaedic devices have recovered along with most of those in other market sectors, future growth in life sciences is under threat due to a widespread retreat from traditional VC financing that had been its life blood. The principal cause of this retreat is the downward pressure on US regulatory pricing of devices and adverse changes in insurer reimbursement policies, factors that have stretched private investment horizons and fuelled sharp increases in current and future capital needs creating a ‘Saharan Desert’ for most participants. That said, this is creating enormous growth and earnings opportunities for investors in the secondaries market for VC-backed entities. The good news is that this sea change is creating an unprecedented access by institutional investors to high quality life science businesses. Superior business models in the hands of

/ October 2013

talented management can now be acquired at a sharp discount to their intrinsic worth. The instrument of choice to seize this opportunity will increasingly be through the secondaries marketplace. Established VCs, pension funds and entrepreneurial investors are seeking out or working closely with individuals offering the deepest knowledge and experience in managing life science business. This is essential to mitigate the greater risks posed by lengthening time horizons. Advisory firms have also sprung up to undertake independent analysis of secondary buy-side and sell-side providers and transactions. Since 1980, the PE/VC sector raised at least $35 billion spread among 2,100 medical device companies of which about 30% were focused on orthopaedics – such as hip, knee and spine treatment. The rate of new company formation and follow-on financings is now limping along at an average of just $8 mm per deal – of which there were more than

Bringing businesses to next level is one of the things we look at with secondaries. During the past couple of years, Viscogliosi Bros. LLC engineered substantial buyouts of investors in two private orthopaedic device manufacturers. In one case the investor wished to dispose of its entire portfolio due to a change in corporate policy. In the other case, the investor had changed its legal status to a point where it could no longer invest its own funds in private equities. While these were not exactly fire sale transactions, the acquisitions were made at deep discounts. As noted at the beginning of this article, the blooming of the secondaries market is a huge opportunity or a grave risk depending upon your point of view.

Company: Viscogliosi Bros. LLC Name: Anthony G. Viscogliosi Email: aviscogliosi@vbllc.com Web: www.vbllc.com Address: 505 Park Avenue, 14th floor, New York NY 10022 Telephone: +1 (212) 583-9700

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SECTOR SPOTLIGHT: Ship Registration

Ship Registration ------------------------------------------------------------------------

J. Michael Cavanaugh, Partner at Holland & Knight LLP, gives Acquisition International some insight into ship registration in three flag states. ------------------------------------------------------------------------

Liberia Mr Cavanaugh explained that Liberia is an open registry, permitting nonresident Liberian business entities and foreign entities (filed as Liberian Foreign Maritime Entities) to register commercial ships built anywhere in the world and manned by non-Liberian seafarers. The fees for documentation of vessels are contained in the Liberian Maritime Law, available at www.liscr.com. Annual fees are based on net registered tons. A tonnage calculator is also available on the above website. The principal documents that are required to complete the ship registration process are: • Application for Official Number • Application for Radio Station License • Builder’s Certificate or Bill of Sale • Evidence of P&I cover • IACS Classification Certificates; • Application for Minimum Safe Manning • Corporate Authorisation • Designation of ISM/ISPS person and company In terms of manning guidelines, Liberian law requires that seafarers be licensed by the Republic of Liberia. There is no Liberian requirement that a ship’s master, chief engineer, radio officer, or other seafarers be Liberian citizens. Owners of Liberian flag ships must be either organised as Liberian business entities, example corporations, LLCs, Limited Partnerships, or, in the case of a non-Liberian entity filed in Liberia, as a Foreign Maritime Entity. “The Republic of Liberia maintains one of the strictest flag administrations,” said Mr Cavanaugh. “Shipowners are required to comply with IMO international conventions, including: the International Convention for the Prevention of Pollution from Ships (MARPOL); the International Convention for the Safety of Life at Sea (SOLAS); the International Ship and Port Facility Security Code (ISPS); the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW) and the IMO Maritime Labour Convention (MLC). “Severe economic constraints necessitate that ship owners use a responsive flag state that assists in keeping their ships moving,” he continued. “Liberia is a ‘white listed’ flag with the USCG, Paris MOU and Tokyo MOU. Liberia is recognised for its shipowners and ships compliance with the highest international standards. This has led to an increased use of the Liberian flag.” Marshall Islands The MI is an open registry permitting non-resident MI business entities and foreign entities (filed as MI Foreign Maritime Entities) to register commercial ships built anywhere in the world and manned by non-MI seafarers. Mr Cavanaugh explained that the fees for documentation of vessels are contained in the MI Maritime Law available at www.register-iri.com. Annual fees are based on net

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We look for increased participation in US-flag coastwise shipping by both US and non-US financial institutions and funds, to the extent allowed by law. During the coming year, the US Government will seek better methods to verify US citizenship for registry purposes for public companies. registered tons. A tonnage calculator is contained on the above website.

Puerto Rico, and for most work in the US offshore oil industry.”

The principal documents that are required to complete the process are: • Application for Official Number • Application for Radio Station License • Builder’s Certificate or Bill of Sale • Evidence of P&I cover • IACS Classification Certificates • Application for Minimum Safe Manning • Corporate authorisation • Designation of ISM/ISPS person and company.

US law (46 U.S. Code section 8103) provides that only US citizens may serve as master, chief engineer, radio officer, or officer in charge or a deck watch or engineering watch for a US documented vessel. Unlicensed seaman must be either US citizens, permanent residents, or a foreign national enrolled in the United States Merchant Marine Academy.

Mr Berman explained that MI law requires that seafarers be licensed by the Republic of the MI. As in Liberia, there is no MI requirement that a ship’s master, chief engineer, radio officer or other seafarers be MI citizens. Owners of MI flag ships must be either organised as MI business entities, example corporations, LLCs, Limited Partnerships, or, in the cases of non-MI-entities filed in MI, as a Foreign Maritime Entity. “The Republic of MI also maintains one of the strictest flag administrations,” said Mr Cavanaugh. “The Representatives of the MI flag actively participate at all IMO General Sessions, as well as Committee Meetings. Shipowners are required to comply with IMO international conventions, including: the International Convention for the Prevention of Pollution from Ships (MARPOL); the International Convention for the Safety of Life at Sea (SOLAS); the International Ship and Port Facility Security Code (ISPS); the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW).” Looking ahead, Mr Cavanaugh stated that “the use of obscure, black listed and poor performing flag states is no longer accepted or tolerated”. He added: “The MI Registry will continue to be the flag of choice for US publicly traded shipping companies.” US Mr Cavanaugh explained that US Registry is required to participate in US cargo preference programs for agricultural commodities, goods financed by US export credits and military cargoes. He noted that only US-flag vessels may participate in incentive programs such as US Maritime Security Program, certain Title XI ship financing guarantees, and Capital Construction Fund tax deferral financing as well as US coastwise operation. “US-flag registry brings an owner under protection from US military worldwide,” he commented. “Coastwise registration is required to participate in US internal domestic trade and offshore trade with Hawaii, Alaska,

“US permanent residents cannot make up more than 25% of the unlicensed seamen,” continued Mr Cavanaugh. “There are special requirements, exceptions and waivers for this general requirement for offshore supply and fishing vessels, mobile offshore drilling units, large passenger vessels, etc.” Minimum manning requirements for individual vessels are set out in the vessel’s certificate of inspection (COI) issued by the Coast Guard. Vessels must be under the “direction and control” of an individual holding a Coast Guard license. Discussing the impact of problems in the wider economy, Mr Cavanaugh noted that there is a shortage of domestic trade tonnage, especially in key trades such as crude oil and refined product carriers. “Shortages of coastwise tankers led the US Government to grant short-term waivers for foreign tankers during the aftermath of Hurricane Sandy in the Northeast US in 2012,” he observed. “There is great interest in building more coastwise trade vessels.” Looking ahead, Mr Cavanaugh concluded: “We look for increased participation in US-flag coastwise shipping by both US and non-US financial institutions and funds, to the extent allowed by law. During the coming year, the US Government will seek better methods to verify US citizenship for registry purposes for public companies.”

Company: Holland & Knight LLP Name: J. Michael Cavanaugh Email: michael.cavanaugh@hklaw.com Web: www.hklaw.com Address: 31 West 52nd Street, New York, NY 10019 Telephone: +1 (202) 997-4970

October 2013 /

SECTOR SPOTLIGHT:

The Impact of White-Collar Crime in Today’s Market

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Andrew Mitchell is Head of Chambers at 33 Chancery Lane, the Chambers of Andrew Mitchell QC. -----------------------------------------------------------------------Mr Mitchell specialises in advising people and entities concerned with “commercial wrongdoing”, and is also considered pre-eminent in the field of the recovery of the proceeds of wrongdoing, advising alleged wrongdoers, governments and third parties. His practice engages him internationally and domestically.

Mr Mitchell lectures and has acted as a consultant for many training programmes worldwide in the areas of bribery and corruption and the proceeds of wrongdoing. He has trained and mentored the judiciary on these issues in England, the Caribbean, Australasia and Africa. 33 Chancery Lane has a history of Business Crime representation, including Claimants and Respondents, Defence and Prosecution, individuals and companies – advising and litigating on issues relating to bribery and corruption, fraud and money laundering. Members of Chambers currently represent prosecuting agencies in their pursuit of assets within the UK as well as representing clients worldwide seeking to secure assets. In addition, Mr Mitchell has recently been developing a partnership of international lawyers and investigators that specialise in sovereign stolen asset recovery. “We intend to assist states with a combination of technical assistance and capacity building to train the local officers and aid them in repatriating sovereign wealth that has been stolen through bribery and corruption by public officials,” he explained. Mr Mitchell has witnessed an increase in white collar crime in the majority of jurisdictions since the economic downturn. “It is the classic scenario of everyone being friends when things are going well – once they are not, business becomes

/ October 2013

increasingly competitive and with that comes the temptation to go outside the law to get ahead,” he commented. Mr Mitchell noted that the increasing sophistication of technology has enabled wrongdoers to more easily disperse ill-gotten gains quickly and all over the world, making it extremely difficult to trace. In addition, he highlighted the increase in offshore banking, which means that the key challenge in recovering assets is being able to break down domestic structures which are being used to hide non-domestic property in what is potentially a number of offshore jurisdictions. In order to clamp down on financial criminals, Mr Mitchell advises authorities to be vigilant in their investigations, ensure that every tip-off and suspicious activity report is followed up swiftly, and continue through to enforcement. For companies to protect themselves against financial crime, he recommends the implementation of robust internal mechanisms and systems to regulate compliance, due diligence and KYC, and ensuring that every staff member is trained properly in these systems. “In this fast evolving legal market, Chambers is able to assist prospective clients on a direct access basis in protecting them against fraud, bribery and corruption,” he explained. “Chambers also provides ad hoc advice on specific compliance issues as well as an audit of a business’ compliance procedures followed by a tailored programme of improvements and training with on-going periodical reviews to ensure that changes in regulations are incorporated.” Recent cases that highlight the Chambers’ expertise include: •

Prosecuting in the UK a company for bribery and corruption in South East Asia including making payments to public officials to secure contracts or to make adverse findings against competitor businesses.

•

Representing the former Chairman and CEO of a major Caribbean financial institution further to the collapse of the multi-billion dollar Group. Evidence has been given that hundreds of millions of dollars were handed out in loans to former company executives.

•

Representing an oil company in an action against a bank that were the registrars of the shares and allowed 2 cheques to be specially cleared following a hostile takeover when signed by the ousted directors.

Commenting on the “Office of the Whistleblower” scheme in the US, Mr Mitchell stated that the scheme, handled sensitively, would work in England. “I am not aware of any formal scheme as per the US but at least we know now that people who do blow whistles will, or at least should, no longer be treated as Pariahs,” he added. In conclusion, Mr Mitchell offered a prediction for white collar crime in 2013/14: “The clamping down on those who make quick bucks without regard to compliance and regulation will continue and the increasing use of computer systems by Governments will make detection easier.”

33 CHANCERY LANE

Company: Chambers of Andrew Mitchell QC Name: Andrew Mitchell QC Email: arm@33cllaw.com Web: www.33cllaw.com Address: 33 Chancery Lane, London WC2A 1EN Telephone: +44 (0) 20 7405 3232

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SECTOR SPOTLIGHT:

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

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

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By Chris Velis, CEO, MedCap Advisors

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The worlds of biologics, regenerative medicine, and medical devices are being challenged by a maelstrom of regulatory and economic forces. The recently passed medical device tax in the Affordable Care Act and frustrations around the FDA clearance process are major factors contributing to an industry that is trying to define itself. These headwinds may be strong, but they should not be viewed as a death knell. They are instead drivers for adjustments, as they provide a buyers’ market for large and mid-sized companies seeking to gain quick entry into the medical technology space or expand an existing medical device pipeline. The environment is not only conducive to mergers, it also opens the door for more joint ventures and strategic alliances. Such agreements between large companies are ideal when each partner brings unique or specialized elements to the table, as opposed to one having the dominant share of value. Partnerships are preferable to merger or acquisitions when they allow companies to stay committed to a certain set of criteria alongside a target partner that will satisfy their interests. That word “interest” has a specific connotation when it comes to strategic alliance opportunities: interests typically refer to the business goals that are motivating a seller. The interests in play provide a strategic pathway for an alliance, and the alignment of interests between the two entities – not the overlap – makes for a successful partnership. The most straightforward case for a strategic alliance is built around the development and distribution of a product when the developing company is limited by size,

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capital, or funding. Finding a partner that can execute on the distribution side can lead to a highly profitable arrangement, without the change in organizational control that accompanies a traditional merger. For example, MTF (Musculoskeletal Transplant Foundation)’s alliance with CONMED provided an ideal outlet for an organization with a unique niche in the industry. MTF is the nation’s leading tissue bank and a non-profit organization. Its focus is on processing human tissue for transplantation and on research around improving the science for patients worldwide. However, MTF became stretched when it added distribution of the tissue to its primary mission; while a profitable venture, it was not a core competence of the organization. The stakeholders at MTF were committed to the organization and had no desire to trade control of the entity for a hefty buyout. Rather, they were looking for a solution that allowed them to remain focused on the mission while still getting the product to market. A strategic alliance with a partner with a distribution channel was MTF’s ideal scenario. By retaining control of the organization, MTF also kept decision making power over the kinds of partners – and the number of partners – that could assist with distribution. Over time, the non-profit hooked up with companies like Johnson & Johnson as a distributor of its spinal tissues, Orothofix as a distributor of stem cell technology, and finally CONMED Linvatec as a distributor of soft tissues for sports medicine. This network of strategic alliances created more value for the stakeholders while allowing the company to refocus energy on its primary goal of advancing the science. On the other side of the coin, when alliances or joint ventures are formed between companies that deliver

the same process but have differing philosophies, the partnership will typically fail. Companies also struggle when partnerships are not clearly defined. Even if interests seem aligned, divisions within each entity can become confused and take the alliance off its strategic course. Roles and responsibilities must be clearly drawn up and communicated across each organization. When corners are cut in this stage, partnerships frequently falter. The med tech industry is in an ideal climate for creative alliances that play off the strengths of each participant. When interests are aligned, successful companies can advance their strategic value and set the stage for future growth.

The stakeholders at MTF were committed to the organization and had no desire to trade control of the entity for a hefty buyout.

Company: MedCap Advisors Name: Chris Velis Email: info@medcapadvisors.com Web: www.medcapadvisors.com Address: 97 Winthrop Street, Harvard Square, Cambridge, MA 02138, USA Telephone: +1 617-945-0299

October 2013 /

SECTOR SPOTLIGHT:

What would be the consequences of banning derivatives from the asset management industry? A ‘finance-fiction’ study

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What would be the consequences of banning derivatives from the asset management industry? In a financefiction study called “The Unintended Consequences of Banning Derivatives in Asset Management”, Alessandro Beber, Finance professor at Cass Business School and Christophe Pérignon, Finance Professor at HEC Paris, conduct a what-if analysis of the potential consequences for asset managers and their customers if such a ban were to be enforced. The study describes what an economy without derivatives would look like, with a special emphasis on the asset management industry as it makes use of derivatives instruments for hedging and investment purposes. ------------------------------------------------------------------------

Why banning derivatives? The idea that derivatives markets have a destabilizing effect on the financial system has been pointed out for years. The arguments of the derivatives’ opponents are based on the belief that derivatives are excessively complex, opaque, unregulated, and used by investors who lack financial competence. Derivatives are also deemed to lead to excess volatility, bubbles, and extreme losses, which in certain cases can be lethal. As a result, many have called for banning derivatives from certain activities, including asset management. For instance, the latest UCITS VI consultation paper issued by the European Commission considers limiting the use of derivatives based on their level of complexity: “Do you see merit in distinguishing or limiting the scope of eligible derivatives based on the payoff of the derivative (e.g. plain vanilla vs. exotic derivatives)?” In practice, derivatives are widely used in the asset management industry. According to a recent Morningstar survey, 27% of U.S. mutual funds reported at least one derivative holding. Mutual funds in Europe make even larger use of derivatives. In their large survey of French asset

/ October 2013

managers, Beber and Pérignon find that 52% of the surveyed funds use derivatives and these funds represent 65% of the total assets under management. Derivatives are vital tools for the asset management industry. Derivatives instruments allow mutual funds to implement risk management activities efficiently and with relatively low transaction costs. They also allow asset managers to take specific views on specific markets or asset classes, often for diversification purposes.

His current work focuses on liquidity and asset pricing, risk management, currency and fixed income markets, and financial econometrics. Christophe Pérignon is an Associate Professor of Finance at HEC Paris, France and he holds the Deloitte – Société Générale Chair in Energy and Finance. His areas of research are derivatives markets, financial risk management, and the regulation of financial markets.

The researchers established that if derivatives use were not allowed, mutual funds could generally still perform these activities, but they would have to sustain much larger transaction and operational costs. Such costs could in many cases provide an incentive for investment funds not to perform these risk-management activities, leading to suboptimal risk/return profiles that would cost dearly to final investors. Furthermore, if derivatives were not allowed, the investable choice set for the final investor would be dramatically reduced. A ban on derivatives in asset management would be particularly harmful for smaller size asset managers, as they cannot rely on large economies of scale when implementing alternative risk management strategies. The Professors conclude that banning derivative use in asset management would entail increases in transaction costs and suboptimal risk management strategies, which would both penalize the performance for the final investor. Such a derivative ban would not be justifiable with the usual arguments against derivatives, because these arguments do not appear to be valid in asset management. About the authors: Alessandro Beber is a Professor in Finance at Cass Business School, City University London, UK. Professor Beber conducts empirical and theoretical research in Finance.

Company: Cass Business School Web: www.cass.city.ac.uk Name: Alessandro Beber; Christophe Pérignon Email: alessandro.beber.1@city.ac.uk; perignon@hec.fr Telephone: +44 20 70 40 87 37; +33 (0)1 39 67 94 11

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SECTOR SPOTLIGHT: Global Experts Panel

Global Experts Panel Acquisition International speaks to leading experts around the world to highlight key issues in a variety of jurisdictions. Our expert panel includes professionals from leading firms such as KPMG, Walkers, Russell Bedford and Afschrift. This month, we discuss the resurgence of cash shells, the protection of intellectual property assets and the importance of regulatory compliance, amongst others.

Indonesia “Indonesia will be one of the leading countries in the field of economics and politics. Indonesia’s role in the international market will be substantial in the next 10 years.”

Indonesia: Strengthening the Economy Syarief Basir is a Managing Partner of KAP Syarief Basir dan Rekan. Syarief Basir dan Rekan (SBR) was established in 1994. SBR has long experienced professionals in the field of audit and assurance, and management consulting. Some of the firm’s professionals previously worked in the government audit office, Directorate General of Taxation, and in large private companies. Therefore, the firm’s professionals are very familiar with the management of government and bureaucracy associated with investment practice and policy in Indonesia. The firm is highly experienced in providing audit and assurance services and management consulting to foreign companies in Indonesia, and the recipients of international aid.. The firm’s clients include institutions that receive assistance from AusAID, World Bank, the Global Fund, EU, Germany’s Government, etc.

destination of foreign investment from various countries,” he said. “The interesting thing about investing in Indonesia is Indonesia’s democratic political system, a growing economy with a growth rate above 6% per annum, which is increasingly improved investment facilities, and the availability of abundant labour and reason labour costs rate.” Looking ahead over the next 12 months, Mr Basir concluded: “Indonesia will be one of the leading countries in the field of economics and politics. Indonesia’s role in the international market will be substantial in the next 10 years.”

SBR, together with its group companies are member of Russell Bedford International, a global network of independent firms of accountants, auditors, tax advisers and business consultants. They provide integrated consulting services. This group of companies consists of: an audit firm, a tax consultant, a law firm, and a management consultant.

Company: KAP Syarief Basir dan Rekan, Registered Public Accountants Name: Syarief Basir Email: sbasir@russellbedford.co.id Web: www.russellbedford.co.id Address: PP Plaza 3rd, Jl TB Simatupang No. 57, Jakarta 13760, Indonesia Telephone: +62 21 841 4447/8

/ October 2013

Mr Basir commented: “Thus, through the SBR, our clients can obtain the various necessary investment consulting businesses.” Mr Basir believes that Indonesia is a very attractive location for doing business. He stated that both foreign and domestic investment are growing significantly. “Indonesia, with a population of 250 million and a very strategic location in Southeast Asia has become a

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SECTOR SPOTLIGHT: Global Experts Panel

Nigeria “IP disputes can be resolved where a party agrees to assign its IPR to another party. This will involve valuation of the IP to be assigned. An IPR can also be relinquished by the owner.”

Company: Stillwaters Law Firm Name: Ayokunle Adetula Email: ayoadetula@stillwaterslaw.com Web: www.stillwaterslaw.com Address: 2nd Floor, 11 Awolowo Road, Ikoyi, Lagos Telephone: +234 (0) 817 200 5866

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Avoiding and Navigating Intellectual Property Disputes Ayokunle Adetula is an Associate at Stillwaters Law Firm. Intellectual Property Rights (IPRs) are assets that have assumed utmost importance to businesses. Due to the importance placed on IP, disputes among businesses are inevitable. To forestall IP disputes, businesses must take steps to protect their IP.

that a plaintiff must establish his title as a proprietor or registered user and also prove that the defendant has acted or threatens to act in a way as to infringe his exclusive right among other things. Briefing a versed IP law firm is also important to navigating IP disputes.

A business must register its IP to have an exclusive right to its use. IP disputes include passing off, infringement, opposition to trademarks and patent applications, disputes arising out of licensing and franchising among others. Before applying to register a new trademark, a search must be conducted at the Trademarks and Patents Registry. An opposition may be filed against a trademark application where it is confusingly similar to a registered trademark. To overcome an opposition, evidence of use, proof of distinctiveness among others must be furnished. Furthermore, constant monitoring of an applicant’s IP portfolio through watch notices, journals and quick renewal of expired registrations can help avoid IP disputes.

Therefore, where efforts are made to follow the above suggestions, a business can navigate an IP dispute, where it is inevitable, without despair.

IP disputes can be resolved where a party agrees to assign its IPR to another party. This will involve valuation of the IP to be assigned. An IPR can also be relinquished by the owner. Where IP disputes involve litigation, such disputes must be instituted at the appropriate High Court vested with jurisdiction. To succeed in an infringement action, the Supreme Court in Proctor & Gamble Company v. Global Soap and Detergent Industries Limited & Anor. (2012) LPELR-CA/L/369/2008 held

October 2013 /

SECTOR SPOTLIGHT: Global Experts Panel

Iran “Our firm offers a unique combination of strong corporate, litigation and property capabilities coupled with specialised intellectual property expertise,”

Company: HAMI Legal Services Name: Mohammad Badamchi Email: info@iranlegal.com Web: www.iranlegal.com Address: No. 4, Mahshahr Street, Karimkhan Street, Tehran 15847-38515, Iran Telephone: +98 (21) 88 320 380 Fax: +98 (21) 88 320 383

Luxembourg “Luxembourg remains, of course, a highlight interesting jurisdiction for a company to settle its business, as it is both geographically perfectly located and internationally stable, with an excellent financial and banking reputation abroad,”

Company: Afschrift Name: Thierry Afschrift Email: avocats@afschrift.lu Web: www.afschrift.com Address: 8, rue Mil neuf cents, L-2157 Luxembourg Telephone: +352 26 84 54 16

/ October 2013

Iran: Huge Potential for Economic Success Mohammad Badamchi is an attorney at law and licensed expert before the Courts in Corporate Law, Trademark and patent law in Iran. He is a Partner of HAMI Legal Services. HAMI Legal Services, supported by sophisticated technology and powerful resources, is a leading business law firm offering prominent legal services to its international clients.

opportunities in: FMCG product; carpet; handicrafts; agriculture; mining; natural resources; transportation; automotive; etc.

The firm provides corporate and commercial advice and services to its clients across a broad range of market sectors. “Our firm offers a unique combination of strong corporate, litigation and property capabilities coupled with specialized intellectual property expertise,” said Mr. Badamchi.

“Iran, with the population of around 76.5 million, has the potentiality to be the leading country in the Middle East in attraction of foreign investments,” he continued. “The geographical location of the country as a bridge between Asia and Europe plays an important role in the region.”

“Committed to understanding the needs of clients, their business and the sectors in which they operate, we deliver practical, innovative and prompt legal advice.”

The Judiciary, along with the Government, is in the process to shift from paper-based system to electronic system to improve and accelerate the administrative and formal procedures and minimize the un-necessary beaurecratic formalities.

Mr. Badamchi believes that Iran has great potential in national and international business opportunities, however he noted that international embargos against Iran has hindered foreign investment in the market. He stated that the country has valuable resources and opportunities in upstream and downstream sectors.

Mr. Badamchi concluded: “We are very optimistic that President Rouhani is doing his best to remove the international sanctions on Iran so that the current state of the economy would improve,” he concluded.

“The Iranian people expect the President, Hassan Rouhani, to pave the way for foreign investment in Iran and encourage investors to invest in different sectors during the time he is in the office,” commented Mr. Badamchi.

The Iranian Laws provide for diversified forms of companies and incorporations which meet investors’ expectations to decide on the form of their prospective incorporation in Iran.

Discussing the factors affect foreign investment, Mr. Badamchi highlighted the international sanctions on Iran as well as the strict restrictions in international bank transactions to or from Iran.

During the last years, the Companies Registrar allows registration of 100% Foreign Owned Companies without a foreign investment license. Previously, registration of a company with a foreign ownership exceeding 49% would have required an investment license from the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI).

“Since President Rouhani has taken the office in early August 2013, local businesses and international companies have taken pole position to enter the Iranian market as soon as the restrictions and embargos have been removed,” he added. Aside from upstream and downstream sectors in oil, Mr. Badamchi stated that Iran has great business and investment

Although, the Foreign Iran’s Foreign Investment Promotion and Protection Act (FIPPA) provides some advantages for foreign investors, but still the applicants should be careful in applying a license for a protected foreign investment.

Luxembourg: the AAA Region of Choice Thierry Afschrift is the Managing Partner and Founder of Afschrift Law Firm. Discussing how Luxembourg distinguishes itself from other AAA regions, Mr Afschrift highlighted the country’s small size geographically, its positive growth rate and low rate of unemployment. He also noted its stable political environment, solid institutions and well-regulated and controlled public finances. Furthermore, he stated that the financial structure of the State gives an impression of stability and confidence, whether to honour its public debt or withstand any unforeseen impacts. “Given the above, the AAA rating is perfectly logical,” he commented. “On the other hand, some of the above mentioned factors may, in the future, have a negative impact on the county; this is the main difference with other AAA countries, such as Germany. “Actually, as small country, any movement becomes more visible and changes, positive or negative, arrive faster. In any case, given its size and the fact that its economy is based on banking and financing services – instable by nature – makes its growth potentially volatile. On the contrary of, for example, Germany, who is basing its growth on industry and export.” While Luxembourg’s situation may be better than other European countries’, the OECD has highlighted that its expenses are growing faster than its income. Furthermore, Mr Afschrift noted that the aging population is another problem, a factor which caused a budget imbalance.

“In general, one can say that the country’s situation is better compared to most of the other EC countries but, at the same time, several important indicators (unemployment, pensions balance, inflation etc.) have a negative progress,” he continued. “Last but not least, if, in 2012, the growth rate was important, it will be lower in 2013. “The government has announced that it has the intention to settle a number of problems in the near future but in a long-temps logic; it is thus a question of structural, rather than conjectural, solutions and measures. The target is to awaken competiveness and revive the economy, notably by exploring new segments. “This mission will be accomplished by various means: better monitoring of the economic situation, more efficient energy policies, access for business to land, in order to develop their activities, etc. The most important target to achieve is to create new businesses, by helping new entrepreneurs while supporting sectors who need to be re-boosted. “In the meantime, Luxembourg remains, of course, a highlight interesting jurisdiction for a company to settle its business, as it is both geographically perfectly located and internationally stable, with an excellent financial and banking reputation abroad,” he concluded.

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SECTOR SPOTLIGHT: Global Experts Panel

UK “At Novagraaf, we specialise not only in helping companies to register and enforce their IP rights, we also work with them to value and grow the value of those rights to maximise profit and create competitive advantage.”

Protecting Intellectual Property Assets Tom Farrand is Managing Director – Trademarks at Novagraaf UK. Managed as part of an overall business strategy, intellectual property (IP) is a key corporate asset that can deliver shareholder value and create company growth. For many of the world’s leading companies, as much as 90% of corporate value is derived from the value of intangible assets, of which IP is the main component. Most companies understand the importance of branding and innovation when it comes to marketing and building a business; however, many still overlook the importance of registering and maintaining trademark, design and/or patent rights to protect that creativity.

enforcement. Similarly, we assess the quality and validity of existing IP rights to ensure there are no damaging breaks in ownership or errors in the records that may impact a company’s ability to enforce its IP. Such audits enable companies not only to quantify and exploit their rights, but could also highlight possible new revenue streams and opportunities for expansion. In the case of merger or sale, it will also ensure that you get the best possible return for your investment in IP creation.

In part, this is due to the difficulty many businesses face capturing and valuing their IP assets. Would you be able to put a value, for example, on the branding that you use to market your products and services? What about the know-how that supports the manufacture of your branded goods, or the design of the packaging used in their distribution? At Novagraaf, we specialise not only in helping companies to register and enforce their IP rights, we also work with them to value and grow the value of those rights to maximise profit and create competitive advantage.

Company: Novagraaf UK Name: Tom Farrand Email: info.london@novagraaf.com Web: www.novagraaf.com Telephone: +44 (0) 800 9777 829

Seychelles “Besides Panama, BVI, Belize, Delaware, Hong Kong – among others, Seychelles International Business Companies are an extremely useful alternative.”

Among other things, we do this by looking at the extent to which a company’s core brands and technologies are protected, and the strength of that protection. Reviewing the key components of a company’s IP assets in light of the markets and industries in which it operates can highlight potentially damaging gaps in registration and

Seychelles: A Gateway to Asia, Europe and Africa Jaime Sánchez is a Partner at Quijano & Associates. Quijano & Associates takes pride in our success, built on the professional of our competent personnel, all of whom are dedicated to excellence for the ultimate benefit of our clients worldwide. Besides Panama, BVI, Belize, Delaware, Hong Kong – among others, Seychelles International Business Companies are an extremely useful alternative. Seychelles companies are exempt from Seychelles taxation on foreign income and exempt from Seychelles withholding tax, in addition, they are exempt from Seychelles stamp duty on: the transfer of IBC shares, other IBC securities and on all other transactions related to the business of an IBC. It is one of the fastest IBC registrars in the world! The International Business Companies Act, 1994, governs the operations of offshore companies. The registration process in Seychelles is straightforward.

Company: Quijano & Associates Name: Jaime Sánchez Email: quijano@quijano.com Web: www.quijano.com Address: Salduba Building, Third Floor, 53rd E Street, Marbella, Panama City, Panama Telephone: +507 269-2641 / 269-2743

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Highlights: • Seychelles companies may engage in any lawful business in any country of the world and may carry out transactions in any currency. • Excellent availability of company names for incorporation. • Familiarity of incorporation documents (M&AA, Certificate of Incorporation) because the Republic of Seychelles is a member of the Commonwealth of Nations. • Incorporation documents may be drafted in any language and submitted together with an English or French translation.

•

Speedy incorporation procedures and simple ongoing administration. • The Seychelles Registry is equipped with modern sophisticated computer equipment improving speed and efficiency in the processing of documents. • Shelf companies are available. • Full exemption from taxation for any business activity or transaction carried out outside Seychelles. • No requirement to file annual returns or financial statements; no requirement to hold annual general meetings of shareholders or directors. • Reasonable organization and maintenance costs and fees. Should you have any enquiry, please do not hesitate to contact us at quijano@quijano.com

A view of Seychelles capital Victoria, Mahé

October 2013 /

SECTOR SPOTLIGHT: Global Experts Panel

The British Virgin Islands “The BVI now matches, and in many cases exceeds the regulatory standards of many onshore jurisdictions, its compliance to international standards has been recognised by the governments of several G8 and G20 countries”

Company: Walkers Name: Marianne Rajic Email: marianne.rajic@walkersglobal.com Web: www.walkersglobal.com Address: 171 Main Street, PO Box 92, Road Town, Tortola, British Virgin Islands VG1110 Telephone: +1 284 852 2202

The British Virgin Islands: Leading the Offshore Pack Marianne Rajic is a Partner in Walkers’ Global Finance and Corporate and Investment Funds Groups. Walkers provides legal services to Fortune 100 and FTSE 100 global corporations and financial institutions, capital markets participants, investment fund managers and middle-market companies. Ms Rajic noted that the BVI was one of the first jurisdictions to introduce anti-money laundering legislation in 1999. She explained that the BVI has implemented comprehensive anti-money laundering laws and has stringent know-your-customer due diligence requirements consistent with the Financial Action Task Force’s (FATF) 40 + 9 recommendations. “The BVI has met the standards set by international organisations such as the International Monetary Fund (IMF), Financial Action Task Force (FATF) and the Organisation for Economic Co-operation and Development (OECD),” she commented. “The BVI now matches, and in many cases exceeds the regulatory standards of many onshore jurisdictions, its compliance to international standards has been recognised by the governments of several G8 and G20 countries, and the IMF, FATF, Caribbean Financial Action Task Force (CFATF) and OECD in recent years.”

concerning consultation, cooperation and the exchange of information related to the supervision of AIFMD, with 25 European securities regulators, which demonstrate the recognition and importance of BVI funds in the global funds industry. BVI has committed to concluding FATCA negotiations with the US Treasury and entering into a similar arrangement with the UK Government. “The BVI adheres to the common law principles of confidentiality and the individual’s right to privacy, especially in relation to personal and business transactions, however, the BVI will share information with the relevant treaty partners in response to legitimate requests,” concluded Ms Rajic.

The Baths on Virgin Gorda, British Virgin Islands

As a member of the OECD Global Forum, the BVI has signed 24 tax information exchange agreements (TIEAs), the first TIEA entered into in 2002 with the USA, and continues to negotiate TIEAs with other countries. BVI has entered into a memorandum of understanding (MOU)

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/ October 2013

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SECTOR SPOTLIGHT: Global Experts Panel

The British Virgin Islands “The practice is committed to delivering a highly responsive service to a broad range of clients in Europe and the Far East”

Company: SimonetteLewis, Lawyers & Notary Public Name: Hélène Anne Lewis Email: heleneannelewis@simonettelewis.com Web: www.simonettelewis.com Address: Magnolia Chambers, Harbour House, Waterfront Drive, P.O.Box 431, Road Town, Tortola, VG1110, British Virgin Islands Telephone: +284 494 4367

Sweden “We believe that the interest will be growing but it is very hard to predict if the Swedish market has matured to the extent that we will see actual structures being implemented.”

The Importance of Regulatory Compliance Hélène Anne Lewis is the Managing Partner of SimonetteLewis, Lawyers & Notary Public. Founded in 2007, SimonetteLewis (SL) is an international, commercial law boutique practice that serves as BVI legal advisers to private banks in Europe and Asia, private wealth advisers and high net worth individuals onshore in the establishment of trusts as well as to clients seeking to ensure that their compliance function is fulfilled. Founding partners Hélène Anne Lewis and Garvin Simonette bring 40 years of combined experience to their cross-border practice. The practice is committed to delivering a highly responsive service to a broad range of clients in Europe and the Far East. Against the backdrop of global financial crises, customers, investors and regulators are now far less tolerant of non-compliance in the financial services sector (as demonstrated by the 2012 increase in administrative penalties by the BVI’s regulator, the Financial Services Commission (FSC) from the former maximum of $3500 to $75000). Accordingly, understanding the constantly changing business and regulatory landscape and developing internal systems and controls to achieve compliance presents a greater challenge than ever before.

and Consumer Affairs with personalised attention to your application process. The Managing Partner’s current chairmanship of the Society of Trust and Estate Practitioners (STEP) Worldwide, past Presidency and current membership of the BVI Bar Association together with her co-ownership of Magnolia Trustees Ltd (a trust and company services provider) place the SimonetteLewis team in the unique position of being on the cutting edge of the most recent international developments in regulatory compliance and therefore well positioned to assist organisations in fulfilling their compliance obligations.

As a resident of, and legal practitioner in, the BVI for 23 years, Hélène Anne Lewis (the Managing Partner) and her team bring an in-depth knowledge of the BVI’s robust regulatory regime, and experience in advising clients on the establishment and management of their compliance programmes having regard to their specialised needs, and in their navigation of licensing applications before the BVI’s FSC, and Departments of Labour and Trade,

The Rise of the Insurance Linked Securities Market Kristofer Brodin is a Senior Manager, Tax, at KPMG Sweden. KPMG Sweden is a dedicated and active adviser in the Swedish market for financial services sector clients. For ILS’s the firm’s typical client is an insurance company, bank and/or asset manager interested in establishing ILS structures, evaluating ILS investments or planning to market these investments to investors. “During the last year we have seen interest from insurance clients of reducing or diversifying risks,” said Mr Brodin. “The use of ILS’, either as an investment or as a risk reducer, is one of the routes explored and analysed in this context. The interest from reinsurance company clients facilitating these structures has also increased.”

Mr Brodin stated that the ILS must be structured so that it is viable from e.g. a corporate law, governance, regulatory, accounting and tax perspective. “In addition to the complexity this implies in one jurisdiction it should be borne in mind that the structures often involve several jurisdictions which have totally different sets of rules,” he advised. “It may therefore prove difficult to achieve a structure which is ideal from all perspectives.” Mr Brodin concluded: “We believe that the interest will be growing but it is very hard to predict if the Swedish market has matured to the extent that we will see actual structures being implemented.”

Mr Brodin noted that, from a strict tax perspective, the structures offer the possibility to achieve exposure to insurance risk in many different forms. He explained that, as an ILS could be structured in many different shapes, this allows the investor to choose the most favourable structure from its perspective e.g. allowing the choice of either tax exempt income and non-deductible losses or taxable income with deduction for any losses incurred.

Company: KPMG Name: Kristofer Brodin Email: kristofer.brodin@kpmg.se Web: www.kpmg.se Address: P.O. Box 16106, SE-103 23 Stockholm, Sweden Telephone: +46 (0)8 723 61 84, +46 (0)70 823 58 19

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“As the structures in many cases involve low-taxed jurisdictions and interest/premium components there is a risk of adverse tax consequences in Sweden if the tax impact of the structure has not been properly assessed,” he continued. “As the structures involve a number of elements there is a clear risk of interplay between different tax rules which may lead to unforeseen/unexpected tax consequences.”

