Acquisition international September 2013 by AI Global Media

September 2013 /

IN THIS ISSUE/

14 2013 M&A AWARDS: 52

We profile winners of our 2013 Awards. THE IMPACT OF THE ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE: A.I. speaks to some of the leading players in the alternative investment arena to discuss their thoughts on the AIFMD. PROTECTING INTELLECTUAL PROPERTY ASSETS: Leading experts discuss the exploitation and management of IP to maximise profit and create competitive advantage.

THE FLADGATE PARTNERSHIP

— The family owned wine and tourism group, recently consolidated its leading role as a premium Port producer with the purchase of the family owned Port house Wiese & Krohn. / 8 www. ACQUISITION-INTL .com

Vivino Receives $10.3 Million in Follow-on Series A Funding

— Acquisition International speaks to Heini Zachariassen, founder and CEO of Vivino the most downloaded wine app for Smartphones, available for iPhone and Android. / 10

Digital Realty acquires 5.37 acre site at De President, Hoofddorp

— Bernard Geoghegan, Managing Director – Europe, Middle-East and Africa, discusses Digital Realty’s recent acquisition of a site at De President, Hoofddorp, Haarlemmermeer, and the company’s plans to build two new data centres across Europe. / 13

CONTENTS:

September 2013

Editors Comment Welcome to the September issue of Acquisition International. In this month’s lead cover story, we speak to Adrian Bridge, CEO of The Fladgate Partnership, to discuss the wine and tourism group’s recent purchase of Wiese & Krohn, a family owned Port house. The acquisition adds to the group’s portfolio of Port brands, which includes historic names such as Taylor’s, Fonseca and Croft – turn to page 8 to learn more.

CONTENTS — September 2013

In keeping with the wine theme, our second cover story examines Vivino, the most downloaded wine app for Smartphones, available for iPhone and Android, and its recent $10.3 Million Follow-on Series A Funding. Heini Zachariassen, founder and CEO, gives us some insight into the app’s origins and his plans for the future on page 10. Our final cover story investigates Digital Realty’s recent acquisition of a site at De President, Hoofddorp, Haarlemmermeer, and the company’s plans to build two new data centres across Europe. Bernard Geoghegan, Managing Director – Europe, Middle-East and Africa, gives us the details on page 13. A hot topic this month is the Alternative Investment Fund Manager’s Directive, which creates a tighter regulatory framework for alternative investment fund managers including managers of hedge funds, private equity firms and investment trusts. We speak to leading experts around the world to discuss the impact of the AIFMD in a comprehensive review, beginning on page 52. Don’t forget – voting for the 2014 Hedge Fund Awards opens soon and we want to hear from you. Pre-register to receive voting forms for all of our awards on our website now. 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 – THE FLADGATE PARTNERSHIP INVESTS FOR GROWTH IN PREMIUM PORT / 8

The Latest News Stories From Around The World.

DEALMAKER OF THE MONTH: /5 Bridgepoint’s acquisition of Flexitallic Group.

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

Q3 REVIEW: /93 Acquisition International’s Third Quarterly Review of 2013.

DEAL DIARY: /98 @acquisition-int

ACQUISITION INTERNATIONAL

Introduced by Zephyr/ Bureau van Dijk.

10/ 13/ 14/ 20/ 21/ 22/ 23/ 25/

Cover story - Vivino Cover story - Digital Realty Trust Inc. 2013 M&A awards Difficult Conversions in M&A Trade Finance in Ukraine IRS Postpones FATCA Deadlines by Six Months Recovering Assets From Corporate Structures The British Virgin Islands: Leading the Offshore Pack 26/ Indonesia: Strengthening the Economy 27/ The New Rising Stars: Kenya 28/ Myanmar: An Attractive Location for Foreign Investment 31/ Russia: Paving the Way for Economic Success 33/ Spain: Uplifting the Economy 34/ From Local Counsel to Lead – Boutique & Independent Law Firms 36/ Global Experts Panel 42/ Driving FDI 47/ Insolvency, Turnaround, and Restructuring 50/ Forming & Structuring Private Funds in the USA 52/ The Impact of the Alternative Investment Fund Managers Directive 63/ Implementing an Effective Anti-Money Laundering System 64/ Joint Ventures and Strategic Alliances in the USA: An Attractive Alternative to M&A 66/ Protecting Intellectual Property Assets 72/ Pensions Issues in M&A Transactions 74/ The Importance of Anti-Corruption Due Diligence in Corporate Transactions 76/ Resolving Commercial Disputes Through Mediation 78/ Managing Environmental Issues in Corporate Transactions 83/ Preparing for Exit 87/ The Rise of Alternative, Sustainable Financing 88/ Investing in the Gaming Industry – A Smart Move or a Risky Business 89/ Ship Registration 90/ Cartel Enforcement 96/ Global Expertise Directory 115/ PlayHard

September 2013 /

NEWS:

from around the world

NEWS Appointments

Cass Business School reacts to Microsoft’s Nokia Acquisition

Chamika Hand - Legal Director, Insurance Group - Pinsent Masons

Mircosoft’s smart purchase of Nokia will see it gain a stronger foothold in emerging markets says Ajay Bhalla, Professor of Global Innovation at Cass Business School

David Chijner - Partner, Restructuring Team - DLA Piper Dr Richard Andrews - Director, International Industrial Sector - ENVIRON Frank Frecentese - Global Head of Hedge Fund Research - Lyxor Asset Management Harry Stanford - Director, Equity Sales Trading Team - Renaissance Capital Ilya Lobanov - Director, Equity Sales Team - Renaissance Capital Ivo Holdener - Head of Financial Institutions, M&A Division - Raiffeisen Centrobank John A. Hess - Executive Chairman - Altius Associates Ltd. Jonathan Waghorn - Co-Portfolio Manager, Guinness Global Energy Fund - Guinness Asset Management Jonny Maxwell - Senior Advisor - GMT Communications Partners Kate Randall-Coles - Head of Fund Group Relations - AXA Wealth Manoj Vaghela - Partner, Insurance group - Pinsent Masons Nick Ivel - Consultant - KPMG Noam Ankri - Partner, Restructuring team, Paris - DLA Piper Ronald Foy - Operating Partner - Nova Capital Management

/ September 2013

The sale of Nokia’s mobile unit to Microsoft for a trivial sum of 3.79 billion euros is great news for Microsoft shareholders. It is not yet clear how Nokia’s board arrived at this valuation. But contrast this with Microsoft’s purchase of Skype for $8.5bn in 2011; this appears to be a great bargain for Ballmer. Not only will Microsoft get access to Nokia’s impressive intellectual assets for small change, it will also get access to Nokia’s well-established infrastructure and competencies in emerging markets – where it continues to retain an impressive market share. Nokia has also poured billions into its handset business and has been showing signs of genuine turnaround. For Nokia, it is a day of soul searching. Why did Nokia fail to come up with a two-sided platform? Rather than utilizing its in-house R&D to develop one, why did it go with Elop’s decision to ditch it completely. Reinvention is said to be in Nokia’s blood. One can only hope Nokia’s board makes the right bets beyond networking and infrastructure markets. Microsoft’s tie up with Nokia raises personal data concerns for consumers says Andre Spicer, Professor of Organisational Behaviour at Cass Business School The announcement that Nokia will sell its mobile phone division to Microsoft has raised eyebrows around the world.

The decision might look good on paper - Nokia can exit a business in a downward spiral, and Microsoft can compete head to head with Apple. But the real outcomes are likely to be far less attractive. The deal is likely to kill innovation at the phones’ divisions and undermine longer term value for Microsoft shareholders. So if the consequences are so bad, why is the deal going through? Research suggests big acquisitions have more to do with the delusions and self-interest of top management than cold hard business decisions. CEOs who over-estimate their abilities tend to go on buying sprees. They tend to think they can easily integrate acquired companies, merge the cultures and exploit overlaps between the companies. This is very rarely the case. There might be a short term bump in share price. But what usually happens in the long term is that firm performance dips and the share price goes down. But the CEO gains – their rewards usually go up – irrespective of what happens with the company. An added worry is what this deal will mean for consumers. Despite all the talk of how competitive the mobile business is, it is actually a market dominated by a few players. The integration of hardware and software has meant a small handful companies like Apple, Google and now Microsoft are in all our pockets. They mediate how we communicate with each other. This presents big concerns about who owns, controls and watches over our personal data. After all, many of these companies are not just funky tech companies, they are also consumer surveillance companies.

Piquant Technologies becomes first AIFMD compliant UK hedge fund Kinetic Partners, the global professional services firm, has supported Piquant Technologies LLP, a new UK-based quantitative fund manager, to become the first hedge fund authorised according to the Alternative Investment Fund Management Directive (AIFMD). The directive, which came into force on the 22 July 2013, will change the way EU fund managers manage their alternative investments. Andrew Shrimpton, global head of regulatory compliance, at Kinetic Partners commented: “It’s extremely rewarding for us to know that we have helped Piquant Technologies become the first hedge fund to be authorised by the FCA according to the EU AIFMD. To this end, we worked closely with a number of different parties to put in place the right structure and documentation needed to make sure that all of the regulatory and tax requirements were met. We were able to execute this quickly, with the transition from the original application to the new authorisation according to the AIFMD taking just three weeks.”

Kinetic’s tax, audit and regulatory teams were also on hand to provide Piquant Technologies with expert advice throughout the process, and helped the firm navigate entirely new processes, forms and regulatory permissions. James Holloway, Chief Investment Officer, at Piquant Technologies LLP said: “As a new quantitative manager we have been able to take a fresh approach towards everything from our diversifying scientific models to the structure of our enterprise. This gives us a solid foundation for the future. Kinetic Partners have been instrumental in bringing Piquant Technologies safely and successfully through the launch process.”

ACQUISITION INTERNATIONAL

DEALMAKER OF THE MONTH:

Bridgepoint’s acquisition of Flexitallic Group

DEALMAKER OF THE MONTH

THE DEALMAKER: Florian Schuhmacher THE FIRM: DLA Piper THE CLIENT: Bridgepoint THE DEAL: Bridgepoint’s acquisition of Flexitallic Group

THE DETAILS: DLA Piper advised the British private equity firm Bridgepoint on all competition law aspects under Austrian law concerning the acquisition of the French based Flexitallic Group. In the course of the transaction, which in Austria was subject to the approval from the Federal Competition Authority, Bridgepoint acquired an indirect majority stake in Flexitallic through a newly-created company. The team from DLA Piper, under the lead of competition law expert Florian Schuhmacher, handled the legal advice as well as the official registration. “We are pleased for our client Bridgepoint about the successful completion of the procedure and the approval of the merger in Austria”, said Mr Schuhmacher.

We are pleased for our client Bridgepoint about the successful completion of the procedure and the approval of the merger in Austria.

ACQUISITION INTERNATIONAL

The group has benefited from the significant growth in the oil, gas and nuclear industries in both the developed as well as emerging markets. Two recent acquisitions (AFI in Canada and Custom Rubber Products in the US) have allowed it to position itself in the high growth alternative energy market in the US: oil sands in Canada and oil and gas shale in the US. It is forecast that an additional $117 billion will be invested globally in these sectors in the next five years, equating to a 12% annual growth rate. Apart from Florian Schuhmacher, the DLA Piper team included managing partner Claudine Vartian and associate Georg Muntean.

Bridgepoint Advisers Group Limited is an international private equity company based in London, which specialises in the acquisition and the development of market-leading medium-sized companies in Europe. Bridgepoint has employed more than 12 billion euros from global investors. Flexitallic is an international market leader in specialised high value sealing solutions and products, most notably for the oil and gas industry’s upstream and downstream operations as well as for the power industry. The group, with operations in the US, Canada, China, France, UK, UAE and Kazakhstan, has a network of 750 specialist distributors, allowing it to meet client needs under all circumstances. It is well known for its innovation of high performing products such as its Thermiculite®, Sigma and its new semi-metallic joint ‘Change’ launched in 2012.

Company: DLA Piper Name: Florian Schuhmacher Email: florian.schuhmacher@dlapiper.com Web: www.dlapiper.com Address: Schottenring 14 A-1010, Vienna, Austria Telephone: +43 1 531 78 1014

September 2013 /

SECTOR TALK:

Consumer and Retail The consumer and retail sector ended the first half of 2013 on a positive note, recording a 17 per cent improvement in terms of value on H2 2012. In total there were 1,070 transactions worth USD 55,981 million during the six month period. Although values increased for targets in the consumer and retail sector in the opening six months of this year, volumes declined by 10 per cent, from 1,192 in the second half of 2012 to 1,070, according to data from Zephyr, the M&A database published by Bureau van Dijk. This represents the second consecutive slide in volumes. However, values went some way to making up for this; the USD 55,981 million invested in the sector from January to June represents one of the industry’s best results of recent times. Indeed, since the start of 2008 it was surpassed only by H2 2007 (USD 74,299 million) and H1 2012 (USD 65,380 million). Even though it is barely two months old, H2 2013 appears to be making promising progress towards achieving a similar level. So far 353 transactions with an aggregate value of USD 28,494 million have been recorded. In spite of the fact that this represents around a third of the previous six months’ volume,

Number and Aggregate Value (mil USD) of Consumer and Retail Deals Globally: 2006 2013 YTD (as at 02 september 2013) Deal half Number yearly of deals value

Number of deals with known values

Aggregate deal value (mil USD)

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

639 531 667 581 496 509 530 588 576 518 562 596 710 627 571 201

81,048 68,458 115,835 74,299 48,801 28,335 17,696 42,368 31,012 41,993 39,675 41,671 65,380 48,029 55,981 28,494

(Announced date)

1,360 1,308 1,275 1,150 1,136 1,013 1,174 1,180 1,102 974 1,068 1,121 1,241 1,192 1,070 353

/ September 2013

values are more than half way to equalling the opening half of the year’s showing. Should results continue on this trajectory, aggregate considerations could approach levels not seen for a number of years. Perhaps unsurprisingly given the high value recorded in H2 2013 to date, the largest transaction of 2013 so far occurred in July and took the form of food wholesaler Loblaw announcing an acquisition of Canadian drug store operator Shoppers Drug Mart. Under the terms of the deal, which still requires approval from competition authorities, Loblaw will pay USD 11,930 million in the form of both cash and stock for the business. High value targets in the first half of 2013 included Canada Safeway, which was bought by Sobeys for USD 5,690 million, and Thailand-headquartered cash and carry operator Siam Makro, which offloaded a 64 per cent shareholding for USD 3,918 million.

Companies in North America have been accountable for almost half of all investment value into the consumer and retail sector in 2013 to date. The region’s businesses have so far secured USD 41,016 million, some way ahead of its nearest competitor (Western Europe with USD 16,970 million). The Far East and Central Asia came third with USD 15,029 million. North America’s impressive result by value was in sharp contrast to the number of deals targeting the region. Just 215 transactions had targets based there, placing it fourth by volume and suggesting that a number of high values were responsible for the increase in aggregate considerations. In conclusion, the outlook for the consumer and retail industry in H2 2013 is promising. If investors continue to target the sector then values could continue on an upwards curve, but it remains to be seen if the various peaks and troughs witnessed in previous years will continue into the future.

Number and Aggregate Value (Mil USD) of Consumer and Retail Deals Globally by Deal Type: 2006-2013 to date (as at 02 September 2013) Values Deal type

Number of deals

Acquisition Minority stake Institutional buy-out Management buy-out MBI / MBO Management buy-in Demerger Merger

9,219 7,575 642 150 6 14 36 108

Number of deals with known values 2,892 5,700 281 43 2 2 1 1

Aggregate deal value (mil USD) 436,336 262,686 133,765 6,966 96 59 3 1

Breakdown of Number and Aggregate Value (mil USD) of Consumer and Retail Deals by Sector: 2013 YTD (as at 02 September 2013) Zephus classification (target)

Number of deals Aggregate deal value (mil USD)

Retailing Personal, Leisure & Business Services Wholesaling Property Services Computer, IT and Internet services Banking, Insurance & Financial Services Communications Miscellaneous Manufacturing Industrial, Electric & Electronic Machinery Others

69% 10% 5% 2% 3% 2% 1% 1% 1% 8%

76% 6% 5% 2% 2% 2% 1% 1% 1% 4%

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

ON THE COVER:

The Fladgate Partnership Invests For Growth in Premium Port

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The Fladgate Partnership, the family owned wine and tourism group, recently consolidated its leading role as a premium Port producer with the purchase of the family owned Port house Wiese & Krohn. The acquisition adds another distinguished house to the group’s portfolio of world renowned Port brands which includes such historic names as Taylor’s, Fonseca and Croft. -----------------------------------------------------------------------Commenting on the acquisition, The Fladgate Partnership’s CEO, Adrian Bridge, noted: “The purchase of Wiese & Krohn is part of our strategy of long term investment in the premium Port segment of which we already held a one-third share. Krohn holds outstanding stocks of aged Port, including some wines from the nineteenth century. It also specialises in single harvest tawny Ports, known as colheitas, and offers us an entry into this profitable niche market. Together these factors further strengthen our leadership in the aged tawny segment, one of the most successful and fastest growing Port categories.” The Fladgate Partnership has a long track record of investment in premium Port spread over 300 years of history as a family business. The group has one of the most important holdings of A-grade vineyards in the Douro Valley and one of the most extensive reserves of aged Ports. It also

/ September 2013

has a long line of innovations to its credit, including Late Bottled Vintage, one of the most successful Port categories, and the first ever rosé Port. The group has also played a leading role in the consolidation of the Port industry, the purchase of Krohn being the latest in a series of strategic acquisitions by The Fladgate Partnership, not only of Port firms, but also of vineyards, real estate and other assets. Adrian Bridge notes,

This sustained investment, which has gathered momentum in recent years, reflects our confidence in the future of premium Port. Quality Port is one of the most profitable wine categories, not only for the producer but for all those involved in the value chain. Wiese & Krohn was founded in 1865 by two Norwegian entrepreneurs. As well as extensive reserves of aged wine, it also owns a high quality vineyard and state of the art

winery in the prime Rio Torto area of the Douro Valley. The Fladgate Partnership acquired the company from the Falcão Carneiro family who became owners in the mid-1930s. As family members were spread around the world, the deal took some time to complete, the information memorandum being issued last November and completion taking place in June. In addition, the nature of the Port wine business meant that the deal presented very specific challenges as Adrian Bridge explains: “Professional valuation of wine stocks can be difficult. The stock will sell out over a period of a decade or more meaning that evaporation and the time value of money need to be factored in. Fortunately our experience in this type of acquisition has provided us with a high level of expertise.” Another challenge related to concerns about confidentiality within a tightly knit Port sector and the reluctance of the seller to release detailed commercial data until after completion. In rapidly evolving markets, making use of local expertise was fundamental to ensuring that the financial structure behind this deal was done by skilled consultants, of an entrepreneurial nature who understood the nature of our

ACQUISITION INTERNATIONAL

ON THE COVER:

The Fladgate Partnership Invests For Growth in Premium Port business and could create the correct financial platform to ensure this deal was executed seamlessly. Credit markets globally are tight and none more so than in the local Portuguese market. But the ability to be able to demonstrate that 90% of the Fladgate Partnership’s business is based on exports, with an extremely strong cash flow, an extensive spread of international markets (totaling some 85 markets worldwide), including emerging BRIC markets as well as countries such as Poland and Mexico and a growing book of business, more than satisfied the internal compliance of both BPI (Banco Portugues de Investimento) and the Caixa Geral de Depósitos. For a very long time, all debt financed deals it seems have been based on the property assets of a business, rather than, in our case looking at the stock that a Port wine company has. Adrian Bridge explains: “BPI and Caixa’s understanding of our key asset, which is ageing stock, an understanding developed over their years of working closely with the Port industry, provided strong comfort for the amounts backing this deal”. Regarding the group’s future plans for Wiese & Krohn, Bridge comments: “The Fladgate Partnership has been a key driver of Port industry consolidation which has provided us with opportunities to benefit from greater scale. At the same time we have been careful to continue nurturing the unique heritage of each of our Port houses. The Krohn brand has a valuable following and we will continue to maintain its individuality. However we will achieve significant economies and efficiencies by merging bottling operations and administration.” These scale benefits will be achieved without loss of jobs as Bridge explains: “We are a growing business with no shortage of new projects. We have committed to employ Wiese & Krohn’s entire workforce which will become more productive within the larger group structure.” The acquisition will also provide the opportunity to realign some of Krohn’s valuable inventory of aged wine behind the group’s existing Port brands. As Adrian Bridge notes: “There will be the opportunity to develop a presence for some of our other brands in the colheita Port market. For example Taylor’s will be offering an outstanding 1964 colheita for those looking for something very special to celebrate a 50th birthday or anniversary or as the ultimate corporate gift.” In recent years The Fladgate Partnership, with its strong premium focus and iconic Port brands, has emerged as one of the most successful players in the Port industry. Family owned and run throughout its history, the group traces its origins over three centuries to the very earliest days of the Port trade. Its Vintage Ports are among the most soughtafter by collectors, investors and fine wine enthusiasts and the recent release of 2011 Vintage Ports from the Taylor, Fonseca and Croft stables was highly acclaimed by both wine media and the global fine wine trade. Leading wine authority Jancis Robinson MW went as far as to say that Taylor’s Vargellas Vinha Velha Vintage 2011, made from 100-yearold vines in the firm’s flagship estate, ‘may just be the finest wine produced anywhere in the world in 2011’. While Port continues to be the major focus of the group’s activity and the source of most of its revenue, the Fladgate Partnership has successfully diversified into two areas, tourism and distribution, which offer strong synergies with the core business. The group’s first venture in the world of luxury hospitality occurred in 1998 when it built the first world class hotel in the heart of the Douro Valley, a Relais & Châteaux property which helped establish the beautiful but remote Port vineyard region as a destination for luxury wine tourism. In 2006 the group embarked on another high profile project, the construction of a luxury wine hotel in a spectacular location overlooking the historic World Heritage city of Oporto. The hotel, called The Yeatman, opened its doors in 2010 and has already established itself as one of the world’s leading wine hotels, with a Michelin-starred restaurant, a Caudalie wine spa and the world’s largest cellars of Portuguese wines containing over 25,000 bottles.

ACQUISITION INTERNATIONAL

The Krohn brand has a valuable following and we will continue to maintain its individuality. However we will achieve significant economies and efficiencies by merging bottling operations and administration. The Fladgate Partnership has also invested in distribution in Portugal. In fact, the Group created Heritage Wines six years ago in order to develop the Super Premium segment for fine wines. As well as focusing on the sales and distribution of the Fladgate Partnerships Ports, Heritage Wines has focused on a selection of the most distinguished Portuguese wines, the references: namely Quinta do Crasto for its Douro wines, Mouchão for the Alentejo, and Vertice for Sparkling wines. The portfolio also includes a collection of well-known and highly considered international wines: Bollinger and Ayala Champagne, Masion Louis Jadot from Burgundy, E. Guigal from the Rhône and Roda from La Rioja. Key to its success in the local market has been Heritage Wines introduction and development of important educational programmes for the Portuguese on-trade, as well as other innovative tools supporting the leverage of fine wines in Portugal. Heritage has established itself as the leading distributor in the premium market. The Group has also expanded its presence in distribution, through the acquisition of beverage wholesale businesses covering the northern and central areas of the country. The group also owns OnWine which offers the country’s widest choice of wines for purchase online. Despite the anxiety surrounding the current state of the Portuguese economy and the austerity measures that the country is linked to, all parts of The Fladgate Partnership are performing well. Trending against the curve in the domestic market and owing its success to the fact that most of the group’s companies are export focused; we expect this positive trend to continue for the foreseeable future.

Company: The Fladgate Partnership Name: Adrian Bridge Web: www.fladgatepartnership.com

September 2013 /

ON THE COVER:

Vivino Receives $10.3 Million in Follow-on Series A Funding

Vivino Receives $10.3 Million in Follow-on Series A Funding biggest market. It also enables us to improve the quality of the app now that the foundation and framework is laid down. A couple of weeks ago I moved to the Bay Area and we will have a new office in San Francisco perfectly located between the tech world of Silicon Valley and the largest wine area Napa Valley. This funding will make us able to execute them all.” The funding round took some time to complete, with the first meeting between Vivino and Balderton taking place in November 2012 and the serious negotiations beginning in March 2013. “It all went pretty smooth, but it just took a while,” says Mr Zachariassen. “One of the reasons was that this is Balderton’s first investment in Denmark, so the whole arrangement took a bit longer. “Doing a funding round is always challenging, as there is a lot of lawyers and people that all want something, but we got there in the end. In the end, we actually had too much money on the table. Everybody wanted to invest as much as possible. This is a privilege, but we had to find the right balance between investment and dilution.” Vivino has a lot of plans for the near future, including strengthening the existing app and expanding to more platforms. Up to now, the companies focus has been entirely on the app, as it did not have the resources to build a quality website.

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Acquisition International speaks to Heini Zachariassen, founder and CEO of Vivino - the most downloaded wine app for Smartphones, available for iPhone and Android – to learn more about the app and the company’s recent funding round. As Mr Zachariassen explains, the app grew from his passion for building things and his love for wine. -----------------------------------------------------------------------“I thought IMDB, the comprehensive movie database, was a great tool, but it surprised me that there was no such thing for wine,” says Mr Zachariassen. “I believed that if I missed a database of wines, there would be many others with the same need, so I started to build one. While I got started on a database – which of course proved to be an enormous task – the world changed and all focus was on mobile platforms. So the project turned and twisted into the Vivino app.” Mr Zachariassen began work on the tool for himself, as he loves wine and really needed the help. The decision was made after he came home once again with a note of the name of a great wine he had tasted but was unable to locate the wine. “It shouldn’t be so difficult to trace wine in an enjoyable way,” Heini Zachariassen states. “The primary aim of Vivino is to be a useful tool for wine drinkers, no matter how little or how much you know about wine. Whether you need a wine for tonight, a last minute decision in a supermarket or restaurant – or when you travel and want to find local wines and retailers, Vivino can help you out very quickly. We would like to demystify and create a transparency in a world that has very little of this.”

/ September 2013

Vivino has the largest database of wine labels in the world, with over 20 million labels in the database. This gives the app by far the best ability to recognise any wine and vintage. Vivino is also the #1 wine app with more than two million users around the world, and nearly all wines are rated on Vivino. “First of all we put down a very good framework, where the technology, the content and luckily the financial matters are really ahead the others,” enthused Mr Zachariassen. “Vivino has also become a very social tool, where our users can look at what their friends and other users drink, their wine ratings and reviews and get inspiration to which bottle they should open on their next occasion.” Vivino has introduced personalized recommendations in the latest version of the app, where the user can see targeted recommendations based on what wines they have sipped and liked in the past and what is available.

“Now, we will have resources to do more than one thing and, for instance, have more focus on the website which already is a Top 10 wine website in the world,” he continues. “The investment makes it possible for us to develop further both in Denmark and in the USA. We will insource some of the development back to Denmark, while I start up the new office in California next month. There are of course even some plans that we can’t yet talk about.” Vivino will measure the success of the investment in terms of new users and increased growth. The company’s goal is to have 10 million users by the end of 2014. “Being #1 is not enough; we want to be the people’s wine app and everyone that loves wine must know Vivino. The wine industry is often underestimated, but it is a huge industry! Wine is actually a $100 billion business – compared to music, which ‘only’ counts for $60 billion. There are lots of opportunities out there, and I want to pursue them all,” he concludes.

“We enjoy making new features that engage our users and make the app more alive,” adds Zachariassen. In July this year, Vivino received the impressive amount of $10.3 million (€7.9 million) in follow-on Series A funding, in a round led by Balderton Capital. The new funding brings the total amount of investment capital that Vivino has received to date to $12.4 million (€9.5 million). The new funding will be used largely for product and business development and to market Vivino more widely throughout Europe, North and South America and to set up the new offices in San Fransisco. “We would like to stay #1,” explains Zachariassen. “The money allows us to expand in the US, which already is our

Company: Vivino Name: Heini Zachariassen Email: heini@vivino.com Web Address: www.vivino.com Address: Amagerfælledvej 56a, 2300 Copenhagen S

ACQUISITION INTERNATIONAL

The primary aim of Vivino is to be a useful tool for wine drinkers, no matter how little or much you know about wine. Whether you need a wine for tonight, a last minute decision in a supermarket or restaurant â&#x20AC;&#x201C; or when you travel and want to find local wines and retailers, Vivino can help you out very quickly. We would like to demystify and create a transparency in a world that has very little of this.â&#x20AC;?