October 2013 /

SECTOR SPOTLIGHT: Global Experts Panel

UAE

“The firm prides itself on understanding the commercial needs and goals of its multinational and regional clients and assists its clients in navigating the market and achieving these goals”

UAE: Continuing to Attract Foreign Investment Aly Shah is a Partner at Fichte & Co. Sai Pidatala is a Senior Associate at the firm. Fichte & Co was founded in 2005 in Dubai, United Arab Emirates (UAE). The firm has a dedicated Corporate and Commercial practice with a wealth of experience across a broad spectrum of business activities.

“The UAE continues to enhance its global exposure as an investor-friendly jurisdiction and pro-business environment,” he continued. “For example, the UAE is bidding to host the World Expo 2020 in Dubai.”

“The firm prides itself on understanding the commercial needs and goals of its multinational and regional clients and assists its clients in navigating the market and achieving their goals,” said Mr Shah.

Mr Pidatala highlighted the cautious approach to lending in the UAE since the global crisis, which has been somewhat of a restraint to investment. However, given the UAE’s continuous drive to providing an investor-friendly business environment, he expects the challenges to be overcome.

According to Mr Pidatala, the current business environment in the UAE is in an upward trend. He noted that an increase in foreign investment has been seen and continues to grow across various sectors, primarily in real estate, construction, retail and hospitality. He believes that the greatest opportunities for investors currently lie in these sectors.

Company: Fichte & Co Name: Aly Shah; Sai Pidatala Email: aly.shah@fichtelegal.com; sai.pidatala@fichtelegal.com Web: www.fichtelegal.com Address: Sheikh Zayed Road, Business Bay, Prism Tower, 19th Floor, P.O.Box 116637, Dubai, UAE Telephone: +971 4 43 57 577

“At present, one can expect continuous growth in the UAE’s economy and FDI levels for 2013/14,” he concluded.

“The UAE has an investor-friendly approach and provides the necessary infrastructure and support services to facilitate investment,” he explained. “Added to this is the fact that the UAE remains a sophisticated and largely no-tax jurisdiction.” Given the investor-friendly environment in the UAE, Mr Shah believes that its ability to attract foreign investment continues to remain optimal. He stated that the UAE remains innovative and flexible in its approach to receiving and deploying capital and implementing infrastructure and support services to promote consumerbased and institutional investments in key sectors.

Diligence Management Consultants are the primary risk and crisis management consultants for numerous international organisations in the Middle East, Africa and South Asia. We guide our clients to make the right decisions to grow their businesses and safeguard their people, assets, and reputation. Living and working in the region for over twenty years, we have the experience, knowledge, expertise, and resources our clients need and trust. With consulting, investigative and research capabilities we mitigate the myriad of physical, information and regulatory risks clients across the region.

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/ October 2013

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Strachan Partners

Integrity, transparency guaranteed... at all times From when Strachan Partners was established in 1991, by the founding partner Charles Adeyemi Candide-Johnson Esq., SAN, Strachan Partners has consistently insisted on proffering commercially-focused legal advice to facilitate legal solutions second to none and as such is known for taking an innovative approach when advising institutions on their most challenging commercial transactions and dispute resolution matters. Such dedication has commanded a high success rate together with commendable global recognition & awards. Our Expertise: Banking & Finance Business Establishment & Corporate Immigration Company Secretarial Services Corporate Advisory (including Foreign Investments & Acquisitions) Energy & Natural Resources Intellectual Property Insolvency & Debt Recovery Labour & Employment Matters Litigation, Arbitration & Alternative Dispute Resolution Maritime Project Finance Real Estate Regulatory Compliance Telecommunications

www.strachanpartners.com

SECTOR SPOTLIGHT:

China: Strengthening the Economy

China: Strengthening the Economy In spite of the present challenging global environment China’s economy has recently shown signs of progression and is now on track to meet the government’s growth target of 7.5%. Industrial production was up 9.7 per cent in July from a year earlier, the biggest increase since February, while trade data showed both exports and imports increasing. The recent success of both the industrial and trade sectors has proven that there is clear overall faith in improving this year’s economic development. The demand for steel has also helped improve the economy resulting in increased steel orders, mainly from the property sector, which has encouraged Chinese mills to keep production high. However, as with any country there are still challenges to be faced, China has seen slow growth for the past two years and signs of improvement have only been established recently. Acquisition International speaks to Barry Tong, an Advisory Partner at Grant Thornton Hong Kong Limited, to discuss the key issues. light trails on the modern city at dusk in beijing, China

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Grant Thornton Hong Kong is a member firm of Grant Thornton International Ltd, one of the world’s leading organisations of independent assurance, tax and advisory firms. The firm is also an integrated part of Grant Thornton China, benefiting from the strong network of 17 offices and over 2,700 professionals. ------------------------------------------------------------------------

“We help dynamic organisations unlock their potential for growth by providing meaningful, actionable advice,” said Mr Tong. “Proactive teams, led by approachable partners, apply both reason and instinct to understand complex issues for privately owned, publicly listed and public sector clients to find their business solutions.” The Grant Thornton GDI index, which is developed in conjunction with the Economist Intelligence Unit (EIU), ranks the world’s 60 largest economies on 22 indicators of dynamism. Five areas were identified as holding the key drivers to an economy’s dynamism: business operating environment; science and technology; labour and human capital; economics and growth; and the financing environment. The 2013 data, release on 16th

/ October 2013

September, reveals that China has gained 17 places and now ranks in third place globally. “To put this in simple terms, the Chinese economy has significantly improved its attractiveness as a place to do business over the last 12 months,” explained Mr Tong. “Earlier this year, China’s economic slowdown provoked speculation and anxiety. Growth is slowing as the new leadership rebalances the economy away from exports and investment towards a more sustainable, consumption-driven model of growth. However, the positive news is that this is not dampening business expansion prospects.” The GDI index shows increasing science & technology activity in China, which will help sustain economic growth potential by boosting the quality, productivity and efficiency of outputs. Mr Tong noted that China is not only a massive market, but it is also developing rapidly. “China’s accelerating development creates a dynamic and exciting environment for ambitious businesses.

It opens up new opportunities, but simultaneously exposes businesses to more complex, more cross border and more regulatory challenges. To succeed, every move has to be precise. Grant Thornton knows that precision is vital to every successful business looking for expansion and improvement,” he added.

Company: Grant Thornton Hong Kong Limited Name: Barry Tong Email: barry.tong@cn.gt.com Web: www.grantthornton.cn Address: Level 12, 28 Hennessy Road, Wanchai, Hong Kong Telephone: +852 3987 1200

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SECTOR SPOTLIGHT: The New Rising Stars

The New Rising Stars For so long now the world’s leading entrepreneurs and business professionals have turned to the BRIC nations in order to take advantage of overseas growth, however with countries such as Brazil, Russia, India and China no longer necessarily providing the best investment opportunities, many are turning to the ‘rising stars’ of the emerging world, Acquisition International speaks to leading business, legal and financial professionals to discuss the benefits of investing in a new ‘rising star’ location, as opposed to the traditionally favoured BRIC nations, as well as examining the challenges that the countries faces as they become more established in the world of foreign investment.

Kenya ------------------------------------------------------------------------

Waringa Njonjo is a Partner at Muthaura Mugambi Ayugi & Njonjo Advocates. -----------------------------------------------------------------------Ms Njonjo described the current business environment in Kenya as optimistic. She noted that, after the recent peaceful election process earlier in the year, the business community is quite optimistic that Kenya is posed to regain its growth momentum and return to +7% GDP growth per annum. “The new government is keen on investing in debottlenecking sectors that have historically stunted growth,” she commented. “A big focus is in reducing cost of energy and transport/logistics in the region, which will allow the manufacturing sector to more effectively compete globally.”

/ October 2013

“The discovery of oil in northern Kenya will also have a large impact on the growth of the country. Not only will it help stabilise our current account deficit, but it will also spur the economy by promoting job creation as well as local firms that will serve the Oil & Gas sector.”

“The terrorist attack may negatively impact our tourism industry in the short-term, but with predicted security enhancements, the sector will bounce back in the medium to long term,” she concluded.

Discussing the benefits of investing in a new ‘rising star’ location, Ms Njonjo highlighted the fact that seven of the 10 fastest growing economies globally are in Africa. This, she believes, shows that the region is an attractive investment destination for anyone who is looking for attractive returns. “The region will continue to outpace the rest of the world because it requires so much investment just to reach the developmental level of the BRIC nations,” she observed. “Investors who invest now will get a ‘first mover’ advantage over others who will look to invest later in the cycle.” Despite the recent terrorist attack on the Westgate Shopping Mall, Ms Njonjo believes that the business community remains optimistic and the new government remains committed to investing in those sectors that have historically inhibited economic growth.

Company: Muthaura, Mugambi, Ayugi & Njonjo Advocates Name: Waringa Njonjo Email: wnjonjo@mman.co.ke Web: www.mman.co.ke Address: 4th Floor, Wing B, Capitol Hill Square, Off Chyulu Road, Upper Hill, Nairobi, Kenya. Telephone: +254 20 273 75 75 or +254 20 259 69 94

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SECTOR SPOTLIGHT: The New Rising Stars

Lima, Peru, panoramic view of San Martin Square

Peru ------------------------------------------------------------------------

Carlos Augusto Sandoval Aliaga is a Partner of UHY Sandoval Aliaga y Asociados S. Civil de R.L -----------------------------------------------------------------------UHY Sandoval Aliaga y Asociados S. Civil de R.L is a Peruvian firm with more than 30 years’ professional experience and counts with representatives abroad since 1990. The firm values perfectionism and prudence, emphasising services development and diversity. It is registered with the National Superintendence of Tax Administration (SUNAT), at the Registry of Corporations of the Public Registry in Lima, the Certified Public Accountants’ Association and the Auditors Firms Registry (SOA) of the General Comptrollers’ Office of Peru. The firm was registered by the Public Accountant’s Association; the Higher National Consultancy Board (CONASUCO). It was also recognised as an eligible firm by the International Bank for Reconstruction and Development and the World Bank; and as a Qualified Audit and Consultancy Corporation by the Inter-American Development Bank. “Our firm includes among its duties to perform professional activities solely of Certified Public Accountants performed as Accountant, Independent Auditor, Accountant Adviser, Tax Adviser, Accountant Appraiser as well as other administrative, economic and financial duties in general, rules by the Certified Accountant Professionalisation Act, its amendments and extensions, as well as other by-laws and rules of the Certified Public Accountants’ Association of Lima,” said Mr Aliaga. The firm corresponds with the Accounting Inter-American Association (AIA) and actively takes part in many events organised by the association, such as the Inter-American Accounting Conferences and the Accounting Regional Workshops.

Pursuant to the NICC at UHY Sandoval Aliaga y Asociados S. Civil de R.L., the firm has created a Quality Control Committee composed of three members who have established quality control elements on the policies and procedures of the audit work, which are:

“Therefore, our firm is permanently updated in the application of the legal regulations of the accounting profession at national and international levels, which is passed on to the technical staff through the Permanent Education Scheme (PES), implementing training programs prepared by UHY International,” continued Mr Aliaga.

• • •

“Our clients trust us due to the professional standards and credit of our firm in the provision of services. “UHY Sandoval Aliaga y Asociados S. Civil de R. L. has evolved significantly in recent years and local level in order to optimise the quality of our services and increase the efficiency of the work is counted using the software ACD Auditor, valuable software tools specialised in the field of management needs management and financial management, as well as for specific sectors, such as financial audit,” he continued. “Being part of a business network with a presence in over 80 countries worldwide puts us one step higher compared to our local competitors and makes us internationally competitive, so one of our main goals is to constantly train our staff allowing us to be at the forefront within the sectors in which we participate.” Mr Aliaga stated that the firm’s services are based on a professional, creative, timely and constructive approach, with special emphasis on the contribution it can give the customer is every aspect of their business to increase productivity and savings wherever possible.

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Responsibilities of quality managers within the firm; Ethical requirements; Acceptance and continuance of client relationships and specific engagements; • Human resources; • Implementation of the commitment; and • Monitoring Mr Aliaga stated that Peru is currently experiencing a period of calm and stability despite the crisis and global recession, which he attributes to the country’s past ten years of strong growth in domestic demand.

In terms of the challenges faced as Peru becomes more established in terms of foreign investment, Mr Aliaga noted the rise in the cost of living that influences the cost of production by using more specialised labour. “While our country has a dynamic and stable economy in the region with annual growth projections ranging from 6 to 6.5, certain conditions have to be maintained and strengthened such as the realisation of major projects in the sectors of greatest projection, promotion and support of the private inversion and finally maintenance of adequate fiscal balance,” he continued. “Peru is a country with sufficient strength and stability needed to address in the best way possible economic downturn in the region. We are currently experiencing a slowdown in our economy which, while not significantly affecting us at the level of our investments, will not allow us to grow internally,” he concluded.

“By far our success is that we took advantage with good administrative management high rates of foreign investment generated interest from international markets,” he added. Discussing the benefits of investing in a new “rising star” location such as Peru, as opposed to the traditionally favoured BRIC nations, Mr Aliaga highlighted the: favourable treatment of foreign investment; the low cast of raw materials and high profitability for its high value in the international environment; and great free market facilities for the remittance of profits and payments of services and professional fees abroad. He stated that the greatest opportunities for investors in Peru currently lie in the mining sector, electro carbides, gas, electricity and fisheries.

Company: UHY Sandoval Aliaga y Asociados S. Civil de R.L. Name: Carlos Augusto Sandoval Aliaga Email: c.sandoval@uhyperu.net Web: www.uhyenperu.com Address: Av. Victor Andrés Belaúnde 147, Via Principal 140 Torre Real 6 – San Isidro, Lima, Perú Telephone: +51-712 4343

October 2013 /

SECTOR SPOTLIGHT: The New Rising Stars

Monument & Tomb For Unknown Soldier. A part of Independence Square, Accra, Ghana

Ghana

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Kwaku Yeboah-Asuamah is the Executive Director of Enterprise Trustees Limited. -----------------------------------------------------------------------Enterprise Trustees Limited was incorporated on 8th November 2010 as a joint partnership between Enterprise Group Limited and Sanlam Group of South Africa. Enterprise Group Limited, a blue chip financial services company listed on the Ghana Stock Exchange currently has three subsidiaries. These are: Enterprise Insurance Company; Enterprise Life Assurance Company Limited; and Enterprise Properties Limited. Enterprise Group Limited, in collaboration with Sanlam Group, a Financial Services & Investment company of South Africa, established Enterprise Trustees Limited to provide trustee services within the framework of the National Pensions Law, Act 766 of 2008. Enterprise Trustees provides pensions administration services for over 1,800 corporate clients. According to Mr Yeboah-Asuamah, the main factor that distinguishes the company from its competitors is the strong institutional support from its major shareholders – Enterprise Group Ltd and Sanlam.

“Both companies have been in the business of insurance and employees benefits for close to 100 years,” he commented. “We therefore tap on the expertise of the two companies in terms of systems and processes. Additionally our well-motivated young and dynamic work force eager to excel has been a great asset in the competitive environment in which we find ourselves.”

opined. “This will go a long way to reduce unemployment and the dependency on the government for work. “2013 has generally not been good, I expect the economy to pick-up during the last quarter of the year to bring the macro-economic indicators on target. Chances are that revenues will fall below expenditure slightly,” he concluded.

Mr Yeboah-Asuamah stated that, as Ghana is a developing country with impressive growth, more business opportunities are opening up for investors. “The political stability and stabilised macro-economic environment makes the country very attractive to investors,” he continued. “The recent oil discovery and the significant investments in the services sector accounts for the impressive growth.” As Ghana becomes more established in terms of foreign investment, Mr Yeboah-Asuamah anticipates that social policies will suffer as more businesses move from the hands of the government to profit-oriented foreign investors. “We need to invest in the education sector with the view to ensuring that our graduates come out as entrepreneurs,” he

Company: Enterprise Trustees Limited Name: Kwaku Yeboah-Asuamah Email: kwaku.yeboah-asuamah@ enterprisegroup.com.gh Web Address: www.enterprisegroup.com.gh Address: Private Mail bag, GPO, Accra Telephone: +233 302 781560 / +233 307030509 / +233 24695752

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Greg Alvin Parbey is the Managing Director of QUALMS Consult Limited. -----------------------------------------------------------------------Mr Parbey is a co-founder and The Managing Director of QUALMS Consult Limited which was set up six years ago to provide Project Technical Services and QHSE Training and Advisory services to enhance work practices and business results for our clients across Africa. “For the past six years our competent technical experts have provided onsite technical services including; Project Technical Staffing, Site Construction Services, Asset Integrity, HSEQ Specialist Training, Advisory and Implementation services for clients in the mining, construction, oil and gas, food processing, food retail, commodity export and hospitality industries across Africa. Through our services, our clients have improved on their business profits, employee satisfaction, expert competitiveness and overall continual improvement of their systems.” Mr Parbey expects that the Ghanaian economy will enjoy strong economic growth over the medium term, propelled

/ October 2013

by the nascent Oil & Gas sector. However, he noted that the abundant natural resources, fast growth trajectory and relative political stability augur for strong foreign investment inflows. “The current account deficit and fiscal deficits will remain key structural weaknesses in the economy but Ghana’s reputation for political stability remains intact following the December 2012 elections and the nation is widely regarded as a safe place to do business.” With a stable political environmental and forward looking investment climate, Mr Parbey believes that Ghana is a prime location for investors wishing to tap the country’s abundant natural resources, exploit market opportunities in Ghana and also within the larger Economic Community of West African States (ECOWAS). “There are gaps that currently exist in infrastructure, Ghana however continues to grow in infrastructural development,” he observed. “Extension of road and air transport within the country, comparatively better power supply within the sub region, expansion of telecommunications facilities are some systems that support investments.”

Mr Parbey concluded: “Finally, as our company strives to focus on local content development strategies to support our industry sector, I foresee ordinary citizens, civil society and pressure groups taking more interest in how the country is run. If this happens, government will be forced to stay on its toes and implement the necessary measures to bring the positive change we have dreamt of for so long.”

Company: QUALMS Consult Limited Name: Greg Alvin Parbey Email: gaparbey@qualmsconsult.com Web: www.qualmsconsult.com Address: P.O Box BC 160 Burma Camp Accra, Ghana Telephone: +233 302 816242

ACQUISITION INTERNATIONAL

DEEP & FAR Attorneys-at-Law 13th F1., No. 27, Sec. 3, Chung San N. Rd. Taipei 104, Taiwan, R.O.C. Tel: +886-2-2585-6688 Fax: +886-2-25989900/25978989 email@deepnfar.com.tw Deep & Far was founded in 1992 and is one of the largest law firms in this country. The firm is presently focused on the practice in separate or in combination of all aspects of intellectual property rights (IPRs) including patents, trademarks, copyrights, trade secrets, unfair competition, and/or licensing, counseling, litigation and/ or transaction thereof. Since this firm edges itself into the IPRs field, the firm quickly comes to fame. As an illustration, this firm often is one of the largest sources from which foreign filing orders originate. The fascinating rise of this firm begins from the founder of Deep & Far 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.

www.deepnfar.com.tw

2013 M&A AWARDS:

Big Four Advisory Firm of the Year – Germany: PwC

2013 M&A Awards Big Four Advisory Firm of the Year – Germany: PwC River view at twilight of Frankfurt am Main in Germany.

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Steve Roberts, Private Equity Leader at PwC, gives Acquisition International some insight into the firm and its experiences of 2013. ------------------------------------------------------------------------

PwC is one of the leading auditing and consulting services organisations in Germany, offering its services worldwide as an independent member of the international PwC network. PwC advises groups and family-owned companies, industrial and service companies, global players and local heroes, the public sector, associations and NGOs. The firm is the leading auditing and consultancy company in Germany, with 489 partners and around 7,147 specialists at 28 locations in Germany. The services provided by PwC to its clients are spread over three divisions: Audit and audit-related services (Assurance), tax and legal advice (Tax & Legal) as well as deals and consulting (Advisory). The experts in the respective divisions work together to enable comprehensive and long-term assistance to be provided to clients – whereby the firm complies strictly with the legal requirements when it provide advice as well as auditing services to a company.

/ October 2013

Mr Roberts began by stating that he was delighted to learn the firm had won the 2013 M&A Award. He stated that, like all successful businesses, PwC has had to be innovative to thrive in the current economic conditions, both with its products and the way it goes about tailoring and delivering its services. In order to address the increasingly global market for M&A services, the firm has an integrated European and Global M&A and transaction network which ensures that it can respond quickly and appropriately to its clients’ needs in any territory.

added that the demand for the firm’s services remains at the high levels experienced over recent years. Discussing the firm’s culture, he concluded: “We are only truly effective when we work together and team culture both within our organisation and also with our clients is hugely important.”

Discussing the last 12 months in terms of M&A, Mr Roberts stated that PwC has seen slightly more optimism in the market generally, but still below precrisis levels. “The recent rise in stock markets and confidence in the future of the Euro appears to have revived M&A sentiment but this has not yet resulted in a higher level of deal activity,” he observed. There has been an increase in the volume of M&A transactions in 2013, however Mr Roberts noted that there has been a relatively steady-state post crisis. He

Company: PwC Name: Steve Roberts Email: steven.m.roberts@de.pwc.com Web: www.pwc.de Address: Friedrich-Ebert-Anlage 35-37, 60327 Frankfurt am Main, Germany Telephone: +49 69 9585-1950

ACQUISITION INTERNATIONAL

October 2013 /

SECTOR SPOTLIGHT:

Switzerland: Experienced, Growing and Welcoming Investment

Switzerland: Experienced, Growing and Welcoming Investment Switzerland is the world’s most competitive economy and despite Europe’s slowdown on economic growth the country is set to progress well. The KOF institute has indicated that GDP growth is expected to be positive moving sharply upwards. Europe’s economic growth as a whole is improving having a key impact with much of Switzerland’s anticipated growth being supported by improvements in the business sentiment in surrounding Euro Zone countries. Acquisition International speaks to some of Switzerland’s leading professionals to examine the current investment opportunities and pull factors which are bringing foreign direct investment into the region.

Zurich / Switzerland

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Dr. iur. Christof Helbling is the Managing Partner of HELBLING Attorneys-at-Law ------------------------------------------------------------------------

We are a small boutique law firm based in Zurich, specialized in any issues around remuneration of the Board of Directors, Executive Board and senior executives and have long-standing experience in remuneration topics and compensation plans. We advise our clients, for example, on finding their suitable variable compensation model and assist and advise you together with exquisite correspondence lawyers on taxation issues arising out of remuneration schemes as well as with regard to accounting issues (IFRS 2) around compensation plans. Our services are focused on national and international listed companies, which are subject to several regulatory regulations, as well as on SME-companies, which in line with a “good corporate governance” want to have reviewed and amended their executive agreements and their remuneration package.

/ October 2013

HELBLING Attorneys-at-Law advises companies (Board of Directors, Compensation Committee, Executive Board) on the following topics: l Employee compensation plans (e.g. performance plans, stock option, deferred cash plans, a.o.), design, drafting, implementation l Remuneration of the Board of Directors, Executive Board and senior executives l Drafting and review of employment agreements, separation agreements for senior executives l Consulting on regulatory guidelines regarding remuneration of senior executives and key risk takers and its disclosure, in particular the compensation report of SIX-companies l Legal opinion on remuneration schemes and compensation plans l Corporate Law (contingent capital, shareholder agreements, articles of association) l International transfer of senior executives, expatriates, international assignees Legal update: On 1 January 2014, a new Swiss law on Say-on-Pay and against “rip-off” will enter into force.

The new law (ordinance) will regulate the remuneration of the members of the board of directors and of the executive board. The law shall curb excessive pay practice by strengthening the shareholders’ rights. It will have a significant impact on publicly traded Swiss companies.

Company: HELBLING Attorneys-at-Law Name: Dr. iur. Christof Helbling Email: christof.helbling@helbling-law.ch Web: www.helbling-law.ch/en Address: Grossmunsterplatz 1, CH-8001 Zurich, Switzerland Telephone: +41 44 500 92 33

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Switzerland: Experienced, Growing and Welcoming Investment

Finding solutions to regulatory challenges

Swiss Alps at Sunset

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Sandra Czich and Isabella Monnerat are Founding Partners at ISCM Law. ------------------------------------------------------------------------

Switzerland is undoubtedly at a cross roads. Vanishing banking secrecy, restructuring of the investment management business, we’ve been predicted the worst. It’s time to demystify and to take a step back! Behind the postcard, heavenly landscapes and luxury watches, lies a country with tremendous added value. The strength of its democratic system, political and fiscal stability and the high level of support of its population combined with very flexible employment rules create extremely solid foundations that contributed to the growth of sophisticated industries, such as finance, biotechnologies or pharmaceutics. Needless to say that the Swiss financial sector is facing the biggest challenges of its history and will be judged on its capacity to adapt to the new legal environment, in order to remain attractive both for asset management and fund distribution. It’s time to face reality … Traditionally investment managers established in Switzerland were not subject to any supervision, except a light self-regulation. Following the adoption of the European directive 2011/61/EU on Alternative Investment Fund Managers (“AIFMD”), restricting the European market to regulated fund managers, the revised Collective Investment Schemes Act (“CISA”) came into force on 1st March 2013. In line with the AIFMD, managers of collective investment schemes (“CIS”) now fall under the scrutiny of the Swiss regulator (“FINMA”). This entails new obligations, namely in terms of capital and own funds requirements, increased risk management and internal control. Distribution of foreign CIS in Switzerland is also impacted. Until now only the public offering and distribution to non-qualified investors was subject to the

ACQUISITION INTERNATIONAL

appointment of a Swiss representative and paying agent. Under the revised CISA, this requirement applies to the distribution of funds (including private placement) to qualified investors. Furthermore, the activity of distribution and placing agent is now subject to FINMA supervision and hence prior authorisation. … And to seize the opportunities! The Swiss regime remains attractive, avoiding the EU regulatory heaviness. No such rules do exist in Switzerland as the ESMA Guidelines on sound remuneration policies, whose density equals their complexity. Furthermore flexibility is preserved: • Delegation by an AIFM to a Swiss regulated manager is allowed provided the rules applicable to the latter are “equally as effective”; • Discretionary portfolio managers do not fall within the scope of CISA and are not subject to FINMA supervision; • Boutique managers of CIS reserved to qualified investors are exempt from supervision subject to their assets under management being below the CHF 100mio threshold, leverage included, or below CHF 500mio provided that the CIS is not leveraged and close-ended for a 5 years’ period; • Two years transition period (i.e. until 1st March 2015) for CIS managers whose assets exceed the aforementioned threshold, to satisfy the new requirements and obtain FINMA authorisation; • Outsourcing of compliance and risk management is allowed, under the condition that conflicts of interest are avoided. Rather than a business earthquake, the new regulatory framework shows an alignment towards the international financial standards to increase investor protection, be it the revised CISA or the future Financial Services Act implementing the principles set out by the Markets in Financial Instruments Directive (“MiFID”).

Although times have changed, financial industry players still enjoy a great entrepreneurial freedom with robust infrastructures as background. Solutions do exist! The long lasting relationships with Luxembourg will facilitate the access to the European market provided that fund managers and advisors in Switzerland take the appropriate steps to upgrade their structure. Keeping in mind the magnitude of changes introduced by AIFMD for the alternative asset management, namely on third countries’ managers, it is crucial to be aware of the new requirements to seize the coming opportunities. From the boutique investment manager to the brokerage firm, we are assisting our clients to adopt intelligent and tailor made measures to prepare the future at reasonable costs.

Company: ISCM Law Name: Sandra Czich; Isabella Monnerat Email: sczich@iscmlaw.ch; imonnerat@iscmlaw.ch Web: www.iscmlaw.ch Address: Route de Crassier, 7 - 1262 Eysins / Nyon - Switzerland Telephone: +41 (0)22 595 19 76

October 2013 /

SECTOR SPOTLIGHT:

Driving Foreign Direct Investment

Driving Foreign Direct Investment In 2007 cross-border investment flows reached an unparalleled high of $2 trillion as global corporations made the most of strongly performing international markets. In the 5 years to follow the housing market collapsed, we’ve had an international banking crisis and we have experienced record levels of unemployment. This combination created severe economic contraction affecting all corners of the globe and had a massive impact on the global flow of Foreign Direct Investment. In the years since, patterns of FDI have been patchy to say the least and unsurprisingly investors remain wary, however according to both the 2012 A.T. Kearney FDI Confidence Index and the World Investment Report 2012 by the United Nations Conference on Trade and Development, flows of investment have shown signs of recovery. Acquisition International speaks to experts from around the world to discuss current levels of FDI and the opportunities within their jurisdictions. ------------------------------------------------------------------------

Kweku Amoafo Meshack is the Managing Director for CIG Micro-Finance Ghana Limited and a member of the Board representing the interest of the Shareholders. -----------------------------------------------------------------------Academically, he holds a Bachelor of Arts Degree in Administration. Professionally, Kweku has part 4 member of ICA-GHANA. He has certificates in Debt Recovery Technique, Banking and Insurance Fraud and Microfinance management. Until his appointment as the Managing Director of CIG, he had worked with Agona Municipal Assembly and Provident life Assurance Company Limited as an Accounts Scheduling officer and Finance and Accounts Manager respectfully. PROFILE OF CIG CIG Micro-finance Ghana Limited is fully licensed and regulated by the Banking Supervision Unit of the Bank of Ghana per the new banking supervision and regulations for ‘’Tier 2’’ (Deposit-taking MFI’s) of the banking hierarchy. We at CIG Micro-finance Ghana Limited pride ourselves with highly skilled, young and energetic professionals working synergistically in various departments. Our clientele base cuts across both the formal and informal sectors of the economy. And, our primary goal is to ensure that, the expectations of our clients are met exceedingly. Currently, our stated capital stands at seven million cedis (¢7 000 000.00).

Since its inception on the 11th day of February 2009, CIG Micro-finance has grown impressively, winning the hearts of many customers and investors both locally and internationally. With over five thousand (5,000) active clients and eight (8) state-of-the-art branches, we are not only working to empower the economically-active poor, but also offering tailor-made products for their financial inclusion.

micro investments products, thus acting as a fall-back for our clients. CURRENT INFRASTRUCTURE IN GHANA Government and the regulators’ efforts to move Ghana into a cash-less society has been slow due to its inaccessibility and complex infrastructure involved in achieving its success. As a result, the informal sector are both unwilling and unable to access these services.

CIG’s CORE COMPETENCE Issuing loans/funding to start-up businesses and offering complimentary business advisory services to these entrepreneurs have help to improve our brand, making customers to choose us over competitors. BUSINESS ENVIRONMENT in the financial industry in Ghana is highly competitive because Commercial banks, S&L’s, MFI’s all competing for the same market, offering similar products and services. Also, the increasing levels of highly trained and experienced employees is making the competition even sterner. CIG’s Advantage Our competitive advantage within the market is the skilful blend of micro insurance with all our micro savings and

Company: CIG Micro-Finance Ghana Limited Name: Kweku Amoafo Meshack Email: kweku.meshack@cigmicrofinancegh.com Web: www.cigmicrofinancegh.com Address: Box GP21861, Accra, Ghana Telephone: +233 (0) 302 94287

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Jean-Patrick Lariviere is the Managing Partner of FTMSynergis Capital. -----------------------------------------------------------------------FTM Synergis delivers value-added merger, acquisition and related corporate finance advisory services for the middle market (transactions less than $250m CAD). The firm is the Canadian partner to M&A International Inc., the largest M&A partnership in the world. Mr Lariviere described the current business environment in Canada as very welcoming, very diversified in terms of industries and very well supported by one of the most robust banking systems in the world and one of the most active and important market exchanges, the TorontoStock Exchange (TSX) He stated that the key pull factors for foreign investors are: access to capital, stability ofthe political system, a strong financial system and the numerous government grants and subsidies available for many industries. Discussing the industrial sectors with the greatest opportunities for investors, he highlighted: natural resources; oil and gas; precious minerals; aerospace; and information technology as some of the leading industrial sectors “Global inflows of foreign direct investment (FDI) rose by 17% in 2011, in spite of the uncertainty prevailing in the

/ October 2013

global economy, expanding from US$1,290 billion in 2010 to US$1,509 billion in 2011,” said Mr Lariviere. “This was above the pre-crisis average of US$1,472 billion (observed during the 2005-2007 period), with FDI inflows on the rise to the developed, developing and transition economies. “Canada’s Outward FDI Performance Index in 2011 was 1.2, producing a ‘C’ grade. Canada ranks only 10th among the 16 comparator countries.”

Looking ahead, Mr Lariviere believes that growth in Canada is very likely to continue and anticipates the FDI levels to be superior to the last five years’ average. “Canada has a high standard of living and an accessible post-secondary education system. The strength of our banking system has allowed Canada to outperform its G20 peers over the last several years,” he concluded.

In order to attract and maintain sustainable investment, Canada has provided tax, capital and labour incentives at the municipal, provincial and governmental levels. Discussing methods to expand into untapped markets and how to broaden the range of business activities, Mr Lariviere highlighted investments in research supported by R&D tax credits. These programs are sought by foreign businesses as they provide allow new operations to enjoy lower cost of implementation. Commenting on how Canada is going against the grain, Mr Lariviere stated that the country has “a highly skilled and highly educated multilingual workforce as well as a very welcoming, very diversified economic system in terms of industries that is well supported by one of the most robust banking systems in the world and one of the most active and important market exchanges.”

Company: FTM-Synergis Capital Name: Jean-Patrick Lariviere, Managing Partner Email: jplariviere@ftmsynergiscapital.com Web: www.ftm-synergiscapital.com Address: 418 Sherbrooke East suite 200, Montreal, Quebec, Canada H2L1J6 Telephone: +1 514 954-0070 x524

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Driving Foreign Direct Investment ------------------------------------------------------------------------

Hendrik Muschal is a Shareholder at Ogletree Deakins International LLP, Berlin. Sachka Stefanova-Behlert is an Associate at the firm. ------------------------------------------------------------------------

Ogletree Deakins International deals with all areas of individual and collective employment law with a special focus on personnel restructuring projects on a national level and in a cross-border context as well as optimising foreign investments by optimising personnel costs. In particular, Mr Muschal highlighted the firm’s excellent track record of advising national and international companies of different sizes and from various sectors in all questions of individual and collective employment law. He noted that the firm offers “proven expertise and practical business solutions in the implementation of complex HR projects on an operational, company and group level”, and that it assists growing businesses involved in transactions by helping clients to cost-optimise their HR practices. According to Ms Stefanvoa-Behlert, Germany encourages and boosts foreign direct investments as important factors for growth and wealth. She noted that foreign investors are attracted to Germany: for access to the German and European market; to benefit from German and European infrastructure and the high level of research and technology; and to expand business opportunities through liaison with German and European partners. She believes that the greatest opportunities for investors currently lie in the high technology industry and IT sector.

“Currently, we experience a noticeable volume of inbound FDIs as foreign investors realises the chances to access the Germany market as a first step to the European market itself,” she commented. “The years before, outbound FDIs were at a considerably high level in comparison to inbound FDIs.” According to Mr Muschal, despite the economic benefits for foreign investors in Germany, foreign investors like national investors are often challenged by relatively high personnel costs of the target objects in comparison with target objects based outside the European Union.

Ms Stefanvoa-Behlert acknowledged that continued growth is not guaranteed in all parts of the world; however she believes that Germany has already proven that it is a safe place for successful FDIs and a stable partner for permanent growth. “We expect that due to the upcoming Free Trade Agreement between EU and US, FIDs, in particular, from US investors, will increase to a considerable extend. Furthermore, due to the stable political system and economic incentives, investments to Germany are worth considering,” she concluded.

“Apart from this, personnel costs are often a considerable costs factor in the countries of the European Union including Germany,” he observed. “In order to maintain the competiveness of the Germany investment market for foreign investors, we have developed an ‘integrated approach to personnel’ enabling the investors to assess as early as from the planning phase the potentials for optimisation of personnel costs and thus to maximise the outcome of the investments in the HR field. “The aforementioned personnel approach achieves and brings about a realistic assessment of cost optimisation opportunities in the forefront of concrete investment and transaction activities on the one hand and the necessary reduction in costs in the implementation phase by means of a reorganisation of the budget in the area of human resources on the other hand. This leads to better competitiveness of the target entity and higher returns of the investments, not only in times of crisis, but in particular after times of crisis.”

Company: Ogletree Deakins International LLP Name: Hendrik Muschal; Sachka Stefanova-Behlert Email: hendrik.muschal@ogletreedeakins.com; sachka.stefanova-behlert@ogletreedeakins.com Web: www.ogletreedeakins.com Address: Fasanenstraβe 77, 10623 Berlin, Germany Telephone: +49 (0) 30 862030 0

Bringing Foreign Direct Investment to Malaysia: Invest in the Vibrant Heart of Malaysia – Invest in Selangor Your investment project is made easy by the SSIC Berhad (Selangor State Investment Centre), which is your partner during the whole process. SSIC Berhad is a one-stop investment promotion agency with information and advisory services for potential and existing investors. Based on the experience of more than 12 years, SSIC is considered the role model for other states in Malaysia, who have formed a similar mechanism. Staying ahead of this competition, Selangor creates new networks, services and competitive investment incentives provided by the Malaysian Investment Development Authority (MIDA).

In other words, you can expect the best of Malaysia in Selangor including an advanced network of highways, the biggest sea- and airport as well as reliable internet, energy and water supply. Our B2B services are globally competitive and regionally leading, making Selangor the perfect bridgehead for Malaysia and ASEAN. Benefit from our stable, export-oriented and investmentfriendly environment. For more information please visit our website www.ssic. com.my or e-mail your enquiry to enquiry@ssic.com.my

What can you expect?

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Hasan Azhari Idris is the Chief Executive Officer at SSIC Berhad ------------------------------------------------------------------------

Selangor is truly the heart of Malaysia’s economy. Contributing more than 23% of the Malaysian gross domestic product, the state offers the largest population, the most institutions of higher learning and a reliable partner for investments.

ACQUISITION INTERNATIONAL

Selangor continues to be an economic stronghold in a sluggish global economy and crucial to Malaysia’s impressing development. Whenever Malaysia’s international rankings improved, Selangor was at the core of it. In 2012 Malaysia ranked 10 in the FDI Confidence Index, 18 in the World Bank’s Ease of Doing Business Index and 14 in the World Competitive Yearbook. Furthermore, A.T. Kearney’s Global Services Location Index saw Malaysia finishing 3rd, which consolidated Selangor as the leading service hub with often more than 60% of all related companies located here.

Selangor State Investment Centre

Company: SSIC Berhad Name: Hasan Azhari Idris Email: hasan@ssic.com.my Web: www.ssic.com.my Address: No. F1-2-G, Jalan Multimedia 7/AG, CityPark, i-City, 40000 Shah Alam, Selangor Darul Ehsan, Malaysia Telephone: +603-5510 2005

October 2013 /

SECTOR SPOTLIGHT:

Hot-Spot for Oil & Gas Investment

Hot-Spot for Oil & Gas Investment The past two years have seen a significant ramp-up in the number of planned investments within the Oil and Gas market with a marked increase in joint ventures and acquisitions. Thanks to this explosion in demand, the Oil and Gas industry remains the largest player in the energy sector; casting a shadow over other forms such as nuclear and even alternative energy. Investors are hungry for opportunities and the cash is available but the difficult decision comes in deciding which region to invest in. International deposits may be plentiful but when it comes to extraction, each presents a unique location, despite political or regulatory risks. Acquisition International speaks to leading industry professionals to discuss the current market.

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Roque Bustamante is a Partner and Co-Head of the Oil and Gas practice at Bustamante & Bustamante Law Firm in Quito Ecuador. ------------------------------------------------------------------------

Mr Bustamante stated that Ecuador has maintained a stable policy regarding oil investments since 2010. He noted that a new model contract has been established, called the services contract, and that exploration and production contracts received a contractually agreed fixed tariff per produced barrel. “The tariff is agreed considering investments and production and is not related to the price of oil,” he explained. “This scheme, with some variations depending on whether an exploration field or a mature field is involved, applies to all contracts. For some companies, the scheme is unacceptable because they still prefer production sharing contracts.” Bustamante & Bustamante has participated in at least eight negotiations for upstream contracts with the government and has seen clients succeed following the new model. Mr Bustamante advised that the key issue is

to understand the law, taxes, costs and production fields. He added that not all companies do so; some just enter into contracts without even understanding how the legal system works in Ecuador.

“We believe that Ecuador is a great place to invest,” he enthused. “The fields are very productive, there is enough pipeline transportation capacity from the Ecuadorian Amazon Basin to the Pacific coast, and the U.S. dollar is our official currency. Most of the companies do not yet realise the new opportunities available and therefore there is not that much competition. The key issue is to properly understand the system and to be ready to act fast when an opportunity arises. It is important not to come in late.”

Mr Bustamante concluded with a prediction for 2013/14: “The companies that can manage to properly evaluate the risk, that can be ready at the right time for opportunities, and that have the courage to come are likely to succeed in their contracts for enhanced oil recovery of mature fields and exploration.”

Company: Bustamante & Bustamante Law Firm Name: Roque Bustamante Email: rbbustamante@bustamante.com.ec Web Address: www.bustamanteybustamante.com.ec Address: Av. Patria E4-69 y Av. Amazonas, Quito Ecuador Telephone: 593 22564929

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Chigozie Anyanwu is a Managing Associate (Energy) at the law firm, Sterling Partnership. ------------------------------------------------------------------------

Ms Anyanwu stated that the Nigerian oil and gas sector had mixed fortunes in 2013. She attributed this partly to the major oil and gas companies appearing to have been in maintenance mode this year as a result of the uncertainties surrounding the passage of the Petroleum Industry Bill.

“Prospective foreign companies/investors have also been reluctant to invest in the sector for the same reason,” she observed. “On the other hand there has been a surge in indigenous participation in the sector due to divestments by the major oil and gas companies in Nigeria.”

/ October 2013

Discussing the key drivers for growth in the sectors, Ms Anyanwu highlighted the increased demand from China, India and the emerging economies. She believes that Nigeria is unfortunately not leveraging this demand to the fullest due to the uncertainties in policy and legislation in the industry at the moment.

from other emerging economies will affect the demand in the region. A combination of these factors is most likely to result in increased activities in the region,” she concluded. Company: Sterling Partnership (Legal Practitioners)

“Divestment by the majors is also driving growth in indigenous participation in the sector as well as the ongoing power sector reforms; a massive privatisation programme in the power sector which is already beginning to witness a rise in demand for gas within Nigeria,” she commented. Looking ahead, Ms Anyanwu expects to see increased activities in the industry as a result of: new investments in the sector resulting from anticipated new bid rounds for licenses; marginal field awards; and the passage of the highly anticipated Petroleum Industry Bill. “On the demand side, what appears to be strong recovery of the European economy and increasing demands from countries like China and India and

Name: Chigozie Anyanwu Email: canyanwu@spnglegal.com Web: www.spnglegal.com Address: 17a, Wumego Crescent, Off Christ Avenue, Off Admiralty Road, Lekki Phase 1, Lagos – Nigeria Telephone: +234 (01) 874 4576; +234 (01) 874 4577; +234 (01) 873 9658

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SECTOR SPOTLIGHT:

Hot-Spot for Oil & Gas Investment ------------------------------------------------------------------------

Carlos E. Alfaro is the Founding Partner of AlfaroAbogados law firm, based in Argentina. ------------------------------------------------------------------------

Alfaro-Abogados is an international corporate law firm with a strong practice in energy, oil and gas and regulatory issues. The firm’s organisation includes offices in New York and London. “We have been advising oil & gas companies for several years and we count with a mature commercial approach with good insight of the industry,” said Mr Alfaro. “In Argentina, knowing the naked literacy of a new regulation may be of poor value if you do not know its background or the expected reaction of the private sector and the public sector (including the courts of law). Our lawyers also count with proven negotiation skills.” Recently, Alfaro-Abogados successfully served as Argentine general counsel to China Petrochemical Corporation (“Sinopec Group”) in the acquisition of all of the Argentine assets (including 22 oil & gas concessions) of Occidental Petroleum (Oxy) in Argentina. Mr Alfaro believes that the oil and gas sector in Argentina is at the beginning of a booming period. He noted that the government has established by law 26,741 (enacted in 2012) a new policy with the goal of first becoming selfsufficient and then a net exporter of oil and gas in the long term. “It has also established in the law that such objective should be achieved through the integration of public and private capital, both national and international, into strategic alliances dedicated to the conventional and unconventional exploration and production of hydrocarbons,” he commented. While there are still enough conventional sources of oil and gas, Mr Alfaro stated that Argentina’s shale oil and gas reserve - the third largest in the world – is a key attraction. The total proven reserves of the Vaca Muerta oilfield are around 927 million barrels (126×106tonnes). The US EIA estimates total recoverable hydrocarbons from the Vaca Muerta Formation to be 16 billion barrels of oil and 308 trillion cubic feet of gas. These reserves are in part already under E&P, but vast areas can be further explored either through new financing, direct investment from local and foreign companies, or in association of the private sector with state owned companies. “One problem that has delayed development until recently was Argentina’s price controls on natural gas, keeping the price at unattractive levels until 2011, when the government exempted tight gas from certain price controls, allowing new prices ranging from US$4 to US$7 per MM/BTU for the producers,” observed Mr Alfaro. “Later, in the beginning of 2013, such price was raised to US$ 7.5MM/BTU for gas produced in excess of level of production existing prior to 2013.” In September 2013, YPF announced that it had closed a deal for a joint venture in which Chevron would invest US$1.5 billion, drilling more than 100 wells in Vaca Muerta over a 12-month period. Pan American Energy (jointly owned by local Bridas and Chinese CNOOC) and Dow Chemical have also closed deals with YPF to explore areas in Vaca Muerta. The province on Neuquén, where the vast majority of Vaca Muerta rests, has also signed a joint venture agreement with Wintershall through its own state company Gas y Petroleo de Neuquén. “The state-controlled company YPF is the main player and leads the industry,” continued Mr Alfaro. “Since its 2012 re-nationalisation most of the big deals have

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involved different sorts of partnerships with YPF (or in some cases, with companies controlled by the provincial states, such as that of Neuquén. “Even though partnership with the state is not a legal requisite, it seems to be welcomed by companies wanting to involve themselves in new business projects in Argentina. At the same time, it is in line with the new policy that has been set forth by the law that has re-nationalised YPF: integration of public and private capital, both national and international, intro strategic alliances dedicated to the conventional and unconventional exploration and production of hydrocarbons.” Mr Alfaro noted that the re-nationalisation of YPF has had a significant impact of E&P, which had been continuously decreasing until 2012. As from this renationalisation, YPF is carrying-out its most ambitious drilling campaign of all time. Its business plan for 20132017 contemplates an investment of US$37,000.” “As of this date, several international oil & gas companies are closing deals in different forms of partnerships to invest with YPF and other state controlled companies,” explained Mr Alfaro. “Vaca Muerta alone is gigantic and there is room for all players to explore clusters there.” In order to attract foreign investment, the Argentine government is issuing new regulations with the aim of attracting foreign investment. As an example of this, Mr Alfaro highlighted the recently issued Decree No. 929/2013, which created a new oil & gas investment promotion regulation according to which Argentina will offer incentives to oil & gas companies if they invest one billion US dollars or more over a five-year period. “After the fifth year of the investment plan, companies participating in the program shall be entitled to sell 20% of their oil & gas production in international markets without paying export taxes and they shall be able to keep export revenue thereof outside Argentina,”

he elaborated. “In the event exports are banned because of shortages in domestic supply, then the companies participating in the program shall be entitled to sell the oil and gas destined for export in the domestic market at international prices, and they will also be granted foreign currency access.” The Government has also approved a resolution that will facilitate imports of equipment for production and drilling by oil and gas companies (Resolution 35 of the Committee of Strategic Planning and Coordination of the National Plan of Hydrocarbons Investments). Looking ahead Mr Alfaro expects major international oil & gas companies to invest substantial amounts of resources in the unconventional exploration of hydrocarbons in the Vaca Muerta oilfield. “They will do it mostly through partnerships with YPF and other state owned companies (such as Gas y Petróleo de Neuquén. “The Argentine government will put pressure on oil & gas players to increase refining capacity,” he concluded.

Company: Alfaro - Abogados Name: Carlos E. Alfaro Email: calfaro@alfarolaw.com Web: www.alfarolaw.com Address: Av. del Libertador 498, (C1001ABR) Buenos Aires, Argentina Telephone: +54-11 4393-3003

October 2013 /

SECTOR SPOTLIGHT:

Dealing with Risks in Cross-Border M&A

Dealing with Risks in Cross-Border M&A According to a recent report by Baker & McKenzie, nearly half of all senior executives expect their firm’s appetite for cross-border mergers and acquisitions to increase over the next two years. Global companies - from SMEs to the major multinationals - are constantly striving for growth and diversification, which is often found in untapped markets. The opportunities are ripe and certainly there for the taking, however expanding beyond domestic boundaries is not without its challenges! Acquisition International speaks to leading M&A practitioners to delve into the most common issues and the proven strategies employed to overcome these.

Long range binoculars and downtown of El Paso in Texas looking toward Juarez, Mexico

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Luis M Lores is a Senior Partner at Lores Budiño y Cía., S.C.

to regulatory and compliance requirements is very important.

be considered are: financial; economic; marketing; and environment.

Lores Budiño y Cía., S.C. is a medium sized organisation primarily focused on auditing, accounting, tax and advice services. Mr Lores believes the firm distinguishes itself from its competition as its partners and managers are very close to its clients in the services it provides.

“Non-compliance can result in the cancelation of an M&A project or any special authorisation or concession, as well as fines and other penalties,” he explained.

He concluded: “We expect that our new membership with MSI Global Alliance allows our firm to perform most of the M&A engagements we can get.”

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The firm has observed growing M&A in Mexico on both sides of the border. Mr Lores noted that at least 20% of the firm’s clients have been involved in M&A during the last 12 months, and the firm expects this to increase another 20% in the next two years. Mr Lores highlighted political risks as key for cross-border M&A. He stated that there are many changes in the game rules that can abort an M&A project due to uncertainty in tax and other governmental operating policies. In terms of the financial reporting frameworks, Mr Lores has not observed a major impact on cross-border M&A as Mexico’s financial information standards are in conformity with the IFRS.He advised that adherence

/ October 2013

Commenting on protectionist measures, Mr Lores stated there has not been a significant rise and that they are only focused on strategic and basic areas, such as some agricultural products and manufacturers such as clothing and food. Regarding corruption, Mr Lores stated that the risk is high and that it is very important to complete a thorough anti-corruption due diligence process. In order to overcome cultural barriers and ensure effective interaction, Mr Lores advises seeking proper professional advice to find major barriers to implement the proper actions. Discussing post-completion integration strategies, Mr Lores recommends that the main factors that should

Company: Lores Budiño y Cía., S.C. Name: Luis M Lores Email: llores@loresbudino.com.mx Web: www.loresbudino.com.mx Address: California 111, Parque San Andrés, México, D.F. C.P. 04040 Telephone: +52 (55) 6234-5000

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SECTOR SPOTLIGHT:

Dealing with Risks in Cross-Border M&A ------------------------------------------------------------------------

Alex Nekrasa is the Director of the M&A unit at Ukrainian M&A advisor MT-Invest. ------------------------------------------------------------------------

According to Mr Nekrasa, the main players in the Ukrainian M&A market in recent years have been local industrial and financial groups of companies. He noted that foreign companies have not been actively participating in the process, except for when they sold their Ukrainian assets. He highlighted the banking sector as a very good example of this, as numerous large European banks, such as Swedbank, Commerzbank and SEB Group sold their Ukrainian subsidiaries or significantly reduced their presence in the country. “Some large Ukrainian companies, however, have been looking and buying assets across the border, and not only in Russia but also in the EU and even the US,” observed Mr Nekrasa. “The situation with lack of interest towards Ukrainian companies from overseas, in our opinion, may soon change. “The main reason for that would be the signing of the Association Agreement between EU and Ukraine in November, which should lead to gradual removal of trade barriers between our markets and would make Ukraine an attractive place for expanding business and locating production capacities due to lower labour costs to say the least. And do not forget that Ukraine itself has a population of 45 million making it an attractive place for business. So we do expect cross-border M&A activity to increase over the next two years and we are already seeing growing interest from European and US companies and financial investors.” Mr Nekrasa stated that the main risk related to crossborder M&A in Ukraine, if one reads European newspaper or watches European news channels, is a

Minneapolis

There are differences and nuances in working in any different market, and multinational companies adapt to each and every market and learn to play by the local rules or even happen to change those rules. Certainly, risks in Ukraine are currently higher than in developed markets, but rewards for higher risks are also higher. political one. He noted that there is fear of not being able to defend investments, being subject to pressure from various government and law-enforcement organs, or corruption. However, in the firm’s opinion, these risks are vastly exaggerated. “Just look at the list of foreign companies working successfully in Ukraine: CRH; Heidelberg Cement; Procter & Gamble; Nestle; AB InBev; Karlsberg Group; Bunge; Knauf; GlencoreXstrata; ArcelorMittal; Craft Foods; Henkel; Johnson & Johnson; Topfer; Metro Cash & Carry; Danone, and these are just the ones of the top of my head,” he elaborate Mr Nekrasa. “I am sure their Ukrainian management will tell you that it is not easy to work in Ukraine, but that this market is just too important to ignore. There are differences and nuances in working in any different market, and multinational companies adapt to each and every market and learn to play by the local rules or even happen to change those rules. Certainly, risks in Ukraine are currently higher than in developed markets, but rewards for higher risks are also higher. And it is our role as a consultant to multinational companies to show them any such risks, real or perceived, and advise on dealing with them or avoiding altogether.”

The firm believes that its partners’ years of handson experience as principals in the marketing communications industry sets it apart from other investment banking firms in its sector. The firm understands the client-driven, culture-critical and people-centric aspects of the business – the very factors that often define the odds of a successful deal and mutually rewarding post-transaction relationship. The firm’s partners have a wealth of experience in both buy-side and sell-side transactions and are familiar with the many challenges they present. Through its thorough approach to research, delicate touch during the screening process and astute brokering capabilities, the firm increases the likelihood of a successful conclusion to a buy or sell mandate. According to Mr McCracken, the demand for crossborder M&A in the USA continues to strengthen “given that marketers view their opportunities through global prisms so then must their agency partners. This has led to an increased need for cross-border M&A activities. McCracken currently has mandates in the UK, China, Canada, Brazil and, of course, the USA.

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Keith McCracken is the CEO and Managing Partner of McCracken Advisory Partners (McCracken). ------------------------------------------------------------------------

McCracken is one of the top international M&A advisers in the marketing services, technologies and media sectors. The firm advises on buy-side and sell-side mandates throughout the process of growth through acquisition and eventual exit strategies.

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In conclusion, Mr Nekrasa offered some advice for overcoming cultural barriers and ensuring effective interaction: “Quite often having a local minority shareholder or respected local top manager involved in a key role in running the company is the most effective way of adapting successfully to the local market.”

Discussing the key risks to consider when embarking on a cross-border M&A project, Mr McCracken noted that each region and country will have a nuanced market, economic and legal conditions surrounding deal making. He believes that local representation from experienced financial, tax and legal advisers is critical. The firm overcomes cultural barriers and ensures effective interaction through local knowledge, gained as a result of its own indigenous staff on the ground, as it has in Sao Paulo, Brazil for example.

Company: MT-Invest Name: Alex Nekrasa Email: nekrasa@mtinvest.com.ua Web: www.mtinvest.com.ua Address: 1 Panasa Myrnogo, office 2, Kyiv 01011, Ukraine Telephone: +38 (044) 280-2350

When creating post-completion integration strategies, Mr McCracken stated that the goal should be a win-win scenario for both buyer and seller. “The integration plan should lay out a mutually agreed strategy and tactics that establishes measurable steps to be taken to ensure that on the one hand the buyer has more than reasonably certain expectation of owning a sustainable asset once the earn out is complete while on the other hand, the seller can reasonably expect that the very same measures will provide a path to a successful and optimised earn out,” he elaborated. Mr McCracken concluded with a prediction for crossborder M&A in 2013/14: “Cross-border deals will continue to increase. The associated risks are more difficult to predict but may in any case diminish and buyers become more experienced in completing international transactions.”

Company: McCracken Advisory Partners Name: Keith McCracken Email: keith@mccrackenap.com Web: www.mccrackenap.com Address: 5041 Park Terr. 2nd Floor, Minneapolis, MN 55436, USA Offices: Minneapolis – New York – Sao Paulo Telephone: +1 952 922 8140

October 2013 /

SECTOR SPOTLIGHT:

Streamlining the Relocation Process

Today’s global relocation market is worth over $60 billion and it’s startling clear as to why; a perfect storm of factors over the past four years has upended traditional plans about how a business should be organised and where they should be based. Businesses are increasingly less confined by international boundaries, cross-border strategy is high on many company agendas, and secondments are more popular than ever. Contrary to some opinions, corporate relocation it not just about moving possessions across country, or indeed around the world; it’s a huge industry and it’s success lies in identifying bespoke solutions for a corporation with a mobile workforce. It’s nothing new but it’s constantly evolving; as our global business needs are changing so are the services on offer from relocation firms; there has been a clear trend by some of the more successful firms to streamline their services. Acquisition International speaks to a panel of relocation industry experts to discuss the current industry trends.

Company: Brookfield Global Relocation Services Name: Scott Sullivan Email: scott.sullivan@brookfieldgrs.com Web: www.brookfieldgrs.com Address: 150 Harvester Drive, Suite 201, Burr Ridge, IL 60527, USA Telephone: +1 (630) 427-2062

Name: Steve Thorne Company: Grosvenor House Apartments by Jumeirah Living Email: StayGHA@jumeirah.com Web: www.jumeirah.com/GHA Address: Park Lane, London W1K 7TN, UK Telephone: +44 (0) 20 7518 4444

Name: Susan Musich Company: Passport Career, LLC Web: www.PassportCareer.com Email: smusich@passportcareer.com Address: 2020 Pennsylvania Ave., NW, #410, Washington, DC 20006 USA Telephone: +1 (703) 608-4433

Company: Pathfinder Relocation Services Sdn. Bhd. Name: Triona Chelliah Email: info@pathfinder-relocation.com Web: www.pathfinder-relocation.com Address: 501-2-B Wisma Thong Sin, Jalan Tanjung Bungah, 11200 Penang, Malaysia Telephone: +6 04 8903758

Company: RSB Deutschland GmbH Name: Helmut Berg Email: helmut.berg@rsb-relocation.de Web: www.rsb-relocation.de Address: Dreieichstr. 59, 60594 Frankfurt, M., Deutschland, Germany Telephone: +49-(0)69-61 09 47 - 0

Company: Wendy Wilson Consulting Name: Wendy Wilson Email: wendy@wendywilsonconsulting.com Web: www.wendywilsonconsulting.com Telephone: +44 (0) 7917 456 608

/ October 2013

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Streamlining the Relocation Process

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Scott Sullivan is the Executive Vice President of Global Sales, Marketing, and Consulting at Brookfield Global Relocation Services. ------------------------------------------------------------------------

For 50 years, Brookfield Global Relocation Services (Brookfield GRS) has been a trusted leader in designing and delivering domestic and international relocation and assignment management services throughout the world. Their portfolio of services includes program administration, selection and preparation, global expense payment and administration, home sale, property management, destination services, global household goods management, immigration, transition assistance, and global compensation services. “We facilitate everything from Government Relocation Program Management and Domestic Relocation Program Management to International Assignment Services and Strategic Consultancy,” said Mr Sullivan. “Our worldwide reach is supported by our global service centres and our Global Alliance Management (GAM) team relationships around the world. Our partnerships and strategically placed service centres give us the range to handle the specific scope of both domestic and international services. “Relocation is our fundamental business, and we are proud to be the partner of choice for the world’s most recognisable corporate brands. Our balanced portfolio, with over 500 clients, including 35% of the Fortune 100, continues to grow and represents a wide spectrum of businesses and industries.” Brookfield GRS is a division of Brookfield Asset Management (Brookfield). Headquartered in New York and Toronto, Brookfield (NYSE: BAM, TSX: BAM.A) is a specialised asset management company focused on property, power, infrastructure assets, and real estate. Brookfield GRS’ employees operate from regional offices in Asia, Europe, North America, and South America to support the success of the firm’s clients and the relocating employees around the world. Brookfield GRS continuously evaluates its service offerings and develops new innovative products to complement their existing portfolio. The firm has a Steering Committee dedicated to product development and enhancement. Ideas are solicited from across the organisation, as well as from its clients, customers, and suppliers. “Not only do we solicit feedback, but we take action,” said Mr. Sullivan. “Proposed services or modifications are

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advanced through different stages from concept, scope, investigation, and development, to testing, launching, and validation phases.” Recently, due to challenges the firm’s clients have faced as a result of the U.S. domestic housing crisis, Brookfield GRS designed and implemented a predecision counselling program that included policy and risk assessment counselling, referrals to client providers for real estate services, dual career counselling, and mortgage services. The program also includes a tiered application of Brookfield GRSs’ eValuator marketanalytic tools, broker market analyses (BMAs), or relocation appraisals, depending on employee profile and lead time. “From a service perspective, several clients had expressed concern with the number of contacts that transferring employees had to speak to during the course of their relocation,” explained Mr. Sullivan. “Each transferring employee is contacted by at least one supplier for each service in scope, in addition to their interaction with the Brookfield GRS Consultant.” As a result, Brookfield GRS has launched a new process ensuring its clients and their transferees receive bestin-class service provision through “Strategic Links”. The revised processes, with supporting SLAs, for its downstream suppliers, have been designed to: •

Reduce the number of supplier contacts who speak with the assignee/transferring employee • Ensure key information is collected only once from the assignee/transferring employee and then appropriately disseminated by the Consultant to the suppliers, with the exception of service-specific information collected by suppliers as necessary, i.e. to support the immigration process • Eliminate supplier-requested information via Brookfield GRSs’ system generated referral form “We follow a formal procurement cycle within our cosourced service streams providing our clients access to the most innovative service offerings and competitive pricing in the marketplace,” elaborated Mr. Sullivan. “Clients benefit from our aggregated volume spend, over 3 billion annually, resulting in a pricing advantage over other relocation management companies or managing suppliers independently. As relocation trends continue to evolve, we will be adjusting our portfolio to meet our current and future clients’ needs.”

Looking ahead to 2014, Mr. Sullivan believes focusing on the competencies of the international mobility function, identifying and mobilising talented workers with unique and vital skills, will position organisations to win lasting and competitive advantages in the talent marketplace. Over the next year, Brookfield GRS anticipates the following trends and conditions: Policy Flexibility Mr. Sullivan noted that business-driven cost and policy flexibility within an overall global mobility program has shifted to focusing on solution development for problems faced during flexible-program implementation. “This will ensure flexibility is well communicated, implemented, and managed within the organisation,” he observed. “As a growing trend, additional policy types, such as short term assignments, localisation, and developmental assignments, continue to enhance flexible packages and benefits within existing policies. More companies are considering the introduction of flexible or segmented programs.” Diversity and Emerging Markets According to Mr. Sullivan, highly educated talent is increasingly available in developing countries, and skilled migration from emerging markets is enhancing the talent-pool’s diversity. “We must re-evaluate mobility programs to ensure that they meet the needs of transferring employees from an array of cultures and home countries,” he continued. “Brookfield GRSs’ mobility practices are continually integrated with talent management initiatives, which are developing and managing talent from emerging countries.” Cost Management Mr. Sullivan stated that companies continue to implement and use cost estimates, assignment authorisation processes, and management of exceptions to optimize costs, new structures, and patterns of mobility containing those costs. Technology to Support Compliance Mr. Sullivan believes showing a renewed interest in technology to support compliance requirements is vital. “Mitigating tax and immigration compliance through technology tracks highlights their impact. In some jurisdictions, the existence of programs, backed by technology, may minimise penalties imposed by authorities, if their records show a company has made an effort to be in compliance,” Sullivan concluded.

October 2013 /

SECTOR SPOTLIGHT:

Streamlining the Relocation Process companies report that assignees have returned home early from an international assignment due to concerns regarding their partner’s career or perceived lack of employment opportunities. Companies recognize that when spouse/partner career issues impact global mobility of assignees, the costs can be significant for both the organization and for the family. The benefits of expatriation to companies, assignees and country economies extend far beyond monetary value. Expatriation gives the employees professional exposure as well as a cross-cultural experience that impacts the way they approach their work and company markets. Employees become more culturally sensitive, adaptable and flexible—key skills valued by global companies.

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Steve Thorne is the Director of Sales & Marketing for Grosvenor House Apartments by Jumeirah Living. ------------------------------------------------------------------------

Securing suitable permanent housing is one of the most stressful areas of the relocation process. Making this easier for companies and relocating employees is Grosvenor House Apartments by Jumeirah Living. These exclusive hotel residences offer the perfect “home” for a newly relocated employee, whether as a temporary solution whilst longer-term housing is secured, or as a luxury semi-permanent residence. Grosvenor House Apartments is centrally located on Park Lane in Mayfair, one of London’s most exclusive areas. The 130 serviced residences range from studios through to four and five bedroom premium suites and penthouses and are ideal for extended stays in London. A new concept in luxury accommodation Combining the services of a five-star hotel with the discretion, comfort and security of a private Mayfair residence, Grosvenor House Apartments is the first exclusive ‘hotel residence’ to be opened in London, offering discerning clientele a highly personalised service with luxurious amenities, full business services and flexible accommodation. Services include 24-hour Concierge, daily maid service, fitness room, and 24hour in-residence dining. Additional services including spa and beauty treatments and private dining are also available in-residence through the At Home with Jumeirah Living services, which offers the best of London services in the comfort of the residents’ London ‘home’. The London Suites & Penthouses For those requiring more space or simply a statement address in London, the London Suites – comprised of the Serpentine, City, Westminster, and Hyde Park – are named after local landmarks and views. Ranging from 158 to 225 square meters, each of the four suites offer breath-taking views of Hyde Park or the rooftops of surrounding Mayfair, and are ideally equipped for either short or extended stays and offer a host of inclusive services and benefits. On the top floor are a further four spacious and luxurious penthouses ranging from 368-448sqm and offer the ultimate in luxury London living, complete with a personal Butler to attend to your every need. Key features include secure private lift access, bespoke Poggenpohl kitchens, opulent dining and sitting rooms – ideally sized for entertaining - as well as a study area, media room and stylish bedrooms. Private balconies offer residents impressive views over Hyde Park or the rooftops of Mayfair.

/ October 2013

Supporting relocating employees Through the experienced team at Grosvenor House Apartments, residents receive the best insider knowledge on how to settle in to life in London. The dedicated Concierge team provides a full settling-in consultation service at the convenience of the resident, while the expansive “At Home” events programme introduces residents to elements of a luxury London lifestyle during their stay, ensuring they can culturally adapt to life in the capital and start to live like a true Mayfair local. For companies without relocation support, the Grosvenor House Apartments team are connected to some of the relocation industry’s most experienced professionals and able to offer advice and support on everything from household goods shipments and school searches, to transporting art collections or buying property in London. The combination of refined hotel services, relocation support and luxurious accommodation available at Grosvenor House Apartments aims to make the transition to life in London as stress free as possible. ------------------------------------------------------------------------

Susan Musich is the Executive Director of Passport Career, LLC. ------------------------------------------------------------------------

Dual Career Impacts Global Mobility Global mobility is increasing in international companies and the changing needs, demands and demographics of the cosmopolitan international assignee is turning mobility departments on their heads. Global mobility support has moved from the traditional destination briefings to an expanded focus of proactively addressing family concerns— particularly that of spouse/partner career support. How dual careers impact a company’s bottom line Dual career couples are on the rise, and now more than 80 percent of couples have a dual career focus and dual income. Therefore, dual career issues are one of the key issues for motivating mid-career and top talent to accept an international assignment. Further, they are of increasing importance to the companies’ success with international mobility. When the careers of both partners cannot be accommodated, it has negative implications for recruitment, talent management, deployment of human resources, retention of key talent and successful economic outcomes for individual employees as well as for companies in home and host countries. Research shows that the cost to a multinational company for a failed assignment due to dual career matters can exceed $1 million. An international assignment failure includes both assignment refusals and early returns for personal rather than business reasons. A number of

Why dual careers are on the rise Over half of companies employ more than one nationality and women make up some 12 percent of the expatriate workforce. The proportion of assignees between the ages of 25 and 35 and those over 50 is also increasing, and these age categories now make up almost 48 percent of global assignees. Family patterns are much more diverse, and now include more accompanying male spouses, unmarried partners and same sex couples. All of these factors impact the dual career issue. Younger, upwardly mobile expats who are offered opportunities overseas and their accompanying spouses are also looking for their partners to have relevant career opportunities in the host country—particularly since the international experience can help move both careers forward in this era of globalization. In many cases, the assignment packages are reduced from previous years, so many assignees also depend on second incomes in the host country. Companies predict that as they start to move larger numbers of employees, and include those in junior positions to new locations, it will become even more of an issue as both partners usually work in the home country and have the expectation for both to continue working in their host country. Addressing the spouse/partner career issue To increase the staff mobility as well as cost effectiveness, efficiency, and the success rate of international assignments, the majority of companies—both large and small—increasingly provide some form of dual career assistance to support expatriate spouses/partners. Spouse/partner career support often includes information on the job search and employment opportunities, work permit regulations, country resources, resume/CV guidance specific to the country, coaching, and alternative career options ranging from volunteer experiences to continuing education opportunities. Passport Career, LLC is addressing this key mobility concern by providing all of the above spouse/partner career support making it both effective and affordable for companies to easily and efficiently mitigate this matter. ------------------------------------------------------------------------

Triona Chelliah is the Owner and General Manager of Pathfinder Relocation Services Sdn. Bhd. ------------------------------------------------------------------------

Pathfinder Relocation Services Sdn. Bhd. is an independently owned and operated Destination Service Provider (DSP) for Global Mobility Companies (GMCs) and the HR departments of international businesses relocating staff to and from Malaysia. Founded in 1996, PRS has been successfully relocating assignees to and from Malaysia through its extensive, yet personal services. PRS provides the following core services: Home Search, School Search, Visa & Immigration, Orientation, Cultural Training, and Departure programmes.

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SECTOR SPOTLIGHT:

Streamlining the Relocation Process “PRS has been certified to the EuRA Global Quality Seal since 2008 and this provides our clients with the reassurance that we have proven procedures and frameworks in place to support the assignee (and family), GMC and Corporate HR with the transition into/out of Malaysia,” said Triona. “I am also conscious to ensure that PRS continues to deliver a personalised and caring service to our assignees and clients, but now we have the strength of the framework to provide consistency.”

The firm is a proud holder of the EuRA Global Quality Seal since 2008. The EGQS is the only quality accreditation for the Relocation Industry, and Mr Berg sees it as proof of the top quality the firm always strives to deliver.

“PRS also supports employee learning with regard to the relocation industry. Three staff members and myself hold the Global Mobility Specialist designation from the Worldwide ERC.”

According to Mr Berg, one of the most important factors that impact the relocation process is the “Management of Expectation”. He advised that the expatriates should get as much information as possible about their new host country, and not only the expatriate.

“These help us deliver on our company motto of ‘Relocation Made Easy’.” By implementing a process-driven methodology through the adoption of the EuRA Global Quality Seal, PRS has used Internal Audit and Management Review to continually re-evaluate the service delivery and how the firm supports the client and assignee. “It’s not always possible to streamline as GMCs and Corporate HR have differing requirements, but we do benefit from being able to improve our core processes and manage the exceptions,” elaborated Triona. The relocation process has a number of participants and PRS strives to ensure their impacts on the process are positive ones. Triona stated that GMCs and Corporate HR require service providers who provide value above and beyond the price they quote. “It is important to build relationships with the organisations and to tackle any problems directly and professionally,” she continued. “Once this can be done the size of the DSP is somewhat irrelevant as the quality of service speaks for itself. I am delighted that PRS is a multi-platinum Cartus Global Network Commitment to Excellence recipient and even shortlisted for the Cartus Masters Cup Award.” “Managing the expectations of the assignee and their family, if included, is vital within the relocation process. PRS starts with the end in mind by incorporating a robust Needs Analysis process that gathers relevant information and provides an area for the assignee to write in longhand what their concerns and requirements are. Sometimes tick boxes are not enough. I encourage my staff to create a dialogue with the assignee as conversation is also important.” Triona stated that there are many challenges to be faced, as by definition, the relocation industry is a people industry. In particular, managing the gaps between expectation, perception and reality can be challenging. “It can be managed through acting as a partner in the relocation process and providing professional communication to the assignee, GMC, and/or Corporate HR. Sometimes the Destination Service Provider is not in a position to meet the assignee’s expectation due to their company’s relocation policy, but we keep a smile on our face and explain the options for the assignee to decide upon,” she concluded. ------------------------------------------------------------------------

Helmut Berg is the Managing Shareholder and General Manager of RSB Deutschland GmbH, among the leading destination service providers in Germany. ------------------------------------------------------------------------

RSB was founded in October 1990. From the beginning, the firm offered services in the national and international (inbound and outbound) dimension.

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Mr Berg, in his time as President of the European Relocation Association EuRA from mid-2008 to mid2011, was instrumental in implementing this tool to improve the overall quality of the industry.

“This should also comprise the accompanying family or partner,” he commented. Facts about the housing market should be communicated as well as information on the “red tape” that is to be expected. And not to forget an intercultural preparation about different norms and values in the new host country.” Mr Berg stated that every expatriate faces different challenges. RSB recently conducted an analysis about expatriates’ experiences in Germany. Top of the list of challenges are: disability to speak the language; irritation about small apartments/houses; and disability to distinguish “normal” behaviour of the locals from what the expatriates rate as unfriendly treatment. “Again: the best way to overcome all this is unbiased information, support with home finding and dealing with the authorities and giving the feeling that the counterpart is very welcome,” he continued. From RSB’s experience of the industry, Mr Berg stated that the business volume has grown compared to last year, though there are no exact figures available. “However, the monthly EuRA Index on the basis of a research among the EuRA members indicates that business is better than last year,” he observed. “For RSB the year 2013 is a little lower than 2012, when we had the best year of the company history.” Mr Berg noted the positive trend seen in the industry, but he stated that the still unsolved financial uncertainties in Europe and elsewhere can have a slightly negative impact on the relocation business in Germany and Europe. However, in other parts of the world, e.g. the BRICS, he expects to see more volume. “The relocation industry – yet rather small and not in the focus of public interest – is successfully contributing to the economic success of international corporations. There is a trend that relocation is either a mere transaction activity (orientation, home search, settling-in) or is developing to be partnering with the HR departments when it comes to the development of assignment policies and – following this – take care of the entire process of assignment management,” he concluded. ------------------------------------------------------------------------

Wendy Wilson is founder and director of Wendy Wilson Consulting. ------------------------------------------------------------------------

Wendy Wilson Consulting supports businesses managing global workforces, implementing bespoke coaching programmes to prepare employees for global assignments. The increased demand for one-to-one cross-cultural and transition coaching support is a direct result of the radical changes in modern talent mobility.

Firstly a marked shift in mobility patterns is resulting in more flexible opportunities but in new and different forms. As more efficient, short-term and cost-effective alternatives to traditional global mobility are being implemented in response to the global business need to move talent quickly, a new pattern of mobility is emerging – the ‘purpose based’ mobile worker is gradually superseding the traditional ‘duration based’ assignee role. Secondly there is also a new generation of global talent now entering the workforce - the Millennials (Gen Y’ers born between 1982 and 2002). By 2020 Millennials will comprise around 75% of the world workforce and their expectations are reflective of the changing economic, technological and increasingly globalised environment that they are immersed in. Self-sufficiency through technology has bred a generation of confident, independent, self-assured and adaptable individuals who are extremely receptive to new ideas and lifestyles. They expect to have several different employers during their career and many expect an overseas assignment during the early part of their career as part of their learning and development. Millenials are the blue-print of the ‘purpose based’ mobile worker and forward thinking relocation specialists are now having to re-think their current working models and how they might accommodate this new demographic as well as a new market for self-driven lower cost relocation. Some relocation companies have begun to embrace a new relocation approach by introducing web-based online relocation services to their clients – a sort of onestop shop for the transferee to go shopping online for all their relocation needs prior to, during and following their move to their new destination and this innovative use of technology in global mobility is beginning to transform the relocation industry. By using technology to facilitate round the clock access to online expertise, online relocation is reducing cost and administration for businesses when relocating their staff around the world and it’s empowering assignees and their families as they have more control and knowledge of what’s happening with their moves. This is particularly beneficial if they’re managing a lump sum relocation package because it gives them the flexibility to personalize their relocation plan according to their individual needs and at the pace they prefer. It’s also opening up a relocation support path to a much wider globally mobile audience such as graduates and interns, local hires, contractors and project managers, who have not traditionally been supported in the past. Online relocation can also provide support for the relocating client and their family not just at the time of the move but beyond. With an online relocation platform in place, relocation companies will now be able to offer a much wider range of what are often referred to as the ‘soft’ support packages for pre departure and post arrival care including cross-cultural coaching and training, partner support and career advice. The client can go online and research products, compare prices and ultimately make a purchase for exactly the sort of post-landing support they require to suit their needs and budget. And that’s good news for independent suppliers such as Wendy Wilson Consulting who offer an integrated cross-cultural coaching service to support the needs of the individual assignee, their partners or family, not just before the move but throughout the duration of their assignment, including on-going repatriation support if required.

October 2013 /

SECTOR SPOTLIGHT:

The Power of Immigration to Boost Economic Recovery

The Power of Immigration to Boost Economic Recovery In this increasingly globalised economy businesses recognise that internationally sourced candidates could well be the key for boosting growth. Immigration is proving to be a strong source of population growth for many regions across the globe with immigrants driving demand for housing and durable consumer goods. Recent reports across the U.S, the UK, numerous EU countries, Canada and Australia (to name just a few) have cited immigration as a key factor in boosting their economies. It is of course vital for business executives to ensure that they are abreast of regulation and reform within the regions they are working in or sourcing suitable candidates from. Senior executives need to seek succinct and comprehensive advice from those familiar with the constantly updating policies to ensure compliance. Acquisition International speaks to immigration experts to discuss the key issues.