ACQUISITION INTERNATIONAL

September 2013 /

ON THE COVER: Digital Realty

Digital Realty acquires 5.37 acre site at De President, Hoofddorp Companies large and small around the world trust Digital Realty to help them realise their digital ambitions. They need effective data centre options, which we are able to design, fund, deliver and operate – wherever they are or want to be across the world.” Digital Realty recently purchased a 5.37 acre site at De President, Hoofddorp, Haarlemmermeer, a suburb of Amsterdam. Discussing the strategic rationale behind the deal, Mr Geoghegan explained that Digital Realty recognises the Netherlands as a strategically important market for its customers. As a result it already owns and operates four data centres in the Amsterdam area, totalling 26,783 square metres. “One of the most important factors was that for many businesses in the region, the site will also afford superior connectivity as well as access to multiple Tier 1 and Tier 2 International Carriers,” he commented. “In addition, it will connect via Amsterdam’s main fibre ring to Digital Realty’s other European data centres as well as its U.S. locations.”

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Bernard Geoghegan, Managing Director – Europe, Middle-East and Africa, discusses Digital Realty’s recent acquisition of a site at De President, Hoofddorp, Haarlemmermeer, and the company’s plans to build two new data centres across Europe. -----------------------------------------------------------------------Digital Realty (NYSE: DLR) is a trusted data centre solution provider for many of the world’s leading organisations. The company offers: • An unmatched, highly experienced leadership team • The industry’s largest wholesale data centre portfolio (127 data centres worldwide) • Financial strength to ensure long-term stability and customer support ($14B enterprise value) “We stand out from other data centre companies by offering innovative solutions driven by customers who see data centres not just as a technical investment but as a strategic platform for success,” said Mr Geoghegan.

“As the largest wholesale owner, operator and investor in outsourced data centre facilities in the world – we are simply unmatched in the experience, stability and reach to provide or build a secure home to your public, private or managed Cloud.” Digital Realty has shaped data centre solutions for some of the most diverse, complex and challenging organisations in the world. In total, the company has built over 22.7 million sq. feet of data centre facilities across 32 markets throughout North America, Europe, Asia and Australia. According to Mr Geoghegan, no other data centre company has more experience in designing and building facilities than Digital Realty. “As data continues to fuel global economic growth, we work alongside our customers as a strategic data centre partner,” he continued. “We support organisations with a range of tailored data centre solutions, while maximising existing infrastructure and unlocking growth potential.

The Digital Realty difference Flexible solutions: Our comprehensive suite of flexible solutions accommodates the varying needs of your business, now and in the future. We can help you save time, reduce costs, minimise risk, and better align your data centres with your business strategy.

The new Digital De President Data Centre, when completed, will have a size of around 75,000 sq. ft. with 11 MW of power split across six Data Halls. The facility will enable Digital Realty to provide high quality and leading edge Data Centre space to both its existing customers looking to expand in Amsterdam and new prospects planning to enter the Dutch market. Digital Realty also recently announced that it has partnered with KPN, the leading Dutch provider of telecommunications and information and communication technologies (ICT), to build a data centre in Groningen. In the transaction, KPN has signed a long-term, triple net lease with Digital Realty for the existing data centre. The 7,000 sq. ft. building and overall site have the potential capacity for 3.5 megawatts of critical load. In the next six to 12 months, there will be further announcements regarding new partnerships and expansion across Europe, Middle-East & Africa for Digital Realty. “This transaction underscores our ability to complete a highly structured transaction that enables our customer to provide solutions in its controlled data centre real estate assets with a well-capitalised, long-term data centre owner,” said Mr Geoghegan. He concluded: “This deal continues our strategy of expanding our European footprint by investing in high-quality data centre facilities that are home to top-tier global brands.”

Financial strength: Our substantial financial resources make us a stable and reliable long-term partner, giving us an unmatched capacity for financing your data centres and supporting your growth. Expertise: Our data centres are designed, built, and operated by professionals with decades of experience in site selection, design, construction, engineering, operations, and customer service. Our data centre operations are standardised to give you the highest level of reliability regardless of location. Locations worldwide: With more than 100 properties in over 30 markets around the world, we have data centres where you need them—today and in the future. Global supply chain: Our proprietary global relationships with major contractors and suppliers can dramatically improve efficiencies and significantly reduce your time to market.

ACQUISITION INTERNATIONAL

Company: Digital Realty Name: Bernard Geoghegan Web Address: www.digitalrealty.com Address: 71 Fenchurch Street, London, EC3M 4BS, United Kingdom Telephone: +44 207 954 9100 Email: channelteam@digitalrealty.com

September 2013 /

2013 M&A AWARDS:

Trust Formation Firm of the Year – Belize: Bay Trust Corporate Services Acquisition International speaks to Glen CH Wilson, President of Offshore Solutions Group, to learn more about his background and Bay Trust Corporate Services. Offshore Solutions Group comprises four companies: Bay Trust International Limited; Bay Trust Corporate Services Limited; Broadway Trust Consultancy Services Limited; and Bitterne International Trust Consultants Limited. In reaction to wining the M&A Award, Mr Wilson said: “I was happy to hear that we were nominated, and to have won fills me with pride and joy.” Mr Wilson first started business in Switzerland in 1995. He stated that it was “more by accident than design” that he started, in 1996, using Belize International Business Company (IBC) as a vehicle for his clients to shelter assets offshore. In the same year he established Bay Trust Corporate Services Limited, and Bay Trust International Limited was incorporated and licensed to do trust business in 1999. Company: Offshore Solutions Group Name: Glen CH Wilson, TEP, FCIS Email: MD@broadwytcsl.com Web: www.offshoregroupbelize.com Address: PO Box 2130, The Matalon Business Center, 5th Floor, Suite 501, Coney Drive, Belize City, Belize C.A. Telephone: +501 223-1756

“During the years, my faith in Belize grew and in 2006 I decided to phase out my Swiss operation and transfer all the business to Belize,” he elaborated. “This transfer was completed in 2008 at which time I came to live in Belize. Today I have four companies, with 14 members of staff offering trust, company, foundation and limited liability companies along with establishment and management services. “Our group of companies distinguishes itself from our competitors by being pioneers in our field, and offering the best customer service,” he added. Commenting on the current economic turbulence, Mr Wilson stated that the company finds that there is always a steady flow of business,

/ September 2013

regardless of whether the economic conditions are more or less favourable, therefore the company has not had to adapt. While the market for M&A services is increasingly global, he noted that the company focuses on a niche market jurisdiction, so it is not really involved in the global market. The demand for the firm’s services has increased over the last year, primarily in the fields of Foundation and LLC business. The company has responded to this demand by establishing a thriving Foundations and LLC department within the company and developing its staff, training them to service clients in this field. Mr Wilson stated the company emphasises a team culture as it helps with the overall development of the company. “We pride ourselves in our customer service thus it’s important to have a strong team and to give the employees importance,” he commented. “A company can only be as great as its leader and members.” Looking ahead to 2014, Mr Wilson noted that the firm is aiming to develop its International Insurance clientele over the next 12 months. “We are predicting steady growth in relation to our M&A activity for the next 12 months,” he added. “To have another successful year we need to never lose sight of our clients and continue to offer impeccable services.” In conclusion, Mr Wilson offered a piece of advice to the other nominees for the award: “Concentrate on impeccable service, as competitive helps instil excellence.”

ACQUISITION INTERNATIONAL

2013 M&A AWARDS:

UK Regulatory Compliance Advisory Firm of the Year: Kinetic Partners

Monique Melis, Global Head of Consulting and a member of Kinetic Partners’ Board, gives Acquisition International some insight into the firm, its team and its approach to due diligence. Kinetic Partners is an award winning global professional services firm focused exclusively on the financial services industry. The Firm provides a full range of consulting, regulatory compliance, due diligence, tax, forensic, risk, audit and assurance services to clients who value their expertise, delivery and highly client focused approach.

Company: Kinetic Partners Name: Monique Melis Email: monique.melis@kineticpartners.com Web: www.kinetic-partners.com Address: One London Wall, Level 10, London EC2Y 5HB, UK Telephone: +44 20 7862 0700

With teams in eight key financial centres globally, the Firm’s excellent reputation is driven by strong relationships with the industry, the quality of service and the exceptional value provided to clients. Kinetic Partners’ multidisciplinary team of industry recognised experts recruited from regulators, financial institutions and major professional services firms, along with its enviable depth of regulatory and industry experience enables them to offer a highly valuable tailored product specifically to Private Equity firms who are investing in financial services firms. Monique Melis, the Global Head of Consulting and a member of Kinetic Partners’ Board says: “Due diligence is a critical part of any acquisition, not only for the acquirer itself but for any third party providing finance for the acquisition. Whilst investors are well versed in performing financial and commercial due diligence, the ongoing fundamental shift in regulation globally shows that the importance of regulatory due diligence should not be underestimated.” Monique continues “Our due diligence approach identifies how people, skills and structure in terms of governance, systems and control can ensure future growth with the least amount of risk and is based on international

regulatory standards. It is designed to assess and determine operational, regulatory and compliance risk using a combination of impact and probability evaluated against sound practice in the areas of governance, systems and controls. We also believe that due diligence should not stop when the deal is complete. We assist in all aspects of post deal due diligence follow-up, remedial work and to assist in any post deal structuring.” The Firm has seen a notable increase in the demand for regulatory due diligence within the market place and sees this rising in the future: “Balancing client, shareholder and global regulatory interests in a competitive financial services industry is a continuous challenge. The M&A sector is global, dynamic, complex, highly competitive, and currently experiencing a period of consolidation. Any regulated firm is facing significant pressure from an array of sources to ensure a sound product is consistently delivered. Although the resources required to implement procedures to meet these requirements can be significant, the costs of failure to comply are often much higher in terms of remediation, financial penalties, reputational risk and damage to customer confidence. The Investment Director of CPBE Capital says of the Firm: “The regulatory and compliance due diligence work undertaken by Kinetic Partners was key when assessing the investment opportunity in the trust sector. Kinetic Partners has a detailed understanding of the sector and were able to clearly articulate their findings and opinions. We valued the quality of work undertaken and the ease at which Kinetic Partners worked alongside our target company as well as the other advisors involved in the transaction.”

International Client Choice Law Firm of the Year – Russia: Vakhnina and Partners

Dr Tatyana Vakhnina, Senior Partner at Vakhnina and Partners gives Acquisition International some insight into her background and the firm’s award winning services. Dr Tatyana Vakhnina has more than 35 years’ experience of work in IP, including patents. According to the most reputable Russian and foreign magazines, Dr Vakhnina is one of the leading IP professionals in Russia. In 2010, 2011, 2012 she have already included in the lists of leading experts of Russia by the edition “Who’s Who Legal”, and “Best Lawyers”. Company: Vakhnina and Partners Name: Dr Tatyana Vakhnina Email: ip@vakhnina.ru Web: www.vakhnina.ru Address: Bld. 6, Preobrazhenskaya Pl.,Moscow, 107061, Russia Telephone: +7 495 231 4840

A graduate of the Moscow Aviation Institute, since 1970 she has worked as a specialist in patent engineering at the Scientific and Research Institute for Manufacturing Engineering, the Moscow Textile Institute, and the Tupolev Aircraft Company. Dr Vakhnina was registered as a patent attorney of the Russian Federation in 1993. In 1995 she was registered as a patent attorney without any limitation in activities, obtained registration as a Eurasian patent attorney, and completed postgraduate studies at the Russian State Institute for Intellectual Property. She received her Masters in juridical science in 2001, and was made Advocate of the Russian Federation in 2002.

ACQUISITION INTERNATIONAL

Her sphere of interests is intersection of rights in patents trademarks, and designs with rights in other kinds of IP. At present, Dr Vakhnina actively practices law before the arbitration courts, the anti-monopoly committee and the Chamber for Patent Disputes of the Russian Patent Office, protecting the interests of IP owners. She is the author of a number of inventions herself, and speaks fluent English. She is Honorary Advocate of Russian Federation, Patent Attorney of Russian Federation and Eurasian Patent Attorney. The team at Vakhnina and Partners comprises highly-qualified patent and trade mark attorneys and specialists, professionals, lawyers and technical experts with academic credentials. Vakhnina and Partners is a full service intellectual property law firm, located in Moscow, Russia. The firm is engaged in the legal affairs of clients in the areas of IP, and has represented clients in the Chamber of Patent Disputes and in the courts of various jurisdictions. The firm advises its clients in all aspects of Intellectual Property in Russia, CIS and the Baltic States.

September 2013 /

2013 M&A AWARDS:

Education Investment Platform of the Year – UAE: Al Najah Education Shailesh Dash, CFA, is the Chairman of the Board of Directors for Al Najah Education, and CEO and Founder of Al Masah Capital Limited, the investment manager of Al Najah Education. have successfully upgraded the acquisition’s rating from the regulator to the highest level less than 12 months after acquiring it. Our distinguishing point is that we acquire good operating assets and add value to further upgrade them to be the best-in-class in the education segment they operate in.”

Dubai Skyline / UAE

Mr Dash described education as a very defensive sector, noting that this has enabled it to ride the turbulence in the MENA region in the recent past, which included the financial crisis and the Arab Spring. Education assets were still showing robust growth or at the minimum maintained their performance through the various crises. “Furthermore, we focus on well-run education assets for our acquisitions, and they have all shown a steady track record of historical growth; but that doesn’t mean we rest on our laurels – badly managed schools or nurseries will not survive in this sector for long, especially with increased competition and tough regulatory oversight – so our focus is always to maintain the highest standard in terms of quality of education and teaching staff,” he explained. “We believe it is through our emphasis on offering the best quality in teaching, with the children/students being at the core of all we do, that has allowed and will allow us to thrive in the current economic conditions.”

Al Najah Education was launched and is managed by Al Masah Capital Limited as one of UAE’s first private equity funds with a dedicated focus on the MENA education sector. Al Najah is a private equity investment platform with the objective to establish a platform comprising high quality and accredited education assets with operations all across the MENA region. Al Najah invests in assets encompassing the entire education spectrum, from pre-primary, primary and secondary, tertiary to continuing education, including the ancillary segments of education.

“We are steadily working towards our objective of creating a pan-regional education platform,” he continued. “In terms of client base, we have a strong and well diversified investor base of both institutional investors as well as ultra high net worth individuals which are predominantly from the MENA region but with some from the western hemisphere and India.”

The team at Al Masah Capital and Al Najah Education comprises both investment and education sector veterans with years of investment experience, domain knowledge and operations expertise across the education sector.

In the last year, Al Najah Education has invested in a primary school, a high school and two pre-schools. Starting from scratch, the company has built up an education platform with capacity for more than 2500 students, ranging from preschool to 16 years of age, in about 12 months.

Al Najah Education has an international management team comprising more than five nationalities with diverse experiences, knowledge and perspectives. The company currently hires more than 300 employees including teachers, assistant teachers, nannies and administrators.

“All of our schools have a long waiting list and we are seeing the demand of places spilling over into our nurseries,” enthused Mr Dash. “The education sector has always been a sector with demand superseding supply, and it is most apparent in the high quality segments whereby we operate in. We have responded to this good demand by embarking on expansion projects to increase our school’s capacities as well as build up a strong nursery feeder chain to alleviate the crunch of space at entry levels in our schools.”

“With such a diverse mix of staff, we place an importance on developing a strong team culture whereby there is knowledge sharing, mutual support, alignment of all interest and where every opinion or suggestion counts,” said Mr Dash. “We are extremely elated by this recognition of Al Najah Education for its performance as an education fund and contribution towards the education sector,” he continued. “We would like to dedicate this award as recognition to the support of our investors and the effort of each individual team member.” Company: Al Najah Education Limited (Managed by Al Masah Capital Limited) Name: Shailesh Dash, CFA Email: shaileshdash@ almasahcapital.com Web: www.alnajaheducation.com Telephone: +971 4 453 1500

Mr Dash stated that the company’s in-depth knowledge of the education sector distinguishes it from its competitors and the significant experience of the team in the field enhances the company as an industry leader. “We distinguish ourselves by being very active investors, with our focus on adding value to the assets we invest in,” he elaborated. “We enhance the investment value to our investors by ensuring strong participation in further developing the invested assets. “In one of the schools which we acquired, we embarked on an expansion project to almost double its capacity immediately after acquiring it, and we

Commenting on the increasingly global M&A market, Mr Dash stated that Al Najah has established a presence through its first four acquisitions in Dubai, UAE. The company is also in the process of closing four more acquisitions in Dubai and Abu Dhabi, and has pipeline deals in Oman and Qatar, which it expects to close within the next 3-4 months.

/ September 2013

Al Najah Education has established a strong presence in Dubai, its headquarters of operation. In this coming year, the company will be expanding into at least three more cities in two other countries to further solidify its aim of forming a regional education company. “We will also be leveraging on some of our top school and nursery brands to start new branches in new cities around the GCC,” explained Mr Dash. “We aim to be an education company with capacity of more than 10,000 students within the next 12 months, and to have a capacity of almost 20,000 within the next two years.” He concluded: “It is indeed an honour to be awarded amongst the stellar list of nominees for this award. What I would like to say is that at the core of what we do, it should and will always be the wellbeing of the children in our schools and nurseries, their interest should always come first and this will directly and indirectly be reflected in the performance of our investments.”

ACQUISITION INTERNATIONAL

2013 M&A AWARDS:

SME Corporate Finance Advisory Firm of the Year – UK: WK Corporate Finance LLP

Andy Coghlan, Managing Director of WK Corporate Finance LLP, discusses the firm’s background, achivements, and pride at winning the M&A Award. We were thrilled to find out we had won the Acquisition International SME Corporate Finance Advisory Form of the Year 2013 award; it is an honour for the team to be recognised globally for our hard work and achievements in the corporate finance SME marketplace. WK Corporate Finance LLP was founded in London in 2005.

Company: WK Corporate Finance LLP Name: Andy Coghlan Email: andy.coghlan@wkcf.co.uk Web: www.wkcorporatefinance.com Address: Bridge House, London, SE1 9QR, UK Telephone: +44 (0)20 7403 1877

In the last year WK Corporate Finance has expanded and has recently opened an office in the South of England as a result of increased demand. We have a solid, experienced team of hands on professionals with practical as well as theoretical corporate finance experience, offering a full range of corporate finance services, including: lead advisory, transaction support and asset based lending, across a wide variety of market sectors in the UK and around the world. Our core specialism is working with small and medium sized enterprises and institutional funders, particularly the smaller private equity houses from around the world, many of which are looking to invest in the SME and owner managed business markets. Despite the ongoing global economic difficulties, and low levels of banking finance available, our excellent network of contacts and continued work with smaller private equity houses has meant we have seen a notable increase in deal activity, and a steady deal flow, with a record-breaking past two years.

ACQUISITION INTERNATIONAL

Our client base continues to be domestic and global – we continue to have strong ties with International Accountancy group IAPA (www.iapa. net ). IAPA allows accountancy firms all over the world to work with overseas organisations, sharing resources and expertise and allows firms to gain further exposure to foreign markets. One of our directors, Philippa Robinson, is the chairperson of the IAPA European Corporate Finance Group, founded by WK Corporate Finance. We recently advised on a £46 million secondary management buyout of Autologic, which operates offices in the UK, US and Hong Kong. Within the last 12 months we took pleasure in assisting with a multi-million pound client disposal in the global food industry market. The firm was acquired six years ago for £7 million, backed by UK private equity and sold to a US food group backed by US private equity, exiting for multiple times the original price. The US based client has retained WK Corporate Finance for audit and future acquisition work. Over the next 12 months we do not predict any change in terms of levels of bank lending but it is evident that private equity houses are still extremely keen to invest if the right opportunities present themselves. More recently in the UK we have seen favourable exchange rates for overseas investors and a return in the overseas trade buyer, which could be deemed as an emerging market going forward.

September 2013 /

2013 M&A AWARDS:

Overall Law Firm of the Year – UK: Bargate Murray

Quentin Bargate, Senior Partner of Bargate Murray, discusses the firm, it’s achievements over the last year and its plans for the next 12 months. Commenting on how Bargate Murray has positioned itself to address the increasingly global market for M&A services, Mr Bargate stated that the firm’s niche areas of practice have helped to develop its global client base, which spans many jurisdictions such as the UK, Eastern Europe and Asia.

City of London

Over the last 12 months, the team has been involved in several high value transactions and cases, including Superyacht sales and purchases. Moreover, the firm was one of the first to produce Maritime Labour Convention (“MLC”) compliant seafarer employment agreements, approved by the Cayman Islands Shipping Registry. Mr Bargate has also been invited to join CISAC, the maritime authority of the Cayman Islands Yacht Committee. “This year has also seen success for the Litigation team, with a number of successful High Court applications,” added Mr Bargate. “The team continues to be involved in various high value commercial matters, often with an international focus.” With the entry into force of the MLC last month, Bargate Murray has seen an increased demand for its services from high net worth clients to yacht managers and other professional crew agencies keen to instruct the firm, to ensure that they have MLC compliant employment agreements in place. “Our Superyacht group is busier than ever, particularly with the MLC coming into force, and we have also seen an upsurge in corporate and commercial work,” he continued. “We put this down to a strong reputation for excellence and great value.” Discussing the team culture within Bargate Murray, Mr Bargate stated that the firm prides itself on successful teamwork.

From its establishment in 2004, Bargate Murray has continued to grow in number and services with the addition of an Aviation department in 2012. It is a boutique law firm with particular expertise in commercial and corporate law, litigation and alternative dispute resolution and Superyacht and maritime law matters. The firm has also just changed from a partnership to fully incorporated status, in order to better serve the needs of its clients, and to lay the foundations for future growth. “Based in the heart of the City, but without the costly overheads, we pride ourselves on understanding each client’s needs, from small sole traders and partnerships to large international corporations and high net worth individuals,” said Mr Bargate. “It is our on-going commitment to client care and practical commercial approach which sets us apart from the traditional law firm. “We also support the emergence of new start-up businesses, holding frequent meet up events under our Seed Academy brand. This reflects our commitment to local as well as national and international clients.”

Company: Bargate Murray Name: Quentin Bargate Email: quentin@bargatemurray.com Web: www.bargatemurray.com Address: 20-22 Curtain Road, London, EC2A 3NF, UK Telephone: +44 (0) 207 375 1393

In reaction to winning the 2013 M&A Award, Mr Bargate said: “It has been a successful year for the firm and it is always good to have some recognition from prestigious publications.” Despite the challenging economic conditions, Bargate Murray’s practice areas including Dispute Resolution, commercial work and Superyachts have prospered and the firm has enjoyed strong growth in these areas over the last few years. “In any event the firm understands the present economic environment is challenging for clients, and we are always looking to adapt our approach to best serve our clients and their commercial needs,” he commented. “Otherwise, we continue to strive for efficiency and value for our clients.”

/ September 2013

“It is critically important that from partners through to trainee solicitors and paralegals, every individual is able to make a visible contribution,” he elaborated. “There is no hierarchy or top down culture, instead we operate an open and flat playing field. “The team continues to work hard and our forward thinking attitude means we are already looking to widen our international reach, whilst ensuring the same client centred service. We are particularly focused on further developing our already excellent contacts and client base in Eastern Europe and the Russian Federation, and our relatively new Aviation group has a bright future.” During September, Bargate Murray will hold its first event at the Monaco Yacht Show. Along with the firm’s four co-sponsors, it is hosting a three day event at Zest Bar bringing together fellow professionals from the yachting industry. The firm will also be present at various aviation events in Moscow during September. “The recent addition to the firm of aviation associate Lauren Payne is an exciting development and will help us to expand our expertise to the aviation industry,” added Mr Bargate. “We also have exciting developments with the incorporation of the firm and promotion of Senior Associate Adam Ramlugon to Partner. “The firm is continuing to grow and we predict further diversification of our services with increased demand.” In conclusion, Mr Bargate explained how he believes the firm distinguishes itself and beat the competition for the award: “Here at Bargate Murray, we remain committed to our strapline ‘business matters.’ We tailor our service to the individual client and we strive to build on our existing relationships whilst forging new ones. It’s the personal touch that matters. Clients receive a hands-on approach, with partner involvement from beginning to end.”

ACQUISITION INTERNATIONAL

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:

Difficult Conversations in Mergers and Acquisitions

Difficult Conversations in Mergers and Acquisitions Edinburgh Castle and City / Scotland

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Patricia Barclay, Founder of Bonaccord Ecosse Limited, discusses value destruction in M&A. -----------------------------------------------------------------------As we all know many mergers or acquisitions end up being value destroying; that is the value of the combined entity is less than the value of the two original entities prior to the combination. Additionally it is common for staff to resign in the period leading up to the merger or in the months immediately following. While sometimes this may be helpful to both parties if the merger is to lead to redundancies and the resigning employee has a good offer somewhere else, more often the people who leave were in jobs that were not under risk or were employees that the combined company wished to retain. There can also be disruption from staff who do remain in post who are in some way unhappy with the result of the merger. Value destruction can come from a number of sources such as incomplete due diligence or a badly thought out negotiation strategy but staff issues nearly always arise from just one problem – poor communication. Staff may imagine implications for themselves that are either unduly pessimistic or overly optimistic – the former leads to talent flight while the latter can lead to disgruntled employees creating on-going discontent when reality proves less rosy than the future they had projected. One way of handling this problem is to use an external facilitator who is independent of the management structure. The facilitator can have frank and confidential

/ September 2013

conversations with key staff – remembering that key staff are not necessarily just senior staff but others further down the structure who may have skills or knowledge vital to the smooth running of the business who cannot quickly or easily be replaced. This approach can identify concerns amongst some workers that management may not have considered or realised were of such significance. Many staff indeed through fear of the future may appear to share their boss’ enthusiasm for the deal while at the same time brushing up their cv. Once management is made aware of some of these hidden concerns or the number of people considering leaving they are better placed to then come up with plans to counter misplaced fears or to keep some staff in place through the immediate post-merger period until things settle down and staff can make more reasoned decisions as to their future. A much more difficult issue of course is how to deal with the over optimistic employee. Management will want to encourage enthusiasm within the workforce for the new arrangements and talking down the possibilities of the deal with individuals may be counterproductive leading to pessimism and unnecessary talent flight. A solution here may be for the facilitator to work with the managers putting out the upbeat messages to reality test and ensure that they are tailored to particular groups and address timescale or that group’s hopes and concerns in an honest manner. Use of a facilitator can be particularly useful in small or family owned businesses where there may be issues and loyalties that go beyond the commercial or individual career interests and where close relationships may make conversations about change more difficult for management.

Using an outsider allows issues to be aired without any sense of disloyalty or risk that the on-going relationship with the managers will be damaged. Bonaccord offers a discrete facilitation service. Principal, Patricia Barclay’s international experience in senior roles in a variety of very different businesses taken with her expertise as a mediator give her a particular understanding of how such issues can be tackled. Bonaccord can also help with other aspects of M&A from the legal documentation to supporting the negotiation and undertaking due diligence. Additionally the firm has an extensive international network of experts across a number of sectors to address whatever matters may arise in the course of the transaction.

Company: Bonaccord Ecosse Limited Name: Patricia Barclay Email: patricia@bonaccord.eu Web: www.bonaccord.eu Address: 31 Merchiston Park, Edinburgh EH10 4PW Telephone: +44 (0) 131 202 6527

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Trade Finance in Ukraine

Trade Finance in Ukraine reasons, the prospects of an active Ukrainian ECA in the near future remain cloudy.

Kiev skyline over beautiful fiery sunset, Ukraine

“In the absence of Ukrainian ECA insurance, Ukrainian exporters minimise their non-payment risks by use of instruments such as letters of credit and by advance payments.” Avellum Partners would highlight the following issues which should be borne in mind in the context of ECA-backed financing in Ukraine:

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Glib Bondar is a Partner at Avellum Partners. -----------------------------------------------------------------------Avellum Partners is a leading Ukrainian law firm for corporate finance and a firm of choice for leading international law firms in the areas of capital markets, competition, disputes, finance, mergers and acquisitions, real estate, restructurings, and tax in Ukraine. Mr Bondar stated that 2012 was not a particularly impressive year in terms of opportunities for Ukrainian businesses to obtain financing. He explained that, as a result of the volatility of global finance markets and a lack of long-term funding supply, banks and other foreign investors scaled down their appetite for Ukrainian risk and, as a result, capital markets and traditional bank lending became no longer easily accessible to Ukrainian borrowers (subject to a few exceptions, such as Ukrainian “blue chip” companies). “The situation improved significantly in 2013, with a number of leading Ukrainian businesses (both state and private) having successful Eurobond issues or securing pre-export (‘PCF’) financing,” he commented. “At the same time, the supply of trade financing backed by foreign export credit agencies (‘ECA’s) has been – and continues to be – available.” Mr Bondar noted that trade finance as an instrument is in high demand in Ukraine due to the absence or lack of other readily available sources of funding and the volume of heavily outdated technologies used by Ukrainian companies requiring upgrade with more advanced technologies produced by developing countries (e.g., the EU or the United States). The pros of trade finance involving an ECA, according to Mr Bondar, include the relatively low cost of funds for borrowers and the availability of long-term funding, low risk for lenders as a result of ECA coverage, and guaranteed payment to foreign exporters.