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Dominey Flores is a Licensed Immigration Adviser & Communications Co-Ordinator at Silver Fern Immigration Services Ltd. ------------------------------------------------------------------------

New Zealand is a small and remote country with immense potential for economic growth. Ms Flores states that while there are of course benefits to this, from an economic standpoint, she noted that this has proven to be an on-going challenge for economists, government, policy makers and businesses. “The advance of technology may have helped to alleviate the spatial gap between New Zealand and the rest of the world, but the issue of population size is still a concern,” she commented. “New Zealand’s population is small and it is aging. The average age of New Zealand’s population is rising and this of course, presents economic challenges – because in order to maintain economic and social growth, the country needs a higher proportion of working age people to sustain and grow its economy.”

/ October 2013

“One of the ‘solutions’ to addressing this population is immigration,” continued Ms Flores. “Immigrants have and will continue to play an integral role in the overall ‘growth’ and future of New Zealand. Immigrants provide a steady flow of labour and revenue to New Zealand; and contributes to building New Zealand’s workforce by bringing in skills that are in shortage and in high demand, as well as expertise and international trade linkages. Moreover visitors and international students bring in significant revenue to the country.” Ms Flores believes that immigration is a key factor in the growth of New Zealand’s economy. She anticipates that the policies and regulations that the government will implement in the coming months will be aimed at attracting investors, highly skilled and qualified migrants and supporting business visa applicants in the exporting industry. Economist continue to expound the economic constraints that come from a small population, and underline the benefits of ‘being a bigger country’.

“Emphasis on trade will be further consolidated by new policies that aim to foster ties to major countries such as the USA, Canada, India and China and there will continue to be a focus on recruiting overseas workers to fill the skill and labour shortages.”

Company: Silver Fern Immigration Services Ltd. Name: Dominey Flores (Licensed Immigration Adviser no: 201200844) Email: dominey@sfimmigration.co.nz Address: Botany Junction, Te Irirangi Drive, Flat Bush 2016, Auckland, New Zealand Telephone: +64 9 277 7848 Web: www.silverfernimmigration.co.nz

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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 The Alternative Investment Fund Manager’s Directive (AIFMD) has been introduced to provide a common regulatory regime for managers of non-UCITS funds, creating a single European market in this area. The AIFMD is the first time that private equity has been subject to pan-European regulation. The directive is designed to create a genuine single market for alternative investments, which includes private equity. Understanding a new regulation and more importantly its impact can be challenging, particularly when confusion exists around the detail. Acquisition International speaks to some of the leading players in the alternative investment arena to discuss their thoughts on the AIFMD.

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Jean Devambez is the Global Head of Products at BNP Paribas Securities Services. ------------------------------------------------------------------------

The aim of AIFMD is to bring more transparency and safety that will contribute in rebuilding trust in the fund industry by broadening the role and the scope of the depositary. It creates a harmonised set of rules for the marketing and management of non UCITS funds and provides a passport for the Alternative Investment Fund Managers (AIFM) as well as the Alternative Investment Funds (AIF). It is a major change for our clients as asset restitution liability will be extended to all European markets. Asset Managers have now to integrate this risk in their investment approach: what is the level of risk linked to this asset or country? What if my depositary bank doesn’t accept to consider this asset in the safekeeping category? What is the cost of this risk? etc. Based on our experience as a long-standing depositary, we have developed a standard risk assessment tool to support them. Investment companies should also consider how to optimize the opportunity of the AIFM passport or the AIF passport; it may well change the way they organize their fund range and their marketing approach. It may trigger fund range reorganization to take into account distribution policy (UCITS for retail distribution and AIF for more specific distribution purposes) and investment strategy (leverage/standard, listed/OTC asset, etc.). Generally speaking, the impact of the directive is significant for real estate funds, it is a push for more

/ October 2013

Our global / local model, physically established in 12 European countries while having global platform, allows us to support our clients in each local market but also for cross-border distribution. We recently opened a new depositary business in two additional countries: the UK and the Netherlands. outsourcing, while the impact is more limited for private equity funds. There is still an open discussion on single hedge funds with prime brokers to manage the restitution liabilities of the depositary when the assets of the funds are held by the prime broker. The negotiation for discharge is on-going. In the longer term we see some impacts on the funds using leveraging strategies.

AIFMD will significantly push for further reorganization of the European landscape. This has a cost but it should be absorbed in most of the cases by the benefits of collecting more assets. Clearly, we see AIFMD as a tremendous opportunity for our markets to become a globally recognized brand outside Europe, following the example of UCITS.

It is also a huge change for our industry compared to the current situation. As a pan-European depositary, we are well positioned to benefit from this change as AIFMD is very close to the previous regulatory frameworks of some markets where we are operating, such as France, Luxembourg or Italy. Our global / local model, physically established in 12 European countries while having global platform, allows us to support our clients in each local market but also for cross-border distribution. We recently opened a new depositary business in two additional countries: the UK and the Netherlands. This model, combined with our proprietary network in 25 counties worldwide that gives us an absolute control over risk and operational processes, is unique to ensure to our clients a seamless transition to AIFMD compliance

Company: BNP Paribas Securities Services Name: Jean Devambez Email: jean.devambez@bnpparibas.com Web: www.bnpparibas.com Address: Grands Moulins de Pantin, 9, rue du Débarcadère, 93500 Pantin, France Telephone: +33 1 42 98 10 00

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SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Manager’s Directive ------------------------------------------------------------------------

Samuel Won is the Founder and Managing Director of Global Risk Management Advisors, Inc. (“GRMA”). ------------------------------------------------------------------------

AI: What are some of the common misperceptions surrounding AIFMD? GRMA: many funds are significantly underestimating the work required for AIFMD. These funds are incorrectly assuming that because they are in the “transition period” they have sufficient time to satisfy the many requirements (e.g. organizational, remuneration, transparency, risk management, etc.). Many non-EU funds believe they can finesse many of the requirements by giving up active marketing and relying on passive marketing and reverse solicitation from European investors. In our view, this approach is flawed because we believe European regulators can be expected to adjust the rules so that EU funds are not placed at a competitive disadvantage versus their non-EU counterparts with regards to the AIFMD requirements. Ultimately, what many funds are missing is that the requirements outlined in AIFMD represent a new threshold that funds will be expected, by investors as well as regulators, to meet to be considered institutional-quality with regards to risk management. Therefore, in our opinion, even funds that are deemed to be non-EU AIFMs will need to comply with most if not all of the same requirements as EU AIFMs. AI: What do you believe are the greatest operational challenges with regards to implementing AIFMD? GRMA: most funds do not presently do much of what is required by the new directive. Consequently, the greatest operational challenge for funds is to put in place the extensive infrastructure, processes, controls and governance associated with the requirements. For

most funds do not presently do much of what is required by the new directive. Consequently, the greatest operational challenge for funds is to put in place the extensive infrastructure, processes, controls and governance associated with the requirements. example, a very substantial effort is necessary for most funds to put in place the infrastructure and processes for risk measurement and monitoring, develop risk management policies and procedures and independent risk management governance. AI: What do you believe are the major similarities and differences between AIFMD’s ESMA reporting and Form PF? GRMA: there are many similarities between the transparency and risk reporting requirements in the AIFMD’s ESMA reporting and what is required for Form PF. Both European and U.S. rules require reporting of detailed risk profile information to the regulators on a periodic basis. However, many of the questions and assumptions behind the questions in the ESMA form and Form PF are substantively different, and therefore funds would be wise not to assume that they can merely “map the data” in one form to the other. Also, in the ESMA, the European regulators were wise enough not to allow funds to evade answers by answering “relevant but not tested.” AI: What do you recommend that firms do to best prepare themselves to be in full compliance with AIFMD? GRMA: we strongly recommend that funds should start by performing a gap analysis to understand and

determine where they have the capabilities and where they lack the necessary infrastructure, processes, controls and governance. We believe that this type of analysis will help a fund to identify not only the common areas of intersection among the various reporting and transparency requirements but also the areas where there are distinct differences that may require a new approach and/or processes. Overall, we strongly advise funds to take a unified approach for all of their risk-related regulatory reporting and investor-driven transparency requirements (e.g. ESMA Form, Form PF, OPERA, etc.).

Company: Global Risk Management Advisors, Inc. Name: Samuel Won Email: swon@grmainc.com Web: www.grmainc.com Address: 445 Park Avenue, 9th Floor, New York, New York, USA Telephone: +1 (212) 230-1610

The AIFMD Implementation in Slovak Law ------------------------------------------------------------------------

Alena Černejová is a Senior Partner at ČERNEJOVÁ & HRBEK, s.r.o. ------------------------------------------------------------------------

On 22 July 2013 the substantial amendment of the Law on Collective Investment implementing the AIFM Directive (2011/61/EC) (the “AIFMD”) entered into force. The AIFMD implementation in Slovakia has introduced the regulation of entities and funds and their activities which were not regulated before in Slovak law. The amendment of Collective Investment Law has not been widely publicly discussed prior adoption and it is questionable how difficult the funds’ managers will find to comply with the new law. The interpretation of the amendment is yet to be provided and the practice must establish the common understanding of the new terms and definitions. The implementation of the law in practice will be a challenge also for the Slovak regulator - the National Bank of Slovakia (the “NBS”). Its competencies have been enlarged, the communication with the managers will have to be more intensive and the NBS will have to review all notifications of the funds to be distributed in the Slovak Republic and otherwise supervise the managers of the funds and their activities. The new regulation enables to establish a variety of undertakings that will be considered the alternative investment funds (the “AIFs”), including the collective investments undertakings being the legal entities. This is a new phenomenon in Slovak collective investment law comparing to foreign regulations. Investment companies

ACQUISITION INTERNATIONAL

existing before the AIFMD implementation were established under the general corporate regulation of the Commercial Code as any other commercial companies. Now such companies being defined as the collective investment undertakings have to comply also with specific requirements under the collective investment legislation and will be supervised by the NBS.

can start with distribution of the foreign AIF described in the notification.

According to the amendment, the AIFs may be marketed only via a private offer and only to professional investors. The law distinguishes between the Slovak AIFs and foreign AIFs. The creation of the Slovak AIF which is not a legal entity does not require a specific license or a permission, provided it is managed by the management company holding the license for management of the AIFs. The AIF being a legal entity must first obtain the license from the NBS.

The near future should show whether the purpose of regulation of distribution of the AIFs has been achieved. Or whether it is so heavy and strong, as some say, that in result the marketing with the AIFs will decrease due to many obligations of funds’ managers. The managers and the lawyers will be now waiting that the NBS issues the guidelines for the most efficient and accurate application of the new law.

We expect that the situation in assessment of marketing of foreign AIFs on the territory of the Slovak Republic will become more interesting yet also more complicated. The European AIFs will be permitted to be marketed on the Slovak market on the basis of the European passport, subject to notification to the NBS of the intention to market the European AIF on the territory of the Slovak Republic which must be done by the appropriate regulatory authority of the home member state of the AIF. The non-European AIFs’ manager will be obliged to notify its intention to market the foreign AIF in Slovakia. After control of all conditions stipulated in the law, the NBS will inform such manager within 20 business days from the delivery of the complete notification whether it

The Slovak collective investment law does not apply to foreign AIF’s manager who responds to an unsolicited request from a Slovak investor and further communication is limited only to such request.

Name: Alena Černejová Email: cernej@chplaw.sk Web: www.chplaw.sk Address: Kýčerského 7, 811 05 Bratislava, Slovak Republic Telephone: +421-2-5244 4019, 5244 4020

October 2013 /

SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Manager’s Directive

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Fergus McNally is an Asset Management Partner at EY.

-----------------------------------------------------------------------“With many asset managers and global service providers impacted by the directive, being in a position as EY are, to mobilise multi-jurisdictional teams with the requisite local legislative and industry knowledge has been a big advantage,” said Mr McNally. “We have been able to mobilise these cross border teams at short notice to deliver meaningful solutions to our clients as they navigate the challenges of the directive.” Mr McNally stated that the breadth and reach of AIFMD make it a truly transformational piece of legislation. He noted that, following the financial crisis in 2008, legislators have sought to impose a comprehensive set of rules on investment managers, in the hope that crises of the future will be averted. “From an AIFM’s perspective, the directive places numerous responsibilities on the manager vis-à-vis authorisation, operations and supervision of the manager,” he observed. “For smaller asset managers, there is no doubt that the directive will add cost and complexity to the running of these businesses, as they either look to add staff numbers or delegate out certain functions in order to comply with the requirements of the directive.” Mr McNally explained that the directive does not stop at investment managers. In his view, arguably one of the most contentious aspects of the directive concerns the role of the depositary and in particular depositary liability. Under the directive, a depositary will be, as a general rule, liable to an AIF or its investors for the loss of financial instruments in its custody. The depositary will not however be liable where it can prove that the loss has arisen as a result of an external event beyond its reasonable control, the consequences of which would have been unavoidable. “As you can imagine, this has been the subject of intense debate within the industry over the past few years as organisations seek to understand their new found responsibilities under the directive and develop new operating frameworks and pricing structures to manage this challenge in an AIFMD ready world,” he elaborated. For EY’s clients, the directive raises the regulatory/ compliance bar. Mr McNally noted that over the past 18 months, the firm’s clients, both managers and service providers alike, have been conducting a gap analysis of

/ October 2013

existing operating models, policies and practices with the requirements of the directive. “At EY, we have a long history of working with start-up managers in the alternatives sector,” he continued. “With the additional cost barriers to entry of AIFMD, I believe we will see a further drop off in start-ups in this space than we have seen in the past.” According to Mr McNally, the obvious pros of the directive are the ability for authorised AIFM’s to avail of the European marketing passport as they seek to distribute their products across the EU. From an investor perspective, he believes that the “Brand AIFMD” could be seen as a mark of quality, with “base line” operational standards for investment managers. This could in turn speed up investor operational due diligence and decision making when it comes to investing in an AIFM’s fund products. On the other hand, Mr McNally highlighted the increased costs associated with compliance as a major con. “There are many compliance challenges associated with the directive,” he commented. “Right now, a key area of focus for managers is to understand the remuneration provisions of the directive with certain jurisdictions, including the FCA, having just recently published specific guidance on this. In addition, managers have been: • working through how they are organised internally and what gaps need to be remedied to comply with the directive; • determining how they will seek to manage the delegation of functions and establishing; and • documenting robust policies and procedures, in order to be able to demonstrate to regulators on inspection their compliance with the directive. “Depositaries have been grappling with the risk that AIFMD poses to their business and how to develop sophisticated pricing policies to ensure that they are remunerated for this. They have also been carefully redesigning their internal operating frameworks, to enable themselves to carry out their responsibilities under the directive, including developing new solutions to capture their responsibilities for cash flow monitoring.” Mr McNally believes that the most positive impact of the directive will be felt by firms who look to avail of the

marketing passport sooner rather than later. He stated that the benefits of having such a passport will enable firms to navigate and distribute in a homogenous manner across the EU, which compares favourably with the complexity and differing requirements of currently navigating differing private placement regimes on a country by country basis. “Additionally, and admittedly it’s too early to say yet, but AIFMD has the potential to be to alternatives what UCITS is for mutual funds and in the future might serve as a positive marketing banner for firms looking to gather assets,” he added. As a jurisdiction, Ireland administers more than 40% of all global hedge fund assets. Mr McNally sees AIFMD as an opportunity for Irish service providers to offer clients AIFMD ready solutions in fields such as reporting, valuation and possibly through “Depository Lite” offerings. “As a location which has heavily invested in servicing the alternatives sector, Ireland may well be ideally placed as a domicile, for investment managers as they look to either re-domicile existing fund products to a European centre of create new European based AIF’s, that fully comply with the directive and mirror their successful offshore investment strategies,” he explained. “I suspect new fund/manager launches will drop off as firms utilise the transitional provisions of the directive, adopting a wait and see approach for a form of precedence or standardisation to emerge,” concluded Mr McNally.

Company: EY Name: Fergus McNally Email: fergus.mcnally@ie.ey.com Web: www.ey.com/ie Address: Harcourt Centre, Harcourt Street, Dublin 2 Telephone: +353 1 221 2599

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panama

cayman islands

malta

SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Manager’s Directive One of the most challenging aspects of the AIFMD is that not all territories have implemented their domestic AIFMD regulations, making it difficult for firms to plan how they meet them whenever marketing AIFs to investors from that territory. We are concerned that firms will delay before starting to make plans to meet the requirements of the AIFMD and will risk not being authorised on time.

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Andrew Shrimpton is the Global Head of Regulatory Compliance at Kinetic Partners, global professional services firm. ------------------------------------------------------------------------

Kinetic Partners was founded in London in March 2005 to provide regulatory consulting, tax and audit services and compliance consulting to the Asset Management industry. We have now expanded to eight locations around the world including Hong Kong, New York and Luxembourg with over 150 employees. We offer services including corporate recovery, forensic services and risk solutions. The firm also gained clients across investment banking, broking and private equity. The Alternative Investment Fund Management Directive (AIFMD) will require UK alternative investment firms to be authorised by the FCA in order to continue to do business after 22 July 2014 (although firms will have to have applied for authorisation by 22 January 2014). One of the key points for firms to think about regarding the AIFMD is that it must be implemented differently

according to firms assets under management and also where it is marketing its funds. The first step for alternative investment fund managers (AIFMs) will be to decide if they are a full –scope UK AIFMs or alternatively a small authorised UK AIFM. We have worked with a number of clients already, to make sure they are AIFMD compliant under AIFMD and its regulations, so we are well versed in the requirements that firms are expected to meet. We can sit down with clients to build a tailor made plan for them to outline where they are and what they need to do to in order to be compliant. We have produced a range of material to help firms do this including templates for compliance manuals and variations of permission forms. We have also recently launched our AIFMD checklist which can identify the areas firms still need to work on to meet the requirements of the AIFMD. Additionally we will also work with firms once they are FCA authorised to ensure they meet the on-going reporting systems and procedures.

With the deadline for submitting applications to the FCA confirmed for 22 January 2014, a significant amount of information needs to be submitted in a relatively short space of time. For full-scope AIFM’s this includes constructing a business plan, reviewing existing investment management agreements and distributing an annual AIF report. Although the requirements for small AIFMs are less onerous they too must evidence a regulatory business plan and comply with the FCA’s on-going reporting requirements. These are significant undertakings for businesses. Firms who are not yet authorised will be unable to manage AIFs after 21 July 2014 until they are authorised or registered as a small UK AIFM.

Company: Kinetic Partners Name: Andrew Shrimpton Email: andrew.shrimpton@kinetic-partners.com Web: www.kinetic-partners.com Address: One London Wall Level 10, London, EC2Y 5HB, UK Telephone: +44 20 7862 0700

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Ewan McGill is an Audit Director, Investments & Banking, at KPMG.

-----------------------------------------------------------------------With the Alternative Investment Fund Managers Directive (“AIFMD”) coming into force on July 22, 2013, fund managers are under pressure to understand and respond to its requirements.

The requirements with which Alternative Investment Fund Managers (“AIFMs”) need to comply will depend to a great extent on their activities, as well as where their funds and the investors to which they market are located. As a result, many firms continue to struggle with questions around the transposition requirements and the associated implications, with non-EU AIFMs frequently asking questions around marketing and private placement as of July 22, 2013. Challenges for non-EU managers Until transposition actually takes place in a particular EU member state, non-EU AIFMs should be able to market their non-EU alternative investment funds to investors in that member state via the existing private placement regime. It is important to note, however, that some member states are contemplating the elimination of the private placement regimes at such time as the AIFMD is transposed into law. It is important, therefore, that nonEU AIFMs conduct proper due diligence with respect to their marketing initiatives, as sanctions for noncompliance could be severe. After the date of transposition, a non-EU AIFM will need to comply with a number of conditions (including new reporting and disclosure requirements) in order to continue to take advantage of the private placement regime in a given EU member state. As of July 22, 2013, the AIFMD has been transposed by 12 out of 28 member states.

/ October 2013

This initiative, amongst others, illustrate Bermuda’s continued commitment and ability to serve the international fund industry in meeting their commercial objectives, in an environment of increasingly demanding regulatory and investor requirements. The member states that have transposed the law, either through an active legislative procedure or through negative assurance procedures, have published information on the transitional arrangements and the majority will have transitional relief for domestic AIFMs, other EU AIFMs and non-EU AIFMs. Only the Netherlands and Latvia limit the transitional relief to (domestic) existing managers. Non-EU AIFMs who market to Malta and Ireland will be granted a 2-year relief period. Reverse solicitation (or passive marketing) is permitted in principle by the AIFMD; however, in practice this is unlikely to be as useful as many managers might be hoping. Several member states have already indicated that they consider this to be an exceptional circumstance, and expect there to be comprehensive documentary evidence of interactions with investors in order to prove reverse solicitation. Managers currently intending to rely solely on reverse solicitation to distribute their fund products in Europe are, therefore, likely to run into problems. Bermuda’s response Bermuda has signed a co-operation agreement with EU Member States in relation to the AIFMD, enabling Bermuda funds and managers to participate in the European market. Furthermore, as a leading international fund centre, the Bermuda Monetary Authority has recently announced an ongoing legislative review in relation to

the AIFMD, with a view to potentially further enhancing Bermuda’s fund product (on an opt-in basis), enhancing flexibility and structuring opportunities for managers domiciled or domiciling their funds in Bermuda. This initiative, amongst others, illustrate Bermuda’s continued commitment and ability to serve the international fund industry in meeting their commercial objectives, in an environment of increasingly demanding regulatory and investor requirements.

Company: KPMG Name: Ewan McGill Email: ewanmcgill@kpmg.bm Web: www.kpmg.bm Address: Crown House, 4 Par-la-Ville Road, Hamilton HM 08, Bermuda Telephone: +1 441 295 5063

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Managerâ&#x20AC;&#x2122;s Directive

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Mark Huntley is the Head of Financial Services at Heritage Group.

-----------------------------------------------------------------------Heritage Fund Services is a full service fund administrator with offices located in Guernsey, the UK and Malta. We have particular expertise in the establishment and servicing of private equity, property, infrastructure, emerging markets and esoteric (e.g. forestry, shipping litigation) funds. We have assets under management and administration and excess of US$50billion and we service a broad range of structures across multiple jurisdictions. Our advantage is that we bring to bear considerable expertise and enthusiasm for the alternative asset classes. We work hard at our ethos of client partnership and at making the complexity of todayâ&#x20AC;&#x2122;s structures work efficiently and cost effectively. We are independent and management owned and thus avoid the conflicts of interests that affect the larger players or those owned say by a private equity house. We are jurisdictionally agnostic but passionate about quality and we have ensured that we have offices to service the key requirements in the European time zones and also service business on a global basis. Our listed funds experience compliments our long standing private fund knowledge and expertise. The Alternative Investment Fund Managers Directive will certainly add a layer of complexity and cost to alternative fund structures. The delays in finalising the implementation, the broadening of the scope coupled with the fact that there remains regulatory ambiguity all make for a challenging operating environment. That said, in the context of the non-financial assets that will typically be the assets we will administer, acting as Depositary for such assets, monitoring cash and asset verification all form part of our long standing functions in Guernsey. For the UK business we have really applied and modified our tried and tested procedures. We see the key aspects that are of importance to existing clients are a smooth transition and extension of services being delivered by a knowledgeable and pragmatic provider with a keen interest and a deep understanding in their asset class. The regulatory requirements to enable further fund raising are an essential driver for client funds. For new clients, we see this as a means of growing the relationship particularly in the UK where services are typically more fragmented and work of a suite or menu of administration and depositary functions.

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We have had to work closely with clients, many of whom have had to adopt a wait and see approach, as the regulatory aspects unfold. The debate over appointing an AIFM or becoming a self-managed AIF has been extensive. We see a growth in our support for risk management with specific hiring of staff by Heritage to evidence the necessary level of review and control. Similarly the management and control functions for non EU AIF structures whilst already very much in place requires some changes to evidence the management and control processes to meet the objective. The biggest change for us is to recognise and segregate the custody (safe-keeping) and cash monitoring functions by establishing a Depositary Company, Heritage Depositary UK Limited, which will be the centre of excellence for our services across all jurisdictions. In addition as already mentioned, actively working with clients to find an optimal solution and help them wade through the regulation has been important. The lack of clarity in a number of areas is of real concern and the political overtones across Europe seem to have little to do with any real investor protection and more to do with a redistribution of asset management. The varying conclusions from legal advice provides a further layer of, at times, bewildering complexity. What we do is sit down and look at the practical intent of AIFMD with clients and fund boards and then have that reviewed by advisers. It saves a lot of time and expense because we start with something that works from practical administration perspective.

Equally we are seeing changes to the regulatory regimes in Guernsey and Malta to reflect the need to implement the directive. In the UK we are keen to grow our Depositary business and support the private equity and property sectors including infrastructure to absorb the new UK regulations. We also see opportunities to support structures outside of AIFMD Scope such as managed accounts. In short we have a range of solutions to discuss with existing and prospective clients. In terms of outlook for alternative investments we see through our new business flows and pipeline clear support from investors in certain themes. These include yield based offerings including non-bank debt, infrastructure (with a yield) commodities, age and health (e.g. care homes) and energy. Within the energy sector clean tech with a yield has been strong and this is a trend we expect to continue. The key driver for alternatives remains the need for real capital growth and above average yield to support the pension fund liability challenge in the current environment below mean levels of growth and record low levels of interest rates. The key to achieving the returns from the alternative sector therefore is to work with asset managers who have the imagination and expertise to deliver supported by strong and knowledgeable service providers. The track record of delivery is all important in a changing environment where the shifting sands of regulation can obscure the very real returns on offer.

It is very easy to find fault with the directive and, in so doing, miss some of the potential benefits. The benefits can be that the segregation of functions improves the control environment and strengthens protection for investors. The breadth of scope and levels of liability are however significant and will necessarily incur varying degree of cost. Where there is some degree of outsourced administration the roles of Administrator and Depositary combine well. However, the challenges of assets or asset classes that have complex of detailed structures, geographical diversity or where verification is not easy require specialist knowledge and will incur a varying degree of cost. The market place has changed already and we are equipping our services to include physical office to support and work with managers who want to exit all or some part of their business from the EU with a physical presence in Guernsey.

Company: Heritage Group Ltd Name: Mark Huntley Email: mark.huntley@heritage.co.gg Web: www.heritage.co.gg Address: Le Marchant Street, St Peter Port, GY1 4HY, Guernsey, UK Telephone: +44 (0) 1481 716000

October 2013 /

SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Manager’s Directive ------------------------------------------------------------------------

Lionel Aeschlimann - Managing Partner and Head of Asset Management of Mirabaud & Cie. ------------------------------------------------------------------------

Mirabaud Asset Management is the investment arm of Mirabaud, an independent wealth and asset management group established in 1819 in Geneva, Switzerland. In 2011, Mirabaud Asset Management initiated a reorganisation of its UCITS asset management activities and set up a UCITS IV compliant management company, which has a central function in its asset management organisation. Mr Aeschlimann stated that, as a result, the procedures and policies in relation with asset management have been harmonised over the respective entities in the group, in compliance with the UCITS requirements. “We have now introduced a request to the CSSF to have the same management company authorised as AIFM and benefit from a ‘Super License’”, he explained. “This will enable us to develop synergies and further leverage on the existing structure and organisation with the objective to have access in a more efficient way to European investors, being retail or institutions.” “This evolution implies some adaptations to our current organisation as well as the review and update of the legal documentation or the development of additional tools (especially to support the reporting), to meet AIFM specific requirements. The implementation of the AIFM Directive is a collective exercise, which has to be organized in coordination with all AIFs service providers, especially the custodian bank and the investment managers in our case. “For investors in our non UCITS funds, this means that they will be invested in a fund managed by a duly

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With more than 13 years’ experience in the Luxembourg funds environment, Jean-Florent Richard advises clients on Luxembourg fund structures at NautaDutilh Avocats Luxembourg.

-----------------------------------------------------------------------All 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), which provides a harmonised regulatory and supervisory framework for managers of alternative investment funds (AIFs) within the EU.

The AIFMD entered into force on 1 July 2011 and the deadline for its transposition by the EU Member States into their national law was 22 July 2013. It still poses countless challenges, the most salient of which are the following: • The AIFMD aims to regulate an industry that encompasses numerous different sectors with very little in common. Hedge funds operate very differently than private equity funds or real estate funds, for example in relation to their investment strategy and executive remuneration policy. Therefore, trying to impose a common set of rules on all these sectors may not really work. • There are still many uncertainties surrounding the definition of an AIF, as well as possible loopholes. • The requirements imposed by the AIFMD carry additional costs and it is still uncertain whether they will be borne in full by the end investor or absorbed, at least in part, by the funds industry. Despite voices to the contrary, the AIFMD will certainly create opportunities. Once authorised, an AIFM can benefit from a “marketing” and a “management” passport. In other words, the AIFMD enables EU AIFMs to provide

/ October 2013

The financial crisis has often been used as a reason justifying the strengthening of the regulatory environment, even though the EU Commission itself has recognized, in relation with the AIFMD, that alternative funds have not been the cause of the financial crisis. regulated entity, which will be subject to a certain number of transparency requirements, such as the publication of annual reports.” In terms of the pros of the AIFMD, Mr Aeschlimann believes that a more regulated environment for nonUCITS funds will address certain concerns raised in recent years by governments, regulators as well as investors, and will allow for a more level playing field with the UCITS funds industry and ease the distribution to institutional investors. On the other hand, he noted that AIFMD is a significant piece of regulation that comes in addition to other developments, notably at European level, which significantly increases the regulatory pressure on the asset management industry with the aim to enhance investors’ protection. However, in the firm’s view, it is not certain that all these developments will actually meet this objective. “The financial crisis has often been used as a reason justifying the strengthening of the regulatory environment, even though the EU Commission itself has recognized, in relation with the AIFMD, that alternative funds have not been the cause of the financial crisis,” said Mr Aeschlimann. “In our view, proportionality is key in the regulatory process and over-regulation

should be avoided as this impacts negatively and growth and innovation. “In addition, the rules of the AIFMD (and of the future UCITS V directive) on variable remuneration is another topic which is in our view sensitive and may lead to a negative impact on the industry. The larger actors will probably benefit from these rules as they will be able and keen to pay higher fixed remunerations, which is not the case of small or medium size player. This situation can only be detrimental to competition and innovation and therefore to the development of the asset management industry,” he concluded.

Company: Mirabaud & Cie Name: Lionel Aeschlimann Email: lionel.aeschlimann@mirabaud.com Web: www.mirabaud.com Address: 29, boulevard Georges-Favon, 1204 Genève, Switzerland Telephone: +41 58 816 22 22

If alternative fund managers succeed in adapting to the new framework and in applying the AIFMD’s numerous technical requirements efficiently and in a commercial savvy manner that satisfies the increasing demand from certain European investors for more risk management, security and transparency, the AIFMD should make it possible to create a brand comparable to the renowned UCITS brand. their management services cross border to EU AIFs domiciled in other Member States. It also enables EU AIFMs authorised under the AIFMD to market their EU AIFs to professional investors based in all EU countries. If alternative fund managers succeed in adapting to the new framework and in applying the AIFMD’s numerous technical requirements efficiently and in a commercial savvy manner that satisfies the increasing demand from certain European investors for more risk management, security and transparency, the AIFMD should make it possible to create a brand comparable to the renowned UCITS brand. For many fund managers the UCITs brand has proven to be a gateway to Europe and far beyond. For example, Luxembourg UCITS are distributed in more than 80 countries including the most important markets of Asia, the Middle East and Latin America. To the extent operational requirements imposed on AIFMs are similar to those applicable to UCITS management companies and services, leading fund managers can leverage their existing UCITS experience into the successful operation of an AIFM. In particular, duallicensed AIFMs allowed to manage both UCITS and AIFs should be able to apply such leverage if they focus on cost efficiency and streamlining of operations. Additionally, because it must be read in conjunction with the AIFMD and came into force on 22 July 2013, it is also

my hope that EU Regulation N° 345/2013 of 17 April 2013 on European venture capital funds will help boost venture capital investments and ultimately allow small and medium-sized enterprises to realise their full potential in terms of growth and innovation. These enterprises account for nearly 99% of all European businesses and provide around 90 million jobs (two-thirds of all private sector jobs) but are being stymied by difficulties in raising capital. The boost will only happen, however, if the EU decides to tackle cross-border tax issues faced by venture capital funds, as these issues remain an obstacle to fulfilling the regulation’s ambitious aims.

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

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Investment Consultants & Expert Witnesses in Financial Services l l l l l l l

An established, independent firm specialising in asset, investment and wealth management consulting We provide independent research to institutional investors, sovereign wealth funds, family-controlled businesses and professional advisors Consulting across alternative investments, including private equity, hedge funds, real estate, forestry and commodities Our knowledge of industry best practices keeps projects on track We also offer expert pre-litigation support analysis, reports and testimony on instructions from solicitors and barristers Expert services in cases of dispute resolution & litigation involving investment management, capital markets & securities trading Reports and testimony on matters addressing areas of best practice in investment management, issues of negligence, suitability of investments and allegations of wrongful advice

Contact Wallace Wormley for further details: Bridge House, London Bridge, London SE1 9QR Phone: +44 (0)1494.724.544

Website: www.ospara.com Email: info@ospara.com

SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Manager’s Directive

Fort Saint Michael gardjola (watch tower) in Senglea, Malta

MFSA acceptable DepositaryPrime Broker Arrangements ------------------------------------------------------------------------

Dr Caroline Pace is a Senior Associate at lecocqassociate ltd.

The prime-broker may also be appointed as depositary to the AIF provided it ensures a segregation of functions.

The much anticipated Alternative Investment Fund Managers Directive (‘AIFMD’) has been transposed in most of the Member States` national laws and the repercussions are being felt by many. Asset management companies and investment funds are in full gear in an attempt to be fully compliant with the AIFMD, and thus be in a position to benefit amongst others from the passporting rights granted under the AIFMD. The provisions of the AIFMD have undoubtedly stirred the world of service providers, particularly depositaries, prime-brokers and administrators, all of which must jointly discuss an operating model which satisfies the requirements of the AIFMD.

Liability The AIFMD contains strict depositary liability provisions and specific conditions for the discharge of the same. This has led to discussions between services providers, particularly prime brokers and custodians as to the liability to be retained or discharged by each and the structures acceptable by the competent authorities.

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Malta was one of the first Member States to transpose the AIFMD into national law. In addition, the Malta Financial Service Authority (‘MFSA’), the regulatory and supervisory body in Malta, has issued guidelines for a company to be licensed and authorised as an Alternative Investment Fund Manager (‘AIFM’) or an Alternative Investment Fund (‘AIF’) in Malta. The Depositary Under the AIFMD, an authorised AIFM must ensure that each AIF it manages has appointed a depositary. The depositary must be an EU credit institution or EU investment firm or an institution entitled to act as a UCITS depositary. A non-EU AIF may appoint as its depositary an entity which is equivalent to an EU credit institution or investment firm provided such entity also complies with prudential regulation and supervision comparable with EU law. Derogation: Although the AIFMD requires an EU AIF to appoint a depositary in its home Member State, the MFSA has availed of the right granted under Article 61(5) of the AIFMD allowing EU credit institutions and EU institutional firms to be appointed as depositaries to EU AIFs until 22 July 2017. This derogation is without prejudice to the full application of the AIMFD provisions regulating the depositary. Appointment of a Prime Broker An AIF may appoint a prime broker which must be a credit institution or a regulated investment firm or an entity which is subject to prudential regulation and ongoing supervision.

/ October 2013

MFSA acceptable Depositary – Prime Broker Arrangements The MFSA will consider any arrangement proposed by an applicant wishing to be AIFMD compliant. Nonetheless, the MFSA has shown a preference to the following three depositary-prime broker arrangements: Model 1: This model sees the depositary being appointed by the AIF, which depositary appoints a prime broker as its subcustodian and uses its own sub-custody network. In such scenario, the parties may agree that: •

The depositary retains full liability for any loss of financial instruments held in custody, whilst depending on the reporting efficiency of the prime broker;

•

The depositary transfers the liability for any loss of financial instruments to the prime broker, which may in turn also transfer that liability to its local agents. In accordance with the AIFMD, the depositary must provide objective reasons for the discharge of liability. In addition a written agreement must be entered into between the parties involved;

•

The depositary retains liability for any loss of financial instruments held in custody but is given a contractual indemnity from the prime broker for any loss arising directly out of the actions or omissions of the prime broker or delegates within its network.

Model 2: Under this model the prime broker is appointed as sub-custodian, however, the depositary retains liability provided the prime broker uses the depositary’s sub-custody network. Therefore, the assets of the AIF will be held

within the depositary’s sub-custody network which can be monitored by the depositary but will be settled and cleared by the prime broker. Model 3: The parties may decide that the depositary holds all the assets of the AIF and pass collateral to and from the prime broker. The depositary would retain full liability given it keeps control of all the assets of the AIF, with the prime broker moving the AIFs assets to the depositary’s network in daily sweeps of collateral. Although the depositary retains control of the assets it is still exposed to the efficiency of the prime broker until it receives the assets in its sub-custody network. Conclusion The MFSA is open to suggestions or proposals which may be brought forward by an applicant desirous of being AIFMD compliant. lecocqassociate’s Experience lecocqassociate provides legal advice on the structuring, authorization and incorporation of collective investment schemes and asset management companies in Malta, Switzerland, Luxembourg, the Emirates and in offshore jurisdictions. Please contact Dominique Lecocq (drl@lecocqassciate.com) for further information

Company: lecocqassociate ltd. Name: Dr Caroline Pace Email: cpa@lecocqassociate.com Web: www.lecocqassociate.com Address: Swiss Urban Factory, The Law Suit(e), 5 Saint Frederick Street, Valletta VLT 1470, Malta Telephone: +356 21317171

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SECTOR SPOTLIGHT:

Forming & Structuring Private Funds in the UK

Forming & Structuring Private Funds in the UK Despite the on-going challenges faced by the private equity sector, the investment funds world seems to be adjusting to its new environment of increased regulation, challenging fundraising and greater investor scrutiny. Forming a fund and deciding which region and sector to invest in can raise all sorts of considerations. Whether you are a first time sponsor, or an experienced manager, the legal, tax and accounting issues are detailed and complex. With this in mind, Acquisition International speaks to some of the world’s leading legal, business and fund professionals to analyse the current market and examine the future of private investment funds.

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Luke Gannon is a Partner and Head of Funds and Asset Management – Asia at DLA Piper. ------------------------------------------------------------------------

“DLA Piper’s global asset management practice group which covers all major financial centres in Asia, Europe and the US has unrivalled experience in fund establishment and asset management work,” said Mr Gannon. “DLA Piper is widely recognised in the institutional investment community in all financial centres around the world, providing international creditability for our clients. “As the largest law firm in the world, we have deep funds capability in all major financial centres.” DLA Piper’s Funds and Asset Management team in Asia is widely recognised as a market leader in the alternative funds space. Luke Gannon is recognised as a leading investment funds lawyer in numerous publications including Legal 500; Chambers Asia Pacific, IFLR 1000 and PLC Which Lawyer. In addition to being a major global financial centre and the key financial centre for Asia (and in particular China), Mr Gannon believes that Hong Kong benefits from having: •

a stable legal system and an established set of laws and regulations consistent with international best practice – the Securities and Futures Ordinance, the Companies Ordinance; • a respected and responsive regulator (the Hong Kong Securities and Futures Commission); • a “business friendly” approach – low red tape

/ October 2013

to establishment and operating with the asset management field; • availability and competency of service providers for the funds industry; and • low corporate tax. Discussing the major issues affecting asset managers and service providers, Mr Gannon noted that the raising of capital remains challenging for most asset managers. He stated that capital continues to be deployed to the larger, established managers and smaller managers with high pedigree founders with a lengthy track record, and that sponsors are taking for longer to get a first close of their funds. “The other challenge is the on-going implementation of international regulatory requirements which have been introduced into the asset management industry in response to the Global Financial Crisis,” he explained. “This is impacting how managers operate their funds and has considerably increased burden on managers in terms of due diligence, registration, reporting and record keeping requirements.” In terms of LP/GP relations, Mr Gannon highlighted the push from limited partners for greater accountability and transparency with respect to private equity investments. He added that general partners recognise that in order to secure capital commitments, it is necessary to more closely align the interests of partners in terms of matters such as transparency, fee structure and governance. He elaborated: “It is now more common for investors to seek to heavily negotiate fund documentation

and enter into side letter arrangements with respect to matters such as the payment and timing of management fees and carried interest payments (including claw back), reporting on the performance of the fund and underlying investments, disclosure of pipeline investments under consideration, and stronger participation at advisory committee level.” According to Mr Gannon, the sector remains in a challenging window which has now stretched to five years. “We expect the market to remain challenging in terms of fundraising for the next couple of years. We expect to see to more ‘club’ deals where small numbers of investors have a strong say over the investments of the fund,” he concluded.

Company: DLA Piper Hong Kong Name: Luke Gannon Email: luke.gannon@dlapiper.com Web: www.dlapiper.com/luke_gannon/ Address: 18th Floor, Edinburgh Tower, The Landmark, 15 Queen’s Road Central, Hong Kong Telephone: +852 2103 0824

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Forming & Structuring Private Funds in the UK ------------------------------------------------------------------------

Robert Kimmels is the Managing Director of Praxis Luxembourg S.A., a fund and SPV administration company in Luxembourg. ------------------------------------------------------------------------

Praxis is a niche provider that aims to provide very high quality service. “Of course everybody says that, but at Praxis management and senior staff are still very much involved in daily operational work, giving a level of experience and expertise to clients that competitors will find very difficult to match,” enthused Mr Kimmels. “At the same time we keep our overheads low so we are still able to offer very competitive fees. Our focus is on alternative investment funds, notably in the real estate, private equity and debt asset classes.” Mr Kimmels stated that Luxembourg is the second largest fund domicile in the world, which in itself attracts investors as they know they will find laws, regulations and infrastructure that have proven their mettle. “The combination of excellent fund regimes, attractive tax laws and a large number of tax treaties make Luxembourg a natural choice for PE, RE and debt funds,” he commented. “Being well aware of how important it is to the national economy the Luxembourg government always keeps close tabs on the international fund arena and tries to ensure that Luxembourg is always at the front end of new developments.” Mr Kimmels highlighted the real estate sector as particularly active, though he stated that this is perhaps more on an SPV level than in funds. In the last 18 months there has been a lot of talk of debt funds and there are many promoters trying to raise capital for such funds,

Being well aware of how important it is to the national economy the Luxembourg government always keeps close tabs on the international fund arena and tries to ensure that Luxembourg is always at the front end of new developments. however Mr Kimmels is not convinced that there is sufficient deal flow available for all these funds. The EU AIFMD directive has recently come into force, and Mr Kimmels noted that the market is still digesting its impact. His feeling is that there will be many nonEU managers setting up their own AIF management companies in the EU, rather than relying on a third party manco, which is a service that many providers in Luxembourg have rushed to offer.

“I think that it will become increasingly popular,” he predicted. “We are working on a number of securitisation funds and I expect many more to follow. “I think that boards will have to become more professional in Luxembourg. From experiences in other offices in the group I know that boards in other jurisdictions tend to be more active. I expect that trend to set in Luxembourg as well,” he concluded.

“On the other hand, many smaller managers will be looking for ways to avoid full compliance with the directive and instead will opt for joint ventures, club deals etc,” he opined. “Also, for both managers and service providers the consolidation that has been taking place will continue.” Discussing the current nature of LP/GP relations, Mr Kimmels stated that GP fees have definitely come under pressure from LPs in recent years. He added that LPs have become much more demanding in terms of reporting and access to other documents such as minutes of the board and committee meetings. Mr Kimmels believes that the securitisation regime in Luxembourg, introduced in 2004, has been a fairly quiet success.

Company: Praxis Luxembourg S.A. Name: Robert Kimmels Email: robert.kimmels@praxisgroup.lu Web: www.praxisgroup.com Address: 55 avenue Pasteur, L-2311 Luxembourg Telephone: +352 27 47 91 607

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Motunrayo Ade-Famoti is Head, Private Trust at UBA Trustees Limited. ------------------------------------------------------------------------

Motunrayo Ade-Famoti brings almost 15 years’ experience in Law, Sales and Real Estate finance, including 10 years’ experience as a qualified and practicing lawyer in UK and USA. Over the years, she has achieved a successful legal career both in the public and private sectors as a Solicitor in London, with core expertise in Corporate, Property and Charity law. She also has extensive experience in Private and Corporate Trusteeship and provided Trust services to some of the biggest charities in UK. In addition to her legal experience, she has worked in property investment and property services companies both in London and Nigeria overseeing property finance, sales and portfolio management. She holds an LL.B from University of Sheffield, LPC and LL.M in International law from City University, London. She is a member of the Law society England & Wales and New York State Bar Association. UBA TRUSTEES UBA Trustees, the leading Nigerian Trustee company, commenced business about five decades ago as a Trustee company. It is a wholly owned subsidiary of UBA Capital Plc. Our sole business is trusteeship and we play a key role in major financing transactions, charged with protecting the interests of Lenders and Investors, keeping custody of assets, documents, rights, shares, funds and other holdings in financial transactions.

ACQUISITION INTERNATIONAL

We possess quality, depth and extensive experience in a wide range of money, capital market and real estate transactions, with Trust mandates in excess of N6 Trillion and clear leadership across products: Mutual Funds, Bonds, Debenture Trusts and REITS. In 2007, UBA Trustees set up UBA Global Investor Services to provide Custody Services in respect of client’s financial assets which are held in duly segregated accounts by its subsidiary, UBA Nominee Limited. UBA GLOBAL INVESTOR SERVICES UBA Global Investor Services (GIS) is a Division of the United Bank for Africa (UBA) Plc to set up in September 2007 to process securities trades, safe-keep financial assets and service associated portfolios and the leading Nigerian Custodian company. UBA GIS is a sub-regional provider offering custody in Nigeria and the eight francophone countries namely: Senegal, Benin, Burkina Faso, Togo, Niger, Mali, Cote D’Ivoire and Guinea Bissau.

behalf of clients in a Nominee name and follow up with the collection of dividends and bonuses. These services include Asset Registration in a Nominee name, safekeeping of assets and collection and distribution of income and bonuses earned on such assets. UBA Nominee is able to consolidate clients’ holdings in various securities and cash accounts on which accurate consolidated reports are sent to the client promptly at pre-agreed periodic intervals. SERVICE COMMITMENT We are committed to providing the highest quality trustee services, characterized by professionalism, proactiveness, accurate information, prompt and efficient services and flexibility, where required, to achieve transaction objectives and secure the interests of our clients.

The Division has excellent track record in Custody and currently services the assets of foreign and domestic clients, including The Bank of New York Mellon, the World’s largest Global Custodian and to major Nigerian Mutual Funds. The total volume of assets held in custody by the group is in excess of N 600 Billion. UBA NOMINEE UBA Nominee is a subsidiary of UBA Trustees Ltd. In corporation with UBA Global Investor Services, UBA Nominee holds shares and other securities for and on

Company: UBA Trustees Limited Name: Motunrayo Ade-Famoti Email: motunrayo.ade-famoti@ubagroup.com Web: www.ubacapitalgroup.com Address: 12th Floor UBA House, 57 Marina, Lagos, Nigeria Telephone: +2348142270960 Ext: 18853

October 2013 /

SECTOR SPOTLIGHT:

Real Estate and REITs: An Asset Class with Sustainable Returns

Real Estate and REITs: An Asset Class with Sustainable Returns Although the future remains uncertain for many asset classes, the climate is looking more favourable for real estate investment, with many respondents predicting a shift from traditional bank lending to other sources of capital. Preqin, the leading source of information for the alternative asset industry, recently reported that real estate fundraising has improved significantly in the latest quarter: “Q2 2013 has seen increasing momentum in the private equity real estate fundraising market, with the capital raised in the quarter increasing by 188% compared to Q1 2013.” Acquisition International speaks to leading experts to find out what real estate investments and REITs can offer that other asset classes can’t.

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Deric Eubanks is the Senior Vice President of Finance at Ashford Hospitality Trust. ------------------------------------------------------------------------

Ashford Hospitality Trust is a publicly traded US-based real estate investment trust (REIT) listed on the New York Stock Exchange under the symbol “AHT”. Ashford Trust went public as blind pool in August of 2003, raising a little over $200 million and has since grown to almost $5.0 billion in gross assets. It currently owns 123 hotels with 25,715 rooms. The majority of Ashford Trust’s hotels are upper-upscale and upscale hotels that operate under the major brand families of Marriott, Hilton, Starwood, and Hyatt. Ashford Trust is focused on investing opportunistically in the hospitality industry across all segments and at all levels of the capital structure primarily within the United States. In June of 2013, Ashford Trust announced a plan to spin-off an 80% interest in an eight-hotel portfolio of high quality, high-RevPAR hotels to its shareholders. This new company, Ashford Hospitality Prime, will be a conservatively capitalised real estate investment trust

/ October 2013

(REIT) focused on investing in high RevPAR full-service and urban select-service hotels located predominantly in domestic and international gateway markets. It is expected to trade on the New York Stock Exchange under the symbol “AHP”, with the spin-off expected to happen sometime in the fourth quarter of 2013.

“Over the past ten years, since Ashford Trust went public, our total shareholder return has significantly outperformed our peer average. Every member of the management team that took this company public ten years ago is still here and our insider ownership is 19%, which is approximately ten times higher than the industry average,” concluded Mr Eubanks.

According to Mr Eubanks, the fundamentals in the US lodging industry are currently very attractive. Room demand growth has continued to exceed supply growth, and that trend is forecasted to continue for a few more years. “If the industry forecasters are correct, the US lodging industry could see several more years of attractive RevPAR growth, resulting in significant EBITDA growth,” he commented. “We continue to believe it is an attractive time in the cycle to be acquiring hotel assets.” Ashford Hospitality Trust believes that two of the key factors investors should consider before investing in a REIT are the strength of the management team and its track record in delivering shareholder returns.

Company: Ashford Hospitality Trust Name: Deric Eubanks Email: deubanks@ahtreit.com Web: www.ahtreit.com Address: 14185 Dallas Parkway, Suite 1100, Dallas, TX 75254, USA Telephone: +1 972-778-9600

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Real Estate and REITs: An Asset Class with Sustainable Returns

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Mark G. Tiefel is President of Capital Equity Group, Inc., a private real estate investment firm involved in all aspects of real estate. He is currently a managing partner of a commercial real estate portfolio with a value in excess of $400,000,000.

who reside with their parents. Census Bureau data revealed that in 2012, 13.6% of Americans ages 25 to 34 were living with their parents. As the recession’s hold weakens, expect these young adults to move out and form their own households.

Finally, apartments generally have shorter leasing cycles than other types of real estate. Shorter leasing cycles allow apartment owners to adjust rents to reflect current economic conditions and surrounding market values.

Savvy investors know the importance of a diverse portfolio. Diversification often drives people to investigate investing in real estate asking the question, “Are sustainable returns achievable with real estate?” Similar to stocks or bonds, not all real estate asset classes are created equal. We believe the multifamily sector of real estate offers many investors the best opportunity for sustainable returns. Let’s dig deeper into both the supply and demand factors of multifamily properties to understand why.

In addition, baby boomers are downsizing to smaller households in greater numbers. Apartments offer investors a myriad of choices based upon location, property size, age, and quality.

Real Estate Investment Trusts (REIT) are one way of packaging real estate ownership. One advantage of REITs is they often trade on a secondary market thus providing liquidity to shareholders. However, a number of studies suggest that REITs tend to trade in value more like a stock than ownership in real estate. This appears to be especially true in times of high stock market volatility.

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Demand for apartments is driven largely by household formations. The factors influencing household demand are numerous but household demand is driven largely by population growth and an expanding economy. The demand for multifamily properties is expected to be strong through the next few years due to demographic trends and a shift in homeownership preferences, says a 2012 report by Freddie Mac’s Multifamily Research Group. The Census Bureau reported there are about 41 million renter households in the U.S.—so, about 35% of all households are renters. Additionally, rental households increased by more than 1.1 million between 2011 and 2012. Another strong indicator that there is pent-up demand for multifamily housing is the number of young adults

ACQUISITION INTERNATIONAL

The demand for multifamily development is outpacing the supply. Some experts estimate that no fewer than three million new rental units will be needed in the next ten years. Looking at the supply side of apartments reveals some interesting dynamics as well. Industry experts forecast delivering 180,723 rental units in 2013–an increase from 86,554 in 2012. For 2014, the number of new rental units is expected to decline slightly from the previous year. This is in contrast to an average of 100,000 units per year from 2003-2009. A second driver of supply is the availability of mortgage capital which is becoming more readily available for multifamily properties, compared to retail or office properties, because apartments are viewed as having a more stable net operating income. This competition results in lower interest rates, which in turn, often provides greater profitability for investors. In addition, due to the high demand for apartments, there are fewer delinquencies among borrowers for multifamily properties.

As the economy stabilizes and jobs return, multifamily investments should provide better than average returns as compared to other real estate sectors and with less associated risk.

Real Estate Investment Solutions

Company: Capital Equity Group, Inc. Name: Mark G. Tiefel Email: mark@capitalequitygroup.com Web: www.capitalequitygroup.com Telephone: +1 440-543-4137

October 2013 /

SECTOR SPOTLIGHT:

Insolvency, Turnaround, and Restructuring

Insolvency, Turnaround, and Restructuring In an unstable global economy, the risk of corporate insolvency remains high. Whether a company is faced with full-on insolvency proceedings or the challenge of restructuring; company owners, directors, stakeholders and creditors are all faced with difficult decisions to make concerning highly contentious matters. Insolvency can affect a business in many ways, be it indirectly through trading partners or directly facing the risk themselves; this makes them susceptible to a wide range of disputes, involving a wide range of people. Disputes can arise in the context of both threatened insolvency and after insolvency proceedings have begun but either way, having the right team of experts on hand to bring about a resolution is key. Acquisition International speaks to Luis Alberto de Paiva, a Partner at Corporate Management Consulting Empresarial Ltda, to learn more.

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Corporate Management Consulting Empresarial Ltda is a business consulting firm comprised of professionals with extensive experience and expertise in the areas of Economics, Finance and Control.

Mr de Paiva noted that Brazil does not have a high rate of insolvency. However, many companies have liquidity problems as there are insufficient credit lines for investments and tax burdens are too high.

The firm was established with the purpose of turning knowledge into value for the benefit of its customers, its people and the market. Its structure was devised to provide services with high quality standards throughout the Brazilian national territory.

Discussing so-called “zombie companies”, Mr de Paiva stated that these companies are a very localised case, dealing with management problems and a lack of capital for their operations. However, he noted that the Brazilian market has good rates of growth.

Mr de Paiva commented: “The firm was established in 2001 and is driven by very skilled professionals, coordinated through targets for results and controls over operations.

Corporate Management Consulting’s approach to restructuring is based on: effective cost control; supply of capital; improvement in productivity; turning operations; driving control; and managing assets.

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“Since it was founded, the consultancy has grown tremendously and has more and more cases of success in operations.”

/ October 2013

Mr de Paiva concluded: “In Brazil, approximately 100 companies ask for bankruptcy a month. These

are the most critical cases and approximately 30% of them have been recovered.”

Company: Corporate Management Consulting Empresarial Ltda Name: Luis Alberto de Paiva Email: paiva@corporateconsulting.com.br Web: www.corporateconsulting.com.br Address: Rua Gomes de Carvalho, 1507 6º andar Vila Olímpia São Paulo, SP Brazil Phone: +55 (11) 5505-0202

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Resolving Commercial Disputes through Mediation

Resolving Commercial Disputes through Mediation As more and more companies and individuals are becoming aware of the benefits of mediation compared with other methods of dispute resolution, its popularity has been gaining pace. Well suited to the current economic climate; it is cost-effective and nonconfrontational, which makes it a popular choice for solving all manner of business disputes. Resolutions can often be met within a short time of meeting the mediator and it often provides a more satisfactory outcome for all parties due to the fact that everyone is empowered to negotiate, therefore terms are agreed to a greater extent than they are imposed. Deciding to mediate is the easy part; finding a neutral third party to facilitate the process can be slightly more challenging! Acquisition International speaks to experts in Mediation to discuss how best to select a mediator, the advantages of mediation, and to what extent it has moved into the mainstream as a tool to settle disputes. ------------------------------------------------------------------------

Bart Neervoort is a full time mediator and arbitrator and the Founder of a single practitioner practice.

-----------------------------------------------------------------------A DUTCH MEDIATOR FOR INTERNATIONAL MEDIATIONS Parties often choose for a Dutch mediator, even if the dispute has no ties with the Dutch jurisdiction because of their fluency in English, German and French. Dutch mediators have the ability to understand and deal with cultural differences - Holland being a small country with a long history of international trade. MEDIATION IN THE NETHERLANDS Mediation in corporate and commercial matters is frequently used by in house counsel as a cost effective and swift way to settle disputes with business partners. It is seen as a nonadversary way to deal with disputes the resolution of which would otherwise result in long and costly litigation and disturb existing relationships or could otherwise endanger a company’s reputation.

BART NEERVOORT Bart Neervoort is one of the few Dutch mediators who operates in the international market. Educated in England and The Netherlands, Bart was an international litigator with one of the major Amsterdam Law firms for over 30 years, before starting his single practitioner practice as full time mediator and arbitrator. Bart received his training as mediator with CEDR (Centre for Effective Dispute Resolution) in London in 2002 and has since practiced in international issues with parties from different jurisdictions in Amsterdam, London, New York and Geneva. His style is experienced by parties as evaluative, hands-on and efficient, breaking the ice between parties with humor if necessary. He is known to have helped parties to settle multimillion dollar disputes as well as small business to customer matters. Unlike many mediators Bart conducts mainly one day mediations. Bart’s rate is similar to that of

senior partners in major Dutch law firm. If parties desire mediations can be done on a no cure no pay basis or with a basic fee and a success fee.

Name: Bart Neervoort Email: neervoort@medarba.nl Web Address: www.medarba.nl Address: PO Box 75230 Amsterdam, NL 1070AE The Netherlands Telephone: * 31 6 53 202 437

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Bruce Bourne BSc MRICS MCIArb is a Partner in Bruce Bourne Associates LLP. -----------------------------------------------------------------------Bruce Bourne Associates undertakes Commercial Mediation, specialising in helping parties to resolve their disputes in a timely and cost effective manner.

Mr Bourne has a very proactive style of mediating due to his commercial experience and excellent communication skills. With his recent experience in a Plc. and as a Chartered Surveyor he is ideally placed to maximise the assistance he can give to the parties. Although mediation is recognised as an effective tool in dispute resolution, Mr Bourne believes that it has not yet reached anything like its full potential. He attributes this to a lack of understanding, firstly of what the process is and secondly how it can help parties find a solution to their dispute which is both time and cost effective. “In addition to cost, mediation also benefits parties by: 1: Reducing the time involved in the matter as the dispute can be settled earlier 2: Maintaining relationships within organisations and between on-going business partners, 3: Staying in control of their dispute rather than passing the decision to a judge or arbitrator,

/ October 2013

4: Enabling parties to compromise rather than 1 party winning and the other party loosing, 5: Ensuring all matters discussed in a mediation are confidential, as is the outcome, with no detrimental effect to the business,” He explained. Mr Bourne stated “The main criteria on which a mediator is chosen is trust. Parties must also be confident the mediator is fair and unbiased, does not breach the confidential nature of the process and is able to help the parties reach a solution rather than just passing comments from one party to the other. “A mediator must be able to understand the dispute and empathise with the parties,” he elaborated. Discussing the benefits of mediation from a business point of view, Mr Bourne not only highlighted the savings in management time and money but also the confidential nature of the process protects the brand. He added that it maintains relationships between the company and its staff and between the company and its trading partners, as well as allowing the company to negotiate a settlement rather than the win/lose of a court. “The cost of mediation is relatively small compared with legal costs and so the cost of a mediation with the possibility of success is good value compared with ongoing legal costs,” continued Mr Bourne. “Management time in preparing for and attending court is both

extensive and unproductive. Mediation also allows the parties to manage their costs by staying in control of the dispute rather than leaving it to a judge.” In conclusion, Mr Bourne offered a prediction for the use of mediation in the UK: “I do not think there will be a dramatic increase in the number of cases mediated until business and individuals are aware of the advantages of mediation over continuing litigation”.

Company: Bruce Bourne Associates LLP Name: Bruce Bourne Email: bruce@bbamediation.co.uk Web: www.bbamediation.co.uk Address: 35 Hazel Way, Fetcham, Surrey, England, KT22 9QF Telephone: +44372 878841

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Save Time, Money & Resources: Outsource your Debts

Save Time, Money & Resources: Outsource your Debts Over recent years bad debts have been a major driving force behind increasing insolvency levels and they mark one of the biggest threats to companies operating in the current economic climate. Bad debts and long outstanding bills can be disastrous for a business, negatively affecting cash flow and profitability and what’s more, they often have no connection with errors made or undelivered services. So what to do when you can’t get paid, even when you have done everything right? Outsourcing debt collection work can actually save a business time, money and resources and not surprisingly, the demand for debt collection agencies and specialists has increased. Acquisition International speaks to major players in the B2B debt collection world to learn more about their approach and the benefits of outsourcing to their company.

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Sean Barton, CEO of BW Legal in Leeds, is a litigation and recoveries lawyer with over 15 years’ track record in representing mainstream financial institutions, debt purchasers, corporates and insolvency practitioners. ------------------------------------------------------------------------

The Future of Legal Debt Recovery: BW Legal has recently been authorised by the Solicitors Regulation Authority (“SRA”) as an Alternative Business Structure (“ABS”). An ABS is a new breed of law firm which allows non lawyers, including corporate investors, to own and manage law firms. This is big news in the debt recovery sector. Debtors are resistant to correspondence from DCAs. Therefore, law firm such as BW Legal who specialise in pre-legal and legal recoveries are finding that their services are increasingly utilised earlier in the collection cycle. BW Legal is now jointly owned by an investment vehicle owned by Rachael Withers, a credit management and debt collection specialist known

as a leader in her field, with a CV which includes running the Woolworths collect-out – still one of the largest collect-outs in British corporate history. Being a law firm which has combined legal skills with knowledge from the credit management sector, sets BW Legal apart. Its structure makes it a business which is attractive to investors looking for a foothold in this sector. BW Legal embraces a modern approach to recoveries. It has invested heavily in technology which allows high volume portfolios to be recovered in a manner which protects the client’s brand. With 50 staff in its Leeds office, it has an infrastructure designed to support a modern approach: an IT team creating bespoke solutions; a training department ensuring best practice and compliance with regulations such as the OFT debt collection guidance. It has its own consumer credit licence and is a member of the CSA. Modern debt collection is driven by the OFT and the move to the FCA. Good practice is expected by large

clients such as banks and debt purchasers. BW Legal take this approach in both consumer and commercial collections to ensure positive financial outcomes – but not at all costs.

Company: BW Legal Name: Sean Barton Email: sbarton@bwlegal.co.uk Web: www.bwlegal.co.uk Address: The Tannery, 91 Kirkstall Road, Leeds, West Yorkshire, LS3 1HS, UK Telephone: +44 (0) 113 357 0523

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Matej Golob is CEO of Converta, financial solutions company, Ltd. ------------------------------------------------------------------------

In today’s economy it is more than ever important how companies cope with a bad debt. If left unsolved, bad debt might accumulate and threaten to push the company toward insolvency. We have specialized in international debt recovery services and credit reports. With our local partners, we cover more than 150 countries worldwide. Debt recovery Cross border debt recovery cases might be even worse than domestic ones. Debtors might be thousands miles away from a creditor. They might think that the creditor can’t do anything to collect the debt, because they are in another country or even continent. The Creditors think that solutions for such cases will cost them a lot of money and will be time consuming. To help clients with such cases, we have decided to work on no-win-no-fee basis. That means that client pay

/ October 2013

our fees only if we are successful. We provide our services internationally through a global network of local partners in order to solve global problems locally.

origin? You can find answers on such questions with a support of our company. We can provide you credit reports for companies from more than 150 countries worldwide.

Court debt recovery If nothing else worked, you might decide to pursue a debt recovery in front of a court. Court debt recovery should be the last step to obtain repayments of past-due receivables. We support our clients with a network of lawyers that have specialized in debt recovery services from a country where a debtor is from. We provide a client cost estimation for court procedures to make an informed decision. International credit reports Are you in contacts with a new partner and you don’t know a lot about them? Are you wondering if they are financially strong enough to pay your goods, services? Is a new partner fully incorporated in its country of

Company: Converta Name: Matej Golob Email: matej.golob @converta.si Web: www.converta.si; www.debt-collection-europe.com; www.international-business-credit-reports.info Address: Ulica Jožeta Jame 12, 1000 Ljubljana, Slovenia Telephone: +386 59 077 084

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Strategy vs. Risk: Managing Corporate Tax

Strategy vs. Risk: Managing Corporate Tax With governments cracking down on loopholes in order to raise tax revenues and corporations going out of their way to increase profits, disputes over tax are unsurprisingly commonplace. Corporations – from the multinationals to the SMEs - are extremely lucrative to the tax authorities and as such legislation is becoming increasingly stringent and audits becoming more frequent, not to mention complex. Until now tax hasn’t directly driven business decisions however with the subject of tax risk affecting long-term investments, internal recruitment, and the careful choice of external advisory firms, it has now been thrust into the boardroom. Acquisition International invites a panel of tax experts to voice their opinions on how best to manage tax strategy vs. risk.

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Daniel U. Lehmann is a Tax Partner at Bär & Karrer AG, Zurich. ------------------------------------------------------------------------

Bär & Karrer is a leading Swiss law firm with more than 120 lawyers in Zurich, Geneva, Lugano, and Zug. The firm’s core business is advising clients on innovative and complex transactions and representing them in litigation, arbitration, and regulatory proceedings. Its clients range from multinational corporations to private individuals in Switzerland and around the world. “We are one of the biggest and internationally bestconnected law firms in Switzerland,” said Dr Lehmann. “Our focus is on creating solutions tailored to the requirements of our clients. Through efficient teamwork and state-of-the-art technology, we can mobilize at all times the legal knowledge and experience of our firm to address the needs of our clients. “Most of our work has an international component. We have broad experience handling cross-border proceedings and transactions. Our extensive network consists of correspondent law firms which are all market leaders in their jurisdictions.” Dr Lehmann stated that Switzerland still has a very competitive corporate tax system with low effective tax rates, which may be as low as 12.5% for companies taxed at ordinary rates and below 10% for mixed companies enjoying a special tax status. He noted that the latter tax status has been put under great pressure from the EU and will most likely be abolished in the coming years during the course of the so-called Enterprise Taxation Reform III.

ACQUISITION INTERNATIONAL

Most of our work has an international component. We have broad experience handling cross-border proceedings and transactions. Our extensive network consists of correspondent law firms which are all market leaders in their jurisdictions. “It can be expected that the cantons will react by introducing other attracting tax regimes which will be compatible with the EU and OECD taxation standards,” he commented. “Among others, the license box regime will most likely be introduced offering an attractive taxation regime for IP revenues. Further, it is expected that the ordinary cantonal tax rates will be significantly reduced to maintain a competitive corporate tax rate.” According to Dr Lehmann, the main corporate tax benefits in Switzerland are the low effective tax rates for all types of business operations. He also highlighted the business-minded approach of Swiss tax authorities dealing with advance tax ruling requests guaranteeing for foreseeable taxation. “Furthermore, international double taxation can generally be efficiently avoided thanks to the large network of double taxation agreements concluded by Switzerland,” he continued. “Risks may arise in connection with international structures not meeting the arm’s length test or being built on artificial legal set-ups being regarded as tax avoidance structures by foreign tax authorities. “In addition, insufficient economic substance may lead to non-regulation of the legal structures by the competent tax authorities, which may significantly

increase the tax burden. In particular, it must be mentioned that the Swiss withholding tax on effective and deemed dividend distributions may constitute a significant tax risk to companies which must be avoided by way of careful tax planning.” Dr Lehmann concluded: “In 2013, no specific new trends have emerged. However, a continuing issue is and remains for all countries, including Switzerland, the OECD’s intensified combat against so-called base erosion and profit sharing (BEPS). These efforts may have an impact on certain aspects of Swiss taxation, e.g. the so-called Principal Structures.”

Company: Bär & Karrer AG, Zurich Name: Dr Daniel U. Lehmann Email: daniel.lehmann@baerkarrer.ch Web: www.baerkarrer.ch Address: Brandschenkestrasse 90, CH-8027 Zurich Telephone: +41 58 261 50 00

October 2013 /

SECTOR SPOTLIGHT:

Strategy vs. Risk: Managing Corporate Tax ------------------------------------------------------------------------

Willy Rubeya is the Managing Partner of Rubeya & CoAdvocates. ------------------------------------------------------------------------

Rubeya & Co-Advocates is a law firm with the overriding goal to work alongside its clients as a trusted adviser, providing the support they need to thrive in the dynamic economic environment throughout Burundi. The firm is a member of DLA Piper Africa Group, an alliance of independent law firms in Africa. Rubeya & Co-Advocates’s staff includes: 12 lawyers: three partners and nine associates; an auditor; an administrative and operations staff. “They work together in a highly integrated manner to leverage their expertise and experience for our clients’ benefit,” said Mr Rubeya. “As a result, our lawyers are involved in many of the most influential commercial ventures and are known for providing clients with pioneering solutions to the toughest legal challenges.” The firm currently operates through the following departments: Corporate; Energy- Oil & Gas; Energy – Power; Mining and Minerals; Telecommunications; IP; Infrastructure; Private Equity; Banking and Finance; Tax and Audit; Litigation and Arbitration; Hospitality and Leisure; Art and Craft. “Most other firms deal only with tax litigation,” continued Mr Rubeya. “Our firm offers a range of corporate tax services including strategic tax planning, lobbying for conducive tax regulations, negotiation of tax incentives, and tax litigation. We employ highly qualified tax professionals, fluent both in French and English. ” Mr Rubeya explained that following the introduction of a new income tax in Burundi in January 2013, corporate

Our firm offers a range of corporate tax services including strategic tax planning, lobbying for conducive tax regulations, negotiation of tax incentives, and tax litigation. We employ highly qualified tax professionals, fluent both in French and English. tax is paid on the worldwide basis for residents and territoriality for non-residents.

law is more modern tax legislation responsive to the needs of business.”

“Permanent establishments of non-residents are subject to the same tax as residents and repatriation of benefits does not attract additional charges,” he commented. “The standard corporate tax rate is 30% for residents and non-residents. Non-residents without permanent establishment are subject to a final withholding tax of 15%. Limited tax credit is applied to alleviate international juridical double taxation where there is no double tax treaty applicable. So far, there is no double tax treaty applicable to Burundi.”

Looking ahead, Mr Rubeya noted that negotiations are underway aimed at the harmonisation of income tax across the countries composing the East African Community (Burundi, Kenya, Rwanda, Tanzania and Uganda).

Discussing the corporate tax benefits associated with investing in Burundi, Mr Rubeya highlighted the range of tax incentives granted under the Investment Code of Burundi, such as an investment credit of 37% for eligible companies, reduced tax rates depending on the number of employments provided to local workers, and exemption of inter-resident companies dividends, and free charges repatriation of benefits. He noted that non-compliance with tax law and procedures triggers severe penalties. On 24th January 2013, a new income tax law was enacted in Burundi. “This law overhauled the old territorial and schedular income tax system,” explained Mr Rubeya. “The current

“This process may yield innovations in corporate tax,” he concluded.

Company: Rubeya & Co-Advocates Name: Willy Rubeya Email: infos@rubeya.bi Web: www.rubeya.bi Address: 28; rue de l’industrie; PARIDE SELLA Building; Apartment n°6; First, Second and Third floor. Telephone: +257 22 24 89 10; +257 22 22 55 69

Managing Corporate Tax Risk in the United Kingdom ------------------------------------------------------------------------

Stephen Labrum is the Managing Director of Alvarez & Marsal Taxand UK LLP.

also a significant penalty regime which can add to the economic consequences of compliance failures.

Alvarez & Marsal Taxand provides a comprehensive range of tax services to corporate clients from our London office, including transfer pricing, international tax, supply chain and restructuring, corporate tax, VAT, real estate tax and advising on transactional tax issues. We are part of the global Taxand organisation which has over 2000 tax professionals in almost 40 countries. We differentiate ourselves from our competition by the level of service that our partners provide directly to our clients as part of every engagement. In London, we have over 30 professionals, many of whom have served previously as partners in Big 4 firms.

Strategies to Manage Corporate Tax Risk in the UK There are a number of very important actions that multinationals in particular should take in order to mitigate these risks: • Understand the risks a group faces by assessing what issues HMRC might challenge, how they would conduct the challenge, and what the impact on the group would be if HMRC were to challenge • Preparing for such challenges, through careful documentation and support for positions that may be subject to challenge • Managing the group’s relationship with HMRC through active consultation and other steps intended to foster the perception by HMRC that a company does not present high compliance risk • Making changes to tax policies or strategies that might be difficult to defend, particularly with respect to issues covered by the OECD’s BEPS initiative

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Corporate Tax Risk in the UK The corporate tax risk environment in the UK has never been higher than at present, particularly with respect to cross-border issues such as transfer pricing and business restructuring. Political engagement on the issue has been evidenced by the high profile criticisms of Starbucks, Google and Amazon in front of the Public Accounts Committee. The UK is very committed to the OECD-led initiative on Base Erosion and Profit Shifting, as evidenced by the fact that the UK is leading the BEPS working group focused on transfer pricing. In short, we can expect an ever-increasing enforcement effort by HMRC against strategies in these areas perceived to be intended to avoid UK tax. The risks faced by multinationals in the UK are not limited to tax assessments leading to double taxation; there is

/ October 2013

There can be no assurance that these steps will eliminate tax risk completely, but they can go a long way to reducing the risk, which many senior executives want to see, given the current concern over reputational risk resulting from adverse publicity relating to a group’s tax matters. Predictions for 2014 The UK tax environment will change in 2014. The OECD,

with the benefit of HMRC’s contributions, will drive much of the developments. In many ways, HMRC is ahead of many other countries in passing the legislation needed to establish a more challenging environment for multinationals with aggressive tax strategies, so the legislative changes may not be as pronounced here as in some other countries. What we will see, however, is more aggressive enforcement. One of the outcomes of the involvement of the Public Accounts Committee in the affairs of Google, Starbucks and Amazon was some harsh criticism of HMRC’s effectiveness at enforcing the principles that are already addressed by the rules and guidance. While HMRC will no doubt disagree with the criticism, they will nonetheless feel pressure to increase their enforcement efforts.

Company: Alvarez & Marsal Taxand UK LLP Name: Stephen Labrum Email: slabrum@alvarezandmarsal.com Web: www.alvarezandmarsal.com Address: One Finsbury Circus, London EC2M 7EB, UK Telephone: +44 (0) 20 7663 0443

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Strategy vs. Risk: Managing Corporate Tax

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Harald Christensen is Partner and Chairman of the law firm Torkildsen & co. He has been a lawyer since 1985, and specializes in tax and corporate law. ------------------------------------------------------------------------

Torkildsen & co (www.torkildsenco.no) was founded in 1979 with a wide practice in areas covering commercial property and business law. In recent years, and as a natural consequence of the development of the legal market, the firm has expanded its focus areas to include trade, industry and energy as well as commercial real estate and construction. The firm has recently relocated and rebranded its name, and presently has 34 lawyers in Oslo and 6 in Bergen. Torkildsen & co is well known and recognized for its thorough understanding of their clients’ business, allowing them to recommend comprehensive solutions including corporate tax and related matters. In the Norwegian legal market, corporate tax practices, are, apart from the bigger audit-related organizations, often found in smaller law firms or smaller groups within bigger law firms, providing tax advice by taking part in teams working on a wider range of practice areas, for instance large transactions or restructuring processes. In Torkildsen & co, a group of 5 lawyers are dedicated to offering tax advice in such teams or independently. The Norwegian economy is presently strong and is expected to remain so. Norway offers a legal system and framework that is fairly predictable, simple and efficient. Through the EEA, Norway has adopted the EU Law to a large extent to harmonize with the EU. Norway is determined to remain an attractive country within the EU/EEA, offering non-discrimination for instance with respect to dividends and capital gains on shares. Norway is presently adopting the IFRS, and has recently implemented legislation for transfer pricing similar to those of the EU countries.

ACQUISITION INTERNATIONAL

However, one should bear in mind that Norwegian authorities are increasingly exchanging information and communicating with the tax authorities in other countries in order to detect and prevent tax evasion, and is on the offensive when examining tax matters nationally. Penalty for non-compliance would be from 30 – 60 % punitive tax with additional interest as well as possible criminal charges for companies as well as their officers and advisors. Emerging trends in later years are not so much legislative changes but changes in the practice and attitude of the tax authorities, becoming increasingly on the offensive particularly when it comes to larger equity- and business transactions. Norwegian legislation offers a wide range of opportunities for tax free restructuring, hereunder mergers and demergers. However, a particular Norwegian legal concept may allow the tax authorities, provided they find that the main purpose has been to save tax, to set aside the form of a structure or a transaction or restructuring, basing the taxation on what the tax authorities find to be the merit or the reality (Norwegian: “gjennomskjæring”). To avoid this risk, one must be able to prove that the transaction or structure has been based mainly on good and verifiable business reasons other than to save tax. One should also note that in such cases, the tax authorities will demand disclosure of all correspondence between the client and their advisors, including lawyers. Even though such demands may well be considered a violation of the ECHR, non-disclosure will be held against the client. And another emerging trend in 2013 is a proposal to reduce the general tax rate from 28 % to 27 % in 2014, in order better to remain competitive among the tax rates within the EU. This which may well be taken as a sign that further reductions can be

expected. Furthermore, the Parliament election held in September this year is expected to lead to a change of government with a majority of parties advocating reduced taxes. In particular, inheritance tax as well as wealth tax, both applying to persons, is expected to be discontinued within a few years. For foreign investors, as well a nationals, the overall best tax strategy would be to fulfill all formal requirements for registration and tax reporting in Norway, to obtain national legal advice when setting up a business here, to clarify the tax consequences prior to restructuring or transactions, and to keep ahead of changes. Norwegian legal advisors should work in cooperation with advisors in the country of residence of the foreign investor, to fully clarify total tax consequences according to internal law in both countries and applicable tax treaties. All considerations by the board of management prior to any transaction or agreement should be clearly recorded in simultaneous board minutes, agreements and other documents, to form a basis against allegations of undue tax motivation.