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“Cons include the relatively insignificant amounts of trade finance loans (as compared to syndicated loans) and the involvement of additional parties (other than lender and borrower), such as ECAs and foreign exporters, which may affect deal dynamics and result in certain delays (extra time may be required for agreeing on the deal structure and finalising transaction documentation),” he explained. Mr Bondar believes that it is difficult to overestimate the role of ECAs in trade financing. ECAs provide insurance coverage (guaranteed support) to lenders, thus substantially reducing lenders’ credit risk exposure. “As a rule, ECAs are actively involved in the process and will never sign off on insurance coverage or give the green light to a particular trade financing unless they are absolutely comfortable with the deal structure, transaction documentation, financial standing of a borrower, results of legal due diligence on the borrower, and overall risk assessment in relation to the transaction.”

(i) Regulatory approvals/currency control requirements: Ukrainian law provides special regulations for foreign currency loan agreements with foreign lenders, including mandatory registration of such agreements with the National Bank of Ukraine (“NBU”). The loan registration procedure was changed in November 2012, shifting primary responsibility for loan agreement registration to Ukrainian servicing banks and so increasing their liability in the area of currency control compliance. Consequently, Ukrainian servicing banks have begun to favour a more conservative interpretation of Ukrainian currency-control regulations. It is generally recommended that parties approach Ukrainian servicing banks as soon as possible to clarify important elements of any ECA-backed financing, such as structuring payments of the ECA coverage costs, compliance with the maximum interest rate limitation, etc. It should be remembered that, unlike other CIS countries, Ukraine still has a strict currency-control regime, imposing certain restrictions on different types of cross-border foreign currency payments. (ii) Corporate approval requirements: In addition to existing corporate authorisation requirements under Ukrainian law, the Ukrainian joint stock company law introduced further authorisation requirements for Ukrainian joint stock companies. For example, if a particular transaction satisfies the “significant transaction” and/or “interested party transaction” tests, the transaction will be subject to prior supervisory board approval or approval of a general meeting of shareholders. “Any other available financing instruments would have certain disadvantages when compared with ECA-backed financing, which is specifically tailored for trade-financing purposes,” concluded Mr Bondar.

There is currently no Ukrainian ECA. An attempt was made to create a Ukrainian ECA in 2012, but it was ultimately rejected both by the Ukrainian Parliament and the President due to a lack of readily available state funding and the absence of political consensus over the concept of export support in Ukraine. In light of the current budget deficit, Mr Bondar believes that it is unlikely that the Government will come back to this idea in the near future. “Usually, ECAs are backed by countries with a high credit rating (e.g., Germany, the Netherlands, France, Switzerland, U.S., UK, Scandinavian countries), and Ukraine is unlikely to viewed as one of those,” he observed. “Finally, ECA-back trade financing is mainly focused on supporting the production and export of highly technological equipment, while, in the foreseeable future, Ukraine would predominantly be an active “consumer” rather than a “supplier” of such equipment. For the above

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

September 2013 /

SECTOR SPOTLIGHT:

IRS Postpones FATCA Deadlines by Six months

Issues Additional Guidance for FFIs in Countries with Intergovernmental Agreements ------------------------------------------------------------------------

Marian Ancheta Llera is an International Tax Partner at MSI Global Alliance’s member firm Concepción Martinez & Bellido, Florida, USA. -----------------------------------------------------------------------Citing the “groundswell of international interest in FATCA,” on July 12, 2013, the U.S. Internal Revenue Service (the “IRS”) released Notice 2013-43 (the “Notice”), which sets forth a revised timeline for the implementation of the Foreign Account Tax Compliance Act (“FATCA”), as well as providing additional guidance concerning the treatment of foreign financial institutions (“FFIs”) located in jurisdictions that have signed intergovernmental agreements (“IGAs”) for the implementation of FATCA, but have not yet brought those IGAs into force. U.S. Treasury Department (“Treasury”) Deputy Assistant Secretary for International Tax Affairs Robert B. Stack went on to say: “we are providing an additional six months to complete agreements with countries and jurisdictions across the globe, before withholding begins. The high volume of international participation in this effort represents a quintessential race to the top. Every additional country we bring on board means we are one step closer to winning the fight against offshore tax evasion.” Stopping offshore tax evasion is a global issue and the IGAs are a crucial component to FATCA implementation. To date, Treasury has signed nine (9) IGAs, and is engaged in related conversations with more than eighty (80) other jurisdictions. The changes outlined in the Notice are expected to be adopted in revised regulations and will apply to intergovernmental agreements signed with FATCA partner countries. Until that time, taxpayers are permitted to rely on the Notice. Key Dates Postponed until July 1, 2014 FATCA and the Final Regulations published by Treasury and the IRS on January 17, 2013, originally provided for a phased implementation of the requirements of FATCA, beginning on January 1, 2014, and continuing through 2017. In particular, in order to comply with FATCA, FFIs would be required to

/ September 2013

begin withholding with respect to withholdable payments made after December 31, 2013 (with an exception for socalled “grandfathered obligations” outstanding on January 1, 2014, and associated collateral). The due diligence required to identify payees and accountholders would be phased in during 2014 and 2015. Annual reporting would be phased in starting in 2015 (with respect to information related to the 2013 and 2014 calendar years), with reporting of the full scope of FATCA information required by 2017. Guidance for FFIs in Jurisdictions which have signed IGAs There are currently nine (9) IGAs which have been signed, but they are not ratified and in force. Because it is very possible, if not probable, that many of these IGAs will not yet be in force by January 1 2014 when FATCA withholding was scheduled to commence, the IRS has issued guidance in this Notice indicating that a jurisdiction will be treated as having an IGA in effect if it is listed on the Treasury website available at the following address: http://www.treasury.gov/resource-center/tax-policy/ treaties/Pages/FATCA-Archive.aspx

indicates that a jurisdiction may be removed from the list, and provides that FFIs resident in that jurisdiction as well as branches in such jurisdiction will no longer be entitled to the status that would be provided under the IGA, and must update their status on the FATCA registration website accordingly upon removal of the jurisdiction from the list. Concepción Martinez & Bellido, Florida, USA is an independent member firm of MSI Global Alliance (MSI). MSI is a leading international association of independent legal and accounting firms with over 250 carefully selected member firms in more than 100 countries. MSI was formed in 1990 in response to the growing need for cross-border cooperation between professional services firms. MSI member firms are able to work cooperatively to serve clients with international operations, wherever in the world they need assistance.

Concepción Martinez & Bellido

A foreign financial institution (an “FFI”) resident in a jurisdiction that is treated as having an IGA in effect will be permitted to register on the FATCA registration website as follows, depending on the type of IGA:  In the case of a Model 1 IGA (a “Reporting Model 1 FFI”), the FFI may register as a registered deemed-compliant FFI; and  In the case of a Model 2 IGA (a “Reporting Model 2 FFI”), the FFI may register as a participating FFI. Additionally, an FFI may designate a branch located in a jurisdiction that is treated as having an IGA in effect as a branch that is not a “limited branch.” The Notice also

Company: Concepción Martinez & Bellido, Florida, USA Name: Marian Ancheta Llera Web: www.cfclaw.com Address: 255 Aragon Avenue 2nd Floor Coral Gables, Florida, 33134 USA FL USA Telephone: +1 (305) 444 6669

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SECTOR SPOTLIGHT:

Recovering Assets from Corporate Structures

Recovering Assets from Corporate Structures ------------------------------------------------------------------------

Nick Ractliff is a Commercial Litigator at PCB Litigation. -----------------------------------------------------------------------A major part of our work whilst acting for creditors and victims of fraud is the recovery of assets that are hidden within a holding structure. There are valid reasons why individuals and entities use these structures, such as for tax and financial planning purposes. However, they are invariably used by fraudsters or judgment debtors with the primary motive to shield their assets and make it intentionally difficult for potential claimants to link them to the ownership of the underlying assets and make a financial recovery. These structures are often complex with multiple layers of ownership using companies, nominees, discretionary trusts and other entities such as foundations spread over a number of different offshore jurisdictions. The legal concept of separate corporate identity, the inability of being able to go behind a trust without establishing that it is sham, and the lack of available public information and the laws of secrecy of some of jurisdictions make it difficult, but not impossible, to breakdown these structures to establish the identity of the ultimate beneficial owner of the underlying assets. The English Supreme Court in its recent decision in the divorce case of Prest v Petrodel Resources Limited concluded that the court had a very limited power to ignore the concept of separate corporate personality and it should only look to do so if there was no conventional remedy to provide assistance. However, it identified and provided illustrations of the availability of alternative remedies that are likely to give assistance where fraud is involved and someone is seeking to hide by a corporate identity. Examples of such claims include conspiracy to injure, knowing receipt, unjust enrichment, fraudulent misrepresentation and, particularly in England pursuant to the Insolvency Legislation, setting aside transactions at an undervalue for the purposes of putting assets beyond the reach of claimants. Likewise, the burden on demonstrating that a trust is a sham is heavy. This is because there has to be a common intention between the settlor of the trust and the trustee that the intention of the trust, i.e the assets are to be treated as if owned by the settlor, is different from that set out in the trust document, i.e they are to dealt with in accordance with the terms of trust and at the discretion of the Trustee. The Trustee is invariably a professional person. Therefore the chances of finding that the Trustee has operated in a deceitful manner on setting up the trust are low. However, recent case law has provided some assistance to allow claimants access to trust assets without having to demonstrate that it is a sham. The Privy Council in the case of Tasarruf v Merrill Lynch Bank and Trust Company (Cayman) Ltd found that a settlorâ&#x20AC;&#x2122;s power of revocation in respect of a trust was sufficient to give him such control to withdraw assets from the trust so as to vest in the settlor an equitable interest which is equivalent to an asset and capable of enforcement. The principle was adopted by the High Court in another case last year to prevent a debtor from hiding his assets in a

ACQUISITION INTERNATIONAL

pension fund where he has the right to withdraw monies to pay his creditors. Although the judgment debtor or the fraudster is likely to refuse to exercise those rights in such a manner, the court has the ability to appoint a receiver to take control of their assets either on an interim basis or for the purposes of enforcement. The right of revocation or such other right of control or withdrawal from a trust that could be said to be tantamount to having rights of ownership and an asset can be placed in to the hands of a court appointed Receiver. The Receiver is then able either to protect or to make a recovery of assets for the claimant. Our recent experience suggests that the appointment of a Court Receiver either on interim basis either in place of or in addition to a freezing injunction pending the determination of a claim, or as enforcement measure post judgment to be a useful tool in breaking down asset holding structures. Whilst a claimant establishes it claim the courts, both in England and other common law jurisdictions, are prepared to appoint a receiver to take control and manage the entity at the head of the structure, particularly if it is considered that a freezing injunction may not be sufficient to protect the assets within a network that has numerous layers spread over different jurisdictions. Likewise, once a claimant has obtained judgment against the fraudster or creditor, their interests, whether they are beneficial interests in shares of company or a power of revocation in a trust placed at the head of the structure can be placed into the hands of a court appointed Receiver. The

court will then grant appropriate powers to the Receiver to allow him to exercise control over the entity at the head of structure and to use it to start breaking down the layers to release the underlying assets. The downside is that it adds an extra layer of initial cost for the claimant. Although the receiverâ&#x20AC;&#x2122;s costs will hopefully be paid out of the recovered assets, there is no guarantee that this will happen and until it does the receiver will require it costs to be underwritten by the claimants However given that it can be an effective protective and enforcement remedy where assets are hidden by a complex structure, it is an additional cost that may be worthwhile incurring in the long term.

Company: PCB Litigation Name: Nick Ractliff Email: nr@pcblitigation.com Web: www.pcblitigation.com Address: PCB Litigation LLP, 4th Floor, 90 Chancery Lane, London, WC2A 1EU, UK Telephone: +44 (0) 20 7831 2691

September 2013 /

SECTOR SPOTLIGHT:

The British Virgin Islands: Leading the Offshore Pack

The British Virgin Islands: Leading the Offshore Pack The British Virgin Islands (BVI) is the world’s second largest domicile of offshore investment funds and a leading international finance jurisdiction. The country’s economy is one of the most stable and prosperous in the Caribbean and it is well known for encouraging effective regulation and promoting products which are flexible and relevant. At the recent G8 summit, the BVI had a unique opportunity to demonstrate its commitment to the global problem of tax evasion. The agenda of tax co-operation and transparency is more dominant in the international business community than ever before, but some forget that it is an agenda that the BVI has been working to for many years. Acquisition International speaks to some of the region’s leading legal and financial minds to discuss their views on the investment climate, business practices and opportunities. ------------------------------------------------------------------------

Glenn Harrigan is a Director at CCP Financial Consultants Limited. ------------------------------------------------------------------------

The CCP Group of Companies comprising CCP Financial Consultants Limited and CCP Accountancy Services Limited, is a multi-disciplinary financial services group based in the British Virgin Islands. The group’s primary areas of business are Company Management, Audit, Accountancy, Insolvency and General Business Consultancy Services. We have been in business since 1991 and are proud members of Kreston International a worldwide network of experienced, independent accounting firms. Commenting on the BVI’s stronghold in terms of new offshore company activity by volume, Mr Harrigan stated that different centres have their specialist niches and the BVI’s niche is incorporations. Success in this area was initially attributed to great timing, i.e. entering the market at the time of the demise of Panama the previous leader. “However since then the BVI has clearly established its brand and dominance and attempts by many other jurisdictions to compete with

and take away BVI market share have been largely unsuccessful” he observed. “This is a result of the hard work and dedication of the British Virgin Islands Financial Services Commission, which is responsible for regulatory oversight; and the BVI International Financial Centre, which is responsible for marketing of the jurisdiction.” Another important factor noted by Mr Harrigan is the high degree of efficiency and reliability of the BVI Companies Registry and the many local institutions which speedily process thousands of applications on a monthly basis. Mr Harrigan stated that the BVI is aware that responsible regulation is key to maintaining its brand and dominance and proactively seeks to ensure that its laws and regulations are compliant with international prudential standards relating to transparency, antimoney laundering and other such matters. “The AIFMD initiative is no different as evidenced by the recent announcement that on July 11, 2013, 25 European

Utilising a wealth of product and industry knowledge we provide services that include Fund Structuring and Administration, Insurance Management, Corporate Management and Director Services. Our advice is autonomous and cost efficient, ensuring our clients receive the structure that works best for them and provides a springboard to success. We appreciate our success depends on the success of our clients and their business which is why we value our clients and provide value both before and after capitalisation.

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The Folio Group is a leading, multi-jurisdictional offshore service provider to Investment Funds, Insurance Companies and Business Companies. Founded in 2001 in the British Virgin Islands, the group now has additional offices in the Cayman Islands, Malta and Panama and is represented in a number of other important financial services centres, such as Barbados, Delaware and Anguilla. ------------------------------------------------------------------------

ACQUISITION INTERNATIONAL

Securities Regulators had entered into a Memorandum of Understanding concerning consultation, cooperation and the exchange of information related to the supervision of Alternative Investment Fund Managers with the BVI Financial Services Commission,” he concluded.

We know that in today’s competitive global economy our clients require timely solutions to the challenges posed by the dynamics of their respective industries and circumstances. We tailor our administration service delivery around our clients’ needs and the industry in which they operate, enabling us to develop and offer specialist knowledge. Our clients represent a wide variety of industry sectors, including insurance/reinsurance, mutual funds, telecommunications, consulting, energy, education, manufacturing, shipping, tourism and investment.

Company: CCP Financial Consultants Limited / CCP Accountancy Services Limited Name: Glenn Harrigan Email: gharrigan@ccpbvi.com Web: www.ccpbvi.com Address: P.O. Box 3274, Road Town, Tortola, BVI Telephone: +1-284-494-6777 (office) +1-284-441-2494 (cell)

For more information on our services please contact us.

Company: The Folio Group Web: www.folioadmin.com Address: Folio House, James Walter Francis Drive, PO Box 800, Road Town, Tortola, British Virgin Islands Telephone: +1 284 494 7065 Funds: daniel@folioadmin.com william@folioadmin.com Corporate: calum@folioadmin.com Insurance: simon.owen@folio-insurance.com

September 2013 /

SECTOR SPOTLIGHT:

Indonesia: Strengthening the Economy

Indonesia: Strengthening the Economy In spite of the present challenging global environment the Indonesian economy is progressing well, domestic demand remains robust helping boost growth in the manufacturing sector. South East Asia’s biggest economy has seen four years of expanded growth in the exports sector; resulting in businesses across the globe looking to Indonesia for Investment opportunities. Indonesia is now recognised for its potential to become the 10th largest economy and this is one of many reasons why the country is seen as an ideal location for foreign direct investment. Nevertheless there are still challenges to be faced, such as the decline in Indonesian-European trade along with the slight contraction in new export orders. Acquisition International speaks to some of Indonesia’s leading professionals to discuss how Indonesia plans to further develop the economy in order to reach its full potential. ------------------------------------------------------------------------

Bagus S.D. Nur Buwono is a Partner at Bagus Enrico & Partners (previously Bastaman Enrico Bagus). -----------------------------------------------------------------------“BE Partners has the regional strength and influence to help clients spearhead their operations across multiple jurisdictions in South East Asia,” said Mr Buwono. “By collaborating closely with a handpicked selection of prominent law firm across the region, we are primed to offer value added legal services and solutions.”

The firm has extensive experience in representing local, regional and international companies in a broad range of transactions, including corporate/commercial law and capital investment, banking and finance, mergers and acquisitions, capital markets, energy and natural resources, plantations, property and real estate, hotels and resorts, pharmaceutical, IT and telecommunication, as well as infrastructure projects. Mr Buwono noted that Indonesia is the largest economy in South East Asia and has already been the 16th largest economy in the world. According to McKinsey Global Institute – 2012, it has the potential to be the seventh

largest by 2030. It will be home to the total of 135 million members of the consuming class. “This fact should be combined with other facts that Indonesia has abundant natural resources (petroleum, tin, natural gas, nickel, timber bauxite, copper, fertile soils, gold, silver and coal),” added Mr Buwono. “The growth of consuming class will boost particularly the financial and retail services, such as including food and beverage, garment, telecommunication and broadband internet. To ensure a broad-base growth, significant investment in energy sectors, agriculture and fisheries, transportation, and other infrastructure projects will be required. The government has launched the various initiatives to support and facilitate the public-private partnership, such as setting up financial institutions to facilitate the infrastructure and issuing various regulations on the incentive for investment in infrastructure projects.” A general election will take place in Indonesia to elect the members of parliament and the president in the second semester of 2014.

“I think all proposed investments with the significant amount of capital will be on hold,” predicted Mr Buwono. “So far, it is quite hard now to predict whether the ruling political party with be the same post 2014 general election.”

Company: Bagus Enrico & Partners (BE Partners) Name: Bagus S D Nur Buwono Email: bagus@bepartners.co.id Web: www.bepartners.co.id Address: DBS Bank Tower 17th floor, Jl. Prof. Dr. Satrio Kav. 3-5, Jakarta 12940, Indonesia Telephone: +62 21 2988 5959

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Mohamed Idwan (‘Kiki’) Ganie is the Managing Partner of Lubis Ganie Surowidjojo (LGS). ------------------------------------------------------------------------

Dr Ganie graduated from the Faculty of Law of the University of Indonesia and holds a PhD in Law from the University of Hamburg. Dr Ganie is a Chairman of the Association of Indonesian Anti-Trust Lawyers, a member of the Regional Panel of the Singapore International Arbitration Centre (SIAC), and a fellow (FSIarb) of the Singapore Institute of Arbitrators. Dr Ganie has more than 30 years of legal experience and specialises in commercial transactions and commercial litigation, including alternative dispute resolution, and has acted as an expert in a number of court and arbitration proceedings. His expertise covers: general corporate/company law; banking law; finance; bankruptcy and restructuring; mining; investment; acquisitions; infrastructure projects/project finance; antitrust; and shipping/aviation, with a particular focus on corporate governance and compliance.

/ September 2013

LGS was founded in 1985 by Timbul Thomas Lubis, Dr Ganie and Arief Tarunakarya Surowidjojo. Since then, LGS has grown into the largest corporate transactions and corporate litigation firm in Indonesia. LGS has also obtained Lloyd’s Register Quality Assurance certifications of ISO 9001:2008 for Quality Management systems and ISO 14001:2004 for Environmental Management systems to ensure the quality of all aspects of the firm’s operations and services. Dr Ganie stated that Indonesia’s substantial population, whose prosperity is steadily increasing, and ample natural resources have proven to be an attractive business environment for both foreign and domestic investment. “At a time of turmoil in more developed markets, Indonesia presents a potentially more appealing proposition than some of its peers – an economy driven by growing domestic demand rather than exports, with a domestic resource base, and a market that is growing organically rather than due to, and arguably in spite of, government policies,” said Dr Ganie.

“However, the pre-2014 election time period will bring a level of uncertainty due to attempts to introduce populist policies before the election and due to officials’ reluctance to make firm commitments prior to cabinet and other political changes that will follow the election,” he concluded.

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

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

The New Rising Stars: Kenya

The New Rising Stars: Kenya For so long now the world’s leading entrepreneurs and business professionals have turned to the BRIC nations in order to take advantage of overseas growth, however with countries such as Brazil, Russia, India and China no longer necessarily providing the best investment opportunities, many are turning to the ‘rising stars’ of the emerging world, such as Kenya. Acquisition International speaks to CPA Mohamed Ebrahim, Partner at Ace Associates- Certified Public Accountants and Director of Ace Financial Advisory Limited., Ace Consultants Limited and Ace Taxation Services Limited, to discuss the benefits of investing in a new ‘rising star’ location. Ahmed M.Y. Salyani & Associates was formed in 2003 by CPA Ahmed Salyani, as a sole practitioner. In 2011 he turned it into a partnership and rebranded the Group as Ace. Currently, the partners are CPA Ahmed Salyani ACCA, CFIP and CPA Mohamed Ebrahim MBA (Manchester), CGMA, ACMA, CFIP, FCT, with the following firm namely Ace Associates- Certified Public Accountants (Audit services) and at the same time set up Ace Consultants Limited (accountancy support services, Internal Audit and Risk consulting services), Ace Taxation Services Limited (Tax compliance, and advisory services), Ace Financial advisory Limited (Corporate Finance and Wealth Management) and ACE Secretaries and Registrars (company secretarial services) to offer specialised services to businesses.

Commenting on the benefits of investing in a new “rising star” location such as Kenya, as opposed to the traditionally favoured BRIC nations, Mr Ebrahim noted the lower entry barriers, governments that are eager to welcome foreign direct investment, and tax incentives to attract value added manufacturing industries.

From 1st January 2013 Ace Associates – Certified Public Accountants joined the McMillan Woods Global network and was rebranded as McMillan Woods Ace Certified Public Accountants.

He also highlighted the processing of traditional agriexports like value added packaged tea and coffee as part of Special Economic Zones, noting its “phenomenal tax incentives like 10 year tax break, no import duty and VAT on imports”, as well as the commercialisation of agriculture to produce food and process the crop to feed the growing population of Kenya and the East African Community - a market of nearly 100 million people.

Mr Ebrahim commented: “The partners have combined experience of nearly 40 years, gained in Big 4 firms, and major mid-tier firms, mainly in Kenya but with stints in Dubai (UAE) and Calgary (Canada), hence we are able to integrate skills and knowledge, in Kenya with a global flavour, personalised services available in Big 4 firms to the SME and emerging industries.” According to Mr Ebrahim, the current business environment in Kenya is positive and the government elected in the recent March 2013 elections is probusiness, supporting a balance of corporate investments and development of a locally owned SME sector. This is achieved through initiatives like the Youth Fund and Constituency Women’s Enterprise Fund. “They are also committed to the Vision 2030 programme which intends to transform Kenya into a middle income country by 2030,” he added. “The key to this will be how the international business community take up the Special Economic Zones and its tax advantages.” Mr Ebrahim attributed the country’s impressive growth to its pro-business environment, recent resource finds of Oil & Gas and other natural minerals, investment by the government in infrastructure (physical and financial) and Kenya’s Education system which produces skilled manpower. “In my opinion the skilled workforce in Kenya is more important than any natural resource find, as in a knowledge economy ideas rule and are the source of sustainable growth and wealth,” he elaborated.

ACQUISITION INTERNATIONAL

Nairobi, the capital city of Kenya

In terms of the sectors in which opportunities for investors lie, Mr Ebrahim suggested: transportation to and from resource find areas; supply and services to natural resource companies; bulk active pharmaceuticals; petro-chemical industry as a user of by products from oil refining; fertiliser making for the East African Region; and commercial fish processing and fishing in Kenya’s long coastline’s exclusive economic zone.

As Kenya becomes more established in terms of foreign direct investment, the country faces a number of challenges. One such challenge raised by Mr Ebrahim is overcoming the country’s reputation for post-election disputes and the political uncertainty it creates each year in the run-up to the general election and at least one year after, noting that losing presidential candidates are not willing to accept poll results leading to polarisation of the people. “The politicians have to mature to keep the interests of the nation before their individual interests, the people have to learn to vote based on merit rather than ethnicity and the business community to have confidence that the people of Kenya will not let their country descend into a civil war irrespective of periodic political rubble rousing,” he explained. The Special Economic Zones bill 2012 will be passed into law this year and Mr Ebrahim believes that this will set the stage to make Kenya a middle income country and focus on investment outside the Capital Nairobi, which due to its unsustainable increase on property prices has out priced itself in value creation. “The investment focus will be in Mombasa and its environs which is also close to the area’s where natural resources have found and is one of the area’s where Special Economic Zones are to be set-up, plus its historic advantage of being East Africa’s biggest port City,” he predicted.

“Kenya also has a dynamic Stock exchange, a well regulated banking sector, a flourishing tourism and hospitality sector and enterprising people. We are poised for awesome growth - Welcome to Kenya”

Company: Ace Associates - Certified Public Accountants and Ace Financial Advisory Ltd Name: CPA Mohamed Ebrahim Email: mebrahim@acegroup.co.ke Web: www.acegroup.co.ke Mombasa Address: Ace Group, Narok Road, off Jomo Kenyatta Avenue, PO Box 16916-80100, Mombasa, Kenya Nairobi Address: KMA Centre 7th Floor offices 2 & 3, Mara Road Upper Hill, Nairobi, Kenya Telephone: +254 41 2491515, +254 707 688699 Mobile +254 706 869892

September 2013 /

SECTOR SPOTLIGHT:

Myanmar: An Attractive Location for Foreign Investment

Myanmar: An Attractive Location for Foreign Investment Myanmar presents a true example of a location that’s ideal for foreign direct investment; huge corporations such as Coca-Cola and Unilever are already planning to invest Billions of dollars over the next decade. The country’s potential certainly hasn’t gone unnoticed by Japan and Korea who are now also making plans to invest billions of dollars in the hope of building up the country’s infrastructure. The country’s vast and virtually untapped natural resources coupled with its strategic location in the region makes it an attractive location for international investors. Acquisition International speaks to experts in Myanmar to learn more. Sunrise over temples of Bagan in Myanmar

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Sam Fox is a Senior Consultant, Global Client Services, South-East Asia at Control Risks. ------------------------------------------------------------------------

Control Risks has been helping clients in Myanmar (selectively) since the 1980s; over the last two years, however, their caseload has increased dramatically. They are currently consulting political, operational, reputational, regulatory and security threats – as well as economic opportunities – acriss a wide range of sectors. Mr Fox described the current business environment in Myanmar as “fascinating”. He noted that the business environment is undergoing profound change, in particular for international investors. “At the most basic level, that begins with the simple ability to do business in Myanmar; beyond that, we are seeing (and will continue to see) changes in the political, institutional and legal spheres that will impact investment decisions for years to come; the upcoming new telecommunications law and potential foreign ownership restrictions as a case in point,” he continued. “However, whilst these on-going structural changes are likely to remain on a largely beneficial

/ September 2013

tack for international investors, we see the operating environment for businesses in Myanmar remaining one of the (if not the) most challenging in the region. There is a huge amount of goodwill for Myanmar, and the momentum is growing; that has attracted a lot of interest, but we are only now starting to see who is prepared to deploy capital. Those that are investing now will need to commit considerable time, energy and expertise to succeed. But the opportunities are there.” Mr Fox stated that Myanmar enjoys an abundance of natural resources and agricultural potential, noting that the country requires massive investment in all types of infrastructure, particularly in the telecommunications and energy sectors. He highlighted the country’s large population who should, if reforms maintain and progress, benefit substantially from economic growth. “The apparent openness of the government and an increasingly engaged international community means it is likely to enjoy strong year-on-year GDP growth for the foreseeable future,” he added. “All this in a country which borders 40% of the world’s population and is located in one of the fastest growing regions in the world.”