Company: Torkildsen & co Name: Harald Christensen Email: hc@torkildsenco.no Web: www.torkildsenco.no Address: Henrik Ibsens gate 100, PB 2884 Solli, NO-0230 Oslo, Norway Telephone: +47 23 13 33 00 Mobile: + 47 92265632

October 2013 /

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, prior to completion, many mergers, acquisitions and joint ventures are subject to approval from multiple antitrust and competition authorities. Acquisition International speaks to the experts to learn more.

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Gönenç Gürkaynak, LLM, Esq. is Managing Partner at ELIG, Attorneys-at-Law. ------------------------------------------------------------------------

Discussing the main burdens associated with filing a transaction to the relevant authorities in Turkey, Mr Gürkaynak highlighted the monetary fines for failure to notify (mere violation of the suspension requirement). “In the event that the parties to a merger or an acquisition which requires the approval of the Competition Board realise the transaction without approval of the Board, a turnover-based monetary fine of 0.1 per cent of the turnover generated in the financial year preceding the date of the fining decision (if this is not calculable, the turnover generated in the financial year nearest to the date of the fining decision will be taken into account) shall be imposed on the incumbent firms (acquirer(s) in the case of an acquisition; both merging parties in the case of a merger), regardless of the outcome of the Competition Board’s review of the transaction,” he explained. “The minimum amount of fine is 14,651 TL for 2013 (equivalent of around EUR 5,980 at the time of writing).” Another very important sanction is set out under Article 7 of the Turkish Competition Law: a notifiable merger or acquisition which is not notified to and approved by the Competition Board shall be deemed as legally invalid with all its legal consequences. Mr Gürkaynak stated that the termination of infringement and interim measures is another significant

/ October 2013

burden. Pursuant to Article 9/1 of the Competition Law, should the Competition Board find any infringement of Article 7, it shall order the parties concerned, by a resolution, to take the necessary actions in order to restore the same status as before the completion of the transaction infringing the Competition Law, and thereby restore the pre-transaction level of competition. “Similarly, the Competition Law authorises the Competition Board to take interim measures until the final resolution on the matter, in case there is a possibility for serious and irreparable damages to occur,” he added. If, at the end of its review of a notifiable transaction that was not notified, the Competition Board decides that the transaction falls within the prohibition of Article 7 (ie: it creates or strengthens a dominant position and causes a significant decrease in competition), the undertakings shall be subject to fines of up to 10% of their turnover generated in the financial year preceding the date of the fining decision. If this is not calculable, the turnover generated in the financial year nearest to the date of the fining decision will be taken into account. “Employees and managers of parties that had a determining effect of the creation of the violation may also be fined up to 5% of the fine of the respective party,” he continued. “In determining the monetary fines, the Competition Board shall take into consideration the existence of wilful misconduct, intent, economic power of the entities concerned, whether they comply with the commitments given, whether they assist with

the examination, level of fault and amount of possible damage in the relevant market, as well as the market power of the undertakings or undertakings within the relevant market. “In addition to the monetary sanction, the board is authorised to take all necessary measures to terminate the transaction, remove all de facto legal consequences of every action that has been taken unlawfully, return all shares and assets if possible to the places or persons where or who owned these shares or assets before the transaction, or, if such measure is not possible, assign these to third parties; and meanwhile to forbid participation in control of these undertakings until this assignment takes place and to take all other necessary measures,” he concluded.

Company: ELIG, Attorneys-at-Law Name: Gönenç Gürkaynak Email: gonenc.gurkaynak@elig.com Web: www.elig.com Address: Çitlenbik Sokak No:12, Yıldız Mahallesi, Beşiktaş, 34349 Istanbul, Turkey Telephone: +90 212 327 17 24

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SECTOR SPOTLIGHT:

Getting to Grips with Merger Control ------------------------------------------------------------------------

Ricardo Lan Arredondo is a Senior Partner at Goodrich, Riquelme y Asociados. ------------------------------------------------------------------------

Goodrich, Riquelme y Asociados is one of the most prestigious and traditional full service law firms in Mexico, with more than 85 specialised lawyers in different fields of practice and with a staff of more than 250. Mr Arrendondo stated that merger control and antitrust are very specialised areas which require experience, expertise and deep knowledge. He noted that the firm’s partners have represented clients in complex, sophisticated mergers which required approval from Mexico’s antitrust authority, the Federal Commission for Economic Competition. “Therefore, our M&A and antitrust attorneys have well established connections at said commission which is always an advantage,” he commented. “As a firm, we have diverse competitive stances which differentiate us from other firms. Almost all of our lawyers speak several languages and work with their clients in English, French and German, inter alia. As lawyers with long tradition in services to the business and commercial community, we understand and speak the language of business. Furthermore, we conduct our cases preventively and properly monitored, by consulting key officers of the antitrust authorities.” As a result of the specialised nature of M&A and antitrust, Mexico has very sophisticated competition laws which fully specify and describe the thresholds and transactions that must be filed by the parties. Mr Arrendondo explained that, as the process is well regulated, it is rather formalistic so it is always a challenge to provide the authority with sufficient and relevant information and to comply with several pre-established requirements for filing.

As a firm, we have diverse competitive stances which differentiate us from other firms. Almost all of our lawyers speak several languages and work with their clients in English, French and German, inter alia. “A fair amount of the work is also devoted to the economic analysis needed in order to determine whether a transaction meets the filing thresholds established in the Federal Act on Economic Competition,” he added.

Finally, Mr Arrendondo stated that, in accordance with the recent amendments to the economic competition regulations, there is a strong tendency towards implementing stricter controls on monopolies.

Article 20 of the Federal Act on Economic Competition and its relevant regulations provide the thresholds for deals that require filing. Mr Arrendondo noted that these thresholds mainly refer to the economic value of the transaction, the accumulation of assets and capital in the country and the value of total assets and sales of the economic agents participating in the transaction.

“Furthermore, President Peña Nieto’s amendment bills (reforms) aim at promoting foreign investment on the telecomm and oil/gas markets, and one of the main purposes of this is to dismantle existing powerful monopolies and to reduce the control that few groups have over those markets,” he concluded.

“The purpose of the filing is that the commission is able to sanction or ban transactions (so called ‘concentrations’) which purpose or effect is to reduce, affect or block competition and free concurrence regarding similar or related goods or services,” he elaborated. Depending on the impact of the transaction on the relevant market, the commission is authorised to request detailed information on the transaction during the 15 days after the filing in order to render a resolution. Mr Arrendondo continued: “In this sense, it is necessary to prove that the transaction does not affect the free competition in the relevant market, as to render all the information, during a 15 days period, as requested by the commission.”

Company: Goodrich, Riquelme y Asociados, A.C. Name: Ricardo Lan Arredondo Email: rlan@gra.com.mx Web: www.gra.com.mx Address: Paseo de la Reforma 265 P19, Col. Cuauhtémoc, Del. Cuauhtémoc, México D.F. Telephone: +52 5533-0040

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Dmitry Taranyk is a counsel at Sayenko Kharenko.

-----------------------------------------------------------------------Sayenko Kharenko has colossal experience in merger control and has one of the biggest practices in the country. The firm is very client-oriented, producing tailor-made solutions for each of its clients.

According to Mr Taranyk, the most unanticipated part in seeking merger approval in Ukraine, for both local and foreign applicants, is the vast volume of information to be collected, processed and presented to the Ukrainian competition authorities. “Furthermore, it is very hard to interpret the data requested under applicable Ukrainian legislation for companies that never dealt with the Antimonopoly Committee of Ukraine (The ‘AMC’) before, as well as the fact that it is not fully adjusted for various types of businesses which adds on additional confusion while preparing the necessary set of documents,” he elaborated. “Applicants that are somewhat familiar with the merger clearance process in other jurisdictions usually argue that significant part of requested information is rather unrelated to the assessment of the concentration, i.e. information on all Ukrainian activities of the parties is required rather than the ones being affected by the concentration. “The other hardship the applicants face in Ukraine is the timing required to obtain the merger clearance of the AMC. Particularly, when the companies are facing any deadline, the Ukrainian competition laws do not provide any procedure whereby the parties may obtain the clearance on the expedited basis.” Discussing the time constraints of seeking clearance, Mr Taranyk explained that, in general, the application is

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Applicants that are somewhat familiar with the merger clearance process in other jurisdictions usually argue that significant part of requested information is rather unrelated to the assessment of the concentration. supposed to be reviewed by the AMC within 45 days from the date of its submission.

other party has assets or sales exceeding €50 million worldwide.

“The AMC’s failure to initiate an in-depth investigation or grant its approval within the first 45-days period results in approval of the concentration per se,” he continued. “As a practical matter, the AMC never lets the indicated time limit elapse and grants the respective approval by the expiration of the 45-day period.

“Such changes will certainly be of more help for both business and the AMC itself as it may focus on more high-profile transactions and avoid spending time and resources on the transactions that are very unlikely to impact competition in Ukraine,” said Mr Taranyk.

“The filing fee for the review of the concentration application by the AMC amounts to approximately €500 (UAH 5,100).”

“Giving that the indicated amendments were introduced long before, it is very difficult to predict when they will come into force,” he concluded.

In 2008, the AMC prepared an amendment to the existing law that is supposed to increase the financial thresholds and change the necessary nexus requirement. Under the proposed amendment, the combined total value of assets or combined sales (turnover) sufficient to trigger the filing requirement has been increased from €12 million up to €50 million. At the same time, at least two of the parties to the concentration should have assets or sales in Ukraine exceeding €4 million (currently it is sufficient for one party to have assets or sales in excess of €1 million). Alternatively, the proposed amendment also provides for the AMC approval in case, if one of the parties has assets or sales in Ukraine exceeding €50 million and the

Company: Sayenko Kharenko Name: Dmitry Taranyk Email: dtaranyk@sk.ua Web: www.sk.ua Address: 10 Muzeyny Provulok, Kyiv 01001, Ukraine Telephone: +380444996000

October 2013 /

SECTOR SPOTLIGHT:

Implementing Pre-Emptive Forensic Strategy

Implementing Pre-Emptive Forensic Strategy Unsurprisingly the financial services industry remains the most attractive sector to financial fraudsters; the average number of firms reporting fraud is 45%, compared to just 30% in other industries. Falling victim to financial crime can have huge implications for business, and reputational risk is often the primary concern for most, even more than financial loss. With organised criminals using increasingly complex techniques, it is becoming more and more common for firms to adopt preventative methods in the fight against financial crime. Pre-emptive forensic analysis aims to identify risks, develop procedures, and educate the workforce; helping to prevent economic crime, disputes, and to save on financial/reputational damage. Acquisition International speaks to forensic experts for their opinions on the current landscape.

Fraud Prevention Strategies for Financial Institutions ------------------------------------------------------------------------

Angela R. Morelock, CPA, ABV, CFE, CFF, Cr.FA® and S. Todd Burchett, CPA, ABV, ASA, CFF are partners in the Forensics & Valuation Services division at the CPA and advisory firm BKD, LLP.

-----------------------------------------------------------------------More occupational frauds are discovered in the financial services industry than any other industry. According to the ACFE’s 2012 Global Fraud Study, Report to the Nations on Occupational Fraud and Abuse, 16.7% of all frauds reported in 2012 occurred in this industry sector. The financial services industry consistently excels in this statistic. The financial services industry’s main purpose is to handle an inventory of cash, which makes it a significant target for fraud. There are a number of strategies and controls that can help mitigate the risk of fraud and embezzlement in financial institutions. We cover several of these strategies below. 1.

Know relationships between insiders & loan customers – Implement a strict policy regarding conflicts of interest. Monitor activities where conflicts are known to exist. Ask questions when you are unsure. Push back on things that seem unusual. 2. Make a 2nd sign-off a REAL control – A second signoff is often required for banking transactions. Often times, this sign-off is done based on trust and the signer doesn’t actually review the transaction. Train employees to understand the transaction before they sign-off to make this control more effective. 3. No cash transactions outside the presence of the customer – Strike a balance of providing customer service with security and internal control. Many of the fraud schemes that we have seen over the last five years have involved a customer service representative processing transactions involving cash for the customer

/ October 2013

outside of their presence. We have discovered lapping in customer accounts, fictitious loans, theft from customer accounts and unauthorized draws on lines of credit. In each of these cases, involving the customer in the transaction would have prevented the fraud. 4. Good controls around ACH & wire transfers – Follow these controls religiously. Train employees to protect bank credentials. Corporate account takeover has become a big problem. Many mistakes are made in this area. 5. Make sure your correspondent account really balances – Several internal embezzlements are evidenced as reconciling items on the correspondent account. Theft from the correspondent account has become more common. 6. Implement surprise cash counts – Do them regularly. Make them a surprise. Count everything! 7. Review the accounts of Officers, Directors and Employees –Look for unusual levels of cash transactions, non-payroll deposits, bank journal entry credits, and deposits of loan proceeds or cashiers’ checks. 8. Implement a confidential hotline – A hotline can be the single most effective tool for discovering fraud. Consistently, tips have been the #1 fraud detection method of occupational frauds discovered by firms. A hotline can be both a deterrent and a detection method. And, frauds are uncovered sooner when hotlines are in place reducing losses by approximately 44%, on average. 9. Mandatory Vacations – Rotate job responsibilities, including opening mail and returning customer inquiries while employees are out. Many problems are identified during perpetrator vacations. 10. Data Mining & Continuous Auditing – Analysis of loan master and maintenance files, including pattern

recognition, can identify fraud schemes. By employing data mining and continuous auditing, you increase your chances of finding things that you would never find by looking at paper documents (e.g. fictitious loans, rolling loans, undisclosed conflicts of interest). 11. Don’t forget about A/P and expenses reimbursements & corporate credit cards

Company: BKD, LLP Name: Angela R. Morelock; S. Todd Burchett Email: amorelock@bkd.com; tburchett@bkd.com Web: www.bkd.com Address: 10001 Reunion Place, Suite 400, San Antonio, TX. 78216, USA Telephone: +1 210 268 1932

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SECTOR SPOTLIGHT:

Implementing Pre-Emptive Forensic Strategy ------------------------------------------------------------------------

Dan Solomon, Director of Cyber Risk & Security Services at Optimal Risk Management Ltd ------------------------------------------------------------------------

The methods employed by criminals now compel organisations to adopt a more proactive approach to the security of digital assets and the processes that handle them. The nature of advanced threats negates the efficacy of reactive measures to defending against cyber attacks, and severely complicates incident response options. Consequently the process of security is becoming increasingly complex as it now must integrate different facets of the organisation’s preparedness & planning into an overarching security framework to include systems, processes and management practices. For example, security decision-making must be riskinformed, and many firms struggle with methodologies for evaluating and quantifying risk involving digital assets & processes. Similarly, the requirement for physical and cyber security domains to collaborate in combatting the converged nature of sophisticated threats challenges both functions to dovetail capabilities effectively, and many struggle with identifying interdependencies and vulnerabilities. Finally in the majority of cases, organisations rely heavily on the deployment of security measures and tend to neglect the testing of defensive and response capabilities against different scenarios, which ultimately hampers their ability to handle the unexpected or unfamiliar aspects of their ‘next threat’. The principles of pre-emptive forensics are evolving, but the essence of a pre-emptive approach should be based upon developing foresight. Applying a forensic approach to doing so, is key to developing insight into both probable, and plausible outcomes of a breach. The enduring adage that being ‘forearmed is forewarned’

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justifies the testing and exercising of an organisation’s capabilities, which is chronically under-valued by most firms. The process of simulating real-world attacks and analyzing the performance of security apparatus forensically to determine its strengths and weaknesses is a key platform of organizational preparedness, not only because ‘practice makes perfect’ but because it develops an organizational preoccupation with ‘what if’ scenarios, and the failure to deal with them effectively. The forensic benefits of dissecting an attack provide an organization with the opportunities to examine its own response to incidents, and develop great precision in its actions and reactions to events as well as a clear demonstration of vulnerabilities. Ultimately, the justification for adopting a pre-emptive and proactive approach must be to enable better riskinformed decision-taking. A comprehensive evaluation of cyber risk requires a meticulous approach to mapping an organisation’s assets and processes before modeling risk against them, and there are few methodologies that are fully evolved to accomplish this. The mapping process is complex in itself, but it is an imperative in

order to assess vulnerabilities. A methodology like FAIR – Factor Analysis of Information Risk, then builds on an overlay of the threat landscape, based on up-to-date intelligence requires a fusion of different types of intelligence and sources in order to highlight exposure to specific types of threat, and is central to a forensic approach to analysis. These steps all enable the modeling of risk in quantitative terms, producing hard data points for probabilities, the financial implications of different events, and the deterrence vs. cost assessment of different security measures, alongside alternatives for impacting the risk posture.

Company: Optimal Risk Management Ltd Name: Dan Solomon Email: dan.solomon@optimalrisk.com Web: www.optimalrisk.com

October 2013 /

Mkono & Co

Advocates in Association with

Mkono & Co. Africa is a leading East-African law firm headquartered in Dar es Salaam, Tanzania. Founded in 1977 by the firm’s managing partner, Honourable Nimrod E. Mkono, the firm has gradually developed to become Tanzania’s leading law firm and a prominent corporate, commercial and financial practice in the East-African region. Mkono & Co.’s growth is reflected by the unique and dynamic team of lawyers coming from the US, Europe, India and from all over Africa. The firm has a unique mix of common law and civil law practitioners which is key to its move to the East African and Great Lakes Region. The firm is recognised by international professional directories and has received multiple awards for its legal leadership and quality of services. The firm has been ranked in Tier one by Chambers Global since 2000 and counts several lawyers ranked as leaders in their field.

Head Office: 8th Floor, EXIM Tower, Ghana Avenue. PO Box 4369, Dar Es Salaam, Tanzania

Tel: +255 22 2118789-91, 2194200 & 2114664 Fax: +255 22 2113247 & 2116635

info@mkono.com

www.mkono.com

SECTOR SPOTLIGHT: 2013 Q3 Review

2013 Q3 Review

Heading into 2013 dealmakers were optimistic and predictions were that this would be the year when the transactions market went back into growth after five years of decline and that 2013 would close as the most active for private equity investment since the crisis hit. The uptick has unfortunately not yet been seen but M&A markets are growing and are set to continue recovery through the remainder of 2013. After a pre-summer dash to announce deals at the end of Q2, deal value was up 10.6% from Q1, however H1 still down 12.2% compared to last year. According to analysts the Eurozone’s recession could end this quarter, after official data showed that the region’s businesses had returned to growth for the first time in 18 months. Overall there seems to be an increase in confidence with regards to global M&A in Q3 with a number of M&A opportunities emerging. Acquisition International speaks to leading advisors from around the world to discuss their experiences and opinions of 2013 Q3.

Growth and Deal Opportunities in Portugal -----------------------------------------------------------------Luis Filipe Teixeira e Melo is a Lawyer and Senior Partner of GLX LTM AND ASSOCIATES. -----------------------------------------------------------------According to Mr Melo, after a terrible 2012 with massive insolvencies of companies and individuals, it seems the “strongest” have survived. He noted that companies are changing their business models, investing in exports and searching for new markets, not only in the Portuguesespeaking countries, but also in other markets.

“At the same time, the escalating unemployment seems to have stagnated, with the help of one of the most important Portuguese sectors, the tourism”, he commented. Mr Melo noted that tourism has seen an impressive increase in growth, benefiting from the problems and instability in Turkey, Egypt and other countries. The agricultural sector has also benefited from growth, where the market has adapted to limiting legislation and restricted standards. “Finally, the traditional sectors of footwear and home textiles industries have benefited from a strong knowhow, the recognition of their remarkable quality and the impulsion of trademarks”, he added. Discussing legislative updates, Mr Melo stated that Portugal has faced major legislative modifications in what concerns labour law, fiscal law, insolvency and procedural law. He believes that the goals set out by the Troika have mostly been achieved, but at the expense of legislation that has been produced and published in a hurry, and thus not matured. “Many of these changes have had an enormous impact on our clients”, he observed. “On one hand, different labour proceedings have been used to help the companies face the problems of organising working time, as there was a flexibilisation in the proceedings, exempting from workers’ agreement. In what concerns to insolvencies, a new proceeding for the recuperation of companies has been created, which has helped to recover some companies, with their creditors’ agreement. On the other hand, tax changes have encouraged new investments and the collecting of some additional tax revenue for the State.” Looking ahead to Q4, Mr Melo concluded: “We believe that if the companies are duly accompanied and have an effective and careful business plan, their growth will be possible, and the countries’ recovery will too.” Company: GLX LTM and Associates Name: Luis Filipe Teixeira e Melo Email: luisfilipetmelo@gamalobomelo.com Web: www.gamalobomelo.com Address: Av. General Humberto Delgado, 181, 4800-158 Guimaraes, Portugal Telephone: +351 253 421 600

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David Pickles is a Director, Strategy & Development, at MIAC | Acadametrics. ------------------------------------------------------------------------

MIAC | Acadametrics Ltd is a UK based company working both in the UK, and across Europe. We are a top independent provider of risk management and analytics for the lending markets (residential, commercial, and other assets) providing proven solutions for stress testing, pricing and valuation, and asset level cashflows along with other risk-based consulting services. We have expertise in secondary and capital markets, price discovery methods and collateral behaviour analysis. We utilize proprietary software, developed and enhanced over the past 20+ years, in support of these activities. The software is adaptable to a wide range of asset classes and valuation purposes, allowing for integration with third party prepayment and credit risk models. Aimed at supporting mortgage lenders, capital markets players and asset management businesses, MIAC | Acadametrics is a unique, independent, source of the leading edge risk analytics required of all participants in today’s demanding markets. 2013 has seen a continuing focus on regulatory requirements. The markets in a number of countries look to be showing signs of stabilising, or seeing some growth. There is increasing activity in the capital markets, and we have seen a number of larger transactions getting away, including some of the assets from the Government owned holders of ex-bank assets. With increasing regulatory and market pressures, organisations need to be able to look to independent providers who can support their needs and requirements through delivery of high standard output and

services that are compliant, timely, cost effective, and underpinned by a highly professional and experienced team. MIAC | Acadametrics provides such services and solutions. With the current forecasts for the Eurozone, continuing increasing regulatory and central bank activity, further deleveraging by major financial institutions across the zone, increased activity by non-bank organisations in acquiring assets and institutions, together with the need to deliver yield and return in a low rate environment, MIAC|Acadametrics is well placed to support businesses to achieve these and other core objectives. As an organisation we have a positive view about the last quarter of 2013 and expect to see increasing levels of business in the areas we work in this period. We look forward to further improvement in business activity through 2014, as many players look to complete strategic and regulatory objectives, inclusive of the effective disposal of non-core assets.

Company: MIAC │Acadametrics Name: David Pickles Email: david.pickles@miac-acadametrics.co.uk Web: www.miac-acadametrics.co.uk Office: +44 (0)20 3397 4904 Mobile: +44 (0)7851 214975

October 2013 /

SECTOR SPOTLIGHT: 2013 Q3 Review

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Ms Elvan Aziz, Partner, is Head of the Corporate Department and Co-Head of the M&A Department at Paksoy, Attorneys at Law, a leading Istanbul law firm offering a wide range of legal services to the domestic and international business community in Turkey. ------------------------------------------------------------------------

According to Ms Aziz, Turkey has adopted an investorfriendly attitude to all foreign and domestic businesses, having ratified significant legal and regulatory changes. These changes include the liberalisation of markets, the reduction of formalities for setting up companies, as well as the improvement of corporate governance rules in the last years. “The Turkish government and regulators issued quite a lot of regulations and took measures, aligned with EU standards to ensure and oversee a reliable, predictable, transparent, and efficient legal and regulatory landscape for the investors,” she explained. “These are very positive steps aimed at improving the country’s investment environment in a vast array of sectors and facilitating an increase in foreign direct investment flow. “Turkey continued to be the major attraction point for foreign strategic investors and funds in 2013 despite the global economic crisis and developments in the neighbouring countries. Although there was considerable number of deals in the market, some transactions could not successfully close especially due to currency fluctuations and other economic measures. However, even in such cases we observe our clients’ continued interest into the market and search for alternative investments. Fall 2013 brought an increased activity to M&A transactions, and we expect the trend to continue this way until the year end unless a major adverse political or economic event occurs.”

At Paksoy, our experience and reputation creates value to clients as we focus on solutions and on the value that the client realises from our contribution to their business. We are defined as a one-stop full service law firm with a culture and passion to provide practical, innovative and creative solutions to the issues we face. We are the professionals making a difference. Ms Aziz stated that the first half of 2013 has proven to be very positive for Turkey, with increasing activity in M&A. There has been activity in pharmaceuticals, healthcare, and insurance, and increased activity in the energy and retails sectors. “Being also one of the fastest growing and promising energy markets in the World and considering the key parameters such as per capita energy consumption, growing economy and population, it looks like the country will maintain this position for a long time,” she added. Looking ahead, Ms Aziz expects more M&A activity by private equity and strategic investors with more focus on energy, infrastructure, financial services, and health care. She believes that there are a lot of opportunities and potential growth areas in Turkey that provide foreign investors with a friendly investment climate. She anticipates that financial services, including insurance, pension and asset management, energy and health care, as well as the media sectors, will continue to see an increased amount of interest from foreign investors. “To exploit these opportunities by investing in this country, the investors feel the need to reach competent, experienced and innovative advisors and lawyers who

add value to their investment and act along with them in providing solutions,” explained Ms Aziz. She concluded: “At Paksoy, our experience and reputation creates value to clients as we focus on solutions and on the value that the client realises from our contribution to their business. We are defined as a one-stop full service law firm with a culture and passion to provide practical, innovative and creative solutions to the issues we face. We are the professionals making a difference.”

Company: Paksoy Name: Elvan Aziz Email: eaziz@paksoy.av.tr Web: www.paksoy.av.tr Address: Sun Plaza Bilim Sok. No:5 K:14 Maslak 34398 / Istanbul - Turkey Telephone: +90 212 366 4700

Australia – Opportunity for skills, business talent and investors! ------------------------------------------------------------------------

Bambrick Legal is an Australian commercial law firm providing specialist legal services, particularly in the fields of taxation controversy, estate and succession planning and, migration and citizenship law. ------------------------------------------------------------------------

Australia is one of the many popular destinations for potential migrants. It is a nation that is home to a most diverse mix of people from different cultures in the world – and proud to be so! Moreover, Australia continues to have a robust and growing economy (compared to most parts of the world), is recognised for its safe and relaxed lifestyle, offers excellent schools and universities, first class health and medical services and affordable, high class housing and accommodation. For prospective migrants, there is on-going high demand for a wide range of skilled workers and experienced business professionals to work and live here. From the health sector, aged care, mining and resources, engineering and construction through to qualified chefs, there is strong demand. We also engage with employers who wish to sponsor and employ an identified skilled worker from off-shore. The Australian Government, through the Department for Immigration and Border Protection (DIBP), also actively encourages migrants wishing to invest and establish new businesses. Just on a year ago DIBP introduced a new

/ October 2013

and relatively straight-forward business visa category, the significant investor visa, which has attracted great interest. Whether a skilled worker, business professional or business investor, making a visa application is a complex and time consuming task. Providing advice about the correct visa, temporary or permanent, preparation and verification of all documentation, lodging the visa application and follow-through to the visa being granted, are all part of this often lengthy process. If a visa application lacks the necessary detail or does not comply with DIBP’s requirements in any way it will be rejected by DIBP causing unnecessary delays and further costs in resubmitting the application. We believe it is imperative that potential migrants engage a Registered Migration Agent to undertake this work on their behalf. Adrian Bambrick, Principal of our firm, is a Registered Migration Agent (No. 1278753). Adrian delivers a complete visa consultancy, advice and advocacy service providing professional advice and support which reduces the stress associated with this critical aspect of the migration process. Drawing on the significant experience of our team together with meticulous attention to detail, we keep all stakeholders fully informed every step of the way.

Bambrick Legal specialises in employer sponsored visas, special business skills and distinguished talent visas as well as business investment visas especially the significant investor visa category. Bambrick Legal’s core values embody the practice of law with excellence, delivering quality legal services in a cost effective and timely manner. Our commitment to understanding the unique needs of each client enables us to structure their business in order to minimise taxation, protect them and their assets and, ensure compliance with the many Government and other rules and regulations. Liability limited by a scheme approved under Professional Standards Legislation

Company: Bambrick Legal Name: Suzi Cengarle Email: suzi@bambricklegal.com.au Web: www.bambricklegal.com.au Address: Suite 12, 15 Fullarton Road, Kent, Town South Australia 5067 Telephone: +61 8 8362 5269

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: 2013 Q3 Review

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Stuart King, FCCA is Managing Director of FR Global Advisors (an affiliated company of Fiscal Reps Limited) which provides insurance related tax, risk, finance advisory services to small and medium sized entities.

may buy significant amounts of insurance whereas others may only purchase those that are legally required, such as: professional indemnity, employers’ liability and the like.

Insurance related matters before, during and after a merger or acquisition. Understanding risk can often reduce uncertainty in a transaction, improving deal negotiations.

Depending on the nature of the business being acquired some may have longer term risk exposure, evidently increasing the uncertainty of the risk and the risk premium (including collateral) attached to the valuation price – uncertainty can often be improved by engaging with an independent actuary to verify the provisions and establish tolerance ranges that can be negotiated in the sale price.

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Traditionally uncertainty arising before a merger or acquisition is managed via clauses contained within the sale and purchase agreement. However, this can often lead to inefficiencies in capital deployed as typically collateral is provided by the seller which can be drawn down by the buyer in the event of unforeseen or undisclosed matters during due diligence. The decision to merge or make an acquisition can occur in a limited timeframe where there is a flurry of activity to “get the deal done”. Due diligence is primarily focused on material items in order to establish as accurate a valuation price as possible. Very often insurance related matters can be neglected and is more an afterthought following integration. There isn’t a tremendous amount of effort required to undertake a risk and insurance review before a transaction closes. Many purchasers would be wise to undertake a risk analysis of: strategic, financial, hazard, and operational items and map key risks against whether or not insurance is purchased, analysing the policy limits, terms and conditions and applicable deductibles. It is also important to understand the financial risk tolerance and appetite of the business being purchased – some

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James Rosenblum is a Founder of Rosenblum Newfield, LLC. ------------------------------------------------------------------------

Rosenblum Newfield is a civil litigation, administrative and health care law firm. “We are a boutique firm,” said Mr Rosenblum. “Unlike so-called law firm ‘factories’, clients can be sure that senior attorneys will work on their matters. This provides expertise and efficiency. It also means that the goal is to keep the client satisfied, not to keep many associates occupied. Together, this provides high quality work in an efficient, cost-effective manner. If additional resources are needed, they can be retained as needed. For example, in some cases, we hire experts in court-room technology. In other cases, we hire experts in designing courtroom exhibits.” Mr Rosenblum stated that there is no substitute in that courtroom communication is a highly specialised form of communication, in terms of presenting complex, technical information to lay juries, in a legal context. Fluency in courtroom communications requires experience. “Which words are used, timing, how ideas are explained, how repetition is used, how themes are devised and developed, are all challenges which are best addressed by real experience in the courtroom,” he elaborated. “Meanwhile, many so-called ‘corporate’ litigators – while bright and knowledgeable – often lack significant, on-going experience in the courtroom.” Rosenblum Newfield also provides cutting edge litigation services. Thus, in addition to following time-tested methods, the firm is also sensitive to modern theories

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Where there are provisions established for future claims, in the vast majority of cases undertaking a claims analysis and seeking to accelerate claims closure or understand the reserving methodology can improve negotiating positions – some businesses may be conservative (claims settle for less than reserved) others aggressive (provisions inadequate). In both cases lack of understanding can lead to uncertainty. Understanding insurance arrangements before M&A activity can aid to operational integration of acquired businesses into the insurance arrangements of the buyer. At times there can be a myriad of brokers and differing territories, policy limits, terms and conditions – without presenting a solid position of the consolidated business post acquisition it may lead to underwriter uncertainty come policy renewals and increasing premiums. Those who regularly engage in M&A activity often seek to manage insurance volatility or improve cash flow certainty by utilising self-retained risk vehicles called captive insurance companies. These vehicles have the ability (if permitted by law and regulation) to provide

unique insurance products. In more recent times protected cell companies (PCC’s) are proving popular as they isolate portfolio risks into “cells”. Both forms have the ability to directly access alternative capital in the reinsurance market place to protect a firm’s balance sheet.

Company: FR Global Advisors Name: Stuart King Email: stuart.king@fiscalreps.com Web: www.fiscalreps.com Address: 200 Fowler Avenue, Farnborough Business Park, Farnborough, Hampshire, GU14 7JP, UK Telephone: +44 (0)20 7036 8070

We are a boutique firm,” said Mr Rosenblum. “Unlike so-called law firm ‘factories’, clients can be sure that senior attorneys will work on their matters. This provides expertise and efficiency. It also means that the goal is to keep the client satisfied, not to keep many associates occupied. Together, this provides high quality work in an efficient, cost-effective manner. of litigation, including the role of neuro-science in juror consideration of cases. Mr Rosenblum explained that, in this regard, multi-media is more significant in more aspects of litigation than was traditionally the case. “It also involves sensitivity to what is called peripheral vision which jurors have, which means that they are not only focused on a particular witness or a particular issue, but also the atmospherics of the courtroom,” he observed. “Thus, while jurors may be listening to a particular witness, they are also looking at how the parties react to testimony. Therefore, witnesses have to be prepared for being on -- and off -- the witness stand while in the courtroom.”

experience, in court, before juries, actually arguing the merits of cases. Meanwhile, even if they have conducted depositions (which are more extensive in the United States than in England), the lack of real trial experience impedes the efficacy of deposition interrogation. “Like a trip, one needs to know the destination to know how to get there. Similarly, to take effective depositions, one needs a clear idea as to how testimony is likely to be used in court, during opening and closing statements, and in direct and cross examinations. Litigators have to mould concepts over months or years. That takes experience and seasoning,” he concluded.

England has traditionally recognised the separate roles of solicitors, providing counsel to clients and negotiating relationships, and barristers, whose job is to plead a client’s case to a court or jury. Mr Rosenblum highlighted the lack of these clear distinctions in the United States. “In contrast to certifications of physicians, there is comparatively little certification of attorneys, although the National Board of Trial Advocacy has begun to fill this niche over the past 15 years,” he continued. “Many large ‘corporate’ law firms have ‘litigation departments.’ Those litigators drafts pleadings and motions and discuss litigation strategy and negotiate settlements. But they are unlikely to have extensive

Company: Rosenblum Newfield, LLC Name: James Rosenblum Email: jbresq@msn.com Web: www.rosenblumnewfield.com Address: One Landmark Square, 5th Floor, Stamford, CT 06901 Telephone: +1 203 358 9200

October 2013 /

SECTOR SPOTLIGHT: 2013 Q3 Review

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Dr Rolf Lanz is the Managing Partner of CGS Management giesinger gloor lanz & co. (CGS Management), a Swiss advisory firm to the CGS Funds.

View of Swiss Parliament building at night. Bern.Switzerland

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After his studies and a PHD at the University of Zurich, Mr Lanz made an industrial career as CFO and CEO in different industries. These years were characterised by many acquisitions and the integration of acquired companies. “Consequently this formed the basis in 1999 to start with CGS’ Buy & Build strategy with an industrial approach,” he commented. “Over these years we have successfully developed many mid-size companies to industrial groups, acting on a global level and thus have consolidated several industries. The latest example is the Schöttli Group, where we have developed a Swiss based mould manufacturer to a global player, with production and sales hubs in Asia and the US, resulting in tripling the sales.” At the beginning of 2013, CGS Management saw good economic forecasts regarding growth in its targeted jurisdictions (Switzerland, Germany, Austria). Based on this, the firm was expecting an increasing deal flow, especially taking into consideration the rather moderate years after the financial crisis. “Economic growth in our jurisdictions is confirmed or lay even above original forecasts,” observed Mr Lanz. “But as target companies are export oriented, they still suffer among the uncertainties in their markets, not only in Europe. This resulted in a reduced ‘readiness’ to sell companies. On the other hand, in our target

industries (machinery, electronics, plastic, construction supplies etc.) we see a rising pressure for consolidation – especially in this sluggish environment. This motivates target owners to rely on our proven Buy & Build strategy.”

Mr Lanz concluded with his expectations for the next 12 months: “Our targeted jurisdictions will continue to perform well. But more important is the development in the export markets of the targeted companies. And there we expect only a slow recovery.”

Mr Lanz stated that the overall deal flow did not increase as the firm originally expected, which he attributes to uncertainties in the target’s markets. Despite this, the firm was able to close several deals and will do so also in Q4, based on its convincing Buy & Build Strategy. “It’s more and more the aspect of added industrial value by the new owner that attracts and motivates target owners beside the price,” he explained. Discussing significant legislative updates, Mr Lanz highlighted the implementation of AIFMD into Swiss law, which he believes has created a lot of uncertainties as the rules set by the regulatory body are still unclear.

Company: CGS Management giesinger gloor lanz & co. Name: Dr Rolf Lanz Email: rolf.lanz@cgs-management.com Web: www.cgs-management.com Address: Huobstrasse 14, 8808 Pfäffikon/SZ, Switzerland Telephone: +41 55 416 16 44

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Dennis Prahl is a Partner in the New York Office of Ladas & Parry LLP.

Skyline of downtown New York, New York, USA

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Ladas & Parry LLP is an international law firm focusing in the area of intellectual property. The firm is specialised in all areas of IP law, including counselling clients and other law firms on the IP related aspects of international acquisitions, etc. Mr Prahl stated that, in the firm’s experience, the beginning of 2013 started off with a fairly strong climate favouring modest growth, in particular through acquisitions. He noted that the optimism has diminished slightly as the economy has not in general picked up as rapidly as expected. “The US continues to experience sluggish growth, with consumer spending trailing slightly behind expectations and due in part to increased global uncertainty as well as the fallout from the US government sequester earlier in the year and the inability of the US Congress to address fiscal management and the debt ceiling,” he commented. Mr Prahl stated that the firm still sees deals being considered and negotiated at a steady pace, noting that the Healthcare, Technology, Medical/Pharma and Real Estate sectors seem to be the most active deal sectors. He highlighted a number of significant deals involving US parties from the last quarter that demonstrate activity is steady, including: the offer to sell IMG Worldwide, the famous talent agency, expected to be priced between $2 -

/ October 2013

2.5 billion; the Stryker Corporation, surgical equipment manufacturer, acquisition of Mako Surgical Corporation for $1.65 billion; the $6 billion sale of Nieman Marcus to PE investors; Kock Brothers’ $7.2 billion offer for Molex, maker of electronic plugs; the acquisition of Global Tower Partners, a communications infrastructure firm, by American Tower Corporation for £3.3 billion; Microsoft’s purchase of Nokia’s handset business for $7.2 billion; Verizon’s buyout of Vodafone in its wireless unit for $130 billion; Perigo’s acquisition of drug maker Elan for $6.7 billion; the merger of Omnicom Group and Publicis Groupe; and the Activision Blizzard deal for $8.2 billion to become independent from Vivendi. According to Mr Prahl, there have not been any significant legislative or regulatory updates in Q3 in the IP area, however the increased attention of the US government on patent exploitation and litigation, as well as a Supreme Court decision denying patent protection to naturally

occurring genes, has introduced more or less certainty into patent portfolios, “depending on where you sit”. “Provided the US Congress is able to come to terms with budget issues and the debt limit, Q4 seems poised to continue activity at an even pace,” he concluded.

Company: Ladas & Parry LLP Name: Dennis S. Prahl Email: dprahl@ladas.com Web Address: www.ladas.com Address: 1040 Avenue of the Americas, New York, NY 10018, USA

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: 2013 Q3 Review

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Phyllis Kwong is the Founder and Principal Lawyer at Phyllis K.Y. Kwong & Associates.

Hong Kong Harbour at sunset

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The Firm Established since 1991, Phyllis K.Y. Kwong & Associates is a Hong Kong based solicitors firm committed to serving small-to-medium size enterprises (SME) in the Greater China region. In strategic partnership with over 20 law firms in major cities in China, the firm provides one-stop cross-border services to growing SMEs covering the practice areas of Private Equity; Corporate Restructurings; Pre-IPOs; Mergers and acquisitions; Relocation/migration to Hong Kong (companies and individuals); Setting up Businesses; Corporate advisory and Company secretarial services. With rich experiences and exceptional exposure in a variety of clients, our firm takes pride as our clients’ entrusted strategic business partner and together witness the growth and success of each and all of client’s businesses. Our firm also comprise of a well-trained international team of which all the members shall strive for nothing but the very best interest of all our clients. We are committed to render competent, pragmatic and ground-breaking legal advice on all and every of your legal issues. The Principal The firm’s founder and principal lawyer, Ms Phyllis Kwong, has more than 20 years’ solid experience in handling foreign direct investments, joint ventures, mergers & acquisitions in Hong Kong and in mainland China, with highlight experiences involving Deal advisories; Negotiation strategies as well as extensive complex Corporate commercial related work. Ms Kwong has a master degree and a Doctorate degree in Law at Sun Yat-University and China University of Political

Science & Law, Beijing. Ms Kwong is also a Hong Kong registered Financial Planner, Accredited Mediator and Civil Celebrant of Marriages. Ms Kwong currently chairs for Asia Pacific Law Association and Vice President of the China Private Enterprises Development Promotion Association. Core Strength / Why choose us? We nurture trusted relationships. We believe that our clients must be treated with the utmost courtesy, patience and respect. We provide clients with immediate, efficient, and successful strategic solutions for complex cases. Our lawyers are passionate and together guide our clients through every step of the legal process. Hence, you are not just hiring a lawyer, you are hiring an inspired, professional and talented legal team that understands your objectives and work with you to turn them into reality. We pride ourselves on our strong client relationships and we focus on ensuring you are placed at a comfortable position throughout the process. We firmly believe in: • Experience, Service Focus and Transparency ;

• Professional service and legal advice of the highest quality ; • Long-term relationships with our clients built upon trust ; • Achieving client goals in a timely, cost-effective, and proper manner ; • Exceeding our clients’ expectations with service and value.

Company: Phyllis K.Y. Kwong & Associates Name: Phyllis Kwong Email: phyllis@pkykwong.com Web: www.pkykwong.com Address: Suite 805, 8/F, Tower 2 Lippo Centre, 89 Queensway, Hong Kong Telephone: +852 2877 8662

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Dato’ Azmi Mohd Ali is the Senior Partner of Azmi & Associates, an established corporate law firm in Malaysia.

and stable labour market conditions to support private consumption. He stated that the strong domestic demand is crucial as it has offset weak exports to Europe and the rest of the world.

Mr Ali stated that in Malaysia, along with the rest of the notable Asian economies, economic growth continues to prosper, albeit at a slower pace. He attributed this growth mainly to domestic demand, the favourable labour market and increasing public investment.

“Although the growth of the domestic demand is lower than 11.6% recorded in 2012, it is still notable at 6% in Quarter 3 of 2013,” he elaborated. “The domestic demand will likely remain as one of the key emerging trends of the Malaysian economy that will continue into 2014.”

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“Specifically, the Malaysian economy continues to expand at 4.1% based mostly from the strong domestic activities,” said Mr Ali. “In relation, the global economic activities are expanding at a moderate pace at the beginning of the first quarter of 2013 and continued at the same moderate rate in the second quarter of 2013. This can be seen from the modest economic growth in the United States where as Japan’s economy continues to decline due to the decline in private investment in the country.” “More notably, the Ringgit has depreciated against the US dollar by RM3.15 (By Bank Negara Malaysia as on 20/09/2013),” he continued. “The Ringgit depreciation is affected by the Cyprus banking crisis and stimulus measures of advanced central banks. The Ringgit has also weakened against the regional currencies in the range between 0.3% to 5.3% in Q1 of 2013.” Mr Ali expects that the economic growth will continue, albeit at a moderate pace, based on the continued strong domestic demand based on significant spending, low interest rate, sustained income growth

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“Gross export continues to decline throughout the quarter and is expected to continue in Quarter 4 of 2013. This has led to critical decline on the Ringgit that will continue to depreciate. In 2013, the Ringgit had depreciated to 7% due to lower gross exports of petroleum, palm oil and rubber as opposed to the increase in oversea investment and higher imports mainly for infrastructure projects. However, Bank Negara Malaysia is still confident that there shall be rapid growth in the market in Quarter 1 of 2014 as the Malaysian economy will continue to grow to 5.5%6%,” he concluded.

However, the construction sector has increased by 16.7% whereas the agriculture sector grew further by 6% as compared to 5.6% in Quarter 4 in 2012 based from the significant output of palm oil. The services sector has also registered increased activity by 5.9% growth and had contributed to 3.2% of the overall GDP national growth. Bank Negara Malaysia has predicted a lowered economic growth of 4.5% for 2013, as compared to the earlier prediction of 5%. Mr Ali believes that the Malaysian economy has been shown to be weaker throughout the previous quarters, particularly Q1, due to the weakness in the external environment. “The main factor for the weaker than expected economic growth is due to the decline in export trade and investment,” he observed. “The policy uncertainty in the US and Europe from the quantitative easing programme have also been attributed to be one of the causes for the inconsistent growth in the Malaysian economy.

Company: Azmi & Associates Name: Dato’ Azmi Mohd Ali (Senior Partner); Ahmad Lutfi Abdull Mutalip (Managing Partner) Number of lawyers: 65 lawyers Email: azmi@azmilaw.com; alam@azmilaw.com Web: www.azmilaw.com.my Address: 14th Floor, Menara Keck Seng, 203 Jalan Bukit Bintang, 55100 Kuala Lumpur, Malaysia Telephone: +603 2118 5160 Fax: +603 2118 5111

October 2013 /

SECTOR SPOTLIGHT: 2013 Q3 Review

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Adeyemo Adebayo is a Partner at Abax-OOSA Professionals. ------------------------------------------------------------------------

Abax-OOSA Professionals is a four partner firm of accountants providing Audit/Assurance, Accountancy, Taxation and Advisory services. Abax-OOSA Professionals was established on 1st January, 2008 by its senior partners who realized that the time was right to combine their successful and flourishing individual firms in order to best serve the growing needs and demands of current clients, and also to be best positioned to deliver efficient value-added services to a broader spectrum of domestic and offshore business entities. Abax-OOSA Professionals is a member firm of MSI Global Alliance, an international network of independent professional firms. The firm is also a member of the Ran One Consulting Group, an international network of accounting and consulting firms which provide strategic and business growth consulting services to small and medium-sized business (profit-oriented growth enterprises) using cutting edge tools and resources not usually available to other accounting firms. The firm is duly registered with the Securities and Exchange Commission, among other regulators. According to Mr Adebayo, the overall attitude towards growth in Nigeria has been driven by innovation, divergence of ideas and problem solving strategies, exploration of new ideas, direct interaction of people and freedom for creativity. “Deal opportunities abound in the power, agriculture, infrastructure and oil and gas sectors of the economy,” he commented. “There is a huge investment opportunity

The reforms in the power and agricultural sectors have improved the ease of doing business and completing deals. The ease is largely attributable to better supervision by relevant regulatory authorities and innovative ideas and the jurisdiction’s desire for change. in the power sector in the third quarter as the government divests and allows private ownership of power infrastructure.” Mr Adebayo noted that a significant portion of the power sector deals have been completed, and that growth in Nigeria is attributable to increased framework participation in the power sector. “The power sector reform is similar to the revolution witnessed in the telecommunication industry,” he continued. “The reforms in the power and agricultural sectors have improved the ease of doing business and completing deals. The ease is largely attributable to better supervision by relevant regulatory authorities and innovative ideas and the jurisdiction’s desire for change.” In terms of deal activity, the power sector has been the most active. Mr Adebayo highlighted that successful bidders for the power sector assets have made payments and are set to assume control. Discussing legislative updates, Mr Adebayo noted that the revised Petroleum Industrial Bill (PIB) is expected to lead to greater deal opportunities. “However, the bill is still at the floor of the National Assembly,” he added. “As soon as the bill is passed

into law, investment opportunities both locally and internationally will be created.” He continued: “This jurisdiction is classified as an emerging markets economy by both local and international market analysts and the agricultural sector that is contributing significantly to the gross domestic product (GDP) is the next emerging trend in deal opportunity.” In conclusion, Mr Adebayo predicts that a review of the Land Use Act, which makes land available for agricultural businesses, will boost investment in the sector.

Company: Abax-OOSA Professionals Name: Adeyemo Adebayo Email: aadebayo@abax-oosa.com Web: www.abax-oosa.com Address: 18, Akanbi Damola Street, South West Ikoyi, Lagos, Nigeria Telephone: +234 1 463 0842, 463 0843

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Elise Donovan, Executive Director of the British Virgin Islands International Finance Centre (BVI IFC), which is responsible for marketing and promoting the BVI’s world-class financial services industry globally. ------------------------------------------------------------------------

Ms Donovan stated that the BVI began 2013 with a very positive attitude towards growing its global market share. The BVI IFC forecast a very busy year and this has proved to be the case. “The BVI understands that it operates in a very competitive market and began 2013 with a clear set of priorities, including participation in a series of global conferences and networking events, and this foresight and planning has paid off in terms of the BVI’s market presence and client base,” she commented. “We have seen strong business inflows into BVI service providers, driven by the strength and sophistication of BVI legislation, our expanding range of services and products, and the professionalism of individuals that work in the jurisdiction.” Ms Donovan believes that the optimism has been justified, noting that the BVI is confident that the fourth quarter of 2013, as well as the year ahead, will be positive with regards to business flows and brand awareness. She added that the BVI IFC has worked hard in 2013 to strengthen its reputation as a leading global financial centre, particularly with regards to markets in Asia, the Middle East and South America, and this strategy has seen a strong return on investment for all stakeholders in the BVI. “For instance, in Q3 the BVI Government opened a new office in Hong Kong to meet the continued demand for

/ October 2013

The BVI understands that it operates in a very competitive market and began 2013 with a clear set of priorities, including participation in a series of global conferences and networking events, and this foresight and planning has paid off in terms of the BVI’s market presence and client base. BVI products in Asia and improve our visibility in this critical market for the BVI,” Ms Donovan elaborated. “Establishing a physical presence in the region will allow the BVI to increase its footprint in Asia. It will also enable the BVI to be even more responsive to the needs of clients in these markets, a critical factor in developing the BVI’s innovative products, services and legislation. “This is a clear indication of our commitment to growth and the potential it offers for BVI’s future success.” The BVI experienced growth over the quarter in corporate business, private trust companies and insurance. Ms Donovan stated that the BVI has become a world leader due to its excellence and innovation in financial services and it continues to be a constructive partner maintaining the highest standards of regulation, as the jurisdiction deems good regulation is good for quality business. Discussing emerging trends from Q3, Ms Donovan highlighted the greater intensity in the debate about global finance, taxation and the role of offshore financial centres. She stated that the BVI welcomed the discussion as a good opportunity to reinforce its commitment to the transparency and international cooperation agenda.

“There is a trend towards greater transparency and globally applied regulatory standards,” she continued. “To these, the BVI remains highly committed and will continue to engage in progressive discussions in setting the standards and in being a responsible player in the global economy.” Ms Donovan concluded: “The BVI is confident that the fourth quarter of 2013 as well as 2014 will be positive with regards to business flows and brand awareness.”

Company: BVI International Finance Centre Name: Elise Donovan Email: info@bviifc.gov.vg Web: www.bvifacts.info Address: Road Town, Tortola, British Virgin Islands Telephone: 1 284 468 4335

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: 2013 Q3 Review

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Dr Barbara Mayer is the Managing Partner of Friedrich Graf von Westphalen & Partner, Germany.

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

Jeff Taylor is a Partner and Head of Business Services at Thomas Horton LLP.

According to Mr Gonneau, the mood in the European private equity market is slowly but surely picking up. He attributed this to improvements in financial markets and the development of the euro crisis.

Our sense is that UK business clients are moving from amber to green,” said Mr Taylor. “Plans that were ‘on hold’ are now moving ahead, and we predict that the next 12 months will see a 30% increase in our UK M and A transaction activity. We also predict that many businesses will be ‘let go’ by their banks who, for a variety of reasons, have allowed them to survive for some time when in years gone by they would have had their facilities pulled. The demise of those businesses will present market opportunities for those that remain, and so add to UK deal flow levels.”

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The corporate / M&A team of FGvW headed by Gerhard Manz and Dr Barbara Mayer supports and advises its clients on a worldwide basis. FGvW is one of the most renowned legal practices in Germany for mid-cap transactions, both on a national and an international level. The approach of co-operating and working with a selected circle of “best-friend” law firms all over the world has proved to be very successful. Through integrated teams, clients have access to international legal services which are client-focused, cost-effective and result-oriented. The M&A practice has established an excellent reputation for their committed, solutionoriented approach and quick reaction times. Company: Friedrich Graf von Westphalen & Partner Name: Dr Barbara Mayer Email: barbara.mayer@fgvw.de Web: www.fgvw.de Address: Kaiser-Joseph-Straße 284, 79098 Freiburg, Baden-Wuerttemberg, Germany Telephone: +49 761 21808-0

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Anastasia Aravani, LLM Lawyer, is an Accredited Mediator, Associate in CORINA FASSOULIGRAFANAKI & ASSOCIATES LAW FIRM. -----------------------------------------------------------------With the economic crisis still present in Greece, jurisdiction has not experienced growth at least in favor of the expansion of investments; therefore deal opportunities have been narrowed even more. The lack of liquidity in the market has led companies and banks to reconsider and negotiate existing financial relationships, so that companies will manage to overcome financial problems in an affordable way. Regarding individuals with high exposure to bank loans, already assisted by legislation to request alteration or even reduction of their debt, there is an optimistic development in jurisdiction, regarding the proposed amendment for the involvement of mediators in the process, so that the parties will benefit from the advantages of such ADR method, especially in terms of cost, time and confidentiality, with both parties being able to resolve disputes with concrete effects. Company: CORINA FASSOULI-GRAFANAKI & ASSOCIATES LAW FIRM Name: Anastasia Aravani Email: anastasia.aravani@lawofmf.gr Web: www.cfgalaw.com Address: Panepistimiou 16, Athens 10672, Greece Telephone: +30 210-3628512 / +30 210-3602240

ACQUISITION INTERNATIONAL

“The mood is more upbeat in France than previously expected but changes will come from investors,” he elaborated. “In 2013, PE investors will focus more on developing their portfolio companies. The PE business models must be examined in terms of their future sustainability. “Private equity funds should take the opportunity and enforce a more active approach to manage their portfolio companies. This is certainly the main lesson to be learnt from this crisis. It will help to adjust for the new market conditions and help them to deal with future crises.”

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Company: Thomas Horton LLP Name: Jeff Taylor Email: jrt@thomashorton.co.uk Web: www.thomashorton.co.uk Address: Strand House, 70 The Strand, Bromsgrove, Worcestershire B61 8DQ, UK Telephone: +44 (0)1527 871641

Company: Camden Associates Name: Jean-Claude Gonneau Email: jcg@camdenassociates.co.uk Web: www.camdenassociates.co.uk Address: 27 Hill Street, London, W1J 5LP, UK

Toxic Debt Resolution - The Nigerian Perspective ------------------------------------------------------------------

Dr Olisa Agbakoba (SAN) is a Senior Partner at Olisa Agbakoba & Associates. -----------------------------------------------------------------Following the 2008 global financial crisis, the Asset Management Corporation of Nigeria was established in 2010 to acquire non-performing toxic debts from Nigerian Banks to free up their balance sheets and enable resumption of traditional lending, a necessary catalyst to drive the economy. Leading insolvency practitioners, Olisa Agbakoba & Associates, was mandated to recover substantial toxic debts. From a practitioner’s perspective, it has been challenging but overall, implementation of AMCON’s debt resolution mandate has been successful. Further, the IMF and World Bank acknowledged AMCON’s economic benefits supported by the Nigerian government’s macro-economic reform policies. Company: Olisa Agbakoba & Associates Name: Dr Olisa Agbakoba (SAN) OON. FCIArb. Email: olisa@agbakoba-associates.com Web: www.agbakoba-associates.com Address: Maritime Complex, 34 Creek Road, P.O. Box 3196, Apapa, Lagos, Nigeria. Telephone: +234 1 2790915-6

October 2013 /

SECTOR SPOTLIGHT:

Global Expertise Directory

Global Expertise Directory Acquisition International profiles the leading players around the world in a variety of sectors.

The Law Firm of Dr. Khalid Alnowaiser is Saudi Arabia’s fastest growing regional law firm. We specialize in corporate matters, commercial litigation, investments, finance and arbitration for both multinational corporations and local clients. With offices in Riyadh and Jeddah, the Law Firm of Dr. Khalid Alnowaiser has the in-depth knowledge of international law, Sharia’a Law and Middle Eastern legal systems that is a major asset to regional and international businesses and individuals. Our practice areas include: Commercial legal services; Company formation and governance; Commercial contracts; International Investment; Mergers and acquisitions; Privatization; Intellectual Property; Labour and employment law; Banking & Finance; Capital markets; Corporate finance; Project finance; Real estate & construction; Commercial Litigation; and Arbitration and mediation. The Law Firm of Dr. Khalid Alnowaiser is made up of some of the finest legal minds in Saudi Arabia. Our vast network of Saudi and international attorneys are fluent in Arabic and English and have experience in corporate governance, dispute resolution and all legal aspects of doing business in the Middle East. We also have a network of correspondent law offices throughout the Middle East, so we can assist you in business ventures throughout the fast-growing markets. Company: The Law Firm of Dr. Khalid Alnowaiser Name: Mohsen Malash Email: mohsen@lfkan.com Web: www.lfkan.com Address: P.O. Box 50100, Jeddah 21523, Saudi Arabia Telephone: +966 2 664 5666

/ October 2013

Haidermota & Co. is one of Pakistan’s top law firms with more than 54 years of experience as a premier provider of legal services. Bhandari, Naqvi & Riaz, established in 2003, has consistently been ranked as one of the top litigation firms in the country. The two firms have now formed a new partnership HaidermotaBNR & Co, with A.M. Haidermota as the firm’s managing partner. All lawyers of the two firms are now part of HaidermotaBNR & Co. The new firm comprises 13 partners and over 35 associates with offices in Karachi, Lahore, Islamabad and an affiliated office in Dubai. HAIDERMOTABNR is recognised as one of the top firms in the Country across key sectors: M&A, Corporate/Commercial Advisory, Project Finance, Projects & Energy, Privatisation, PPP, Telecom and Dispute Resolution. The firm is committed to providing practical solutions to complex issues faced by clients in all sectors and establishing market standards for others to follow. Its highly qualified and experienced litigation team consisting of distinguished practitioners of the Supreme Court of Pakistan offers clients an exhaustive service in the field. Together with its transactional and advisory work – the firm provides clients with a ‘one-stop-shop’ solution to all issues arising from project inception to operations. Company: HaidermotaBNR & Co Name: Kazim Hasan Email: kazim@hmcobnr.com Web: www.hmcobnr.com Address: D-79, Block No.5, Karachi 75600, Pakistan Telephone: +92 35879097

Mucheru-Oyatta & Associates Advocates (formerly Gadhia & Mucheru Co. Advocates) firm was established to provide personalized legal services to corporate clients with the intention of giving our clients services similar to what our clients would expect of an internal legal department. Our firm was established under the name Gadhia & Mucheru Co. Advocates in July, 2003 as a partnership between Mrs Oyatta and Mr Amit R. Gadhia and has grown to become one of Nairobi’s recognized and respected law firms. Mr Gadhia emigrated to the United Kingdom where he has been residing and working since January 2011 and consequently retired from legal practice in Kenya. We are located in an easily accessible location on the 3rd floor of Capitol Hill Towers, Cathedral Road, Nairobi occupying an area of 3000 sq ft. Our premises are fully computerized with adequate communication facilities and a friendly, welltrained staff. We currently employ at least 7 permanent support staff and 2 associate advocates. Our firm is geared towards constant improvement and growth and the provision of high quality legal services that are tailor-made for each client while catering for diverse clientele and maintaining unsurpassed ethical standards. We continue to make growth plans within the ambit of our practice areas striving to create a one-stop-shop for our client’s legal service requirements. Company: Mucheru-Oyatta & Associates Advocates Name: Njeri Mucheru-Oyatta Email: mail@mucheru-oyatta.com Web: www.mucheru-oyatta.com Address: Third Floor, Capitol Hill Towers, Cathedral Road, P.O. Box 7769 00200, Nairobi Telephone: +254 (020) 2712889/891/877

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SECTOR SPOTLIGHT:

Global Expertise Directory

Nangwala, Rezida & Co was established in 1994, and has since then thrived. Today, the firm has two Partners, namely James Nangwala and Alex Rezida, and three Associates, namely Christine Nabirye, Assumpta Kemigisha-Ssebunya and Lillian Helen Kuteesa.

Firm Activities: Administrative Law, Civil Law, Criminal Law, Contract Law, Financing Law, International Law, Trademark Law, Patent law counterfeiting & Infringement Law, Labor Law, Tax Law, Debts Collection, Banking Law, Construction Law, Insurance Law and Business Consultancies.

The firm has fifteen support staff. We also outsource providers necessary for the due performance of legal services. In order to achieve our goal we work as a team. Every one of us is gifted uniquely. It is that unique gifting that each of us utilizes to enable useful contribution to every given task. With that, the solution we deliver to the client is always satisfactory and relevant to meet the client’s need. We have contributed to the development of the Law in Uganda.

The firm offers a full range of legal services and its associated with a comprehensive network of distinguished lawyers experts and consultants in the field of business management and economic feasibility studies.

Our core values include hard and smart work, excellence, and belief in justice and delivery of results. The value of hard work is reflected in the fact when we have a task to do, we ensure professional delivery of results in the shortest time possible. This necessitates us to place the needs and demands of the firm before our individual needs. More so, irrespective of the fact that we aim at helping our clients obtain solutions that are practical, we do not ignore our cardinal duty to be ethical. We are also responsive to the legal needs of marginalised groups. Company: Nangwala, Rezida & Co Advocates Name: Lillian Helen Kuteesa Email: kuteesa@nare.co.ug Web: www.nare.co.ug Address: Suite No. B5 & 6, 2nd Floor, 2nd Office Park, Plot 7/9 Buganda Road P.O. Box 10304 Kampala, Uganda, East Africa Telephone: +256 0414 - 234418

The firm activities are conducted by several professional reputable lawyers dedicated to serve their clients the very best of legal services. Moreover, reliable contacts are maintained with other firms in Syria, Middle East, Europe and USA. Rewards : Several Awards have been granted to my firm: World Bank for Doing Business – Legal 500 has recommended my law firm in 2011&2012 for M&A & corporate law, several letters of appreciations from UIA. I am very glad to announce that my son Louay joined the firm beginning of this year.

Company: Oussi Law Firm Contact: Gabriel Oussi Email: go-law@oussico.net Web: http://www.oussilawfirm.com Address: Salhiye – Shouhada, P.O Box 2506 Damascus – Syria Telephone: +963 11 33500090/1

As a law firm that delivers international capabilities locally, RHTLaw Taylor Wessing’s clients can expect intelligent and innovative legal and business solutions from a team that is attuned to the nuances of working in Asia, with the added perspective and expertise of an international firm. Our model is driven by the focus on helping clients succeed, which translates to clear and precise solutions with high level legal and commercial insights. Based in Singapore, we offer clients access to a network of over 900 legal professionals across 22 offices in Asia, the Middle East and Europe via our membership with Taylor Wessing group. We are also the exclusive Singapore member of The Interlex Group, a global network of 46 leading law firms in 60 countries and 154 cities. Our main Practice Areas are in: 1. Banking and Finance 2. Corporate and Securities 3. Litigation and Dispute Resolution 4. Intellectual Property and Technology 5. Real Estate Company: RHTLaw Taylor Wessing LLP Contact: Christabel Lim Email: christabel.lim@rhtlawtaylorwessing.com Web: http://www.rhtlawtaylorwessing.com/ Address: Six Battery Road, #10-01, Singapore 049909 Telephone: +65 6381 6986

Wafula And Company Advocates SecurIT is a specialized System Integrator in the field of IT Security, in particular in the Identity & Access Management domain, targeting large organizations. The company also markets its own software solutions TrustBuilder and D-Man on a worldwide basis through subsidiaries in The Netherlands and USA and via a partner network, in close cooperation with IBM. TrustBuilder is a compelling solution in the area of user’s identity assurance, supporting virtually any mechanism in the market today, including electronic identity cards, onetime passwords, mobile tokens and biometrics. An organization’s policy can easily be realized and adapted whenever required through its user-friendly workflow interface, a must-have in today’s rapidly changing environment. SecurIT’s solutions are in use at many large organizations across the globe, including large financial institutions, telecom providers and government agencies. Company: SecurIT Contact: Marc Vanmaele, CEO Email: marc.vanmaele@securit.biz Web: www.securit.biz, www.trustbuilder.be Address: Franklin Rooseveltlaan 349d B-9000 Gent, Belgium Telephone: +32-9-265 02 70

ACQUISITION INTERNATIONAL

Wafula And Company Advocates is a leading corporate and commercial law firm in Jinja. We are located in Jinja Town east of Kampala. Wafula Advocates was founded in 2001 and specialises in the areas of Corporate and Commercial law. Our commitment to provision of excellent legal services is the hallmark of Wafula & Co. Advocates. Most of our lawyers have had their legal training in leading Ugandan law schools. Uganda’s legal system is based on English law. Company: Wafula And Company Advocates Name: Wafula Charles Email: wafulaadvocates@gmail.com Web: www.wafuladvocates.com Address: Noor Building, 1st Floor, Plot 16 OBoja Road, Jinja, P.O. Box 573, Jinja, Uganda Telephone: +256 (0)434 130 081

The Wilhelm Law Firm is a boutique Austin, Texas, firm that focuses on oil and gas law. We assist operators and investors in their acquisition and divestiture of properties, and in their development of oil and gas properties and related facilities. We are a full service firm, offering transactional services, representation before local and federal regulatory agencies, mediation and arbitration services, and civil litigation defense. The Firm offers special assistance to foreign investors and operators. Our attorneys are licensed in 4 states within the United States, including Texas, Louisiana, and Arkansas, three of the largest oil and gas producing states in the United States. As well, our lawyers have direct experience dealing with clients from Western Europe and the Far East. The firm is a founding member of Austin ADAM, Inc. (Austin Acquisitions, Divestitures, and Mergers Trade Association). Company: The Wilhelm Law Firm Contact: Edward M. Wilhelm Email: pfk@koep.com.na Web: http://www.wilhelmlaw.net Address: 1703 West Avenue, Austin, Texas 78701 (USA) Telephone: (512) 236 8400 Fax: (512) 236 8404

October 2013 /

DEAL DIARY:

M&A from around the world

Deal Diary

CONSUMER 86

CALISTOGA’S ARAUJO ESTATE WINES

DEUTEK

ERPO MÖBELWERK

PARK RESORTS

TOURNUS EQUIPMENT

87 TRAINLINE

ENERGY & RESOURCES

BLUEFIELD SOLAR INCOME FUND

KAINJI POWER PLC

UGHELLI POWERPLANT

FINANCIAL SERVICES

GENERALI PORTFOLIO MANAGEMENT

GENESIS KENYA

89 SANTIANE HEALTHCARE

Welcome to October’s Deal Diary, Acquisition International’s round up of recent M&A activity. October’s Deal Diary features a wide range of transactions in various sectors. This month’s Consumer section includes MML’s €10m investment into Tournus Equipement, based in France, through a mix of bonds and shares, taking a 21% stake in the company. Tournus is the French leader of stainless steel professional equipment for catering companies, professional kitchens and sales counters for food and beverage vendors. Turn to PAGE 87 to read more. Our Energy & Resources deals include Africa Finance Corporation’s provision of a US$215 million debt financing facility for the acquisition of Ughelli Power Plc, in conjunction with UBA Bank Plc as co-arrangers and FCMB and Fidelity Bank as cofinanciers (PAGE 88). We spoke to Edward Ekiyor & Co, G. Elias & Co and UBA Capital to learn more. We also examine Centum Investment Company Limited’s intended acquisition of a controlling interest in Genesis Kenya Investment Management Limited (Financial Services – PAGE 89); EQT VI and management’s acquisition of Terveystalo from Bridgepoint (Health Care – PAGE 90); Chem-Trend’s acquisition of Zyvax (Industrials – PAGE 91); JZ International and Souter Investments’ acquisition of a 60% shareholding in Winn Solicitors Ltd (Support Services – PAGE 92); and CapMan Russia II’s first investment in MAYKOR (TMT – PAGE 93). Have you done a deal recently? If so, we want to hear from you – head to our website and submit the details.

/ October 2013

CHOICE CARE

90 CURATO 90 TERVEYSTALO INDUSTRIAL 91

ECRONOVA POLYMER GMBH

91 GEVEKE 91 ZYVAX

SUPPORT SERVICES

OAG

SB TRAILERS

92 WINN TMT 93

DATABASE CONSULTANTS AUSTRALIA

93 MAYKOR 93

VERITEK GLOBAL MBO

ACQUISITION INTERNATIONAL

DEAL DIARY:

M&A from around the world

Acquisition International’s round up of recent M&A activity in the Healthcare sector, with data from Zephyr, published by Bureau van Dijk Mergers and acquisitions in the healthcare sector climbed very NUMBER AND AGGREGATE VALUE (MIL USD) OF slightly in H1 2013, according to Zephyr, the M&A database HEALTHCARE SECTOR DEALS GLOBALLY: published by Bureau van Dijk. In total there were 535 deals worth 2006 - 2013 YTD (as at 30 September 2013) USD 15,095 million as volume declined by 6 per cent and value Deal half No. of deals Aggregate deal value increased from USD 15,067 million in the second half of 2012. yearly value (mil USD) Mergers and acquisitions (M&A) activity in the healthcare industry appears to be on the up. After declining to USD 8,875 million in the opening six months of 2012, results have been on the increase ever since (H2 2012: USD 15,067 million, H1 2013: USD 15,095 million). Even though H2 2013 is barely three months old, there have already been 257 transactions worth USD 15,005 million. If results continue on this trajectory, quite a large increase in values should be evident by the end of December. The most commonly targeted region in healthcare deals in 2013 to date has been Western Europe, with 307 transactions. This was followed by North America with 244, while the Far East and Central Asia, Oceania and Eastern Europe came next with 81, 77 and 55, respectively. It was a different story by value, with North America topping the bill with investment of USD 17,908 million. Western Europe trailed in second with USD 8,838 million and Oceania was even further behind in third on USD 1,719 million. In conclusion, the healthcare sector appears to be on the up, although it remains some way behind the heady days of H2 2006, when USD 53,449 million was invested in the industry. Results over the last couple of years have been promising and seem to be showing signs of a revival. There is still plenty of time left until the end of December, meaning results could rise again over the six months to the end of December. A blockbuster transaction could even help the industry reach levels not seen in a few years.

(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

468 487 500 523 448 418 372 418 451 443 484 509 564 566 535 257

19,999 53,449 31,858 27,131 13,361 7,106 5,578 9,967 15,095 17,527 24,983 10,116 8,875 15,067 15,095 15,005

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October 2013 /

DEAL DIARY:

Consumer Deals

CONSUMER

CALISTOGA’S ARAUJO ESTATE WINES

DEUTEK

ERPO MÖBELWERK

l Araujo Estate Wines, producer of distinctive wines from the iconic Eisele Vineyard in Napa Valley, has been acquired by France’s Pinault family through its holding the Artémis Group, parent company of Château Latour in Bordeaux, Domaine d’Eugénie in Burgundy and Château Grillet in the Rhône Valley. The purchase includes the 38acre Biodynamic and organically-farmed Eisele Vineyard, the winery and cave complex in northern Napa Valley, the Araujo Estate brand and existing inventory. The purchase price was not disclosed.

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 Funds advised by AFINUM Management GmbH, Munich, have sold their shares in Erpo Möbelwerk GmbH (“Erpo”) to BWK GmbH Unternehmensbeteiligungsgesellschaft, Stuttgart. The management team also sold shares, however, still holds a substantial stake in Erpo and overall increased its shareholding. Terms and conditions of the transaction were not disclosed.

Araujo Estate Wines, producer of distinctive wines from the iconic Eisele Vineyard in Napa Valley, has been acquired by France’s Pinault family through its holding the Artémis Group, parent company of Château Latour in Bordeaux, Domaine d’Eugénie in Burgundy and Château Grillet in the Rhône Valley. The purchase includes the 38-acre Biodynamic and organically-farmed Eisele Vineyard, the winery and cave complex in northern Napa Valley, the Araujo Estate brand and existing inventory. The purchase price was not disclosed. Gibson Dunn represented Artemis S.A. on the deal, led by Corporate Partner Jennifer Bellah Maguire and Real Estate Partner Drew Flowers. Gibson Dunn has represented Artemis for a number of years, primarily on litigation matters. Any sale structured as an asset acquisiJ Bellah Maguire tion involves more legal work, yet by requiring a more intimate familiarity with key elements of the business, can be more educational for the buyer,” said Ms Maguire. “More important, when founders sell a business which represents their deep passion, some issues cannot be resolved by formulaic solutions, but call for collaborative approaches which take more time and thought. Windels Marx Lane & Mittendorf, LLP represented Credit Agricole CIB, a longstanding client of the firm. The team was led by Michael J. Clain, a partner in the firm’s Financial Transactions Practice Group. He commented: There was wonderful cooperation among all the participants. The greatest challenge was coordinating the simultaneous completion of various pieces of the transaction in France, New York and California. Michael Clain

ARTEMIS GROUP ACQUIRES CALISTOGA’S

ARAUJO Finance ESTATE WINES DRV Corporate

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. 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. 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

Founded 1952 in Ertingen (Baden-Württemberg), Erpo Möbelwerk GmbH is one of the leading manufacturers of high-quality upholstery in Germany. With 150 employees Erpo markets individual armchairs and seating groups made of fabrics or leather, respectively, primarily through retailers and specialised furniture retailers in the Germanspeaking regions. In addition, Erpo sells its furniture into other European countries and into Asia (Japan, South Korea, Taiwan). Its extensive competence and expertise in terms of product and marketing made Erpo one of the most successful and fastest growing German manufacturers of upholstery furniture in recent years. Currently Erpo generates sales of approximately Euro 27 million. AFINUM is a Munich based private equity firm specialising in the financing of management-buyout and -buyin transactions of German mid-market companies since its foundation in 2000. In the coming years, Stuttgart based BWK together with management aims to strengthen the Company’s high reputation and expand Erpo’s market position in Europe and in the fast growing Asian markets. Lincoln International was mandated by the Shareholders as exclusive financial advisor for the sale. maconda, which is specialised in value enhancement, corporate development and commercial transaction services, provided market due diligence on behalf of BWK. Dr Rainer Mayer, maconda’s managing partner, commented: Based on our broad expertise in consumer goods and retail, we operated confidently in this sector with all its specifics and challenges. This applies in particular to the supply to large furniture chains as important distribution channel. Besides, our integrated analytical approach contributed to the better assessment and firm grasp on client behaviour, competitive landscape and Erpo’s positioning.

BWK GMBH ACQUIRES

ERPO MÖBELWERK DRV Corporate Finance

Legal Adviser to the Debt Provider Virtual Data Room Provider

Legal Adviser to the Purchaser

Financial & Commercial Due Diligence Provider

Debt Provider

Legal Adviser to the Vendor

Vendor (Seller) Due Diligence Provider

Market Due Diligence Provider

Environmental Due Diligence Provider

/ October 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

Consumer Deals TOURNUS EQUIPEMENT

l In January 2012 Electra Partners acquired £45 million of term debt in caravan parks operator, Park Resorts, from Lloyds Banking Group. This was followed up with further debt purchases in February and August 2012, taking the total holding in Park Resorts to £69.8 million.

l MML has invested €10m into Tournus Equipement, based in France, through a mix of bonds and shares, taking a 21% stake in the company.

Park Resorts is a leading operator of holiday parks offering caravan holidays at its 39 sites across the UK including Essex, Yorkshire, Kent, Sussex and Scotland. Income is generated from caravan or holiday home sales, pitch and owner rentals, holiday lettings and retail activities. The sector is defensive and has performed well through the recession. Alex Fortescue, Chief Investment Partner at Electra Partners, said: This deal showcases the flexibility of the capital we manage for Electra Private Equity PLC. The initial investment was in Park Resorts’ debt, and upon completion our clients will take a controlling equity position through a transaction which gives the company the solid financial foundation it requires to continue its growth strategy. David Vaughan, Chairman of Park Resorts said: I’m thrilled to have worked successfully with Electra Partners to create the right platform to grow and develop the business. There are many exciting opportunities to improve park facilities and to add to the business and we are looking forward to working to deliver these over the coming years. PwC represented the secured lenders on the deal, led by Heather Swanston, Partner. PwC has long standing relationships with many of the secured lenders and was involved in a previous restructuring of Park Resorts for the secured lenders in 2009. Heather Swanston PwC facilitated and supported secured lenders through the lengthy and, at times, complex negotiations within the lender group and with other stakeholders. This included a review of the business plan, a full options analysis, tax and other ad hoc advice on specific aspects of the deal. Heather Swanston commented: The deal involved a complex capital structure, a diverse lender population, competing stakeholder pressures and, over the course of negotiations, changes to the lender population and proposed equity makeup. PwC used their relationships with all lenders and the wider stakeholder group to facilitate and support the lenders in completing the deal.

ELECTRA PARTNERS ACQUIRES

PARK RESORTS DRV Corporate Finance

Financial Adviser to the Debt Providers

MML led the deal, with other minority partners, teaming up with management to enable them to acquire the business, which was previously majority owned by private equity. Management rolled all of their value demonstrating their commitment to the business. Tournus is the French leader of stainless steel professional equipment for catering companies, professional kitchens and sales counters for food and beverage vendors.The company designs and manufactures a large range of products, from its plant in the Bourgogne region. Henry-Louis Merieux and Sebastien Beth both led and executed the deal for MML, with Henry-Louis joining the board. Chief Executive Officer, Pierre Marcel stated: We are delighted to partner with private equity investors MML Capital, UI Gestion and Bpifrance, which will accompany us in this new phase to both strengthen our position in the French market and to further expand our international sales. Additionally, selective bolt ons will be considered. Henry-Louis added: We decided to back Pierre Marcel and his team, given the company’s excellent positioning in its core market and its growth opportunities in France and abroad, thanks to its well-invested manufacturing plant and its large and competitive product offering. This project reflects perfectly MML’s strategy to back managers to increase their equity stakes in their businesses, and to finance organic and external growth opportunities.