Control Risks has worked with clients representing a comparable cross-section of sectors compared to other similar emerging economies: from natural resources, through energy, transport and communications infrastructure, and more recently consumer sectors and financial services. Two things have interested the firm about that: first, the speed with which interest in Myanmar spread through those sectors - over the course of nine months or so, starting in earnest in early 2012; and secondly, the way in which the firm’s clients in those sectors are now looking to exploit the opportunities that are present. “Myanmar is a blank canvas for a lot of our clients, as it is for their international competitors,” enthused Mr Fox. “Entering a new market comes with its own challenges, but in Myanmar in particular we are seeing clients taking great care with their entry strategy. There is an opportunity to make great strides in a short space of time, but the risk profile and evolving nature of the market demand a huge amount of attention. Do I adopt one, low risk, strategy now and monitor for certain triggers to enter the market in a more

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Myanmar: An Attractive Location for Foreign Investment meaningful way? Do we import our FMCG product and subcontract distribution, or move straight to onshore manufacturing? If I engage these stakeholders now, what could that mean for my relationships in the country in two years’ time (post-2015 elections)? Is now the right time to approach Myanmar, as a GP? If so, how?”

Shwedagon Pagoda in Yangon, Myanmar (Burma).

Mr Fox believes that these fundamental questions need to be asked, and that any particular investor’s answer to them would reflect their opinion of the likely speed and nature of developmental change. He advised that a business which believes it has a successful formula for market entry in other parts of the world, even in other parts of the region, shouldn’t assume it can be applied in Myanmar. “How you enter a market should always be a reflection of your risk appetite and your view on the development of that market. Whilst the former may be constant, the latter – as regards Myanmar – is arguably more unpredictable than most,” he opined. “We also think that a lot of the goodwill for the Myanmar story has already been priced in to certain sectors - look at the tickets put on the successful telecom tenders recently, the share prices of Myanmar-linked companies in Singapore, or real estate valuations in Yangon. Those examples also carry an indication of the challenges to be faced in Myanmar. For example, the re-run of the telecoms tender, the failure of other Myanmar companies to gain access to the SGX, or land and ownership issues in the real estate space. These headline-grabbing issues can ignore the challenges faced by investors looking for long-term, organic growth opportunities in sectors that aren’t necessarily that politicised or requiring as significant capital commitments. Every sector presents its own challenges in Myanmar, but certain sectors can be approached in ways that might satisfy the more conservative investor (it’s all relative, though…).” In Mr Fox’s view, Myanmar’s natural resources have always attracted foreign investors. He highlighted the foreign companies “grandfathered” in Myanmar and operating in the natural resources space throughout the sanctions period, albeit with a strict mandate not to grow during that time. Today, he believes that Myanmar’s natural resources are playing a dual role: they are themselves attracting foreign investors, to assist in their exploitation; and they provide a hedge to other sectors, seeking forward-looking economic stability in a country emerging from years of isolation. “Much ink has been spilt, for example, on the close connection natural resources have with the country’s burgeoning finance sector,” he elaborated. “If wellmanaged, the natural resources dividend that Myanmar should enjoy can help bring about some degree of financial stability, for the medium term. “When you talk of natural resources, it is also worth considering the wider commodities sector. In particular, a sector that, for many years, was one of Myanmar’s most successful industries: agriculture. We see huge opportunity there for foreign investors, particularly since the traditional dominance of Thai exports in this sector have somewhat waned in recent years, but the challenges remain similar to those faced in natural resources: highly politicised sectors with major legal and infrastructural challenges, often with localised risks attached which can fall by the wayside during a foreign investor’s considerations.” For example, Mr Fox noted that the risks inherent in tendering for the offshore oil and gas block awards are very different to considering investing in an existing onshore block, or mine, in a region prone to ethnic and/or communal violence, and the itinerant and

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often heavy-handed military response that follows. He advised that considering the project-level risks in any investment, but particularly in the natural resources sector, is fundamental to success.

Control Risks anticipates continued growth for Myanmar is 2013; in Mr Fox’s view the most likely scenario over the next five years will see accelerating FDI and annual GDP growth hovering around 5 – 7 %.

Typical considerations would include: local political dynamics and interference (as power decentralises); local military commands and the extent of their commercial and operational influence; ethnic and/or communal unrest; logistical, security and operational challenges ; the availability of labour and challenges managing that labour ethically; the available business partners and their probity and track record; and the extent to which others operating in the area and their stakeholder engagements aids, or pollutes by association, other foreign investment.

However, he noted that this timeframe will most likely see a raft of changes to the operating environment in Myanmar: constitutional reform; political energy shifting to focus on hard-fought elections; splintered political parties and the balancing act of coalition government; key institutions re-imagining themselves – restructured, enlarged, upskilled or even privatised; local business groups looking to reassert themselves; and the first wave of projects brought about by economic reform will have been weighed and measured.

Discussing the labour force in Myanmar, Mr Fox stated that there is a significant shortage of skilled labour in parts of the Mekong region. He believes that in Myanmar – a country which previously enjoyed some of the highest standards of education in the region – that shortage is particularly acute. “So it’s fair to say that the skills shortage is an impediment to the growth of knowledge-intensive sectors of the economy,” he continued. “The other side of the equation, however, is the opportunity this presents to investors, in bringing “technical expertise” that is so often requested by governments in developing economies (Myanmar is no exception). “What will be interesting to watch in Myanmar is when the two come together. Even in sectors which don’t require a high proportion of highly-skilled workers – such as the manufacturing of garments – the requisite numbers of qualified employees are still likely to be found wanting. The government, through the Foreign Investment Law, has slated percentage local content requirements on a sliding scale (25% in first two years, rising to 75% in years five and six of an investment), but that may prove a medium-term drag on growth, and a potential operational risk for the foreign investor. “But the “limited labour force” argument applies beyond the bottom or middle of the pyramid. At the highest level, we are yet to see if the major political parties and institutions possess enough executive decision-making capacity and cohesion to drive meaningful reforms in areas in need of overhaul such as education, the civil service, judiciary and social services.”

“The risks present during this period will be many: regulatory change and shifting winds of public opinion frustrating existing projects; on-going ethnic tensions inflamed by perceptions of unfair distribution of economic benefits; geopolitical tensions, even the health and wellbeing of a small cadre of key protagonists will need to be monitored as a potential trigger to increased business risks” he predicted. “In sum, we remain cautiously optimistic about the continued trajectory of reform and economic development in Myanmar. But for anyone doing business in the country, the relatively benign economic outlook belies the amount of effort that will need to be expended to succeed in a fluid and evolving environment. This may well be a ‘once in a lifetime’ opportunity, but with that opportunity come a multitude of challenges and risks which need to be monitored and understood, on an almost daily basis,” he concluded.

Company: Control Risks Name: Sam Fox Email: sam.fox@controlrisks.com Web: www.controlrisks.com Address: 331 North Bridge Road, #04-01/04 Odeon Towers, Singapore 188720 Telephone: +65 9833 4834

September 2013 /

SECTOR SPOTLIGHT:

Myanmar: An Attractive Location for Foreign Investment

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Edwin Vanderbruggen, Partner, leads the team of lawyers and tax advisers of VDB Loi, one of Myanmar’s leading law firms. ------------------------------------------------------------------------

Although some argue it is actually still a bit early for private equity investments, Yangon is these days awash with fund managers looking to build a pipeline. Or, in rare occasions, to make actual investments. Reason enough to discuss one of the key legal issues every fund manager or private equity investor should know: you can’t buy shares in a wholly Myanmar-owned company It’s by now a fairly well-known fact, we thought. Nevertheless, we continue to be amazed by the number of deals that are conceived on the faulty premise that the foreign investor will at some stage buy shares in a wholly Myanmar-owned company. Such transfers are, practically speaking, not implementable. Myanmar has different licensing systems for wholly-Myanmar owned companies and all others. As a result, when a Myanmar company is and has always been owned by Myanmar nationals, a foreigner cannot simply purchase those shares.

/ September 2013

Although the Myanmar Companies Act allows such transfers, a combined and strict reading of the Foreign Investment Law (FIL) and the Myanmar Citizens Investment Law (MCIL), plus the prevailing practice of the authorities basically make this unfeasible. Foreigners that wish to acquire a shareholding of less than 100% in an existing Myanmar business need to establish a joint venture company (JV Co) under the FIL. The local partner will in the process of setting up that JV Co transfer the business to it, with approval of the investment regulator (Myanmar Investment Commission, or MIC). The end result is the same, of course. The foreign investor owns shares in a Myanmarregistered company (the JV Co) which also has Myanmar shareholders. Investors interested in taking shortcuts by using a Myanmar citizen to acquire the shares “on their behalf” end up on a slippery slope. Money flows in and out are in such a scenario unsupported by a clear regulatory framework. You might not have a right to repatriate funds or profit. The structure cannot or hardly be secured. To say nothing of the fact that, depending on how the

structure is implemented, the whole arrangement might not be in accordance with Myanmar law and thus unenforceable in case of trouble.

Company: VDB Loi Name: Edwin Vanderbruggen Email: edwin@vdb-loi.com Web: www.vdb-loi.com Address: Level 8, Centrepoint Towers, No. 65 Sule Pagoda Road & Merchant Street, Kyauktada Township, Yangon Telephone: +95 (0) 94 2031 8709

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SECTOR SPOTLIGHT:

Russia: Paving the Way for Economic Success

Russia: Paving the Way for Economic Success Russia has seen a huge turn in economic growth, so much in fact the country has now overtaken Germany in becoming the fifth largest economy. This growth has spurred from the country’s abundance of fossil fuels and minerals which have played a crucial role in the global energy market, making it become the world’s largest exporters of natural gas. Russia is also the largest oil producer among non-OPEC countries, and is globally second after Saudi Arabia. Acquisition International speaks to some of Russia’s leading professionals to discuss Russia’s business environment, the key pull factors for foreign investors, and how the country is responding to the European crisis. Stunning view of Moscow Kremlin before sunset, Russia

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Alexander Podolsky is the Managing Partner of Alexander Podolsky Law Offices.

complex tax regulations, corporate governance, financial information, employment relations.

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Russia is the largest country in the world with the population of approximately 142 million. Legal system of the Russian Federation is a civil law system based on statutory law rather than case law.

As anywhere in the world success of the investment in Russia depends on the right choice of market entry strategy, strong support of on-going operations and thoroughly designed exit plan.

Russia is increasingly becoming considered a country with a stable investment climate. Constraints on foreign business are being abolished and the regulatory environment has improved. Russia now has the lowest corporate and personal income tax rates of any G8 or BRIC country. Russian law upholds and protects the right to own private property, including land, buildings, premises (i.e., parts of buildings) and other types of real estate.

Choosing which type of business entity to use is one of the most important stages before undertaking business activity in Russia. This choice will influence all activity, including financial and tax reporting, customs and currency control. A foreign investor may act through one or several legal forms: representative or branch office of foreign legal entity, a Russian legal entity or directly as a foreign investor. Among various types of legal entities the most frequently used are joint stock companies and limited liability companies

While the business environment in Russia has been steadily improving, the operating environment remains complicated in a number of areas. Some of the major issues a foreign investor needs to consider in Russia are:

Alexander Podolsky Law Offices is a Moscow general practice law firm established in 2003 and providing international and Russian–compliant legal services to businesses, entrepreneurs and individuals. The

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firm focuses on various business and private matters, including commercial, contract and corporate law, employment relations and disputes, litigation.

Company: Alexander Podolsky Law Offices Name: Alexander Podolsky Email: law@alexpodolsky.com Web: www.alexpodolsky.com Address: Regus Embankment Tower, Presnenskaya nab., 10, Block C, Moscow, 123317, Russia Telephone: +7 (495) 775 69 94

September 2013 /

SECTOR SPOTLIGHT:

Russia: Paving the Way for Economic Success ------------------------------------------------------------------------

Mikhail Aleksandrov is a Partner and co-founder at DS Law, a medium-sized Russian law firm.

Blagoveshchensky bridge and St. Isaac’s Cathedral - St. Petersburg, Russia

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According to Mr Aleksandrov, the current business environment in Russia could be much, much better. He believes that there is too much bureaucracy and too much control over business, noting that there are many forms to be filed and even a small company will need a separate bookkeeper as it’s necessary to file something at least quarterly.

“The other general macroeconomic issues are the high role of the state in the economy and lack of protection of private property rights (though I would say that the rights of the foreign investors are protected better than the Russian ones),” he commented. “However several important improvements through the last decade should be noted. Among such I would name a much clearer rules of taxation in place now and a better overall work of the Tax Inspection and great improvement in the system of state commercial courts which are called ‘Arbitrage courts’ in Russia and which deal with all commercial and shareholder cases as well as other issues of business nature.” Discussing opportunities for investors, Mr Aleksandrov highlighted a number of sectors. He stated that there is a huge demand for medical services and the government is experimenting with concession programmes to hand over public facilities to private operators. “Another huge demand is in the field of public utilities but this requires significant investments and the field is highly regulated,” he continued. “Also I would look at the banking sector. There are about 1000 banks in Russia with some 100 among them which are really active and have a presence in several regions. Due to the bad situation in whole world economy the price tag to acquire a bank is quite low and this is the easiest way to get the banking licence and access to the market. The huge difference between interest rates in the EU and Russia gives lots of ways to get nice returns.” Mr Aleksandrov concluded with a prediction for the next 12 months: “My personal feeling is that we expect a long and sloping fall of the economy and that we will see a slight recession which the government attempts to fight back with cash spent to support the biggest banks and production plants.”

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Andrei Gusev is the Managing Partner - Russia, at Attorneys at law Borenius Russia. ------------------------------------------------------------------------

Attorneys at law Borenius Russia is one of the largest law firms in Northwest Russia. The firm provides legal services to local and foreign clients throughout Russia. Mr Gusev stated that the Russian market is more mature and stable than in the past, however he noted that there are still a lot of undeveloped sectors compared to many western countries. He believes that these sectors offer great investment opportunities, especially as the political situation is relatively stable. “The main challenges in the business environment are the heavy regulations applicable on certain sectors as well as corruption,” he observed. “There is fortunately, however, an increasing number of companies and sectors clearly wanting to operate according to the rules and regulations and wanting to take distance from corrupt practices.” According to Mr Gusev, Russia’s key pull factors for foreign investors are mainly risk and reward. He noted that, due to many undeveloped sectors, Russia still offers many attractive investment opportunities compared to more mature markets.

Company: DS Law Name: Mikhail Aleksandrov Email: aleksandrov@ds-law.ru Web: www.ds-law.ru Telephone: +7-495-6498474

/ September 2013

“The risk of course is higher but the reward is higher as well,” he added. “The biggest investments are still made in natural resources, but the great opportunity lies in the growth of the Russian middle-class, and we see a lot of investments into consumer business, e.g. food products and clothing. In our view, information technology will strengthen its position in Russia

during the next years and offer great potential for investment. In general, all hi-tech areas are very promising.” In order to attract more sustainable foreign investment, Russia is trying to improve its international image. Mr Gusev highlighted WTO membership as a big step in this regard. He noted that the WTO triggers many responsibilities for Russia, including transparency and protection of intellectual property. “For Russia it is important to be better branded outside. A part of the criticism of Western countries relates to the fact that there are many prejudices, misperceptions in respect of Russia and lack of knowledge of what is really going on in Russia,” he concluded.

Company: Attorneys at law Borenius Russia Name: Andrei Gusev Email: inforussia@borenius.com Web Address: www.borenius.com Address: Malaya Konyushennaya Str., 1/3 A, B33, St. Petersburg, 191186, Russia Telephone: +7 812 3352220

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SECTOR SPOTLIGHT:

Spain: Uplifting the Economy

Spain: Uplifting the Economy Despite Europe’s slowdown on economic growth, Spain’s economy seems to be on the road to recovery as both recently released figures and future predictions look positive. Spain’s trade deficit narrowed sharply largely due to booming exports. In May exports rose 7.3% from the previous year with the biggest contributors being the energy and textiles sectors according to the finance ministry data. Entwined in this very global economy, the success of Spain cannot be determined purely by its own performance and the on-going European crisis demonstrates the wider challenges that the country faces. Acquisition International speaks to Alberto Pérez-Solano, the Managing Partner of ALTIUS MA ABOGADOS, to examine how the country is responding to these challenges. Metropol Parasol in Plaza de la Encarnacion - Sevilla, Spain Steven Bostock / Shutterstock.com

ALTIUS MA ABOGADOS is a Spanish legal firm specialised in integral legal and tax advice for corporations, both national and international. Commenting on the current business environment in Spain, Mr Pérez-Solano stated that the past two years of shock measure from the Government have brought Spain back to reality. “In this moment I feel that the self-confidence of Spanish entrepreneurs and companies is increasing day by day, as well as such of the foreign investors which is recovering again, more slowly. However, there will still be profitable investment opportunities in Spain for a long period.” A consequence of the crisis in the Spanish economy noted by Mr Pérez-Solano is the “new order” that many sectors are involved in. He stated that a number of sectors are losing and are close to disappearing, although there are other areas that are overcoming the difficulties.

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“A part of the industry has problems that are not at all consequence of the Spanish crisis: the new order in the world economy is changing its role and maybe things will not be the same,” he elaborated. “In this area I can think in a part of the heavy industry that is losing its position.”

“In relationship with the heavy industry the European government must redesign some aspects of Spain, i.e. steelers and mines,” he concluded.

From Mr Pérez-Solano’s point of view, there are a number of sectors in a good position to help to the growth of the Spanish economy. One such sector is agriculture, where Spanish technology allows the products to travel further and reach new countries with a great number of clients. “The situation in North America and the Middle East is helping to launch the figures regarding tourism,” he continued. “The Spanish and the European government must clarify the role of Spain regarding the renewable energies, an area where Spanish companies got the top. The chemical industry located in Tarragona and Andalucía increases the value of the products made, so they will be able to continue in the right way.

Company: ALTIUS MA ABOGADOS, S.L.P. Name: Alberto Perez-Solano Arques Email: albertoperez-solano@altiusabogados.es Web Address: www.maabogados.es Address: Avenida de la Palmera, número 19-D, CP 41013, Sevilla, España. Telephone: +34 955 113 614

September 2013 /

SECTOR SPOTLIGHT:

From Local Counsel to Lead – Boutique & Independent Law Firms

From Local Counsel to Lead – Boutique & Independent Law Firms Acquisition International speaks to Femi Adekeye, Partner at Hughes Partners (Barristers and Solicitors),to discuss why boutique/ independent law firms are becoming increasingly popular and have the potential to compete not just as local counsel but lead counsel. Femi Adekeye holds an LLB and LLM degree from University of Buckingham, and University of Kent, (UK) respectively. He previously worked with a Commercial law firm, a Merchant Bank, a Commercial Bank, and an Insurance company all in Lagos. Femi co-founded a commercial law practice before establishing Hughes Partners. The practice is based in Lagos with specialisation in Corporate and Commercial Law, Litigation & ADR, Immigration, IT and Technology law. The firm’s clients are principally financial institutions, manufacturing companies, technology companies, service providers, NGO’s and high net worth individuals. “What we traditionally offer is the specialised local knowledge of the laws that regulates business in Nigeria, speed in reacting to our clients need is an advantage and our ability to offer personalised services tailored to our clients need put us in good position over global and local competition,” said Mr Adekeye. Discussing the shift in focus away from historical business

/ September 2013

hubs and traditional investment opportunities, Mr Adekeye noted that the needs of every business vary, as do the methods of achieving these needs. “Where traditional markets look saturated, new and emerging markets in Africa provide new opportunities, greater returns, new alliances and different challenges,” he observed. “Law firms in these emerging markets in responding to these changes in global economic conditions will best serve the needs of its clients by proactively offering and embracing global standard in law practice.” According to Mr Adekeye, boutique law firms in Nigeria are shifting from the conventional practice areas like oil and gas, Banking and Real Estate to Internet and e-commerce Law, Technology, Product liability, Entertainment and media law. He believes that boutique law firms, facing the challenges of competing with larger firms, will have to invest in technology to drive their practice and at the same time ensure the reduction in unnecessary cost associated with larger firms whilst reinvesting in its human capital.

“We foresee increased interest and demand for the services of specialised practices such as ours in the H2 of 2013 and in the nearest future and also as big businesses continue to look for value and cost efficient solutions for their businesses in the face of competitions, and tightened legal budgets, boutique law firms will continue to attract patronage for their outsourced legal services,” he concluded.

Company: Hughes Partners (Barristers & Solicitors) Name: Femi Adekeye Email: femi@hughespartnersng.com Web: www.hughespartnersng.com Address: 55 Akinwunmi St. off Hughes Avenue, Alagomeji, Yaba Lagos Tel: +234-1-7390935, +234-0709-8113965

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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, Baker & McKenzie, De Camps Vásquez & Valera and Gibson, Dunn & Crutcher. This month, we discuss the insurance linked securities market in Bermuda, copyright infringement and protection in the Dominican Republic and the importance of regulatory compliance in the UK, amongst others.

Bermuda “What we have seen in the last year or so is Bermuda becoming the preferred jurisdiction for the CAT Bond market and indeed a number of CAT Bonds previously domiciled in other jurisdictions have moved to Bermuda”

Company: KPMG Audit Limited, Bermuda Name: Jason Carne Email: jasoncarne@kpmg.bm Name: Sioned Evans Email: sionedevans@kpmg.bm Web: www.kpmg.bm Address: Crown House 4 Par la Ville, Hamilton, Bermuda HM11 Telephone: +1 441 295 5063

/ September 2013

The Rise of the Insurance Linked Securities Market Insurance Linked Securities (ILS) provide a range of attractive opportunities for investors largely because they represent a unique asset class, which is uncorrelated to financial markets and general economic conditions. With the combination of tepid global growth, volatile markets and historically low interest rates investors are desperately searching for a way to generate meaningful returns and more and more are turning to insurance and reinsurance linked investments as a potential solution. However, it is of the upmost importance that market participants understand the benefits and the drawbacks of insurance-linked securities. Despite its attractiveness, this asset class comes with its own challenges. Acquisition International speaks to Jason Carne, Managing Director of KPMG Audit Limited, Bermuda and Sioned Evans, an Audit Manager at the firm, to learn more. Mr Carne explained that insurance linked securities (ILS) offer investors diversification for their portfolios as they are non-correlated to traditional markets. In addition to achieving this fundamental objective for investors, he noted that ILS investments can provide high risk adjusted returns compared to traditional markets, particularly in the present low interest environment. An increasing number of investors are being attracted to these benefits and there have been significant capital inflows into the market in recent years. According to Ms Evans, Bermuda was already firmly established as the domicile of choice for ILS funds and the collateralised reinsurance market prior to 2013. “What we have seen in the last year or so is Bermuda becoming the preferred jurisdiction for the CAT Bond market and indeed a number of CAT Bonds previously domiciled in other jurisdictions have moved to Bermuda,”

she observed. “Whilst there has been growth in the supply and diversity of insurance risk marketed to investors I would say that demand currently exceeds supply. This has driven down rates in the traditional markets and yields in the CAT Bond markets and certain ILS funds have also closed their doors to new capital.” Absent a substantial loss event, Mr Carne expects continued growth of the ILS market. The firm believes that the current levels of capital committed to ILS are split between those investors who are in it for the long term and those who are opportunistic investors. “Those opportunistic investors may pull back capital when interest rates increased in the future. It is harder to predict how this opportunistic money will react to a substantial loss event but capital flows will likely be driven by the risk reward profile of the market at the time,” he concluded.

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SECTOR SPOTLIGHT: Global Experts Panel

República Dominicana “Our law on author’s rights is influenced by the continental droit d’auteur concept and recognized by the Constitution of the Dominican Republic”

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

Copyright Infringement and Protection Luis Miguel De Camps García is a Partner at De Camps Vásquez & Valera. Copyright in the Dominican Republic is based on the concept of “right of the author”, not only on the “copyright” concept. This differs from concepts used in copyright law in common law jurisdictions, where its primary difference lays in the protection of moral rights and personality, in civil law systems a less restricted definition of ownership of copyright is used, creating a separation between the legal person and the work of the author; in common law jurisdictions these are embodied in other regulations. Our law on author’s rights is influenced by the continental droit d’auteur concept and recognized by the Constitution of the Dominican Republic, therein established as a basic human right recognizing the protection of ownership rights over scientific, artistic, and literary works. After the Dominican Republic signed the Berne Convention for the Protection of Literary and Artistic Works in September 1997, and in an effort to adopt the appropriate tools required to fight piracy, in August 21st 2000, the Dominican Republic enacted Law 65-00 and its Rules of Application No. 362-01, dated March 14th 2001, which regulate copyrights and other related rights in Dominican Republic. Consequently, copyrights in our country are composed of the authors and holders of rights in literary and artistic works and the literary or artistic form of scientific works as well as the neighboring rights of performers, producers of phonograms and broadcasting organizations. The agency responsible for ensuring the protection of copyrights in the Dominican Republic is the National

Copyright Office (“ONDA” for its name in Spanish). Under the terms of international treaties ratified by the country, this entity has actively assumed its supervisory role of copyright protection and of intervening and solving conflicts that arise between authors. Furthermore, the government created the National Commission for Protection of Intellectual Property Rights, a commission that holds the task of defining and implementing the national policy to fight against the violation of intellectual property rights and of coordinating the activities of the different public bodies that participate in the field. De Camps, Vásquez & Valera is a full service law firm that provides a range of intellectual property law services specializing in international patent, trademark, copyright, unfair competition, sale or licensing of IP rights and entertainment law to both domestic and international clients, including counseling, prosecution, enforcement, domain name dispute proceedings, litigation and advocacy in copyright and trademark disputes. The Firm also acts as local counsel to overseas law firms and their clients in intellectual property disputes. We represent clients in transactional matters and, should the need ever arise, our Firm litigates and mediates intellectual property disputes in both judicial and administrative jurisdictions. As a result of the development of the industry, intellectual property law has acquired a mayor level of importance. Aware of this situation, De Camps, Vásquez & Valera is prepared to offer its clients legal advice of the highest level on all the issues of this area of the law.

Investing in Real Estate in Malta In 2012 Malta had the second best performing economy out of the 17 Eurozone member states (surpassed only by Estonia). All of the country’s major economic sectors registered growth, including retail and wholesale, financial services, manufacturing, tourism and real estate; The Finance Minister in 2012, Tonio Fenech said this performance proved that the country was on the right track and praised the nation for its ability to “sail through the rough international economic climate relatively well”. Acquisition International speaks to Notary Dr Maria Bonavia B.A., N.P., LL.D, the Founder of NUTAR BONAVIA, to discuss the property market in Malta and the firm’s expertise. MALTA, becoming a popular location for the purchase of a second home, is situated at the heart of the Mediterranean Sea, with a pleasantly sunny climate, a long and colourful history, hospitable people who make it easy to integrate within the local community, English speaking, its very low levels of crime which makes Malta one of the safest places to live in, its relatively low cost of living and most importantly, its stable economy, is what attracts foreigners to invest in Maltese real estate. It is quite easy for a non-Maltese to purchase property in Malta. One is to engage a Notary Public in Malta to take care of all the necessary paperwork.

Company: Nutar Bonavia Name: Notary Dr Maria Bonavia B.A., N.P., LL.D. Email: nutarbonavia@gmail.com Address: 12, ‘Dar il-Poeta’, Triq Hal Xluq, Siggiewi SGW1440, Malta. Telephone: (+356) 21462541 Mobile: (+356) 79057728

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Knowing the complexity of notarial and civil law, NUTAR BONAVIA identifies the clients’ needs and provides the relative service in a timely and effective manner. NUTAR BONAVIA understands that both the person buying property and the person selling his property want to be adequately protected by law. Being an impartial professional, NUTAR BONAVIA guarantees that both parties’ interests are safeguarded. NUTAR BONAVIA also gives clear explanations of what the procedure of acquisition of property involves whilst handling all relative paperwork in an efficient manner leading to the publication of the final deed of purchase/sale. If one needs financial assistance, NUTAR BONAVIA can also help you together with a commercial bank of your choice in taking a financial loan for purchasing property in Malta and

making this in timely manner by handling documentation and carrying out the searches in an efficient way. NUTAR BONAVIA’s notarial practice set up in 2009 has today flourished into a practice of having several satisfied clients. Notary Dr Maria Bonavia B.A., N.P., LL.D. graduated from the University of Malta with a Bachelor of Laws (2004), Diploma of Notary Public (2005) and Doctor of Laws (2007) after submitting a thesis on “Duties and Responsibilities of Company Directors: Considerations in the Light of S.136A of The Companies Act of 1995”. In 2007 she was conferred with the warrant to practice as a Notary Public in Malta, and another warrant to practice as Commissioner for Oaths, whereby she practiced her profession as Notary Public with a notarial firm in Malta. In 2009 she eventually set up her own notarial practice. She is a member of the College of Notaries. NUTAR BONAVIA is committed to helping clients achieve their goals by providing notarial services of the highest quality that will consistently exceed their expectation. We ensure we can benefit our clients by combining the highest standards of business and law with local excellence of service and by maintaining the quality and scale of resources necessary to meet our clients’ needs whenever and wherever they arise.