MML BACKS TOURNUS EQUIPEMENT

DRV Corporate Finance

TRAINLINE l thetrainline.com, the UK ticketing company, has raised a £190 million loan to refinance existing debt and pay a dividend to its private equity owner Exponent. The dividend recapitalisation closed on 6 September. The transaction represents the largest unitranche facility put together for a UK-based company this year and the second largest across Europe. The facilities consisted of a £140m unitranche facility backed by Ares Capital Management, Babson Capital, Bank of Ireland and Bluebay Asset Management; and a £50m super senior RCF backed by Barclays Bank plc and HSBC Bank plc. The unitranche product is rapidly gaining prominence in mid-market leveraged financings in Europe and is essentially a groundbreaking single debt instrument which roughly equates in debt size to a combination of senior and subordinated debt, but with a blended margin, and is structured to avoid the need for senior/mezzanine intercreditor negotiations. thetrainline.com was first established in 1999. Its mission is to help customers make savings on train tickets. The company also works with partners to offer savings on car hire, hotels and theatre tickets. thetrainline.com has access to over 293 million fare and journey combinations, covering all routes. Since 1999 thetrainline.com has sold to over 6 million travellers and attracted over 12 million registered users.

EXPONENT-BACKED THETRAINLINE.COM

SECURES £190M LOAN FOR DIVIDEND RECAP DRV Corporate Finance

Legal Advisers to the Debt Providers

Legal Adviser to the Debt Providers Carlara International Legal Adviser to the Management Team

Vendor Due Diligence Provider

Advisers

Financial Adviser to the Company Commercial Due Diligence Provider Legal Adviser to the Equity Provider

Legal Adviser to the Management team Legal Adviser to the Company

ACQUISITION INTERNATIONAL

October 2013 /

CONSUMER

PARK RESORTS

DEAL DIARY:

Energy & Resources Deals

ENERGY & RESOURCES

BLUEFIELD SOLAR INCOME FUND

KAINJI HYDROELECTRIC POWER PLC.

l Bluefield Solar Income Fund Limited is has entered into binding contracts to acquire a large-scale solar plant in Norfolk for total investment consideration of £17 million.

l The Africa Finance Corporation (AFC) has provided a US$170 million debt financing facility in conjunction with Guaranty Trust Bank Plc, to the Mainstream Energy Solutions Limited consortium (MESL), for the acquisition of the Kainji Power Plc in the first round of the Federal Government of Nigeria’s privatisation of power generation assets formerly owned by the Power Holding Company of Nigeria (PHCN).

l Africa Finance Corporation, in conjunction with UBA Bank Plc as co-arrangers and FCMB and Fidelity Bank as co-financiers, has provided a US$215 million debt financing facility for the acquisition of Ughelli Power Plc.

Kainji Plc is one of six power generation limited liability companies established under the provisions of the EPSR Act for the concessioning of hydroelectric power plants, following the unbundling of the vertically integrated PHCN. Kainji Plc consists of two hydroelectric power plants and currently generates approximately 25% of total electricity supplied to the Nigerian national grid.

The team was led by Tonbofa Ashimi, Managing Partner, who commented: There were a few challenges since the target company’s shares were previously government owned. We ensured the acquiring company had enforceable obligations in the agreements to ensure the target company will meet required standards in its operations. tonbofa@edwardekiyorgroup.com www.edwardekiyorgroup.com

The agricultural site located near Hardingham will be one of the largest in the region. The plant, expected to commence electricity generation during December 2013, has been developed, and is being constructed, by Solarcentury, one of the leading specialist UK solar contractors. Following the sale of the project, under the terms of the contract, Solarcentury will warrant the performance of the plant for an initial period and will undertake the on-going operation and maintenance of the plant under a separate agreement. The investment has been made without debt financing and the expected returns on this investment are in line with those anticipated in the Fund’s investment objective as set out in its prospectus dated 25 June 2013. Mike Rand, a managing partner at Bluefield Partners LLP, BSIF’s Investment Adviser, said: Bluefield is delighted to announce its decision to allocate funds to this large scale project. The project was selected by Bluefield due to the exceptional track record of Solarcentury as a leader in the UK solar market. The project represents a first step in a growing partnership with the contractor. Frans van den Heuvel, CEO of Solarcentury commented: Solarcentury has been one of the leading solar contractors in the UK for a number of years. We are delighted, therefore, with the relationship with BSIF, which has taken a pre-eminent position in the UK solar market by being the first institutionally backed solar focused fund. We hope this will be first of a number of large scale acquisitions of Solarcentury built plants by BSIF. BLUEFIELD SOLAR INCOME FUND

ACQUISITION OF Finance PV PLANT IN NORFOLK DRV Corporate

Àrgentil Capital Partners Limited advised Mainstream Energy Solutions Limited, the preferred bidder for the concession of Kainji Hydroelectric Power Plc, led by Gbenga Hassan, Senior Partner. Àrgentil acted as Financial Advisers to MESL advising them on key stages of the transaction including preparation of the Gbenga Hassan bid documents, financial modelling and valuation, transaction structuring, capital raising including identifying capital providers, negotiation of term sheets and financing documents. Prior to the formation of the MESL, Àrgentil had a good working relationship with some of the promoters of the Consortium. Mr Hassan commented: Àrgentil has significant experience in deal structuring and capital raising for project finance transactions particularly in the energy sector and we leveraged on this in assisting the client to achieve financial close. Some key challenges included negotiations of transaction documents to make them bankable against the background of a newly deregulated power sector with very limited private sector investment and the scale of privatising 17 assets at the same time. Having successfully raised project financing on another power transaction in 2008 we engaged with potential lenders very early on to understand their minimum bankability requirements and focused on these in negotiations of the transaction documents. In addition the lenders got comfort from having a strong lead sponsor in MESL. We also actively engaged with the relevant counterparties to carry them along on the investors and lenders requirements. www.argentilcp.com info@argentilcp.com

MAINSTREAM ENERGY SOLUTIONS LIMITED (“MESL”) CONCESSION OF THE

DRV Corporate Finance POWER PLC KAINJI HYDROELECTRIC Financial Adviser to the Purchaser

UGHELLI POWER PLANT

Edward Ekiyor & Co acted as lenders’ counsel for the deal, representing all the lenders. These were: African Finance Corporation; United Bank for Africa PLC; Fidelity Bank PLC; and First City Monument Bank PLC. The firm has an existing working relationship with African Finance Corporation, United Bank for Africa PLC; and First City Monument Bank PLC.

G. Elias & Co. (Solicitors & Advocates) acted as solicitors to the syndicate of lenders, with whom the firm has working relationships. The team was led by Segun Omoregie, Partner, who commented: Two main challenges stood out. The lenders could not take security over the assets of the Target being acquired as this would have violated the financial assistance prohibition provision under Nigerian law. To deal with this issue, we obtained an indemnity from the acquirer’s main sponsor. “Second, a number of critical issues surrounding the entire privatisation process remained unresolved prior to draw down (the major one being the unresolved labour issue between the Government and Labour). To move forward, we had to move a number of conditions precedent to conditions subsequent. Segun Omoregie segun.omoregie@gelias.com www.gelias.com UBA Capital acted as Financial Adviser and Mandated Lead Arranger to Transcorp Ughelli Power Limited in the successful debt and equity capital raising. The firm is also the Facility Agent to the Lenders on the transaction. The team was led by Wale Shonibare, Project Director, and Kolapo Joseph, Team Leader.

Wale Shonibare

Transcorp Ughelli Power Limited (“TUP”) is a Special Purpose Vehicle incorporated to acquire Ughelli Power Plc. The majority shareholder of TUP is Transnational Corporation of Nigeria Plc with whom UBA Capital has a longstanding relationship having advised the company on a number of transactions in the past. www.ubacapitalgroup.com wale.shonibare@ubagroup.com

TRANSCORP ACQUISITION OF

UGHELLIFinance POWER PLANT DRV Corporate

Financial & Due Diligence Adviser to the Purchaser

Technical Adviser Legal Advisers to the Debt Providers Legal Adviser to the Purchaser

G. Elias & Co.

EDWARD EKIYOR AND CO. Legal Advisers to the Borrower

Legal Adviser

Legal Advisers to the Debt Providers

M.E Esonanjor & Co.

Tax/Accounting Adviser

Systems Due Diligence Provider Technical Due Diligence

THOMASSEN SERVICE MIDDLE EAST LLC Risk & Insurance Due Diligence Provider

Heirs Insurance Brokers

/ October 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

Financial Services Deals GENERALI PORTFOLIO MANAGEMENT

GENESIS KENYA

SANTIANE

l Ashcourt Rowan plc has agreed to the conditional purchase by its subsidiary, Ashcourt Rowan Asset Management Limited (“Ashcourt Rowan”), of the assets of Generali Portfolio Management (UK) Limited (“Generali Portfolio Management”).

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 Santiane Group and the investment fund Sagard signed an agreement whereby Sagard will invest in the French company in order to further accelerate its growth.

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.

Santiane Group was founded in 2006 and operates through two wholly owned subsidiaries: the online insurance aggregator Santiane.fr and the insurance wholesaler Néoliane. Santiane Group is the leader in online health insurance and death & disability insurance. In 2012, the consolidated revenue of the firm grew 97% to reach €24 million.

Ashcourt Rowan is the ideal home, being a firm believer in the value of strong client relationship management backed by high quality excellence in its investment research capabilities and perational infrastructure. We are confident that we have found the right home for our clients, commented Generali Portfolio Management chief executive officer Alan Arscott. Jonathan Polin, Ashcourt Rowan’s group chief executive officer, said: We are pleased to welcome Alan and David, their clients and their colleagues in a move that will benefit everyone. We aim to be attractive for investment managers and financial planners seeking a supportive and forward-looking home for their clients and their business. Generali Portfolio Management manages around £200 million in discretionary private client portfolios (excluding certain assets managed on behalf of Generali) and generates annual revenue of around £1.9 million. The initial consideration payable to Generali Portfolio Management will be up to £1.1 million in cash with up to £1.0 million additional deferred consideration payable in stages over the 24 months after completion. Both initial and deferred consideration amounts are dependent on the total assets under management on and after completion. The transaction is expected to be EPS enhancing in the first full year. Dundas & Wilson advised Ashcourt Rowan on all aspects of the transaction providing Corporate, Employment and specialist Regulatory advice, led by Wendy Colquhoun – Partner and Head of UK Corporate.

ASHCOURT ROWAN ACQUISITION OF

GENERALI PORTFOLIO MANAGEMENT (UK) DRV Corporate Finance

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%.

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

DRV Corporate Finance INVESTMENT MANAGEMENT

This fundraising will allow Santiane to boost the growth of its wholesale subsidiary Néoliane Santé, to increase R&D spending and to further diversify its product offering. The fundraising was a cash transaction; no debt was raised during this round. Pierre-Alain de Malleray, Managing Director, declared: Santiane’s potential for organic growth in France remains very strong as the rules governing the insurance distribution sector are rapidly changing. With Sagard’s involvement, we are now seriously considering buyout opportunities as well as all available options for an international expansion. FORSIDES Actuary represented SAGARD on the deal, led by Arnaud Cohen, Partner and Amel Zilmi , Senior Manager.

Arnaud Cohen

Mr Cohen commented: We provided our client with our knowledge of the French health insurance market. We brought our vision of its current state and its perspectives, for instance the impact of the regulatory changes.

“On the technical side, as an actuarial consulting firm, we also assisted our client with our actuarial expertise and methods; especially in the understanding and anticipation of the business risk assessment. “FORSIDES is born from the connection of 3 actuarial firms who had joined forces and launched a new major player in consulting on the European scene. FORSIDES is able to count on over 80 experts who have been operating for more than 10 years on the European insurance market and ready to support an ambitious international expansion project. arnaud.cohen@forsides.fr amel.zilmi@forsides.fr www.forsides.fr

SAGARD INVESTS IN SANTIANE GROUP

DRV Corporate Finance

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ACQUISITION INTERNATIONAL

Virtual Data Room Provider

October 2013 /

FINANCIAL SERVICES

It is intended that the team of seven employees, led by investment directors Alan Arscott and David Barber, will join Ashcourt Rowan when the transaction completes, which is expected to be around the end of the year. This follows the decision by Generali Worldwide Insurance Company Limited (“Generali”) to scale back its private client investment portfolio management in London and focus on its international clients serviced from its operations in Guernsey.

DEAL DIARY:

Healthcare Deals CHOICE CARE l Caledonia Investments plc has backed Edwina Johnston, Choice CEO, in the buy-out of Choice Care Group. Based in Southern England, Choice owns and operates a portfolio of 47 residential learning disability homes as well as providing supported living services in the same areas. Caldonia Investments describe the estate as well invested and believes it represents a solid platform for future developments. The acquisition further strengthens Choice’s position as one of the UK’s leading providers of personalised residential and supported living care for adults with learning disabilities, mental health disorders and complex needs. The group will continue to be led by chief executive Edwina Johnston and her management team, with Caledonia pledging its long-term support for Choice’s expansion plans. Commenting on the deal, which completed on 7 August 2013, Edwina said: This is excellent news for Choice, our staff and our service users as, with Caledonia’s backing, we can continue with our plans to invest in new properties and services, as well as enhancing our existing properties to ensure that we maintain our reputation for delivering the very highest standards of care for all our service users. Caldonia Investments commented: Our investment strategy is to develop new homes as well as extend Choice’s supported living business, building incremental value for shareholders. From the outset Caledonia will receive a running yield on the investment. “Caledonia’s measured, long term investment model is a strong match for Choice’s care driven business model. HEALTHCARE

Caledonia is a self-managed investment trust company listed on the London Stock Exchange: pioneered by family and managed by a talented professional team in pursuit of outstanding performance. Caledonia maintains a concentrated portfolio of international investments and funds. These are organised as pools of capital, with clearly agreed objectives and strategy. Connell Consulting advised Caledonia on the commercial and regulatory due diligence on the Choice Care Group. They commented: Having previously written a commercial report on the business and produced similar reports on their care home and supported living competitors, we knew Choice was a high quality business. Our market Clare Connell research involved bottom up market sizing, interviewing the commissioners of their current and planned services, plus surveying competing services in their local markets for occupancy, fees and new provision. We also conducted detailed analysis of their CQC reports, safeguarding logs and patient notes to verify the quality and acuity levels of their services.

CALEDONIA ACQUIRES

CAREFinance FROM SOVEREIGN DRV CHOICE Corporate

CURATO

TERVEYSTALO

l Funds managed by CapMan have signed an agreement to sell Curato AS, a leading provider of medical imaging services in Norway, to Altor Fund III.

l EQT VI and management have signed an agreement to acquire Terveystalo from Bridgepoint. Terveystalo is the leading private healthcare service provider in Finland, serving private consumers, companies and organizations, insurance companies and the public sector. The company offers a wide variety of integrated primary, secondary, occupational health and diagnostic care services through a nationwide network of 18 hospitals and 141 clinics. Terveystalo is headquartered in Helsinki and employs 6,300 healthcare professionals. In 2012, Terveystalo generated gross sales of EUR 455 million and an EBITDA of EUR 52.4 million.

Curato provides medical imaging (radiology) services in Norway and its main customers are the Regional Health Authorities, as well as health insurance companies and private individuals. The company has a nationwide network of 12 clinics and a patient flow of more than 300 000 patients annually. Curato’s annual turnover reached approx. €53 million in 2012 and currently employs some 220 people. We have achieved the strategic objective set for the investment – to build a leading medical imaging service provider in Norway. The acquisition of the Telemark Røntgen group in 2007 and the merger with Sentrum Røntgeninstitutt in 2008 made the basis for the new company with an unmatched geographical coverage and market position in Norway. Another important development of Curato was successful completion of agreements with all Regional Health Authorities in Norway, says Hans Tindlund, Partner at CapMan Buyout and responsible for the investment. During CapMan’s ownership we have modernized our equipment park and established service offering in three new locations. Today Curato is an important health care actor offering high quality radiology services to both the public health care sector and private patients. We have also gained significant economies of scale and productivity improvements through investing in state of the art medical imaging technology and through establishing centralized support functions. We are confident that Altor as a new owner will bring additional competences for a successful continuation of the company’s development, says Hans Olav Almaas, Chairman of Curato. The transaction is expected to be finalised by the end of October 2013. Funds managed by CapMan made the initial investment in Curato in 2007.

ALTOR EQUITY PARTNERS

ACQUISITION OF CURATO DRV Corporate Finance

Terveystalo is not only the leader in healthcare services in Finland in terms of size but also in terms of clinical and service quality as well as technological expertise in healthcare. Working together with Terveystalo’s management, there are excellent opportunities to enhance well-being and productivity in Finnish corporations, offer high-quality services to private consumers and partner with the public sector in solving availability issues. EQT VI is highly committed to support the continued growth of Terveystalo and, having long experience from the sector, understands the importance of ensuring best-in-class clinical and service quality, says Åsa Riisberg, Partner at EQT Partners, investment advisor to EQT VI. Aon Mergers & Acquisitions Solutions represented EQT, with whom the firm has a long-standing working relationship. Karl Roquet, Practice Leader Sweden, led the team. He commented: The complexity of M&A transactions demands skilled and Karl Roquet dedicated advisors who can identify risks and opportunities and add value throughout the lifecycle of a deal. Aon’s specialized expertise, broad resources, global network and intellectual capital are utilized to deliver integrated strategies and solutions for managing business risks. “Aon Mergers & Acquisitions Solutions’ (AMAS) role in the transaction has been to provide insurance due-diligence services and risk management/ insurance related transaction support. KPMG Oy Ab represented EQT on the deal, led by Tomas Granvik, Partner, and Markku Lepistö on due diligence and structuring advice.

EQT VI AND MANAGEMENT

TO INVEST Finance IN TERVEYSTALO DRV Corporate

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/ October 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

Industrial Deals ECRONOVA POLYMER GMBH

GEVEKE

ZYVAX

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.

l NIKKISO CO., LTD’s (NIKKISO) Board of Directors have concluded a share purchase agreement for the acquisition of 100% of shares in Geveke B.V. of Netherlands (Geveke).

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.

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

It intends to expand the business especially in the oil & gas industry as an important growing market. The business of Geveke was established in 1874 and today is focussed on sales of industrial special pumps and compressors, manufacturing and sales of packaged products incorporating such pumps and compressors, and technical solutions services. The major customer base of Geveke is the oil & gas industry, including major oil companies. Adding Geveke to the group will enable NIKKISO to supply advanced solution businesses by combining the pump technology of NIKKISO group with the packaging technology of Geveke. In addition, it is also expected to diversify the product and service range to clients with packaged compressor products currently not part of NIKKISO’s current products portfolio. Geveke is a Dutch specialised engineering and distributing company that holds the strongest brand recognition especially in the field of oil & gas industry, said NIKKISO. We will look forward to considerable growth in our future pump business with Geveke by; (i) integrating our original pump technologies and Geveke’s recognised packaging technologies, and (ii) expanding our portfolio with Geveke’s compressor solution capability, on which customer needs recently have been arising significantly. “NIKKISO, with LEWA & Geveke, are creating value as the “partner of choice” with our unique pump technologies. Subject to the successful completion of the acquisition, NIKKISO will announce the effect of the acquisition on its business results when it becomes necessary.

LEWA-NIKKISO ACQUIRES GEVEKE

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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

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October 2013 /

INDUSTRIAL

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.

NIKKISO - together with its 100% owned subsidiary LEWA of Germany, which it acquired in 2009 - is developing the business in the field of industrial pumps globally.

DEAL DIARY:

Support Services Deals OAG

SB TRAILERS

WINN

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

l The Asset Alliance Group has acquired the Staffordshire based SB Trailers Limited trading as Total Reefer for an undisclosed sum.

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

The acquisition strengthens AAL Group as one of the UK’s leading independent providers of Finance and Leasing for new and used HGV trucks and trailers.

l International investment companies JZ International (JZI) and Souter Investments have acquired a 60 per cent shareholding in Winn Solicitors Ltd, On Hire Ltd and On Medical Ltd (Winn Group).

The Data Services businesses provide data and information products which professionals use to support their decisionmaking and day-to-day business activities. Operating in 28 countries worldwide, the businesses serve a wide range of sectors including healthcare, technology & IP, global trade, aviation and forest products.

In due course the business will transfer to a new and bigger premises at the Boundary Industrial Estate in Wolverhampton where Asset Alliance Ltd already share premises with ATE Truck and Trailer Sales Ltd, the other company which forms the AAL Group.

OAG, the market leader in aviation intelligence, welcomed the acquisition by Electra Partners, a leading private equity firm, from former parent company UBM plc.

Willie Paterson, Chief Executive of Asset Alliance Group said: Total Reefer is a company we know well. I’m delighted we’ve been able to put this deal together as it is a strong addition to the service we’re already offering to our customers. The business fits well with and complements much of our existing customer base.

Phil Callow, chief executive officer, OAG says: The sale of OAG allows the company to fully capitalise on its competitive advantages. As an independent business, OAG is now excellently placed to extend its position as a leader in the world of global aviation data and intelligence. “Our customers will benefit from new ownership, as it presents us with a welcome opportunity to accelerate the development of new products and deliver even greater overall value for our growing markets around the world. OAG is the industry’s trusted source for aviation information and analytical services. OAG’s leading aviation databases are unrivalled in their scale, accuracy and comprehensiveness and are integral to the world’s aviation industry operations. For more than 15 years Intralinks® has been serving the M&A community with the industry’s leading virtual data room, Intralinks Dealspace™. Today, Intralinks continues our history of innovation to give deal professionals the tools they need to help them manage the full M&A lifecycle - to get more deals done, faster. With a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion, Intralinks is a trusted provider of easy-to-use, enterprise strength, cloud-based collaboration solutions. For more information, visit www.intralinks.com

ELECTRA PARTNERS ACQUIRES OAG

DRV Corporate Finance

Total Reefer operates a fleet of over 100 refrigerated trailers on a mix of long and short term rental contracts and their addition gives the AAL Group a presence in a fast growing area of the trailer market.

“It is a well-established and professionally managed business but was slightly limited in their ability to grow. By becoming part of our group Total Reefer can now benefit from the investment needed to allow their business to expand and deliver a stronger, more complete service to their customers. “The refrigerated sector is one that is expanding quickly, especially in the food industry, and our ambition is to double the fleet per annum over the next three years with the majority of growth coming from long term contract rental agreements. We see this acquisition as a key component of our strategy to grow our market share. “ATE Truck and Trailer Sales are also performing well and we’re currently looking for sites in Scotland and the North West of England where we can expand their offering. We have also not ruled out the possibility of further acquisitions if we can make the right deal.

ASSET ALLIANCE GROUP

BUYS TOTAL REEFER DRV Corporate Finance

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Winn’s core management team, led by Jeff Winn, Dawn Winn and Ghazala Bashey, will retain a 40 per cent stake in the company. All the directors and owners are staying with the business and, together with the investors, are committed to the long-term future of the company. Members of both JZI and Souter Investments will sit on the parent company board alongside Winn’s directors. The Winn Group is a leading player in the insurance legal service processing market and provides an innovative ‘one-stop’ shop for its customers. It provides an entire accident management process. This includes the integrated provision of legal services, replacement car hire and credit repair services as well as medical treatment services to its customers. In the year to March 31, 2013, the Winn Group generated revenues of approximately £40m and it employs over 290 people at its Newcastle headquarters. The accident management outsourcing market is undergoing significant consolidation, driven by regulation and the ability to provide low-cost processing. Recoverable costs for low-value claims have recently been fixed by government at £500, a reduction from £1,200. Tait Walker Corporate Finance represented Winn Solicitors on the deal, led by Michael Smith, Partner, and Helen Finn, Corporate Finance Manager. Winn Solicitors have been a client of the firm for five years. Michael Smith

Mr Smith commented: This deal was the culmination of two and a half year’s hard work, managing the demands of the investors and the separate regulatory requirements for the conversion of the Winn Group to an ABS.

“The Corporate Finance team at Tait Walker were thrilled to be involved in this deal; we are a local business and Helen Finn are therefore fully in support of encouraging growth in the region as a whole. michael.smith@taitwalker.co.uk www.taitwalker.co.uk

WINN SECURES SIGNIFICANT INVESTMENT

FOR EXPANSION DRV Corporate Finance

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/ October 2013

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ACQUISITION INTERNATIONAL

DEAL DIARY: TMT Deals

DATABASE CONSULTANTS AUSTRALIA

MAYKOR

VERITEK GLOBAL MBO

l Telstra has entered into an agreement to acquire the Health Division of Database Consultants Australia (DCA) - Australia’s leading provider of community care software, eHealth secure messaging software for general practitioners and health directory database development and support services.

l CapMan Russia II, a fund managed by CapMan, has made its first investment in MAYKOR – the leading Russian IT outsourcing service provider. The investment is made jointly with the Russian Direct Investment Fund (RDIF) and the European Bank for Reconstruction and Development (EBRD). The objective of the transaction is to further increase MAYKOR’s market share in Russia.

l Mobeus Equity Partners (“Mobeus”) has provided a combined debt and equity funding package to support the £11m management buyout of Veritek Global Limited (“Veritek”), the Eastbourne-based provider of outsourced technical services. Mobeus Equity Partners has provided funding to finance the transaction alongside asset based lending facilities from NatWest.

Telstra’s Head of Health, Shane Solomon, said the acquisition aligned with Telstra’s strategy of developing new growth businesses and building capability in Telstra’s Health portfolio. This investment fits with Telstra’s new health business unit, complementing our existing hosting solutions and expanding our offering. DCA Health will be an important asset as we continue to build capability in this area, Mr. Solomon said. Connectivity will play a crucial role in the future delivery and management of health services. The future of health care will see more patients cared for at home and technology will play a critical role. “As technology evolves and our demography changes our hospitals, medical centres, pharmacies and health professionals will need better ways of serving patients and we are looking to play a part in enabling this. “Our acquisition of DCA Health is an important foundation asset for Telstra Health. It will enable Telstra to play a significant role in care co-ordination for people receiving health care at home, improve connectivity of health services through its national Health Service Directory, and ensure the secure transfer of confidential patient information between hospitals, doctors and other community health service providers. MPR Group represented Database Consultants on the deal, led by Marc Peskett, Director.

Marc Peskett

He commented: We assisted DCA to become sale ready, providing tax advice, mapping out the best deal structure for them and working through due diligence issues.

“MPR have been accountants and advisors to DCA for approximately 10 years, supporting them through the growth and development of their business, through to assisting them with structuring the business, preparing and executing the sale. marcp@mprgroup.com.au www.mprgroup.com.au

TELSTRA ACQUIRES

DATABASE CONSULTANTS DRV Corporate Finance AUSTRALIA

MAYKOR has a leading market position with a federal footprint in Russia and is especially focused on the comprehensive one-stop-shop servicing of IT equipment, facility systems and business applications. The MAYKOR Group was founded in 2010. Today MAYKOR has 83 regional branches, over 400 service subdivisions and employs over 3000 certified engineers. The Group serves over 1,000 large and medium geographically distributed clients in various industries across Russia. We see great potential in the outsourcing industry and have first-hand experience in this space through several portfolio companies in the Nordics. The Russian outsourcing market consists of small service providers with limited regional coverage. In contrast, MAYKOR enjoys significant economies of scale that allow the company to remain highly competitive across Russia, states Heikki Westerlund, CEO and Senior Partner, CapMan Group. This investment will enable MAYKOR to continue to lead the process of industry consolidation through our selective M&A strategy. Integrating newly acquired service providers and increasing our cross-selling opportunities will further boost organic growth and improve our capability to support our customers. Moreover, the investment will help MAYKOR to improve corporate governance according to international standards, says Sergey Sulgin, President of MAYKOR. The IT market in Russia exceeded USD 24 billion in 2012. In the last year the sector has expanded by approximately 15 % and the growth rate is expected to increase further.

Martijn Peeters

PWC advised the consortium on the strategic due diligence of Maykor, led by Martijn Peeters, partner. martijn.peeters@ru.pwc.com

CAPMAN RUSSIA INVESTS IN MAYKOR

DRV Corporate Finance

Veritek provides European-wide installation, maintenance and support services for blue-chip owners of a wide range of complex imaging equipment. The company has revenues in excess of £25m and employs c. 300 staff across ten countries. Kerman & Co LLP represented its long standing client and founder of the business Adrian Teulon. Keith Dempster (Partner) led the team assisted by Susan Perry (Senior Associate) and David Tink (Solicitor). Mr Dempster commented: The team worked in conjunction with the other advisors to achieve a successful management buy-out of Veritek Global Ltd with Keith Dempster funding provided by Mobeus Equity Partners LLP. The challenges included coordination between the advisors in different jurisdictions and complying with an aggressive deal timetable. keith.dempster@kermanco.com / www.kermanco.com As part of NatWest’s participation in the Governments Funding for Lending Scheme, Veritek Global Limited, a new client of NatWest, was provided with asset-backed lending from the bank to support the company’s ongoing growth. The transaction team was led by Robert Laurens, Relationship Director within the specialist Technology and Media Sector Team, NatWest Commercial Banking. Mr Laurens commented: The main challenges faced were tight transaction completion timescales, complex ownership structure and agreement on legal documentation that satisfied all of the counter-parties. Robert Laurens Strong internal project management alongside clear communication to clients and professional advisers ensured successful deal completion. robert.laurens@natwest.com Helen Mead, partner and head of corporate finance led asb law’s role in the transaction which was to act for Mobeus Equity Partners in their support and investment into the MBO. Helen was supported by Rebecca Burford and Nikki Ashfield. Ms Mead commented: A key challenge was to structure the deal in a tax efficient manner for both Mobeus and the MBO Helen Mead team. We achieved this through regular discussions with the other advisers and a common cooperative approach was adopted by all, ensuring free flowing communications and speedier turnaround times. helen.mead@asb-law.com

MOBEUS EQUITY PARTNERS

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TMT

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ACQUISITION INTERNATIONAL

October 2013 /

A subsidiary of Abrempong Holdings, CIG Microfinance is currently one of Ghanaâ&#x20AC;&#x2122;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 SMEâ&#x20AC;&#x2122;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 vital to play just as hard. Acquisition International’s lifestyle section features some of the best ways to do just that. We kick off this month’s section with a detailed look at Metropolitan by COMO, London. The hotel is located on one of the most significant thoroughfares in the city – Park Lane – and was among the capital’s first hotels to embrace contemporary design. Next up, we take a peek under the hood of the new BMW 4 Series Coupe. The BMW engineers have succeeded in making key improvements in areas such as steering accuracy, precision and agility, as well as honing the instincts of the new BMW 4 Series Coupe as an unadulterated driving machine. Finally, we examine Callaway Golf Company’s two innovative new products: the FT Optiforce™ Driver and Fairway Woods. The new clubs debut several new and systematically-designed technologies to help increase a golfer’s clubhead speed, ball speed and, thus, overall distance.

Hotel Review

playHARD

politan ndon o r t e M O, Lo M O C by In February 1997, COMO Hotels and Resorts – the name behind private island resorts like Parrot Cay by COMO in the Turks and Caicos, and adventure retreats like Uma by COMO, Ubud, Bali and Paro, Bhutan – opened Metropolitan by COMO, London. It is the company’s original Metropolitan property (the second opened in Bangkok in 2003). Metropolitan London is located on one of the most significant thoroughfares in London – Park Lane, where it joins Hyde Park Corner. Mayfair lies east of the hotel, Hyde Park to its west. Both are in view, while Knightsbridge and Piccadilly are five-minute walks. Heathrow airport is a 45-minute car journey, or 15 minutes by train. Gatwick operates from nearby Victoria station. Accommodation, spread out over nine floors, includes 51 parkfacing rooms and 93 city-facing rooms that look towards Mayfair’s rooftops. Park Suites have separate sitting areas. City Studios are large, open-plan and flanked with banquettes. Metropolitan Rooms are also desirable – a little smaller than Studio Rooms, at 33sq metres, from which guests can enjoy striking vistas of London’s Royal Parks. Deluxe City Rooms, with Mayfair view, are a popular choice among business clients (desk space is generous) while the 29sq metre City Rooms are ideal for single business travellers visiting the capital for one night. All rooms feature voicemail, UK and US modem points, dual line direct dial telephones and a private fax line with a designated number. Complimentary Broadband and WiFi are available throughout the hotel, and printers and mobile phones on request. The hotel also features one-, two- and three-bedroom suites, some wrapped in floor-to-ceiling windows, all with Hyde Park views. The Deluxe Suite on the Ninth Floor has a separate living room, which includes a dining table (seating four people comfortably) and guest cloakroom. Further details include a Bose iPod docking station. The sleek yet serene design is complemented with selected pieces of antique Asian furniture introducing soft, Eastern accents. The 110sq metre COMO Suite is among London’s most dramatic penthouses – high above Park Lane’s traffic and that sweeping vista of green (a view also enjoyed from the freestanding bathtub and the expansive shower. There is a Japanese rock garden surrounding the suite (non-accessible). For long-stay guests (minimum three months), the 19 Metropolitan Apartments by COMO are ideal for those wanting a temporary base in London. They are located behind the hotel, just off Park Lane. 22 Hertford Street is a converted townhouse with eight two-bedroom apartments and one three-bedroom Skyline Residence; next door, at 23 Hertford Street, is a two-bedroom apartment. Brick Street is a purpose built building with 10 two-bedroom apartments. Each apartment covers a minimum of 1100sq ft. The apartments share many of the hotel’s amenities, including room service, access to COMO Shambhala Urban Escape and gym (charges may apply) and interactive entertainment systems. Interiors feature contemporary lounges, sleek pine and black granite kitchens, two large double bedrooms and two bathrooms. Metropolitan London was among the capital’s first hotels to embrace contemporary design. However, the interiors are also timeless, a subtle balance achieved with a simple philosophy in mind: to strip back the non-essential elements of a traditional English hotel to create something cool yet accessible, sophisticated and warm.

Car Review

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Lane: pe t s a F In the Series Cou 4 BMW The new BMW 4 Series Coupe heralds the dawn of a new coupe era at BMW. Launched as the fourth generation of BMW’s sporty mid-size Coupe, the new BMW 4 Series Coupe embodies the very essence of aesthetic appeal and dynamics in the premium segment. Its stylistic features carry the promise of a powerful presence on the road, standout dynamic ability and driving pleasure in abundance. Indeed, the new BMW 4 Series Coupe represents a paragon of balanced proportions and the final chapter in a story of development. The “4” in its title headlines this new era for the Coupe and emphasises not only its stand-alone design, but also an even greater technical differentiation from its BMW 3 Series cousins. The new BMW 4 Series Coupe is visibly larger in width and wheelbase than the outgoing BMW 3 Series Coupe, and its dynamically stretched coupe silhouette sits considerably lower to the road. This, together with its BMW-typical short overhangs, long bonnet and set-back passenger compartment with flowing roofline, lends the BMW 4 Series Coupe impeccable visual balance. The car’s striking front end – with its characteristic BMW design features, such as the double-kidney grille, twin circular headlights and a large air intake in the front apron – is keen to display its family ties with the BMW 3 Series. However, the more sporting interpretation of the BMW 4 Series Coupe also underlines its dynamic convictions. A new element of the BMW 4 Series Coupe are the Air Breathers, positioned rearwards of the front wheel arches to reduce drag in this area. The Coupe’s muscular wheel arches and wide track make a particularly prominent contribution to the hunkered-down design of the rear, with its prominent horizontal lines. The interior of the BMW 4 Series Coupe presents a stylish fusion of sporting allure and exclusivity. All the controls central to driving are arranged ergonomically around the driver and give him or her optimum access to all functions. In the rear compartment, powerfully contoured seats underline the sporting credentials of the BMW 4 Series Coupe. Recessed head restraints and broad, continuously moulded side supports give the rear bench the appearance of two individual seats. High-grade material combinations and unbeatable finish quality accentuate the premium ambience of the new BMW 4 Series Coupe. Customers can choose from three equipment combinations and an M Sport package as alternatives to standard specification. The Sport Line, Modern Line and Luxury Line packages allow visible individualisation of the car’s exterior and interior appearance. The defining ingredients in the involving driving experience laid on by the new BMW 4 Series Coupe are its impressive driving dynamics and assured handling properties. The BMW engineers have succeeded in making key improvements in areas such as steering accuracy, precision and agility, as well as honing, further still, the instincts of the new BMW 4 Series Coupe as an unadulterated driving machine. Sophisticated chassis technology, torque steerfree Electric Power Steering, 50:50 weight distribution, a programme of finetuning in the wind tunnel and an innovative lightweight construction concept gave them the tools to achieve their aims.

Product Review

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eed ngs Sp rce i r B f l ay Go Optifo Callaw ers with FT y Woods f to Gol and Fairwa s Driver Callaway Golf Company has introduced two innovative products designed to deliver speed and distance to golfers, its FT Optiforce™ Driver and Fairway Woods. The new clubs debut several new and systematically-designed technologies to help increase a golfer’s clubhead speed, ball speed and, thus, overall distance. The FT Optiforce Driver will – in a first from Callaway – offer loft and lie adjustability to optimize launch conditions. In a distinct approach, Callaway is launching two variations of the FT Optiforce Driver clubhead to help golfers find their optimal performance. The four primary technologies that merge to generate the speed and performance advantages of Callaway’s new drivers are: Aerodynamic Efficiency The FT Optiforce driver was born from an aggressively aerodynamic prototype that Callaway tested while exploring the complex variations in aerodynamic flow during a driver’s entire downswing. As a result, the FT Optiforce driver – based on its shape and construction - is tops among the fastest and most aerodynamically efficient driver Callaway has ever brought to market, leading to increases in clubhead speed. The FT Optiforce has been measured with 23 percent less drag than a conventionally shaped driver.* Fast Configuration Also contributing to advances in clubhead speed is the overall configuration of the driver, including the use of lightweight Forged Composite™ in the crown and two stock shaft offerings that can enhance a golfer’s ability to deliver the club to the ball faster. The primary stock shaft is a 43-gram Project X Velocity shaft, the lightest shaft Callaway has ever included in a standard driver offering. The secondary stock shaft is a 62-gram Mitsubishi Diamana S+. The overall construction of the new driver is under 300 grams. Advanced OptiFit Adjustability The FT Optiforce Driver will debut an innovative loft and lie adjustability solution. The driver features an Advanced OptiFit® Hosel that allows players to adjust the driver’s loft 1-degree down or 1- or 2-degrees up. The loft setting helps golfers adjust their launch angle and amount of backspin, while the lie -- selected with the neutral or draw settings also contained within the hosel -- will help golfers adjust side angle and sidespin. Coupled with the differences in the 440cc and 460cc heads, golfers of all abilities can set use the simple adjustability solution in the FT Optiforce to find their optimal launch conditions and ball flight. Speed Frame Face Technology The additional clubhead speed in FT Optiforce generated by the aerodynamic shape and the overall configuration is then transferred to ball speed at impact with the driver face. Implemented with much success in the other 2013 Callaway drivers, the Speed Frame Face Technology found in FT Optiforce distributes stress across the titanium face for a larger, more consistent sweet spot and increased ball speed. The Speed Frame Face also saves weight that is redistributed in the clubhead to improve the CG position and maximize MOI, which leads to optimized ball flight and forgiveness.