September 2013 /

SECTOR SPOTLIGHT: Global Experts Panel

Managing Shareholder Disputes - Buckle Up: The Rise of Shareholder Activism in Canada

Canada

“International and other investors are increasingly seeing Canada as a shareholder activist friendly jurisdiction”

Howard Burshtein and Frank Spizzirri are Partners at Baker & McKenzie LLP. Shareholder activism is on the rise in Canada. Companies across all industries perceived to be under-performing are increasingly vulnerable to shareholder activism, whether it be long-standing shareholders disappointed with share value or activists seeking to unlock hidden value. In today’s challenging economic times, international and other investors are increasingly seeing Canada as a shareholder activist friendly jurisdiction.

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numbers of proposals for consideration at annual meetings. We can assist in the analysis and disposition of these proposals in compliance with applicable rules and regulations. Shareholder litigation. We advise on dispute resolution options for resolving shareholder complaints.

We encourage our clients to consult with us on these matters as early as possible, so that we can assist in avoiding business and legal complications.

These investors may seek increased performance either from their existing portfolio companies or from new investments that they believe could yield returns in the short to medium term. In situations involving struggles over control and the governance of public companies, Baker & McKenzie LLP is well positioned to help you to navigate the Canadian waters. We can assist with: •

Company: Baker & McKenzie LLP Web: www.bakermckenzie.com Name: Howard Burshtein Email: howard.burshtein@bakermckenzie.com Telephone: +1 416 865 6956 Name: Frank Spizzirri Email: frank.spizzirri@bakermckenzie.com Telephone: +1 416 865 6940

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Shareholders’ strategic discussions with management. The initial engagement between shareholders and corporate management often takes the form of a discussion over strategic matters. We can help facilitate these types of negotiations, with the goal of avoiding an unnecessary and expensive escalation of any differences of opinion. Proxy contests. Whether in the context of shareholder activism, acquisitions or management disagreements, we can assist in contested corporate board elections. Shareholder proxy proposals. In recent years, shareholders have been presenting increasing

Partnering in Panama: Local Counsel with International Know-How

Panama “The increasing demand for local counsel in Panama stems from increasing foreign investment, which requires local counsel with a solid background and problem solving talent”

Company: Pardini & Asociados Name: Juan F. Pardini Email: pardini@padela.com Web: www.pardinilaw.com Address: Plaza 2000 Tower, 10th floor, Panama City Telephone: +507 223-7222

/ September 2013

Juan Francisco Pardini is Managing Partner at Pardini & Associates. Pardini & Associates is an international law firm with headquarters in Panama with 31 years of tradition and experience advising foreign clients and corporations of all sizes. The firm has offices in Panama, Cyprus, Ukraine, Switzerland, Belize, BVI and Seychelles.

“Since 1982, Pardini & Associates has been at the forefront of many innovative legal developments and during the past ten years, the law firm has developed a highly specialized practice in Foreign Investments in Panama mainly in areas such as: Tourism, Real Estate, Energy, Telecommunications, Insurance and Reinsurance, Mining, Petroleum, Antitrust, Competition, Intellectual Property, Banking, Securities, Manufacturing, Aviation, Construction, Government Contracts, Litigation in Panama and abroad,” said Mr Pardini. “Our firm has a strong expertise in: Labour, Immigration, Corporate, Commercial, Trusts, Admiralty, and Maritime law.”

Mr Pardini believes that the firm distinguishes itself from its competition through its 31 years of tradition, experience, and the quality of its services.

“We count with a specialised legal team offering our clients the best legal counsel plus we have direct offices in several jurisdictions and we are members of the International Business Law Consortium with offices in 100 countries,” he added. “We reach our clients where they are.” Discussing the current business environment in Panama, Mr Pardini noted that the country has a rating of “investment grade” by Moody’s and S&P only achieved by three countries in Latin America. He highlighted Panama’s political stability, outstanding economic growth, solid legal framework, and excellent tax incentives. He believes that the greatest opportunities for investors lie in: mining; petroleum; energy; ports & maritime industries; banking; asset management; and international services. According to Mr Pardini, the increasing demand for local counsel in Panama stems from increasing foreign investment, which requires local counsel with a solid background and problem solving talent. International firms are not permitted in Panama, which gives local firms a distinct advantage.

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Global Experts Panel

Romania: On the Rise to Economic Recovery

Romania “Romania is a viable field for serious investments, especially for foreign investors. International Laws for of foreign investments has rapidly developed in Romania in the last years”

Company: LEGAL RECOVERY IPURL Name: Cristina Elena Candea Email: cristina@legalrecovery.ro Web: www.legalrecovery.ro Address: Bucureşti, Str. ION PILLAT, nr. 4, bl. G1A, scara TRONSON 2, sector 3 Telephone: +40 021 319 83 67

LEGAL RECOVERY IPURL, headed by Attorney at Law Cristina Elena Candea, is one of the leading companies in this domain in Romania. You can find out more about us by visiting our official website www.legalrecovery.ro. The role of the insolvency practitioner is fundamental in this process, that is why we believe that our cumulative experience as company insolvency lawyer as well as individual experience of each member working within the company, recommends us to be able to manage the procedure of cases. Since its registration, LEGAL RECOVERY IPURL was nominated in a total of over 1,300 cases in Romania. Having international expertise, our company has the qualifications and capability to resolve insolvency proceedings throughout the country. We are able to provide expert advice in the field of international law of insolvency as comparative law. LEGAL RECOVERY IPURL’s activity has grown considerably, with the increasing number of cases of insolvency. In the open procedures management, performance of the following operations was required: • The reorganization of debtors in insolvency, capitalization of the time remaining to cover company liabilities, identification and recovery of goods, evaluating and capitalizing them via public tender or direct negotiation; • formulating actions for annulment of fraudulent documents concluded by the debtor to the detriment of creditors; • recovery of debtor’s claims from some companies by taking specific actions; • drafting the reorganization plans as well as reports and regulations for the sale of fixed and floating assets; • supervising the implementation of the reorganization measures and monitoring payment and repayment schedules of debts to creditors etc.

The large number of insolvency cases in recent years has forced the formation of a professional team of legal, economic and technical experience in the field of insolvency that can cover the entire range of tasks in the procedure - sending notices for publication in the Insolvency Bulletin, convening creditors’ meetings, ensuring secretarial functions for the meetings, introducing actions in order to cancel fraudulent documents. Romania is a viable field for serious investments, especially for foreign investors. International Laws for of foreign investments has rapidly developed in Romania in the last years. Insosolvencies have afected only those companies that lacked good management. The Administrator of Legal Recovery IPURL is Mrs. Cristina Elena Candea, an insolvency practitioner with over 15 years experience in the legal field. Mrs. Cristina Elena Candea is a Lawyer, has a PhD in international law of foreign investment within the Legal Research Institute of the Romanian Academy, Judge at the Court of International Commercial Arbitration attached to the CCIR and Commercial and Maritime Arbitration Court besides CCINA, Constanta , associate Researcher of the Romanian Academy, mediator, Vice President of the Consumer Protection Association Professionals and author of several national and international professional publications.Given that, under the new insolvency law, decisions on policy steps in the procedure belong to the insolvency practitioners, be it administrator or liquidator, it is important that decision makers have demonstrated good manager qualities. And we have proven all this and are ready to resolve any commercial issue.

The Importance of Regulatory Compliance

United Kingdom “Over a third of all recent US enforcement action against international corruption has involved financial liability borne by purchasers following acquisitions”

Company: Gibson, Dunn & Crutcher LLP Name: Patrick Doris Email: pdoris@gibsondunn.com Web: www.gibsondunn.com Address: Telephone House 2-4 Temple Avenue, London, EC4Y 0HB, UK Telephone: +44 (0)20 7071 4276

ACQUISITION INTERNATIONAL

Patrick Doris is a Partner at Gibson, Dunn & Crutcher. In today’s enforcement environment, institutional failure to establish an effective compliance architecture can render acquisition-toxic an otherwise attractive potential target. Liability risks for companies contemplating acquisitions have never been more acute or more globalised. Enforcement of anticorruption, antitrust and AML laws, international sanctions and regulatory standards generally has reached unprecedented levels in recent years. Companies with global operations may face liability not only where offences have been committed, but also in home jurisdictions, in countries where they do business, where they have listed securities, where relevant decisions were taken, and even in countries in whose currencies related payments were made. Acquiring companies are not safe from enforcement, or its consequences; ignorance of pre-acquisition transgressions will offer no defence. Over a third of all recent US enforcement action against international corruption has involved financial liability borne by purchasers following acquisitions. Enforcers are increasingly unwilling to overlook historic wrongdoing just because a miscreant business has changed hands.

To avoid such acquisition-toxicity, targets should: 1. Conduct on-going assessments of sector, country and counterparty risk; 2. Institute robust compliance programmes to avoid problematic behaviour, train staff, identify concerns early and secure effective internal reporting; and 3. Consider the scope for addressing historic offending so as to offer acquirers greater certainty regarding potential future exposures. Targets tempted to make light of minor infringements should tread carefully. However low the perceived risk of detection, any historic offending, even minor, may in practice end up being reported by acquirers or their advisers, pre-acquisition, to money-laundering authorities. Past peccadilloes may appear less trifling if they emerge at the worst possible moment, jeopardising any current transaction, and giving other potential suitors cold feet.

Potential acquirers are no longer content with a mere absence of historic or on-going enforcement action; they want an absence of historic offending (discovered or undiscovered) and the presence of a proactive “controls environment”, with regulatory compliance at the forefront of business decision-making and institutional priorities.

September 2013 /

SECTOR SPOTLIGHT: Global Experts Panel

Cameroon: Increasingly Attracting Foreign Investment

Cameroon “Over the last years the trends in FDI are growing and we have witnessed a large diversification of the investors”

Company: GENI & KEBE Name: Mouhamed KEBE Email: mhkebe@gsklaw.sn Web: www.gsklaw.sn Address: 47, BD. République, BP 14392, Dakar, SENEGAL Telephone: +221 33 821 1916 +221 33 842 6275

Mouhamed Kebe is the Managing Partner of Geni & Kebe and practices in the area of corporate and Investment law with a concentration in the Francophone African Region. Over the last ten years, he has advised many transnational corporations on transactions relating to corporate and investment law, particularly in the mining and energy sectors. Mr Kebe is ranked as top-tier in Chambers Global and is closely attuned to foreign investors’ concerns on doing business in Francophone Africa. He also oversees commercial transactions, including joint ventures, banking & finance, corporate reorganisation and restructuring. Mr Kebe graduated from the University of Dakar UCAD (Senegal) and the University of Essex (United Kingdom). He is qualified with the Senegalese Bar Association (1993) and is member of the Law Society of England and Wales (International Division) and the International Bar Association. He has seconded in major law firms based in Paris and London. He is fluent in English, French, Wolof, and Arabic. Geni & Kebe was founded in 1912 in Dakar, Senegal and began acting as a legal adviser firm for foreign embassies and companies. From then until the present, the firm remains the premier destination legal services firm for national and foreign companies, institutions and individuals in Senegal and the Francophone African Region. Through its affiliate offices, Geni & Kebe covers nine African Francophone countries (Benin, Burkina Faso, Cameroon, Cote d’Ivoire, Gabon, Guinea, Mali, Niger and Senegal) and is at the forefront of most of the important transactions in the African Francophone region. Mr Kebe commented: “We are deeply rooted in Africa and our long standing presence in the Francophone African market combined with our expertise confers to our services an unrivalled added value for those who plan to invest in Africa and those who are already established in the continent and are looking to expand their business within Africa.” Mr Kebe explained that the structure of the Cameroonian economy has evolved over the past decade, with a relatively large decline in the contribution of the primary sector to GDP, whilst the services are growing.

/ September 2013

“All sectors have also undergone structural changes: for example, the contribution of agriculture (food and industrial agriculture, livestock, fisheries and forestry) has gradually but drastically decreased from 33 to 17% between 1998/99 and 2012,” he elaborated. “In contrast, the oil sub-sector trended upward, albeit to a lesser extent, with a contribution of 9% of GDP in 2012, against 5% in the late 90s. In the service sector, trade, hotels and restaurants have experienced a major development while at the same time, transport and communications showed a significant decline.” Discussing the key pull factors for foreign investors, Mr Kebe noted that Cameroon is endowed with abundant natural resources such as: oil; timber; coffee; cotton; cocoa; rubber and aluminium supply – all export industries. The country also has an immense untapped potential in natural gas, iron, bauxite and cobalt. One of the key sectors offering opportunities for investors is agro-industry. Cameroon imports high levels of agri-food products, however it has sufficient land resources and a suitable climate for agricultural development, pastoral and fisheries.

A further sector highlighted by Mr Kebe is energy and mines. He stated that the richness of the soil and subsoil promotes mining (oil, iron, bauxite, gold, etc), and that a new, more attractive mining code has been announced. Finally, he added that the water and textiles sectors offer great opportunities for investors. “Over the last years the trends in FDI are growing and we have witnessed a large diversification of the investors,” he observed. “Primarily, they were coming from the EU but there are more and more investors coming from within Africa and from Asia.” Looking ahead, Mr Kebe noted that Cameroon’s economy rebounded in 2012, thanks to the recovery of the oil industry and strong domestic demand, driven by infrastructure projects. He anticipates that this trend will continue in 2013 and into 2014.

“The development of the agricultural and agri-food industries are promising sectors that benefit from promotion by the State,” he added.

“Thus, thanks to these projects and induced effects on domestic demand, the economic recovery that began in 2010 will continue in 2013/14,” he continued. “Extractive industries are expected to grow, with the operation of the new plant at Kribi gas, in the first quarter of 2013 and private investment to exploit the iron deposits and gas field, it is added to the start of production new oil wells, which will increase the volumes extracted.

Another promising area for investment is in buildings and public works – Mr Kebe described infrastructure development as “the first pillar of the growth strategy of the State of Cameroon”.

“Thus, investments should stand at 21.9% of GDP in 2013 and 22.9% in 2014 and these factors combined should enable Cameroon to achieve a growth rate of 5.0% in 2013 and 5.2% in 2014.

Cameroon has significant forest reserves spread over the equatorial region and the state has taken steps to promote the transformation of wood on site and realise this potential, therefore it is an area ripe for investment.

“However, delays in completion times of major works related to the low absorption capacity investments because of administrative inefficiencies are potential risks to the outlook for 2013 and 2014,” concluded Mr Kebe.

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Driving FDI

Driving FDI 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.

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Vera Ayisi and Nana Serwah Godson-Amamoo are Senior Associates (Corporate, Investment & Tax Group, Banking, Finance& Capital Markets) at AB & David. ------------------------------------------------------------------------

AB & David is a multi-specialist business law firm, committed to the provision of client focused and innovative solutions in Africa to its worldwide clients. “We focus on ensuring businesses and projects succeed in Africa by helping them minimize the risks associated with doing business in Africa,” said Ms Ayisi. “Our extensive experience gained from working with several businesses, public sector agencies, financial houses, multinational lenders, international organisations and individuals is an excellent resource for clients seeking to do business in the complex Africa environment.” Mrs. Godson-Amamoo stated that Ghana’s investment laws seek to attract, encourage and promote foreign direct investment in most sectors of the economy. However, she noted that some businesses – such as the operation of beauty salons, petty trading and pool betting – are wholly reserved for Ghanaians. “The major pull factors for FDI’s include a stable political environment, attractive foreign exchange control regime, competitive business environment and huge potential for growth in various sectors of the economy”, she elaborated. “The greatest opportunities lie in the real estate and financing industries as well as emerging oil & gas sector.” The World Bank has ranked Ghana as the 5th largest recipient of inbound FDI in Africa. According to the Ghana Investment Promotion Centre, the statutory authority which regulates FDI’s in Ghana (with the exception of mining and petroleum), inbound FDI for

/ September 2013

Our extensive experience gained from working with several businesses, public sector agencies, financial houses, multinational lenders, international organisations and individuals is an excellent resource for clients seeking to do business in the complex Africa environment. registered projects was around US$ 4.9 billion in 2012; a decrease from US$ 6.82 billion in 2011. 2010 and 2009 recorded approximately US$ 1 billion and US$ 3.5 billion respectively while 2008 being an election year saw low levels of FDI.

stability following the conclusion of the election petition since this would increase investor confidence in the country.”

Ms Ayisi noted that the government has improved the processes for the start-up of businesses as it seeks to undertake e-registration of businesses. Currently, Ghana is preparing a new Public Private Partnership (PPP) law which will promote private sector participation in the provision of public services at the local government level. In order to expand into untapped markets and broaden the range of business activities, Mrs Godson-Amamoo suggested that the government could hold investor forums to showcase the potential of untapped areas of the economy and provide sector specific fiscal incentives to attract investment in these areas. “The likelihood of continued growth in Ghana is very high,” she opined. “The country has seen consistent economic growth over the years. Improvement in the regulatory framework and the opening of economic barriers will ensure growth in FDI’s.” Ms Ayisi concluded: “The next 12 months will see an increase in FDI if Ghana is able to maintain its political

Company: AB & David Name: Vera Ayisi Nana Serwah Godson-Amamoo Email: vera@abdavid.com nanaserwah@abdavid.com Web: www.abdavid.com Address: No. 8 Dr.Isert Road, North Ridge, Accra, Ghana Telephone: +233 0302-253073; +233 0302-253074

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Driving FDI

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“Paraguay bases its economic system in free trade, release of taxes on investments, free movement of capitals and the lowest tax burdens in the Latin American region,” he elaborated. “Also Paraguay’s FDI is the lowest in the region, but on the other hand it generates one of the biggest revenues per dollar invested.”

Antonio Villa Berkemeyer and Magalí Rodriguez – Alcalá are Attorneys in the Corporate and Commercial Department of Berkemeyer Attorneys & Counselors. ------------------------------------------------------------------------

Established in 1951, Berkemeyer Attorneys & Counselors has since provided expert legal services to local and foreign clients, gaining a global reputation for quality, expertise and professionalism. The firm’s teams of experts and reputable professionals have gained expertise in the following areas when it comes to creating a business venture portfolio: 1. Due Diligence Reports – Risk Assessment Reports on prospective business ventures. 2. Drafting of incorporation documents irrespectively of the purpose of the company for foreign parties seeking for a physical presence in Paraguay. 3. Administrative Registrations to fully operate a new venture. 4. Ongoing advice to companies to succeed and thrive in the target market 5. Agenda coordination and networking with private and public entities for all FDI negotiations and strategy advice.

Ms Rodriguez –Alcalá highlighted a number of factors that investors should consider:

According to Mr Villa Berkemeyer, Paraguay’s approach to FDI could be described as welcoming and receptive. He noted that the accessibility to invest and to foster business growth could be considered an asset as Paraguayan rules and regulations treat foreign and national investors equally when engaging in a business venture. Foreign investors may acquire properties in Paraguay, without any limitations other than those established in the Constitution and other Laws.

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Freedom of production and commercialization of goods and services in general, Free system of prices, with the exception of those goods and services whose production and commercialization is regulated by Law; and, Freedom in the importation and exportation of goods and services, with the exception of those prohibited by Law. Liberty to hire national or international investment insurance Liberty to choose governing jurisdiction to settle arising disputes

“Another factor that should be taken into account is Paraguay’s foreign exchange regime,” she added. “It allows the unlimited convertibility of local currency into foreign exchange and, coupled with the liberty of unlimited remittances of capital and dividends, debt services and royalties for the transfer of technology.

Discussing the key pull factors for foreign investors, Mr Hajji highlighted: the highly competitive cost of labour force; tax benefits in favour of new investments; and the regime of transfer of funds outside of Morocco, which is mainly characterised by freedom. “Besides, the privileged relationships between Morocco and the European Union, its geographical proximity and the various free trade agreements concluded by the Kingdom of Morocco are all factors that make it a highly appreciated destination for foreign investors,” he elaborated. “There are several sectors that present great opportunities in Morocco among which there are agriculture, renewable energies, food industries, textile, and services.” ------------------------------------------------------------------------

Amin Hajji is a Partner at Hajji & Associés. ------------------------------------------------------------------------

Mr Hajji stated that Morocco is fully aware of the importance of foreign investments in generating employment and contributing to the Gross Domestic Product (Produit Intérieur Brut) as a whole. Therefore, Moroccan governments have tried, during the last generations, to increase the economical attractiveness of Morocco for foreign investors. “This has been notably done through (i) the upgrading of applicable legislation in the key-sectors of Moroccan economy (agriculture, textile, food industries and more recently renewable energies) on the one side; and by (ii) implementing laws aiming to establish benefits and advantages for investors in order to encourage investments in Morocco such as law n° 18-95 relating to the Investment Charter on the other side,” he commented.

ACQUISITION INTERNATIONAL

Pursuant to the report of the Office des Changes (Moroccan authority for foreign currency control) as at the end of the year 2012; FDIs have recorded an increase of 53% compared to 2010.

“The majority of the Foreign investments tend to be destined towards the Agribusiness, where attracted by the Tax and Trade regimes (like the 60/90 Law of Tax incentives), and Maquila regimes tend to favor both the industrial and the service sectors.”

Mr Villa Berkemeyer concluded: “Since the amount of foreign capital invested in Paraguay has been considerably between the years 2011 and 2012, it is expected that this trend will continue for the year 2013, or at least maintain the actual percentage.”

Company: Berkemeyer Attorneys & Counselors Name: Antonio Villa Berkemeyer Magalí Rodriguez –Alcalá Email: aivillab@berke.com.py Web: www.berke.com.py Address: Benjamin Constant 835, Jacaranda Building. Asuncion – Paraguay Telephone: +595 21 446706

He added: “Indeed, in addition to all economical pull factors offered by Morocco to attract FDIs, it also offers political stability, which is a very important element that allows privileging Morocco when it comes to choosing a destination for foreign investment in the Arab world.” Mr Hajji stated that the downturn of the global economy stemming from the 2007/08 crisis is slowly beginning to disappear, resulting in a more serene environment. He noted that this general trend is also reflected in the Moroccan economy, and believes that things can only get better. “We are of the opinion that the general environment of investments in Morocco is only going to improve and hopefully the increase of FDIs recorded in 2011 is going to continue,” he concluded.

“However, this remarkable increase follows a long series of falls to the extent that FDIs decreased of 15.8% in 2010 compared to 2009; and of 18.4% in 2009 compared to 2008. This is mainly due to the international crisis that had occurred in 2007,” continued Mr Hajji. “We then note that Morocco is slowly but surely recovering from the aftermath of this crisis, especially as the increase recorded in 2011 is very important.” Compared to the instable political environment in foreign countries, especially due to the ‘Arab Spring’, Morocco has been able to maintain a stable political environment, therefore Mr Hajji believes that it is the most interesting country in the region in terms of investments.

Company: Hajji & Associés Name: Amin Hajji Email: a.hajji@ahlo.ma Web: www.ahlo.ma Address: 28 Boulevard Moulay Youssef, Casablanca, Morocco Telephone: +212 5 22 48 74 74

September 2013 /

SECTOR SPOTLIGHT: Driving FDI

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Jiang Jiang is the Managing Partner of Hylands Law Firm’s Shanghai Office. ------------------------------------------------------------------------

Hylands Law Firm (“Hylands”) is a leading full-service law firm in China. With offices in Beijing, Shanghai, Nanjing, Guangzhou and Hong Kong, and as a member of Terralex, and international network of leading independent law firms, Hylands provides comprehensive legal services to clients from both home and abroad. Hylands is particularly strong and reputable in handling international transactions, cross-border investment (FDI and M&A), arbitration and litigation, intellectual property, anti-trust, labour, entertainment and media law matters. The inbound FDI in China in 2012 was about US$111 billion, with outbound FDI at about US$77.2 billion. These levels are similar to those seen in 2011. According to Mr Jiang, China welcomes foreign direct investment and has made a significant effort to attract and facilitate FDI. He stated that China has become one of the most popular destinations for FDI since the reform and opening up of the country in the late 1970s and that, with the exception of a few restricted or forbidden areas, most industries in the country are open for foreign investors. “Low costs of labour and raw materials used to be the biggest pull factors for foreign investors in the past, but nowadays the huge market potential of China and good infrastructure have become new reasons for investment,” he elaborated. “With massive urbanisation and a huge population base, almost all sectors have good growth potentials, particularly consumer goods and household durables.”

Low costs of labour and raw materials used to be the biggest pull factors for foreign investors in the past, but nowadays the huge market potential of China and good infrastructure have become new reasons for investment Mr Jiang explained that, in the past, China’s government tended to attract and maintain foreign investment by providing various kinds of preferential treatment, such as tax holidays and financial incentives. Today, the government pays more attention to improving the transparency and consistency of laws and regulations, and strengthening the protection of intellectual property rights.

in FDI into China, adding that outbound FDI from China may grow more substantially over the next 12 months. “After more than 30 years of reform and opening-up, China has established a stable legal regime for FDI. With its huge market potential, China will present great opportunities for foreign investors,” he concluded.

Mr Jiang suggested M&A or joint ventures as good methods for foreign investors looking to expand into untapped markets and broaden the range of business activities. However, he warns that foreign investors are restricted or forbidden from investing in certain sectors, such as the postal service and social media, etc. “The market in China is affected by the global economy, but the performance of the Chinese economy is still better than most countries,” observed Mr Jiang. “While attracting foreign investment at large, the Chinese government is trying to promote industrial upgrading, technical innovation and growth driven by consumption, so it has enhanced labour protection which has resulted in an increase of labour costs.” As macroeconomic conditions improve, Mr Jiang believes that both the Chinese and the global economy will continue to grow. He also expects continued growth

Company: Hylands Law Firm Name: Jiang Jiang Email: jiangjiang@hylandslaw.com Web: www.hylandslaw.com/chinese/index.asp Address: Shanghai Office: Suite 1805, Xing Ye Tower, No. 1028 West Beijing Road Jing’an District, Shanghai 200041, China BeiJing Office: 5A1 5F, East Wing, Hanwei Plaza, No.7 Guanghua Road, Chaoyang District, Beijing 100004, China Telephone: +86-10 5201 9988; +86-21 5256

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Gregory Hughes is a Director with KPMG UAE. ------------------------------------------------------------------------

other GCC countries have continued to experience a surge in FDI inflows in 2012 and it seems in 2013.

KPMG has been present in the UAE for 40 years, currently with over 600 professionals and more than 25 partners. KPMG UAE is one of the leading professional firms, providing Audit, Tax and Advisory services across various sectors including manufacturing, oil & gas, financial services, consumer markets, tourism, logistics, family groups and TMT.

“However, this increase has been offset by the sharp declining trend recorded in KSA, the GCC’s largest FDI recipient,” he observed. “Turkey is also witnessing a decline in its export led FDI as a result of the continued fiscal tightening in its European export markets.”

According to Mr Hughes, the UAE has been the region’s leader in cultivating an attractive environment for foreign direct investment for the past decade. “Through its state of the art infrastructure and the development of over 50 free zones, the UAE continues to offer a valuable proposition for investors seeking entry into the wider MENASA region,” he enthused. Mr Hughes highlighted a number of factors which attract foreign investors from around the globe to the UAE, including: the country’s strategic geographical location; its political stability; its tax free base; and its high growth potential. “Serving as an access point to reach more than 1.6 billion consumers in the MENA region, the UAE presents investors with the potential to tap into many lucrative opportunities that lie in various sectors such as utilities, communications, oil and gas, financial services, hospitality, logistics, real estate, healthcare and education,” he elaborated. Despite the decline in West Asia’s inbound FDI over the five years, Mr Hughes noted that the UAE and

/ September 2013

In comparison with 2011, the inbound FDI into the UAE in 2012 is estimated to have increased by more than 20%, reaching above USD9.5 billion. On the other hand, UAE’s FDI outflows have also witnessed growth of around 16% reaching USD2.5 billion in 2012. In order to attract and maintain sustainable investment, the Government continues to develop free zones that allow for full foreign ownership as well as offering other incentives, including easy profit repatriation and various other exemptions. “Thorough reviews are also being conducted to further develop the institutional and regulatory framework to boost investor confidence,” continued Mr Hughes. “Such reviews include easing rules and regulations regarding foreign ownership limitations outside free zones.” Mr Hughes stated that investors continue to have confidence in the UAE’s ability to fully recover from the recent economic crisis, which he attributes to the UAE’s strong economic fundamentals (3.4% GDP growth) driven by Abu Dhabi’s high public spending and a strong track record by Dubai’s non-hydrocarbon sectors,

“The Arab spring and political instability in other areas of the Arab world have presented the UAE with on-going opportunities as it continues to be perceived as the region’s top investment destination and safe haven,” he added. Mr Hughes expects the UAE’s strong growth in FDI to continue in the next 12 months. However, he noted certain challenges and barriers to this growth, such as: the 49% limitation for foreign ownership outside free zones; uncertainty arising from sudden changes in regulations; and the availability of research data and statistics. “As with other countries, there is a continual need to challenge the status quo and augment the ease of doing business in order for UAE to unlock the potential for future growth in the longer term,” he concluded.

Company: KPMG UAE Name: Gregory Hughes Email: ghughes2@kpmg.com Web Address: www.ae-kpmg.com Telephone: +971 (0) 4 424 8900

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Driving FDI

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Daniel Robalino-Orellana and Ernesto Velasco-Granda are Associates at The Law Firm of Paz Horowitz Robalino Garcés. -----------------------------------------------------------------------According to Mr Robalino-Orellana, the Ecuadorian market is widely open to foreign investors. To attract foreign investment, the current government is constantly campaigning to develop new projects and to continue with and complete those currently in process. He explained that the government emphasises that every investment made in Ecuador preserves the Republic´s sovereignty and thus leads to a win – win situation. The most desired transactions are those aimed at generating exports and/or replacing imports. “Additionally, the government set up a Foreign Investment Office, part of the Ministry of Production, to provide information and to assist foreign investors in the start-up of investment projects, and also to serve as the counter part in the negotiation of Investment Contracts,” he elaborated. “Ecuadorian legal framework and government guarantees set forth an appropriate scenario for investors to place funds in several markets.” Discussing the major pull factors for foreign investors, Mr Velasco-Granda noted that foreign investors receive equal legal and fiscal treatment under the Ecuadorian Legal Framework, as if they were national individuals or local corporations. Nevertheless, the government provides special incentives to pull FDI into strategic sectors, including corporate tax benefits, protection mechanisms, regulatory benefits, social standards and, in very specials cases, public aid. “Furthermore, Ecuador is a party to regional investment agreements such as the Andean Community,” he continued. “It is also a party to several international Double Taxation Treaties, providing investors planning tools to tailor the structure of the investment.

“In 2013, the government began to provide specific incentives in some strategic sectors, such as incentives for non-conventional energy generation projects. For example, the National Electricity Council (CONELEC) enacted the “004/11 Regulation” that provides a fifteen year premium feed-in-tariff in order to attract FDI in photovoltaic biomass, geothermal and wind generation power plants.” In order to attract and maintain sustainable investment, the government enacted the Organic Code for Production, Trade and Investment (“COPCI”) on 29th December 2010, introducing specific legislation related to investment and international investment protection standards.

The recently suspended eleventh Oil Bidding Round will provoke a reduction of investments from private parties in the Oil and Gas industry. Nevertheless, Ecuador has shown sustained growth in the last years, and foreign investors rely on tax and regulatory incentives provided by the Ecuadorian framework. “Additionally, under a different contractual model, a multinational consortia focusing on oil extraction recently invested approximately US$300 million in its product. To the best of our knowledge, this is and probably will continue to be the largest private investment in the coming years.”

Mr Robalino-Orellana explained that the COPCI provides definitions for “Productive Investment”, “New Investment”, “National Investment” and “Foreign Investment”. According to Article 13(c) of COPCI, foreign investment is “investment belonging to or controlled by individuals or legal entities registered under the laws of a foreign country, involving capital not generated in Ecuador”. Ecuadorian legislation contains two mechanisms to guarantee and protect foreign investments: i) Bilateral Investment Treaties (“BITs”) and ii) Investment Contracts. Currently, Ecuador maintains over eleven BITs in force. “The investment contract is a multi-party contract signed between the foreign investor, the recipient company and the State, which may provide for tax stability,” added Velasco-Granda. “Moreover, the investment contract contains internationally recognized investment protection standards, such as no expropriation, full protection and security, most favoured nation, and fair and equitable treatment. One of the most important advantages of entering into an investment contract is the possibility of including a dispute resolution clause with binding international arbitration.”

Company: The Law Firm of Paz Horowitz Robalino Garcés Names: Daniel Robalino Orellana Ernesto Velasco Granda Email: drobalino@pazhorowitz.com evelasco@pazhorowitz.com Web: www.pazhorowitz.com Address: Site Center, Tower 1, 3rd Floor, Avenida del Establo y Calle E, Cumbayá, Quito, Ecuador Telephone: +593-2 398-2900

In order to attract and maintain sustainable investment, Senegal’s Head of State established the Presidential Investment Council (PICC) in November 2002 with the support of the World Bank. The PICC aims to:

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SCP Mame Adama Gueye & Associes is the first ISO 9001-2008 certified law firm in West Africa, Central Africa and North Africa, and is the only ISO 9001-2008 certified law firm in Senegal.

•

Propose reforms in order to enhance investments;

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Recommend the actions effectiveness of reforms; and

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Monitor the implementation of reforms.

required

for

the

According to Mr Gueye, the Government of Senegal has implemented a voluntarist approach to attract foreign direct investment. Thus, the Government has created APIX, an agency dedicated to the promotion of Senegal as an attractive destination for foreign investors.

The reputed publication “Chambers Global”, which ranks the firm within the top three business law firms in Senegal, recognises that SCP Mame Adama Gueye & Associates has an excellent reputation in Senegal, performs very well and is extremely reliable.

Mr Gueye highlighted Senegal’s political stability, the availability of human resources, the communication technological platform, and its geographical location as the major pull factors for foreign investors. He believes that the greatest opportunities for investors lie in the mining, energy, agriculture, social housing and infrastructures sectors.

SCP Mame Adama Gueye & Associes enjoys the confidence of national and international companies, multinationals and world leading law firms.

The FDI flow in Senegal was below US$0.1 billion in 2012, as noted by the UNCTAD World Investment Report.

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Identify constraints to investment in collaboration with all the stakeholders, in particular the private sector;

Furthermore, the Government has created the Directorate for Support to Private Sector within the Ministry of Finance.

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Mame Adama Gueye is the Managing Partner of SCP Mame Adama Gueye & Associes.

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Company: SCP MAME ADAMA GUEYE & ASSOCIES Name: MAME ADAMA GUEYE Email: magueye@avocats-maga.sn Web: www.avocats-maga.sn Address: 28 Rue Amadou Assane Ndoye, Dakar, Senegal Telephone: +221 33 849 28 00

September 2013 /

SECTOR SPOTLIGHT: Driving FDI

The Juridical Infrastructure for Foreign Investors in Turkey ------------------------------------------------------------------------

Esra Akcebe is an attorney at the Istanbul Bar Association. ------------------------------------------------------------------------

Turkey’s dynamic and rapidly growing economy presents significant opportunities for foreign investors. In recent years, a secure economic environment has been provided for investors through radical economic reforms and strengthening of the legal infrastructure. The fundamental legal structures are: “Law No. 5084 Encouragement of Investments and Employment”; “Law No. 43875 Foreign Direct Investments Law”; and significant international treaties. The objective of the FDI Law is to regulate the principles for encouragement foreign direct investments; to protect the rights of foreign investors; to define investment and investor in line with international standards; to establish a notification-based system for foreign direct investments rather than screening and approval; and to increase foreign direct investments through established policies. Besides these regulations, there are ministry’s decrees and amendments on some laws. The No. 2012/3305 and 2013/4288 (indicates amendments on some articles) decree of the Council of Ministers, which are decided upon the request of the Republic of Turkey Ministry of Economy, mention the application of a new encouragement system. According to the encouragement system there are general, regional, large-scale and strategic investment

/ September 2013

incentives; it is also separated into specific regions and investment subjects. For example: value added tax exemption; customs duty exemption; tax reduction; employer’s social security contribution support and land allocation in the 1st, 2nd, 3rd, 4th and 5th regions. In the 6th region, the government is providing interest support, income tax withholding allowance and employee’s social security contribution support.

Besides these legal regulations to encourage FDI, The Republic of Turkey’s Prime Ministry, Investment Support and Promotional Agency exists with the fundamental duty to provide assistance to investors at every stage of the investment process and to promote Turkey’s investment opportunities to the global business community. Another significant institute is the General Directorate of Incentive Practices and Foreign Capital.

Thus, the number of foreign investors in Turkey is increasing. Up to 2012, there were 32,146 foreign capital companies and 881 liaison offices. According to this data, foreign investments are being surpassed. In 2012, FDI levels reached US$12.4 billion.

In conclusion, foreign investors should consider investment in: informatics; industry; technology; defence; energy; transportation; automotive; retail; and pharmaceutical industries. Among these, informatics and technology should be considered on a preferential basis.

Examples of modifications to the law include amendments to the Commercial Code relating to the foundation of joint stock corporations and limited companies, which can now be founded by one person and foreign capitalised companies. This provides a great deal of convenience when establishing a company. Another significant modification is an amendment to Article 36 of the Land Register Law, which states: “foreign national natural persons and legal entities incorporated in accordance with legislation of foreign countries and incorporated companies established in Turkey, fifty percent or more shares of which are owned by international institutions or the authorisation of assignment and release of majority of directors for which are granted to international institutions, can acquire ownership rights on a land.’’

The Istanbul Bar Association Company: The Istanbul Bar Association Name: Att. Esra Akcebe Email: esraakcebe@istanbul.av.tr Web: www.istanbul.av.tr Address: Ufak Sokak Ufuk Apt. Daİre: 8 Gümüşsuyu, BEYOĞLU, Turkey

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SECTOR SPOTLIGHT:

Insolvency, Turnaround, and Restructuring

Insolvency, Turnaround, and Restructuring Acquisition International examines the key issues in insolvency, turnaround and restructuring, introduced by Kate Laughlin at Debtwire.

The world of corporate restructuring offered drama and opportunity in fits and starts this year. Pockets of activity exploded into headlines related to commodity price volatility, changes in local regulatory policies and the continuing fallout from the global financial crisis that began six years ago. Still, insolvency professionals and turnaround specialists have been kept at bay by the booming high yield bond and leveraged loan markets. With the primary markets for new issues wide open in North America and Europe this year, distressed borrowers took advantage of the liquidity to refinance or extend seemingly unsustainable capital structures. Instances that proved too distressed for even the “open for business” capital markets spawned intense competition among professionals for restructuring mandates, and equally stiff competition for paper by distressed investors. Vulture investors could be heard complaining that prices for bonds of insolvent issuers were over-valued in the secondary markets, propped up by the glut of cash chasing limited opportunities. Active sectors for restructuring vary by region, but a few have universal troubles. In the shipping sector, a host of credits globally remain on restructuring watchlists, despite a round of loan extensions and recapitalizations already completed in recent years. The sector’s historical lender base consisted largely of European banks more inclined to kick the can down the road and preserve mark-to-market values of their investments than realize a substantial loss upon selling or restructuring. But with global shipping volumes and rates failing to turn around, some banks have started punting positions and a new round of balance sheet restructurings are expected to sweep through the sector.

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In all regions, volatile commodity prices wreaked havoc on metals and mining companies, especially coal and iron ore producers. Like the shippers, many eastern European miners avoided right-sizing their debtloads during refinancing efforts in recent years, in part because of lethargic bank syndicates. And China’s slowing economy – with its decreased demand for commodities – has stressed the balance sheets of miners in Australia, Indonesia and the US. Turnaround professionals and investors around the world have also explored getting involved in large restructurings in Latin America, like Brazilian oil and gas producer, OGX, along with a cluster of distressed Mexican homebuilders. There, investors outside the local jurisdictions have run up against the well-known inefficiencies of local bankruptcy regimes. And regional insolvency law remains a hot topic globally, as European companies have increasingly moved to implement workouts in local legal systems rather than use the US and UK procedures that investors typically favor. A series of reforms to the bankruptcy systems of Germany, France, Italy and Spain have made them more similar to the US and UK, so cross border restructurings with forum shopping will likely continue this year and next. Going forward, the wide-open primary markets that have helped keep struggling companies afloat over the past few years are likely to set in motion the next cycle of overlevered borrowers that need to restructure their balance sheets. Besides prolonging the life of highly levered borrowers with extensions and refinancing, in the US and Europe the new issue market has supported a plethora of new

private equity buyouts with leverage in the high single digits, according to data maintained by Debtwire. Syndicated leveraged loan and bond issuance in the past three quarters has massively outpaced that of any period since the financial crisis, with 2Q13 volumes alone reaching USD 232bn in North America and EUR 42bn in Europe for 2Q13, Debtwire data show. A handful of issuers acquired by PE sponsors in just the last two years with high leverage and little margin for error have already come full circle – violating loan covenants and in some cases filing for insolvency proceedings. A host of geopolitical and financial issues are also set to play out on the world stage this year – rising interest rates, a third bailout for Greece and continuing instability in the Middle East – any one of which could spark a rash of activity for insolvency and turnaround professionals.

Company: Debtwire Name: Kate Laughlin Email: kate.laughlin@debtwire.com Web: www.debtwire.com Telephone: +1 212 686 5277

September 2013 /

SECTOR SPOTLIGHT:

Insolvency, Turnaround, and Restructuring ------------------------------------------------------------------------

Mark Goodman is a Senior Associate at Campbells. -----------------------------------------------------------------------Campbells is recognised as having a leading insolvency and restructuring practice and is regularly involved in some of the largest cross-border cases in the jurisdiction, which is objectively demonstrated by the fact that Campbells has appeared in more of the recent reported cases involving insolvency issues than any other firm.

“We have seen an increase in insolvency and restructuring work in relation to companies which operate in the Far East, China and other emerging economies, which seems to stem from a slow-down of growth in those economies exposing cases of fraud, mismanagement and liquidity problems,” said Mr Goodman. Discussing the problems stemming from “zombie firms”, Mr Goodman stated that companies which produce little in terms of cashflow or profitability but which tie up resources stifle economic growth. “We expect that as the global economic outlook improves, less sympathetic creditors and rising interest rates will expose a large number of companies facing liquidity

problems which will require companies either to be restructured to reduce debt so as to become more productive or enter liquidation,” he elaborated. When structuring a turnaround solution, Campbell’s approach is to look for pragmatic, commercially sound solutions. The firm recently advised the joint provisional liquidators of Arcapita Investment Holdings Limited, a subsidiary of Arcapita Bank, in relation to a successful restructuring. Mr Goodman noted that the case was complicated by related Chapter 11 bankruptcy proceedings involving Arcapita Bank and the international profile of the business and its stakeholders, including the fact that the restructuring plan had to comply with Islamic Shariah Law. In the firm’s experience, the main cause of tension in the context of insolvency proceedings stems from ineffective communication between parties involved in the process. “A failure by officeholders to properly consult with stakeholders or polarised positions as between stakeholders can stifle constructive dialogue aimed at achieving a commercially sensible outcome,” added Mr Goodman.

He concluded: “As Western economies continue to stabilise we expect global insolvencies to generally trend downwards, with an increase in restructuring and insolvency work from emerging markets as growth in those regions slows.”

Company: Campbells Name: Mark Goodman Email: mgoodman@campbells.com.ky Web: campbells.com.ky Address: Floor 4, Willow House, Cricket Square, PO Box 884, Grand Cayman KY1-1103, Cayman Islands Telephone: +1 345 949 2648

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Tunde Ajayi is the Managing Partner of Babington Ashaye & Co. He has over 20 years’ experience in Insolvency and Restructuring and has handled not less than 250 Insolvency and Restructuring assignments to date. Mr Ajayi is a distinguished Fellow of INSOL (Insolvency International) and has the honour of being the first qualified Fellow of INSOL from Africa. ------------------------------------------------------------------------

Babington Ashaye & Co was founded in October 1985 and established on the principles of providing good quality services to clients within and outside Nigeria. “The firm has since built a reputation for solid services and clearly the leading firm in Nigeria in the provision of Insolvency and Business Rescue services,” said Mr Ajayi. The firm has handled most of the major restructuring cases involving the Nigerian Government and its Privatisation agency, the Bureau of Public Enterprises. They include the Liquidation of Nigeria Airways Limited, which had complex cross-border issues. The company had assets and creditors in the USA, seven countries

in Europe, including the UK, and about 12 countries in Africa and Nigeria, its operational base. The firm was also involved in the guided liquidation of three steel rolling mills in Nigeria, which resulted in the privatisation of the three companies.

“We have over the years devised clear strategies and have adequate systems in place with required flexibility to cope with challenges and opportunities,” enthused Mr Ajayi. “Our team is able to make an immediate difference because we focus on Business Improvement and Turnaround and Restructuring. “Nigeria is currently in the process of revising its insolvency laws, when concluded it is expected the law will have addressed the challenges faced by

Practitioners and Insolvent Companies and address cross border issues as a result of the increasing trend of Nigeria Companies establishing subsidiaries and branches outside the country,” he concluded.

Company: Babington Ashaye & Co Name: Tunde Ajayi Email: info@babingtonashaye.com Web: www.babingtonashaye.com Address: 21, Araromi Street, off Moloney Street, Onlkan, Lagos, Nigeria Telephone: 07045706821, 07045706826, 07045706827

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Richard Taylor is the President of Global Capital Advisors. ------------------------------------------------------------------------

The number of corporate insolvencies and related “troubled companies” has been reduced as companies have improved operating results (often by cost-cutting) and learned from the risks of too much debt from the “Great Recession” in 2008-09. However, there will always be companies getting into financial trouble for a myriad of reasons! Due to the sluggishness of the U.S. recovery, the economic problems in Europe and the declining growth rate of China, most economic forecasters are predicting a continued period of uncertainty and business risk. This will translate into a continuation of insolvencies, turnarounds, and restructuring albeit less than during the 2008-09 period. A company can technically be insolvent (typically defined as having negative net worth and/or unable to pay its bills in the ordinary course) and continue to operate as long as it can manage its operations and liabilities, in particular its vendor payables and bank debt. However, the Board

/ September 2013

and officers of the company are supposed to be acting in the best interests of the creditors in an insolvent situation although, quite frankly, this does not always happen. Thus, as a practical matter, management of a technically insolvent company that remains a going concern will likely consider restructuring options that may involve increased risk to creditors in the hopes of salvaging something for equity owners. Part of the role of the independent turnaround professional is to challenge the unrealistic assumptions and projections on which such options are too often based. A classic definition of a “Turnaround” is a significant and sustainable improvement in operations. The operative words are “significant” and “sustainable”. Turnarounds can occur in many ways, but the typical model is to first focus on cash flow (for survival), then improvement in operating results (profits and positive operating cash flow) followed by improvement in the balance sheet (asset management and restructuring of debt). These classic steps, however, can be executed concurrently and do not need to be done sequentially.

In conclusion, aside from a significant and negative macroeconomic event, the greatest obstacles for a successful turnaround and avoiding insolvency are (1) cooperation by or replacement of senior management, (2) changing the “culture” of the troubled company, and (3) willingness of the senior lender to allow the turnaround professional time, and in some cases additional funds, to execute the turnaround.

Company: Global Capital Advisors, LLC Name: Richard Taylor Email: rtaylorconsul@voyager.net Address: 3914 North Farwell Avenue, Milwaukee, WI 53211, USA Telephone: +1 (414) 975-0830

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Darío U Oscós Director SECTOR SPOTLIGHT: Mexico City, Mexico

+52 55 1253 and 0100 Restructuring Insolvency, Turnaround, doscos@oscosabogados.com.mx

Dario U Oscos Coria is a director and attorney o He has held practice in insolvency, litigation an specialises in restructuring, creditors’ rights, in His international and domestic work encompas securities, commercial, corporate, intellectual also engages in general complex civil and com focuses on targets, when viable, in out-of-cou reorganisation plans, as well as counselling and debtors and trustees. Mr Oscós, as a litigator, h federal, and state courts. He is also a lecturer a and a law professor. He is a member of the Am in the NAFTA Insolvency Project, the Internatio International, Insol Europe, International Bar As alia. ------------------------------------------------------------------------

Dario U Oscós Coria is the Managing Partner of Oscós Abogados. ------------------------------------------------------------------------

Oscós Abogados is a high-profile boutique practice that specialises in both domestic and international litigation. The firm has rich experience and technical expertise in handling insolvency, restructuring, creditor’s rights, litigation, arbitration, product liability and bankruptcy within a wide variety of industries that range from banking, energy, oil, gas, construction, industrial property, copyright, torts and financial services to telecommunications. Oscós Abogados has been involved in major cross border and domestic insolvency, litigation and arbitration cases in Mexico in the 21st century. The firm has built up a strong reputation for delivering high-quality results in a discreet and timely fashion. The firm set a milestone by successfully adjudicating the first two cases in the world that recognised and fully enforced another country’s insolvency proceedings under the UNCITRAL Model Law on Cross-Border

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Insolvency (adopted, inter alia, by USA, UK, Canada and Japan). As the Model Law (EU Insolvency Cross Border Statute) becomes increasingly adopted by major countries, Oscós Abogados will refer to its familiarity and knowledge of international insolvency to ensure clients receive the best possible legal solutions. The firm recently successfully concluded a complex US-Mex insolvency cross border case, the Vitro case, wherein a settlement was reached with dissenting Bond Indenture Trustees because of (i) constitutional action brought in Mexico expecting reversal of reorganisation plan and, (ii) recognition of reorganisation plan was rejected by US Bankruptcy Court and withheld by US Court of Appeals. “The financial crisis stemming from the international crisis and the consequent Mexican recession has led to many entrepreneurs, financial institutions, and commercial organisations from all sectors suffering serious financial distress; distress that of course affects their on-going business and liquidity and which can’t be kept out of their main concerns ,” said Mr Oscós.

“We take our responsibility to counsel businessmen affected from financial problems very seriously, in particular those that have been caused by the economy. We want to find solutions for them, ideally through out-of-court settlements, that minimise stress and disruption and save time and money,” he concluded.

Company: Oscós Abogados Name: Darío 64 U. Oscós Coria CORPORATE ADVISOR HANDBOOK Email: doscos@oscosabogados.com.mx Web: www.oscosabogados.com.mx Address: Joaquín Gallo (antes Paseo del Río) No. 53, Chimalistac, Del. Coyoacan, C.P. 04340 México, D. F. Telephone: +52 (55) 12530100

September 2013 /

SECTOR SPOTLIGHT:

Forming & Structuring Private Funds

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. Acquisition International speaks to Henry Bregstein, Global Co-Chair of Financial Services and Member of the Executive Committee and Board of Directors at Katten Muchin Rosenman LLP, to discuss the finer points of forming funds in the USA.

Mr Bregstein attributes the United States’ attractiveness to investors to the presence of many highly talented managers of large hedge funds with long, positive track records, along with high-performing start-up and emerging managers. “The regulatory environment, though possibly somewhat burdensome to managers, results in enhanced transparency, greater legal certainty and reduced risk,” he commented. “The most active sectors currently include: fixed income, structured credit, event driven, distressed, credit opportunity, global macro and infrastructure debt.” Mr Bregstein believes that larger funds are generally best suited to the current market conditions, noting that a relatively small number of large, established funds continue to attract a disproportionately greater share of capital inflows. “This trend may be explained, in part, by the risk aversion among all types of investors in alternative assets but especially among public and private pension plans and foundations that have become significant domestic hedge fund investors,” he elaborated. “Though capital flows into larger funds of funds appear to be increasing somewhat, those funds of funds are still receiving a smaller share of the capital flow than was the case prior to 2008. This trend may be partially explained by the increasing importance of pension plans and other institutional investors, who often hire

/ September 2013

staff or external consultants to identify, provide due diligence on and monitor attractive managers.”

innovation and growth than any of the new regulatory reporting requirements.

Mr Bregstein stated that the dramatically increasing worldwide regulatory burden is a major issue affecting asset managers. He noted that the regulatory focus on hedge funds and their managers has led to the imposition of complex reporting regimes in the US and the EU.

In conclusion, Mr Bregstein predicted that the larger funds will continue to attract a disproportionate percentage of capital inflows.

“These reporting regimes substantially increase costs and force asset managers to carefully examine their operating and business models, and are further acting to slow the growth of smaller to medium-sized managers,” he continued. “Additionally, alternative investment strategies are now employed by publicly offered mutual funds. Previously, mutual funds offering exposure to alternative investment strategies were structured as funds of funds or multiportfolio funds. Increasingly, mutual fund sponsors are seeking to replicate hedge fund strategies directly. It is perhaps a bit too early to determine how much pressure this development will place on hedge fund manager fees, especially in long/short and event driven sectors.” All of the issues outlined by Mr Bregstein represent challenges to finding new sources of capital. Further, in the US, the “push-out” provision of Dodd-Frank has caused banks and their affiliated broker-dealers to exit the business of providing seed or acceleration capital to start-up and smaller hedge fund managers. He believes that this acts as a far more serious barrier to entry,

“However, smaller managers with outsized returns will begin to attract attention and capital more in line with the old normal. Further, the increase in the formation of, and capital flows into, so-called insurance dedicated funds that can generally be accessed on a taxadvantaged basis through the purchase of privately placed variable life insurance and annuities will continue on an accelerated pace as US taxable investors increasingly feel the discomfort of higher tax rates.”

Company: Katten Muchin Rosenman LLP Name: Henry Bregstein Email: henry.bregstein@kattenlaw.com Web: www.kattenlaw.com Address: 575 Madison Avenue, New York, NY 10022-2585, USA Telephone: +1 (212) 940-6615

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2013

M&A AWARDS M&A Law Firm of the Year - Senegal

SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Managers Directive

The Impact of the Alternative Investment Fund Managers 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.

The Depositary in Action – What it Means in Reality ------------------------------------------------------------------------

David R.D. Bailey is the Chief Executive Officer of Augentius Depositary Company Limited. Mr Bailey is one of the four founders of the Augentius Group. ------------------------------------------------------------------------

Under the AIFMD, Fund Managers, who manage in excess of €500m of unleveraged Private Equity and Real Estate Funds, are likely to need to have to appoint a Depositary. The concept of Depositary, for these types of Funds, is a new one in many EU countries (although it has existed in France, Luxembourg and elsewhere for some time). As a consequence many managers are currently talking to Depositaries, trying to understand what the Depositary will be doing, how it will work in practice and what the cost will be. With the initial deadline of 22 July 2013 passed some Funds have already appointed a Depositary and work has commenced. How does it all work in reality? The Depositary has 3 main tasks: Cash Monitoring, Asset Verification and Oversight. The Directive stipulates that the Depositary must reconcile cash “on a daily basis”. Few Private Equity or Real Estate managers monitor cash on a daily basis, weekly being the norm. However by simply copying in the Depositary on all cash authorisations/ instructions the Depositary can maintain appropriate records. Allied with automated cash reconciliation technology and read-only access to bank accounts the Depositary is well placed to meet all the requirements

/ September 2013

of the Directive in a simple and cost effective way – having little or no impact on the day to day workings of the manager. Asset verification is the proper confirmation that the Fund assets are properly registered in the name of the Fund. Once details of the portfolio are obtained from the manager all the work is carried out in the background by experienced, professional staff with a proper knowledge of the registration of Real Assets. Again a task that will have little or no impact on the day to day activities of the Manager. Finally the Oversight responsibility is the task allocated to the Depositary to ensure that the manager is complying with many of the requirements of the Directive (and avoids the regulators from having to have “inspection” teams!!). Again with a proven experienced team who understand the working of a Manager, this is little more than a one day annual review, assuming the preparation has been done in advance. Whilst to many the imposition of a Depositary is an unwelcome encumbrance, using the right group with the right mentality and the right level of professionalism and experience within the organisation is critical. The higher the level of professionalism, technology and experience, the better quality the service provided by the Depositary. The higher the level of understanding of the managers

day to day issues – and the more “invisible” the Depositary will be. And the higher the levels of efficiency, whether it be through people or technology, the lower the overall costs will be. The cost of Depositary services is not great – but it is critical that the Depositary appointed knows what it is doing and has the right people in place. Understanding, Knowledge and Experience in the Depositary will, undoubtedly, deliver an effective but “silently” unobtrusive service to the manager – ensuring little or no additional involvement (and precious time) for the manager.

Company: Augentius Depositary Company Ltd Name: David R.D. Bailey Email: david@augentiusdepositary.com Web: www.augentiusdepositary.com Address: 2 London Bridge, London SE1 9RA, UK Telephone: +44 (0) 207 397 5453

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SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Managers Directive ------------------------------------------------------------------------

Richard Timms is a Principal Consultant at ACA Compliance (Europe) Limited. ------------------------------------------------------------------------

Although a barrister by qualification, Mr Timms’ focus is on compliance and regulatory support. He has been at ACA for more than three years and currently maintains a portfolio of clients, including hedge fund, private equity managers and broker-dealers. For the past two years, Mr Timms has been advising EU and Non-EU managers on the impact of AIFMD, marketing under AIFMD and private placement and has also led a number of AIFMD Gap Analysis and preparation projects. Established in 2002, ACA is the world’s largest compliance consultancy. ACA operates from 20 locations across Europe, US and Asia with a professional team of 140, one third of which are former SEC, FSA, NFA, FINRA and stock exchange regulators. “Regardless of whether or not you believe AIFMD was a necessary regulatory response to the financial crises and scandals that preceded it, its implementation has been handled poorly,” opined Mr Timms. “There is a divergence in the way that local regulators are approaching implementation and a number of Member States are still to adopt the necessary legislation and, for many, full implementation does not look imminent. Certain jurisdictions are using the transitional provisions whilst others are gold plating certain rules. All in all, this is far from creating a harmonised regime. The Directive has effectively caused more confusion and brought greater costs for the firms having to comply.” Mr Timms believes that the pros of the Directive are unclear and can only be speculated upon. He noted that

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As the remaining issues become clearer this should enable existing private equity managers to make informed decisions about their strategy in the new regulatory context. The start-up space should also see new impetus in 2014. Firms will need to consider the regulatory process to be authorised under the Directive much earlier than first thought and those leaving it too late may have some timing issues to address legislators point to AIFMs having access to a ‘marketing passport’, which allows them to market freely to professional investors.

could have taken advantage of the UK transitional period has done so, and this effectively means business as usual in the UK.

“In theory this would be beneficial as it opens up markets where it had been traditionally more difficult to market in the past,” he observed. “Some have also suggested AIFs will become a more trusted ‘brand’ in a similar way to how ‘UCITS’ are considered in the retail market.”

“As the remaining issues become clearer this should enable existing private equity managers to make informed decisions about their strategy in the new regulatory context. The start-up space should also see new impetus in 2014. Firms will need to consider the regulatory process to be authorised under the Directive much earlier than first thought and those leaving it too late may have some timing issues to address,” he concluded.

Whilst the effects of the Directive haven’t been felt immediately, Mr Timms expects that they will be soon. He anticipates that the details of reporting that is required under the Directive will create a significant burden for private equity managers, especially when a controlling stake is taken of an unlisted company. “There also exists real concern regarding the duty to keep other company stakeholders abreast of developments and the disclosure of arguably sensitive information, such as the financing of transactions,” he added. “The assetstripping provisions could have a significant effect on the way that deals are structured and the remunerations rules are likely to create a headache for all.” In the UK, the AIFMD has had little impact, albeit for the time being. Mr Timms noted that almost everyone who

Company: ACA Compliance (Europe) Limited Name: Richard Timms Email: richard.timms@acacomplianceeurope.com Web Address: www.acacomplianceeurope.com Address: 11 Berkeley Street, Mayfair, London, W1J 8DS

September 2013 /

Cortland Fund Administration Services

Cortland offers full service fund administration including integrated portfolio administration services. These services are an ideal solution for hedge funds, PE funds, fund of funds, fixed income funds and separately managed accounts. One-Stop Administration » Onshore/offshore » Custody & asset servicing » NAVs, financials, audit support & tax » Data management, reporting & analytics » State-of-the-art technology » Simple fee structure » Document management Fund Accounting » Calculate daily P&L and indicative NAVs » Prepare periodic financial statements » Prepare annual financial statement package with footnotes » Investor/partnership accounting » Full audit support » Coordinate preparation of annual tax filings and annual audit Manager Services » Consulting services for offering memorandum preparation » Secure investor portal for web reporting and document retention » Maintenance of offshore fund vehicles » License and regulatory approval management Shareholder Services » Preparation and maintenance of investor registrar » Subscription/redemption processing » AML, OFAC compliance » ERISA compliance monitoring Portfolio Administration » Securities and loan document custody » Bank loan servicing » Bank account set-up and cash management » Performance reporting and analytics » Risk management

ABOUT US Cortland is a leading independent investment servicing company providing fund administration, commercial bank loan servicing, securitization services, and middle-office support to financial institutions including proprietary trading and alternative investment managers, banks, and commercial lenders. Utilizing state-of-the-art process technology, Cortland’s experienced professionals deliver effective investment accounting, analytics, and servicing solutions to our clients across asset sectors including structured finance, real estate, managed futures, equities, distressed debt, syndicated bank loans, conventional C&I loans including SBA and USDA guaranteed, tax liens, and more.

TO LEARN MORE, CONTACT Dan Hart (312) 564-5065 dan.hart@cortlandglobal.com Stephanie Golden (212) 796-1684 stephanie.golden@cortlandglobal.com Michael Dombai (312) 564-5095 michael.dombai@cortlandglobal.com Greg Myers (312) 564-5085 greg.myers@cortlandglobal.com Or visit us online at www.cortlandglobal.com

Qualifications » Experienced management team » Operations team with 10+ years experience with numerous strategies and asset classes » Client Web Portal, CorPro » Type II SAS 70 certified, since 2009 » Type II SSAE 16 (SOC 1) audited since 2011

SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Managers Directive Brooklyn bridge, New York City

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Kenneth S. Phillips is the Chief Executive Officer of HedgeMark International, LLC ------------------------------------------------------------------------

The AIFM Directive, when fully absorbed and globally reconciled across regional regulatory interests, will become less of an industry concern. We should, however, reflect on how the industry’s historic approach to investment transparency got us here. Had our industry employed a similar level of transparency into hedge funds as it does for traditional managers we would not be faced with as many concerns over style drift, fraud and reputational risk. Additionally, regulators would not have been compelled to expand their roles. Since our formation, and in addition to our managed account services, HedgeMark has been focused on hedge fund transparency and position-level risk analytics. Our objectives have not, however, been merely an obsession with fraud risk – as is frequently the case with investors first exploring risk analytics. Instead, we were equally interested in how our work might improve absolute and risk-adjusted investment performance. While the

AIFMD has shown great concern for structure and governance, there has been less attention given to how the tools of better governance can lead to an improved investor experience – which should be our foremost objective.

and managed account infrastructure services facilitate compliance with AIFMD requirements. HedgeMark’s technology allows AIFMs to more effectively meet their portfolio and/or risk management obligations utilising an industry-leading t+1 risk platform.

Hedge fund transparency, while enhancing operational and compliance monitoring, also sheds light on the impact of “style factors” on manager performance. Understanding basic style factors, such as a manager’s preferences for value over growth or large companies over small ones, greatly enhances both the portfolio construction and manager evaluation processes. Even within specific strategies, crowded trades and the “stacking of excess risk” can be mitigated by allocating to managers emphasising different style and factor exposures and then having the ability to monitor changes in underlying exposures.

The hedge fund industry is evolving towards more quantitative, empirical methods of evaluation, both in connection with manager selection and on-going performance monitoring. Over time, this will improve investor experience and asset owners will better understand how their investments are positioned with respect to risk factors, sources of risk, and performance. To be sure, the AIFMD will result in an additional layer of regulatory oversight, costs and compliance responsibilities. Hopefully these regulations will also be a catalyst for a broader embrace of best practices, encouraging all parties to do what should have been done all along – looking under of the hood of the car and understanding how the engine actually propels the vehicle.

The quest for “absolute return” in a world of limited transparency increases reliance on historic, returnsbased analytics and qualitative assessments, which impose numerous limitations. Without positionlevel transparency, the risk-mitigation benefits of diversification are difficult to achieve. Multi-factor regression style analysis, a robust tool for traditional investment strategies, mostly result in noisy and unreliable data when used with hedge funds; shifts in gross and net, equity and notional exposures are difficult to track. As a result, limited access to position-level data can easily result in unintended risk concentrations. Unintended concentrations contributed to poor returns in 2008; investors often found themselves unknowingly exposed to similar risks across multiple managers and strategies. We believe that HedgeMark’s industry-leading position-level transparency, risk analytics technology

Company: HedgeMark International, LLC Name: Kenneth S. Phillips Email: info@hedgemark.com Web: www.hedgemark.com Address: 780 Third Avenue, 44th Floor, New York, NY 10017, USA Telephone: +1(212) 888-1300

Planning ahead for AIFMD authorisation ------------------------------------------------------------------------

Matthew Hazell is an Associate Director at Complyport Ltd. Jon Wedgbury is the company’s Head of Corporate Development. ------------------------------------------------------------------------

small authorised UK AIFMs and depositaries) “to apply no later than 22 January 2014” in case the FCA considers it necessary to use 6 months to make a determination due to the specific circumstances of the case.

Although the AIFMD came into force on 22 July 2013, the handful of investment firms authorised to manage an Alternative Investment Fund (AIF) appearing on the UK’s Financial Conduct Authority (FCA) Register suggests many firms are taking advantage of the 12 month transitional provision. With time ticking though, and onerous new requirements to satisfy, firms would be well advised not to leave their AIFMD applications until the last minute.

A crucial nuance is that the authorisation timetable specified by the AIFM Regulations only applies in the UK to full scope AIFMs and ‘small registered UK AIFMs’. For other sub-threshold AIFMs, the usual FSMA timetable (i.e. 6 months for complete applications) applies. In practical terms such small AIFMs should treat the FCA’s advice to apply ‘no later than 22 January 2014’ as a ‘must do’ rather than a ‘should do’.

In the UK, firms already managing an AIF as at the above date are permitted to continue this activity without the regulatory permission (Part 4A) of managing an AIF until 21 July 2014. Firms benefiting from this transitional provision must submit an application for a variation of permission to have ‘managing an unauthorised AIF’ or ‘managing an authorised AIF’ added to their Part 4A before 22 July 2014, or else cease such activity (otherwise they will be in breach of s.20 FSMA - ‘Authorised persons acting without permission’). The transitional provision is not available to firms that were not managing an AIF as at 22 July 2013. Under the Alternative Investment Fund Managers Regulations 2013 the FCA has 3 months from the date of receipt of such an application to make a determination. However the FCA is advising firms seeking an authorisation or a variation of permission under AIFMD (including

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Complyport, a leading compliance consulting firm which advises asset management and securities firms, is helping fund managers understand these rules and complete their AIFMD applications ahead of the FCA’s deadlines. Matthew Hazell, who leads Complyport’s Authorisations Team and previously spent 10 years at the FCA, sees a significant change in approach: “These AIFMD applications are focussed on the substantive measures firms have in place to satisfy the Directive’s onerous compliance requirements. The FCA is applying significant scrutiny to firms’ risk management, liquidity, leverage and valuation policies and procedures. Furthermore, the FCA now insists that applications are submitted complete, meaning firms must start engaging with their service providers now to ensure their compliance and operational arrangements are fit for purpose when they make their submission.” The risk for firms which are unprepared is that they will

face a host of questions from the FCA asking them to provide more detail – potentially causing lengthy delays to their applications.

Mr Hazell concludes: “From our experience, we strongly recommend that firms operating under the transitional provision ensure their AIFMD authorisation planning reflects the above timetable. Firms should also bear in mind the restriction on additional activities that an authorised AIFM can undertake under Article 6(4) of the AIFMD when planning their application.”

Company: Complyport Ltd Name: Matthew Hazell; Jon Wedgbury Email: matthew.hazell@complyport.co.uk jon.wedgbury@complyport.co.uk Web: www.complyport.co.uk Address: 4 Millbank, London, SW1P 3JA, UK Telephone: +44 20 7399 4983; +44 20 7399 4133

September 2013 /

SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Managers Directive ------------------------------------------------------------------------

Ernst Brandl and Roman Rericha are Partners at Brandl & Talos Attorneys-at-Law. ------------------------------------------------------------------------

Brandl & Talos was established in 2000 by Ernst Brandl and Thomas Talos with a focus on Capital Markets. Today, Brandl & Talos ranks among the leading Austrian law firms not only in the fields of Capital Markets, but also in M&A, Banking & Finance, Litigation, Gaming & Entertainment and White Collar Crime. Brandl & Talos has advised some of the largest recent M&A transactions in Austria and assisted leading banks and financial service institutions not only with challenges during the financial crisis. Mr Brandl stated that numerous international clients have made Brandl & Talos acquire substantial experience in international exposure, which is particularly reflected in the firm’s growing track-record of high value, complex and innovative cross-border transactions.

The firm’s lawyers bring years of experience, not only in the private sector but also as members of regulatory agencies and a proven track record to the table, when it comes to offering individual service to their clients,” he commented. “Brandl & Talos is highly recommended for its flexibility and reliability as well as fast and profound advice straight to the point. According to Mr Rericha, as a result of the 2008 financial crisis, the AIFMD completes the regulatory regime for the investment funds industry by addressing all funds not qualifying as UCITS (Undertakings for

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Dermot S L Butler is the Chairman of Custom House Global Fund Services Limited, parent company of the Custom House Group of companies which offer a global hedge fund administration service. -----------------------------------------------------------------------“Custom House consistently wins awards for “Client Service”, which combined with technology and skills, etc., is of primary importance, particularly as we can service global clients through offices in Dublin, Malta, Singapore and Chicago,” said Mr Butler.

Mr Butler stated that the AIFMD is obviously a politically driven initiative, noting that some measures within the Directive are sensible whilst others are unnecessarily complex and disruptive. However, having taken approximately five years to implementation, he believes it could still change before 2014. “As with many ‘targeted’ regulations there are many ‘unintended consequences’ which unfortunately effect innocent bystanders,” he added. “The Directive means high cost and complex system development, such as Custom House’s new “Gateway Platform”, which is an innovative web-based portal that provides managers with a single point of access for all their fund servicing needs and solutions across the middle and back office,” continued Mr Butler. “Whether it’s daily portfolio reporting, month-end NAVs, or risk analytics, an investment manager’s data is always accessible through Gateway.” Designed to simplify life, Gateway is a complete solution that is designed to handle the complexities of an evolving industry – purposefully developed to accommodate multiple brokers, multiple asset classes and a broad range of investment strategies and products.

/ September 2013

Collective Investment in Transferable Securities) which have already been regulated on EU and national level for several years. He believes that the AIFMD-framework is a logical and consequent further step towards a European single market with regard to investment funds. “The AIFMD’s implementation causes one of the most extensive and complex regulatory readjustments in investment funds law and will keep the industry busy for the next few years,” he observed. “In particular in the light of the AIFMD’s vague definition of its scope, important clarifications will have to be made by the competent authorities. Thus, further developments are difficult to anticipate for affected companies and their legal advisers.”

and disclosure requirements to pose a major challenge for the – formerly generally unregulated – alternative investment funds industry. “Further, strategic decisions will have to be taken with regard to potential restructuring of investment projects in the light of the new regime and its loopholes. Applying for a license under the AIFMD-regime is not only accompanied by the burden of restrictive regulations, but also by the opportunity to profit from the AIFMD’s passporting system which enables cross-border managing and marketing of alternative investment funds,” he concluded.

Mr Brandl noted that hasty legislative procedures resulted in several Member States – including Austria – not using the transition period to provide for the implementation of necessary clarifications. He added that – despite the new Austrian law being in force for several weeks now – it is yet unclear to what extent fund managers will have to apply for a license or whether loss participation models and the real estate industry will be affected. “Potentially affected companies and their legal advisers have to work closely together to define a strategically beneficial approach towards the new regime,” he advised. “Further, the AIFMD and its implementation in Austria broadly restrict marketing of alternative investment funds to retail investors which will require many managers to adapt their business model.” Apart from clarifying whether specific investment models are affected by the AIFMD-framework at all, Mr Rericha expects adaptation to the complex compliance

Company: Brandl & Talos Attorneys-at-Law Name: Ernst Brandl, Roman Rericha Email: brandl@btp.at, rericha@btp.at Web: www.btp.at Address: Mariahilfer Straße 116, 1070 Vienna, Austria Telephone: +43 1 522 5700

Mr Butler explained: “Whether an emerging manager is looking to lower start-up costs while utilising sophisticated institutional level infrastructure, or a global manager requiring a scalable solution that grows with their reporting and regulatory needs, Gateway is a solution designed for the entire investment management community.” Mr Butler observed that, over the years, hedge fund administrators have morphed from being sophisticated accountancy practices, producing the NAV, into sophisticated data processors. Today the administrator downloads a huge amount of data from managers, prime brokers and other counterparties, processes that information, manipulates and regurgitates it in the form of an increasing number of reports and other data, which is distributed to the manager, other service providers, regulators and investors.

In conclusion, Mr Butler offered a prediction for 2013/14: “Despite recent under performance, I believe that we are going to see more volatility and therefore more opportunities for hedge funds.”

“AIFMD was introduced to provide both protection for investors and to enable the regulators to avoid any systemic meltdowns,” he continued. “Are investors better protected today? I doubt it. Will their returns be damaged by the increased costs? Inevitably. “Furthermore, do the regulators have the capacity to analyse the new data so as to identify and address any potential systemic danger? We shall see.” “Inevitably, the impact will be quite severe and there will be some reduction in activity, as some non-EU managers decide not to market their funds in Europe, given the growth in the Asian market.”

Company: Custom House Global Fund Services Limited Name: Dermot Butler Email: dermot.butler@customhousegroup.com Web: www.customhousegroup.com Address: 25 Eden Quay, Dublin 1, Ireland Telephone: +353 1 8780807 – ext. 2206

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SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Managers Directive

Cayman Islands Independent Directors & Corporate Governance from Summit Management At Summit, we offer qualified and experienced independent directors to investment structures from our offices in the Cayman Islands. Our directors are Accredited Directors under the Institute of Chartered Secretaries Directors Education and Accreditation Program and are well placed to ensure that the principles of good corporate governance are adopted. We understand the requirements for experienced independent directors and have a proven record of providing stakeholder based solutions. Summit Management Limited holds a Company Managers License and is regulated by the Cayman Islands Monetary Authority. Summit Management Limitet Suite #3-213 Governors Square 23 Lime Tree Bay Avenue PO Box 32311 Grand Cayman KY1-1209 Cayman Islands

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David Egglishaw Director Tel: +1 345 926 4020 Email: david.egglishaw@sml.ky

John Cullinane Director Tel: +1 345 916 6001 Email: john.cullinane@sml.ky

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Web: www.sml.ky

September 2013 /

SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Managers Directive ------------------------------------------------------------------------

James Lasry is a Partner at Hassans. Richard Bowry is a Senior Associate with the firm. -----------------------------------------------------------------------Hassans is the leading law firm in Gibraltar with approaching 30 partners and over 80 qualified professionals organised into 12 specialist practice teams, including mutual funds.

Mr Lasry believes that the AIFMD has fundamentally changed the hedge fund industry in Europe and further afield. He noted that, for those within Europe, it means greater regulation albeit coupled with EU-wide marketing opportunities. “Non-EU managers need to decide whether to be established in Europe or not,” he advised. “They face inherent uncertainty as it’s unclear what rights will be offered in respect of third countries and what restrictions will be placed on those rights.” For Hassans, AIFMD catapults Gibraltar from one of 12 or so internationally focused fund jurisdictions around the world to one of four such centres based in a EU jurisdiction. Mr Bowry stated that it is both a challenge and an opportunity for clients. “The challenges have been well discussed, as have the EU wide marketing opportunities, although less coverage has been given to the flexible manner in which small AIFM’s can operate, and the comparative ease in which they may ‘opt-in’ to full AIMF at a time of their choosing.” Mr Lasry described the AIFMD as “essentially a political project”, and as such he believes there is a risk of overregulation. He noted that remuneration, delegation and depositary compliance will result in increased operational costs for the industry which will inevitably filter down to investors.

This may result in some fund managers staying out of the EU for the present,” he commented. “The challenge for Europe will be to get the regulatory balance right, which means being open to adaptation where necessary and allowing regulators appropriate discretions, such as proportionality in respect of remuneration. Discussing the impact of the directive on investment companies, Mr Bowry stated that, initially, it will depend on whether they are in or outside the EU. However, ultimately private placement rules will disappear, so nonEU fund managers will have to comply in due course if they want access to the EU market. He expects that AIFMD compliance will result in increased costs which may lead to a consolidation within the industry.

in the short term, and ESMA approving passporting rights for such countries in the medium term. “Both are questionable. Our advice to those who market in the EU is to pro-actively plan to be within the EU market in the best way that suits the manager, rather than reacting to further regulatory developments,” he concluded.

“Gibraltar has often been utilised by small to mid-size management firms, many being below the threshold amounts to qualify as small AIFMs,” he observed. “For them, it will largely be business as usual with the advantage of the convenient ‘opt in’ mechanism. We predict small to mid-size managers will see the inherent advantage of this two-step model, and anticipate relocations to the jurisdiction as a result. “We are also seeing interest from larger non-EU managers (Switzerland, for example) who are looking to become fully AIFMD compliant and are seeking a suitable jurisdiction for their purposes.” According to Mr Lasry, it seems that many non-EU fund managers are taking a “wait and see” approach to the AIFMD, in part in the expectation that member states will not restrict third countries from private placement access

Company: Hassans International Law Firm Name: James Lasry; Richard Bowry Email: james.lasry@hassans.gi Web: www.gibraltarlaw.com Address: 57/63 Line Wall Road, Gibraltar Telephone: +350 200 79000

Marketing Funds in Europe Under the AIFMD: Harmony or Discord? ------------------------------------------------------------------------

Tim Aron is a Partner at Katten Muchin Rosenman UK LLP. -----------------------------------------------------------------------The Alternative Investment Fund Managers Directive (AIFMD or Directive) ‘aims to provide a harmonised and stringent regulatory and supervisory framework’ for both EEA (European Economic Area) and non-EEA (e.g., US) managers. However, US managers looking to market their funds in Europe under the Directive would be entitled to question whether the aim of harmonisation has been met given the different approaches of EEA Member States that have emerged to date. This article seeks to explain the legal basis for the divergence and to provide an overview of where things currently stand for US managers that wish to market their funds in the EEA.

The AIFMD is a ‘directive’ which sets out requirements that all Member States must implement in their own national laws through their own national legislative processes. Member States ought to have transposed the Directive into their national laws by 22 July 2013, however, at the time of publication many Member States (including some of the larger states) have not done so. Until the Directive is implemented, the law that exists prior to implementation will remain applicable in these Member States whilst the AIFMD will be applicable in those Member States which have implemented it. However, some Member States which did implement the Directive by 22 July 2013 also put transitional regimes in place. These regimes are likely to allow managers who marketed their funds in a Member State with such a transitional regime prior to 22 July 2013 a year’s transition

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period before the requirements in the Directive apply. Prior to marketing in any EEA Member State it is therefore necessary to understand not only whether the AIFMD is in force in that state but also whether a transitional regime exists and, if it does, whether it applies to the marketing activities being proposed. Article 42.1 of the Directive provides that Member States may allow non-EEA managers to market their funds subject to certain conditions. One of these conditions is for cooperation arrangements to be in place between the regulators of the EEA Member State where the funds will be marketed and the regulators of the EEA Member State where the manager and fund are established. These cooperation arrangements are negotiated on behalf of all EEA Member States by the European Securities and Markets Authority (ESMA) but must be executed by each individual EEA Member State prior to marketing taking place in that state. It is therefore necessary to check on a case-by-case basis if an EEA Member State has executed these agreements with regulators from the manager and fund’s jurisdiction. Another condition that must be met in order for non-EEA managers to market their funds in a Member State is that the managers must comply with certain transparency requirements set out in the Directive. Such requirements include an obligation to prepare an annual report for each fund being marketed, the disclosure of certain information to investors before they invest in the fund and regular reports to be made to national regulators. Managers should be: (1) mindful of Article 42.2 of the Directive which allows Member States to impose stricter rules in respect of the marketing of funds to investors in their territories;

and (2) aware that the process of transposing the Directive into national law may lead to the same provisions in the Directive imposing slightly different obligations in different Member States. The latter may be explained either on the basis of Article 42.2 allowing Member States to impose additional requirements or simply because Member States may interpret, and therefore implement, the Directive’s text differently. The scope for different approaches in all 30 EEA Member States in regard to implementation, transition periods, cooperation arrangements and transposition of the Directive’s requirements means that managers must approach their EEA marketing with caution whilst the various differences are ironed out. In due course harmonisation may still be possible but it is certainly not imminent.

Company: Katten Muchin Rosenman UK LLP Name: Tim Aron Email: tim.aron@kattenlaw.co.uk Web: www.kattenlaw.co.uk Address: 125 Old Broad Street London, EC2N 1AR, UK Telephone: +44 (0) 20 7776 7627

September 2013 /

SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Managers Directive ------------------------------------------------------------------------

Rob McIntyre is a Partner at Lennox Paton. ------------------------------------------------------------------------

Mr McIntyre has a wealth of experience, having practised BVI law since 1996. He has acted for some of the world’s largest hedge funds and has advised investment managers from around the world on the structuring and operation of funds in the BVI. “Lennox Paton is the only full service law firm providing advice on Bahamian and BVI law from its offices in the Bahamas, BVI and London,” he commented. “We are committed to providing clear, accurate advice and doing this in an efficient and cost effective manner.” Mr McIntyre explained that the firm, together with its clients, is assessing what effect, if any, the pending implementation of the Alternative Investment Fund Managers Directive will have on their ability to market BVI funds in Europe. “Managers of BVI funds that undertake portfolio management from within the European Economic Area will need to assess whether or not they need to comply with AIFMD in its entirety,” he said. Discussing the pros of the AIFMD, Mr McIntyre highlighted enhanced investor protection; the choice of a larger range of products and strategies available through the passport mechanism; and the possibility of a new EU and worldwide label, similar to the UCITS brand. In terms of cons, he noted that depositary costs are likely to increase drastically and that there were some questions about the harmonised implementation by the various EU countries. He also believes that it is

“Managers of BVI funds that undertake portfolio management from within the European Economic Area will need to assess whether or not they need to comply with AIFMD in its entirety,” he said. He concluded with a prediction for 2013/14: “The number of EU AIFMs is likely to fall due to increased barriers to entry (costs, delegation issues, inappropriate operational models) and possible increased consolidation in that field. In addition, some nonEU managers may decide to redeem their EU investors.”

likely to wipe-out some smaller managers and service providers. “One of the other challenges of AIFMD for third country managers will be the ‘letterbox’ provisions. Where an AIFM’s activities are delegated to an entity to the extent that they exceed ‘by a substantial margin’ the activities of the AIFM itself the AIFM may be considered ‘a letter box’ and not the actual AIFM under the Directive. To avoid this a third country AIFM will need to structure its activities so that it retains key investment decision making powers, performs senior management functions, has the expertise and resources necessary to supervise delegated tasks and does not delegate more functions than it retains.” “The implementation of AIFMD will inevitably lead to a restructuring of the alternative investment funds industry in Europe.” Earlier this year, BVI entered into a Memorandum of Understanding with 25 European regulators covering the requirements of Phase II of the AIFMD. This will enable the continued marketing of BVI funds throughout most of the EU. Furthermore, Mr McIntyre stated that BVI is committed to meeting the requirements of Phase III and IV of the AIFMD, which means BVI funds should be well placed to continue marketing within the EU through to 2018 and beyond.

Company: Lennox Paton Name: Rob McIntyre Email: rmcintyre@lennoxpaton.com Web: www.lennoxpaton.com Address: Central Court, 25 Southampton Buildings, London WC2A 1AL Telephone: +44 (0)207 743 6490

Tax implications of AIFMD ------------------------------------------------------------------------

Robert Mellor is a Partner and Fiona Hauger a Director at PwC.

-----------------------------------------------------------------------Whilst the intention of the AIFMD is not tax related, operational and structural change to meet the requirements of the directive, including transition, will impact funds and fund managers from both a direct and indirect tax perspective. Moreover, additional AIFMD implementation measures being introduced by member states and other OECD initiatives (such as the UK’s consultation on Residence of Offshore Funds – extending the scope of Section 363A Taxation, and the OECD’s base erosion and profit shifting project), plus unprecedented focus on taxation by governments and the press, create a myriad of new and unclear factors which need to be considered in the AIF/ AIFM’s new operational model. One of the more obvious tax relevant questions is the residence of the AIF and AIFM. Fund structures are carefully thought out to avoid double taxation and to achieve tax neutrality, whilst management companies will seek to be VAT and direct tax efficient. Requirements under the directive and / or to take advantage of the “passporting” may mean such structures need to be revisited and adapted. Any change in the business model or legal/ownership framework, will have tax implications that need to be addressed as part of the change management process. Under AIFMD one entity within the group will be designated as the AIFM for regulatory purposes and this

/ September 2013

entity will be required to hold capital, and take on certain risk management responsibilities including the monitoring of delegated service providers. It will be important to consider this additional functionality and risk when taking into account overall transfer pricing models. In addition, restructuring may be required, say in order to move other functionality and ownership into or out of the AIFM.

This review cannot be exhaustive but the key message is that compliance with the AIFMD and the operational and structural changes resulting from it will have tax implications that need to be carefully assessed.

On top of this, the complete taxation profile including transfer pricing of an asset manager will at some point have to be considered in light of the OECD’s BEPS project, which is directly re-assessing the common principles by which taxing rights are divided between states and will have widespread implications for the industry. Another tax implication results from the remuneration provisions; which although only forming a small part of the directive text and apparently sitting quite a long way down the priority lists of many regulators, give rise to one of the biggest concerns for senior industry figures. Even now there remains a significant lack of clarity around implementation of the provisions and this, coupled with virtually no specific guidance from national regulators, means that firms are forced into second guessing regulators’ interpretation when seeking authorisation. Many asset management firms are still unsure as to whether they will be required to operate specific forms of remuneration structures including minimum levels of deferral and payments in the form of fund units. From an income tax perspective, potential deferral regulations without complementary tax provisions (or practical solutions) may result in partners being taxed on an accruals basis rather than a receipts basis.

Company: PwC Name: Robert Mellor, Fiona Hauger Email: robert.mellor@uk.pwc.com fiona.hauger@uk.pwc.com Web: www.pwc.com Address: 7 More London Riverside, London SE1 2RT, UK Telephone: +44 (0)20 7804 1385

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SECTOR SPOTLIGHT:

The Impact of the Alternative Investment Fund Managers Directive ------------------------------------------------------------------------

David Moss is the EMEA Head of Business Advisory for Citi Prime Finance. ------------------------------------------------------------------------

When AIFMD took effect in July 2013, AIFMs were left with a number of unanswered questions regarding how and when the rules would take force in each member state. Since then, regulators have moved quickly to provide guidance; while some questions remain unanswered, managers are now facing AIFMD-certainties that require action today. For many, AIFMD’s depositary requirement results in the most significant, immediate change to daily operations. The requirement necessitates new relationships, new communication channels, new operating processes, and new reporting capabilities. And while the rules will evolve throughout the phased implementation, managers are expected to be evaluating and adopting depositary solutions today. Onshore managers with onshore AIFs are required to adopt a Full Depositary approach. The AIF appoints a depositary to provide oversight, safe-keeping and custody and cash monitoring. The depositary appoints prime brokers and fund administrators, and can delegate certain safe-keeping and custody duties. The depositary’s strict liability under this option is intended to provide the greatest degree of security, but also makes this the most expensive approach. Given the cost and complexity, only those required to implement a Full Depositary solution and a handful of early adopters with offshore funds are pursuing this option.

Depo-Lite provides a less intrusive first step for managers with offshore funds that expect to eventually comply with AIFMD. Operationally, Depo-Lite is similar to the Full Depositary solution; however, in this instance the depositary does not face strict liability. As such, managers expect similar levels of service and support, but for substantially lower fees.

by leveraging the breadth of experts and capabilities across the Bank, Citi is uniquely positioned to assist clients with evaluating and implementing depositary – and broader AIFMD – solutions.

A third option now being explored is PB-Only Depo-Lite. Here, the prime broker provides safekeeping and custody services, the fund administrator provides cash monitoring, and a yet-to-be-defined independent entity provides oversight. Leading providers, like Citi Prime Finance, are exploring the feasibility of this approach.

David Moss is the EMEA Head of Business Advisory for Citi Prime Finance. The Business Advisory team generates market leading proprietary research, including their May 2013 survey on the evolution of the hedge fund industry and rise of liquid alternatives. Mr Moss has previously served in the Citi Markets Relationship Management team and as Head of NA Client Strategy. Prior to joining Citi, Mr Moss has spent time with McKinsey & Company, Banc of America Securities, and J.P. Morgan Alternative Asset Management.

Selecting a depositary solution – and for offshore managers, choosing to seek AIFMD compliance – requires careful consideration of costs, complexities, investor expectations, and plans for continued marketing in the EU. Managers can simplify the decision making process and their on-going operations by partnering with full-service providers offering integrated AIFMD solutions. Citigroup, for example, offers a holistic solution across the Prime Brokerage and Securities and Fund Services platforms. A single offering with integrated technology results in simpler, more efficient implementation and on-going operations. David Moss, the EMEA Head of Business Advisory for Citi Prime Finance highlights,

Well Positioned

Company: Citi Prime Finance Name: David Moss Email: david.n.moss@citi.com Web: icg.citi.com Address: Citi Centre, Canada Square, Canary Wharf, London E14 5LB, UK Telephone: +44 (0) 20 7986 2921

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The EU’s AIFMD regulations came into effect earlier this year with implications for fund managers in the Channel Islands. Patrick Coyne of EY in the Channel Islands, finds that the CI funds industry is well positioned to comply with the new regulations without creating a negative impact on the ability of the islands to remain competitive in serving the global fund markets. ------------------------------------------------------------------------

AIFMD was conceived as a key element of the EU’s response to the 2008 financial crisis and is one of many regulatory initiatives that is having a direct impact on the global funds industry. The general policy objectives of AIFMD are to increase transparency and accountability to EU regulators and investors, and to enhance EU investor protection. AIFMD became effective on 22 July 2013, subject to a one year transitional period in many EU jurisdictions. The Channel Islands (‘CI’) are not members of the EU (but are important European fund management centres in their own right), and therefore are not required to implement AIFMD. However, the EU is a major market for the CI and a large proportion of business in the islands relates to the Union. Of course, the CI is also an important fund management centre for funds with no connection at all to the EU meaning that both Jersey and Guernsey have had to develop an approach to AIFMD which will allow firms to continue to serve both EU and non-EU business effectively. One of the biggest challenges facing the CI funds industry is balancing compliance with the new AIFMD regulation, wherever required, with the need to provide confidence in using the offshore, or ‘non EU’ model.

/ September 2013

Importantly, CI alternative investment fund managers (‘AIFMs’) and alternative investment funds (‘AIFs’) with no connection to the EU can use the existing regulatory regimes which are free from the requirements of AIFMD. Also, the CI position as ‘third countries’ means they did not have to introduce a fully equivalent AIFMD regime in order to enable CI AIFMs and AIFs to access EU markets after 22 July 2013. Following the UK’s commitment to the National Private Placement (NPP) regime, Channel Island AIFMS are able to continue to access the UK market, enabling CI funds to receive investments from UK qualified investors post 22 July, subject to completion of the notification procedure of the relevant national securities supervisor. Access to other EU and EEA countries depends upon the local NPP regulations however, CI regulators have entered into bilateral co-operation agreements with regulators of many EU and EEA countries. AIMFD also provides the framework for establishing a full ‘passporting’ regime which is expected to be implemented for non-EU AIFMs after July 2015. The CI intends to engage fully with consultations on the third country passporting regime to ensure that local AIFMs will have the opportunity to market AIFs on a pan-European basis with a single authorisation. There is a significant opportunity for Channel Islandsbased fund managers who market a Channel Islands alternative investment fund to EU and EEA qualified investors, by way of reverse solicitation, or passive marketing. This is a situation whereby both the CI AIFM

and the CI AIF will remain outside the scope of AIFMD, thereby achieving competitive advantage over their European counterparts in terms of cost and operations. It’s important to note that where a CI AIFM wants to actively market a CI AIF into the EU post July 2013, the fund manager will be obliged to comply with certain transparency and reporting requirements under AIFMD but these are much less onerous than those faced by their EU counterparts. Overall, as a domicile, the Channel Islands offers a very valuable option for the global funds industry. The islands’ response to AIFMD demonstrates that they have not only recognised the importance of the EU market but also the truly global nature of its investor base.

Company: EY Name: Patrick Coyne Email: pcoyne@uk.ey.com Web: www.ey.com/channel_islands Address: PO Box 9, Royal Chambers, St Julian’s Avenue, St Peter Port, Guernsey, GY1 4AF Telephone: : +44 (0) 1481 717453

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Implementing an Effective Anti-Money Laundering System

Implementing an Effective AntiMoney Laundering System A.I. speaks to Michael G. Kessler at Kessler International to discuss the firm’s expertise in tackling money laundering issues. -----------------------------------------------------------------------As founder and principal, Mr Kessler has over three decades of law enforcement and investigation experience, and has assisted in hundreds of successful investigations for business and government. Working closely with each client, this valuable experience is brought to bear on each unique case. -----------------------------------------------------------------------“The Kessler staff of forensic accountants, CPAs, researchers and investigators are the best in the field, with years of sleeves-up service and training in their disciplines,” he commented. “The Kessler team knows what to look for in complex paper trails, and they know what it takes to conduct investigations quickly, discretely and cost-effectively.” “Kessler employs cutting edge methods and tools to help meet today’s highly sophisticated, high-tech criminals head-on. We constantly invest in new technologies, like the latest audio and photo/video equipment, continuouslyupdated company and personal profile databases, and our exclusive Internet monitoring software. That way, we’re always ready to uncover, document and resolve cases with utmost speed and discretion.” Mr Kessler stated that the firm’s money laundering detection and prevention programs are proven, cost-effective and dependable. With increased legislation against corporations involved in laundering money, including stiff penalties and broad asset

forfeiture provisions, he advises that companies cannot afford to assume money laundering is somebody else’s problem. “Kessler also offers a proactive anti money laundering prevention program designed to keep businesses “dirty money” free,” he continued. “We help businesses establish procedures for customer background searches, employee and compliance officer training programs, and regular ad hoc audits to help restore and maintain legal and ethical standards.”

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

In a recent case, at the request of a European governing agency, the team at Kessler was asked to determine the course of funds that a European official and his associates invested in the United States. “Our researchers and investigators profiled the financial history of each individual involved and found a trail that placed the illegal money in the United States,” elaborated Mr Kessler. “After reviewing the information, the governing agency took immediate action.” Kessler’s investigative expertise has helped uncover even the most subtle and sophisticated money laundering schemes. The firm is familiar with all the red flags that indicate suspicious financial activity in both bank and non-bank institutions, and can trade and document all such activity until the entire money laundering process is revealed.

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

FALL & Co Law Offices Villa 5031 Liberté 4 PO Box 17295 Dakar-Liberté DAKAR (Senegal)

Tel: + (221) 33 864 05 78 Email: fall_aboubacar@yahoo.fr + (221) 77 184 65 45

The firm was established in 1990 and is composed of 7 lawyers and 3 paralegals. The firm is member of a wide range of professional networks both in the African continent and outside, including the Pan African Lawyers Union (PALU),the Africa Business & Legal Expertise (ABLE), the IBA, ABA section of international law, the Comité Maritime International (CMI) etc…. We provide full legal services across the continent in general and in West Africa in particular. Dr. Aboubacar FALL is the senior partner. FALL &Co’s areas of specialization/expertise include the following: Energy, Mining, Oil & Gas, Maritime, Construction, Project Finance, Debt Renegotiation & Financial Law, Intellectual Property, ICT Law, International Trade & Business, International Commercial Arbitration, OHADA Law, ICT Transportation Law (including air and land Procurement, Environmental Law & Policy, Governance (including Legal & Judicial Reform, Public Participation, Fighting Corruption, Stolen Asset Recovery etc…) ,Investment, Infrastructure, Construction, etc….

ACQUISITION INTERNATIONAL

September 2013 /

SECTOR SPOTLIGHT:

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

Joint Ventures and Strategic Alliances: An Attractive Alternative to M&A Joint ventures and strategic alliances provide a desirable way for many individuals and businesses to expand, enter new markets and to achieve their business development objectives. The globalisation of business models and the dramatic change in the way that businesses operate in today’s economy have resulted in a shift in M&A strategy. Increasingly, corporations and investors are going beyond the traditional acquisition/disposal model, using Joint Ventures (JVs) and business alliances to further develop their business. There are certainly lots of commercial advantages in entering into joint ventures; new product/development opportunities, entrance into new markets, cost sharing, mitigation of risk etc. However it is now more important than ever to ensure that the venture is managed and monitored closely. Acquisition International speaks to Adam Zarren, Esq., Partner at Saul Ewing LLP, to take a closer look at the benefits of joint ventures.

Joint Ventures… a Value-Added Alternative to M&A Joint ventures have become an increasingly popular alternative to mergers and acquisitions (M&A). Unlike M&A, joint ventures typically allow the parties to first “test the waters” to determine whether their affiliation works (upfront)…the old adage of “living together before marrying.” A joint venture is an initiative in which two or more parties create a business relationship for a specific or common business purpose. There are many different types of joint ventures and ways to structure them. They can be formal or informal. Typically, a JV is a contractual arrangement that is more flexible than M&A and allows the parties to form a relationship for a particular business initiative without the finality, cost, and complexity of consummating a formal M&A transaction. Many times, this type of relationship leads to a win-win situation. Some simple joint venture structures include a strategic partner arrangement such as a reseller, finder, or other sales initiative, co-ownership of real estate projects, among others. There are also more complex, but rewarding structures. For instance, many times two or more companies have synergistic products or services and, rather than initially engaging in an M&A transaction, those parties form a JV by creating a business alliance typically through a

/ September 2013

new business entity that would be co-owned by the parties. This new company can operate as a new, separate business independent of the parties’ existing businesses and can take the form of many types of legal entities such as a limited liability company, partnership, corporation, or other legal entity depending on the domicile of the parties. There are many benefits associated with creating these relationships so that the parties to them can formally meet their respective goals and objectives without embarking in an M&A transaction. In fact, joint venture partnering subsequently often leads to an M&A transaction between the parties after their partnership proves successful. Some of the more common benefits of a joint venture include: the pooling of skills, knowledge, and resources, ease of beginning and exiting the relationship, risk reduction, expanded technological and other capabilities, nonexclusivity, cost reduction, significantly lower capital requirements, increased buying power, larger market share, partners maintaining separate management structures while retaining the right to compete in other business areas, and access to wider or new markets, among others. M&A certainly has its benefits and advantages, but a joint venture is a common alternative that should be considered

particularly where at least one of the parties is hesitant to engage in an M&A transaction, or if an M&A structure is otherwise not appropriate under the circumstances. In sum, I regularly represent both joint ventures and parties to them with domestic and global business initiatives in addition to handling M&A transactions throughout the world, and would be happy to discuss any questions that you may have.

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

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Protecting Intellectual Property Assets

Protecting Intellectual Property Assets Intellectual property is increasingly viewed as an asset from which to extract maximum value. Businesses are wise to recognise the value of their IP and take steps in ensuring such assets are protected accordingly. Patents, trademarks, design work, domain names, written work etc. can form a vital part to a business and such products and processes need to be safeguarded to ensure that potential disputes can be avoided where possible. From time to time is in inevitable that disputes relating to intellectual property will arise. Pre-empting an attack is the name of the game but where this is not possible a robust response to an infringement is the next best thing. Acquisition International speaks to leading experts to discuss the exploitation and management of IP to maximise profit and create competitive advantage.

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Domenico de Simone is the Naming Partner of de Simone & Partners S.p.A. ------------------------------------------------------------------------

Conventions and electronics have simplified the preparation and filing of patent, trademark, design and any other kind of application by harmonizing legal norms and automating forms, thus reducing the distinctiveness and the value of that type of service. Todayâ&#x20AC;&#x2122;s Intellectual Property Attorney will see these changes as a selective opportunity to devote greater effort into adding forward and downstream value by contributing to the whole cycle, including alternative strategies and procedures, developing business plans, conducting proactive searches into exclusive availability, brand and technology awareness, commercial and territorial deployment strategies, distribution, licensing, franchising contracts, and active and passive defence. Throughout the many years of professional practice

/ September 2013

we have followed the concept that the acquisition of an exclusivity is not limited to the rights over the final product, but is a fallout over the complete entrepreneurial area surrounding that product, the original idea, the research, funding, production, marketing, communication, the memory of the organisation, the credit rating advantage, the equity benefit, and the quality of the knowledge acquired by R&D. And the real competitive edge is measured by the integration of all these before-the-market elements. We therefore suggest that Intellectual Property attorneys should be more closely and better involved, and acquire the ability to educate and to follow the pulse of the clientâ&#x20AC;&#x2122;s initiatives. If we become involved early on in taking decisions we can play a proactive role. As contemporary Intellectual Property Attorneys, we shall be in a position to provide forward advice on the feasibility and economic

contribution of business projects. We may also help to balance the internal position of the creative R&D and Marketing functions.

Company: de Simone & Partners S.p.A. Name: Domenico de Simone Email: nds@desimonepartners.com Web: www.desimonepartners.com Address: Via Vincenzo Bellini, 20, 00198 Rome, Italy Telephone: +39 06 853361

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Protecting Intellectual Property Assets importance to safeguard the knowledge and to prevent that this innovation is not improperly exploited by who had contact with this information but has not contributed to it. It is extremely important to have and to be ready to use IP protection as well having being well counselled by competent and experienced IP professionals. Also, in this fast changing days, IP due diligence is an essential step for A&M as well as IP valuation.

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António Trigueiros de Aragão is the CEO of Raul César Ferreira (Herd.) S.A. ------------------------------------------------------------------------

Raul César Ferreira (Herd.) S.A. is a well-established company in the industrial property field, founded in 1929, and today regarded one of the leading firms in Portugal. RCF is a dedicated IP services firm with proven expertise in all fields of industrial property. RCF works in Portugal, Macao, Angola, Mozambique, Sao Tome and Principe, Cape Verde and Timor. There is no typical client for RCF as our portfolio of clients includes individual inventors, national and foreign SMEs as well as some of the biggest Portuguese as well as European, American and Asian companies in different fields. Those clients have chosen us directly themselves, or through referral from our colleagues abroad. Independently of the types of clients we retain, all of them receive the same attention, dedication, commitment and quality of work. The awareness to the issue of IP is essential. In a society whose motto focuses on innovation, it’s of major

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Christopher Young is a Partner at Minter Ellison Rudd Watts. ------------------------------------------------------------------------

RCF has a vast expertise in all IP matters and also IP-related due diligence and IP valuation. Our collaborators are mainly trademark and patent attorneys, but also collaborators specifically qualified in the field of mechanics, chemistry, computer science, biology, molecular biology, pharmacy, biochemistry, management and economical sciences, etc. These collaborators possess experience in infringement analysis and validity assessment of IP rights, state-ofthe-art and advanced technical searches and promoting a very active expert cooperation in IP disputes.

Company: Raul César Ferreira (Herd.), S.A. Name: António Trigueiros de Aragão Email: mail@rcf.pt Web: www.rcf.pt Address: Rua do Patrocinio, 94, 1399-019 Lisbon, Portugal Telephone: +351 213 907 373

obtaining international trade mark protection is particularly important for exporters.”

“IP is often an important asset both strategically and in a value context,” explained Mr Young. “A common challenge is ensuring that the benefits of IP assets are understood in a business context so that IP is utilised effectively by management.”

“As the IP Registers become more crowded it is more important than ever to register relevant marks and other IP rights in jurisdictions of importance. For some business assets obtaining appropriate intellectual property protection can be critical to maintain a competitive advantage,” he concluded.

Mr Young stated that relevant IP protection can provide a competitive advantage; be useful, and sometimes essential, in distributor, joint venture and licence arrangements; and can significantly strengthen enforcement rights against third parties.

Christopher Young heads the IP team and has been actively involved in IPSANZ, LESANZ, INTA for many years (currently on INTA’s Famous Marks Committee). Mr Young has been consistently named as a leading individual in a number of legal guides.

Minter Ellison Rudd Watts has a dedicated IP practice and a leading team which actively advises on a wide range of IP work.

How has the America Invents Act affected the interplay between patent law and trade secrets in the United States? -----------------------------------------------------------------------John Richards is a Partner at Ladas & Parry LLP. ------------------------------------------------------------------------

Protecting one’s invention by preserving it as a trade secret is often a tempting alternative to seeking patent protection. Trade secrets have traditionally been protected under state law. Prior to the Supreme Court’s 1974 decision in Kewanee Oil Co. v. Bicron it was unclear whether the federal patent law preempted state trade secret law. The Supreme Court held not - as long as the protections provided by state law did not rival those obtainable under the federal patent statute. More recently, Congress has enacted federal laws to protect trade secrets such as the Economic Espionage Act. Additionally, the America Invents Act (AIA), changes the calculus when deciding between trade secret and patent protection. The AIA expands the “prior user rights” defense that was previously available only with respect to business method patents to provide a defense to a patent infringement action to anyone who made commercial use of the invention at least 12 months prior to the patent filing date. Also, the AIA removes the risk that keeping an invention a trade secret may preclude one from later obtaining a patent for it. For patent applications having claims with a date on or after March 16, 2013, there is no longer a risk of the application being rejected or the patent held invalid on grounds that the applicant had previously abandoned, suppressed, or concealed the invention, opening the door to repeated filings of the same provisional application “just in case”. The AIA, therefore gives inventors flexibility in first maintaining their IP as a trade secret and patenting it later. It does not, however, provide any defense against the possibility that others may reverse engineer one’s invention or develop a similar invention themselves. For protection against such situations, a patent is still required.

“Important IP assets should be identified and then actively monitored and updated (e.g. through registration) to ensure synergy with business needs,” he continued. “Ensuring early on that the base IP structure is correct so that businesses own strategic IP, and having sufficient freedom to operate in relevant markets is critical,” elaborated Mr Young.

“We can work with businesses to develop a strategy and then optimise IP protection in the context of particular markets and budgets including assisting with international protection as relevant, for example

ACQUISITION INTERNATIONAL

Company: Minter Ellison Rudd Watts Name: Christopher Young Email: christopher.young@minterellison.co.nz Web: www.minterellison.co.nz Address: Lumley Centre, 88 Shortland St, Auckland 1010, New Zealand Telephone: +64 9 353 9910

Company: Ladas & Parry LLP Name: John Richards Email: iferraro@ladas.com Web: www.ladas.com Address: 1040 Avenue of the America, New York, NY 10018, USA Telephone: +1-212-708-1915

September 2013 /

SECTOR SPOTLIGHT:

Protecting Intellectual Property Assets ------------------------------------------------------------------------

Aaron D. Hurvitz is Of Foreign Counsel at Kangxin Partners, P.C. ------------------------------------------------------------------------

Kangxin Partners is a full service IP firm specialising in all areas of intellectual property. The firm’s clients range from Fortune 50 companies to individual inventors.

The British Virgin Islands Marks New Advances for Intellectual Property Owners ------------------------------------------------------------------------

Jamal S. Smith is the Founder and Principal of Thornton Smith. ------------------------------------------------------------------------

The British Virgin Islands is known as the world’s leading corporate domicile with most of the world’s corporations being registered there due to its reputation as a wellregulated finance center with flexible and innovative corporate legislation. With about 70% of the net worth of global businesses coming from their IP assets, many businesses are establishing arms length IP management structures to raise finance and lower interest rates. On 30 April 2013 the British Virgin Islands enacted the Trade Marks Act, 2013 to replace its dual regime under the old 19th century legislation. It is designed to facilitate the world’s leading intellectual property asset holders to enter into asset-backed security structures, collateralized options and other structured finance mechanisms by transferring the IP assets into a bankruptcy remote IP holding company that may enter into a variable service and management agreement instead of, or in addition to, parallel loans and swaps to repatriate revenues into the group structure. It will provide several changes to trade mark practice in the British Virgin Islands. For example, a trade mark owner will have to appoint a registered trade mark agent who must be approved by the Financial Services Commission. Currently, there is no concept of wellknown trademarks in the British Virgin Islands, but if anyone else tries to register a well-known trade mark in the British Virgin Islands an objection may be made. Additionally, the pre-1938 UK classification system will be replaced with the current version of the international classification system under the Nice Agreement as the default classification. Although the Trade Marks Act has not yet come into force, preparations are being made to bring it into force and to allow everyone to become familiar with the new obligations it creates.

“We are a dynamic firm with a unique and progressive dedication toward client satisfaction,” said Mr Hurvitz. “We are bifurcated in that we are able to manage our domestic Chinese clients yet can meet our International clients’ expectations.” According to Mr Hurvitz, IP rights allow a business to protect and capitalise their brand on a global basis. He stated that the role of an IP adviser is extremely important; adding that they are required to understand their clients’ needs and dedicate themselves to accomplishing their clients’ goals. Commenting on the firm’s services, he said: “We are able to provide an in depth view of the client’s respective market, and utilise our business experience and contacts to implement the client’s commercialisation goals.” Businesses that fail to sufficiently protect their IP potentially face infringement, loss of profits and market share in a given jurisdiction. Mr Hurvitz added: “Further the integrity of the brand and the product may be at stake”. He acknowledged that every situation is unique in its own way, however when an infringement is detected the firm is able to access the specific matter and provide practical suggestions on how to proceed with enforcement.

“Litigation is often the last and final alternative to enforce intellectual property rights,” he continued. “Our technical depth, coupled with our more than thirty years of legal experience allows us to guide our clients through even the most complicated of litigations.

“As China progresses from a manufacturing country to one of innovation, I believe we will continue to see an increase in patent infringement cases. Further as the Chinese Government continues to dedicate significant resources to intellectual property procurement and enforcement, I believe the IP climate will continue to improve,” concluded Mr Hurvitz.

Company: Kangxin Partners, P.C. Name: Aaron D. Hurvitz Email: ahurvitz@kangxin.com Web: www.kangxin.com/en Address: Floor 16, Tower A, InDo Building, A48 Zhichun Road, Haidian District, Beijing 100098, P.R. China Telephone: +8610 56571588 Fax: +8610 56571599

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Ben Dempster is a Patent Attorney at Withers & Rogers LLP. ------------------------------------------------------------------------

Companies are once again considering strategies for growth and mergers and acquisitions are very much back on the agenda. But before embarking on strategic growth plans or selling assets to an interested trade buyer, it is important that companies invest time in making sure their intellectual property (IP) portfolio is in order. It can be notoriously difficult to establish a valuation for IP rights and businesses considering a sale or an acquisition could end up losing out if they fail to ensure that IP rights and schedules are well-presented and up to date. It is important that, when the due diligence team decides to turn its attention to IP matters, which usually occurs during the critical, latter stages of negotiations, all the correct information is available.

and cause a delay in negotiations, perhaps while further assurances in the form of warranties are sought. Rather than leaving IP matters to the last minute, there can be significant advantages in preparing relevant documentation at an early stage. This allows time to ensure that the protection in place meets the needs of the potential buyer’s business, highlighting any gaps that may need to be addressed urgently on completion. Too often IP is treated as an afterthought in commercial transactions, when it could and should be regarded as a strategic asset. At the very least, time may be needed to resolve any issues that arise but there is also the potential to add value and provide enhanced deal security.

Mr. Jamal S. Smith Businesses should ensure that their IP portfolio is complete and presented in an orderly and saleable

Position: Founder & Principal fashion. There should be clear and concise summaries

of individual assets including relevant patents and trade mark registrations and, where necessary, it should be ensured that any required renewal fees have been paid.

Month/year started: February 2011 Contact Information:

Company: Thornton Smith IP assets are rarely the sole motivation for a Email:While jamal.smith@thorntonsmith.com Name: Jamal S. Smith corporate transaction, issues can arise and escalate into potential deal-breakers Tel: 1-284-494-2518 ext. 223if not properly managed. There Email: jamal.smith@thorntonsmith.com is nothing more disconcerting for a potential buyer than Web: www.thorntonsmith.com Education/Credentials: to find that licence agreements have not been properly Address: Capital Chambers, P.O. Box 3532, executed or that an assignment of a patent has not been • Cambridge Advanced Level Certificate (H. Lavity Stoutt Community College), 1996 Road Town, Tortola VG1110, Virgin Islands (UK) recorded at the appropriate patent office. Uncovering • Bachelor of Laws (Hons) (University of the West Indies), 2000 Telephone: +284 494 2518 such oversights could be sufficient to unsettle the buyer • • • • •

Certificate of Legal Education (Eugene Dupuch Law School, The Bahamas), 2002 Admitted as a Barrister and Solicitor in the British Virgin Islands (2002) Admitted as a Notary Public in the British Virgin Islands (2011) Admitted as a Commissioner / September 2013 for Oaths in the British Virgin Islands (2011) Approved by the FSC as a Senior Officer (2009)

Post-Qualification Experience

Company: Withers & Rogers LLP Name: Ben Dempster Email: bdempster@withersrogers.com Web: www.withersrogers.com Address: Nicholas Wilson House, Dormer Place, Leamington Spa, CV32 5AE, UK Telephone: +44 (0) 1926 310700

ACQUISITION INTERNATIONAL

Kangxin is a leading intellectual property law firm licensed by the State Intellectual Property Office (SIPO) and the State Administration for Industry and Commerce (SAIC) in China. Mission Continued Innovation to Maintain Proficiency Vision Developing into a World-Class IP Law Firm Philosophy Advocating for Your IP Spirit Faith, Reliability, Challenge, Teamwork Beijing, Changsha, Xiâ&#x20AC;&#x2122;an, Shenyang, Suzhou, Wenzhou, Hong Kong, U.S., Germany Tel: (8610)56571588 E Mail: iplaw@kangxin.com

2013

M&A AWARDS Licensing Law Firm of the Year - China

www.kangxin.com

SECTOR SPOTLIGHT:

Protecting Intellectual Property Assets

Anguilla – A new Venue for Intellectual Property and Licensing ------------------------------------------------------------------------

Walter Bayer is Special Counsel and Pam WEBSTER is the Managing Partner at WEBSTER. ------------------------------------------------------------------------

What is Anguilla, and where is it? “Anguilla is a British overseas territory in the Caribbean [18.2206° N, 63.0686° W]. It is one of the most northerly of the Leeward Islands in the Lesser Antilles, lying east of Puerto Rico and the Virgin Islands and directly north of Saint Martin.” The legal system, including the Intellectual Property (IP) statutes, is based on English law. However, Anguilla is not a jurisdiction in which IP disputes commonly arise. Patent infringement actions are unheard of; trademark disputes are few and far between, limited to a bare handful of oppositions and to the occasional seizure of counterfeit goods by Anguilla Customs. Copyright and trade secret disputes are practically unknown. But Anguilla does have a new role in the wide world of international IP, and even the heading off and the settlement of disputes involving international IP. Because Anguilla has no capital gains, estate taxes, no corporate income tax, and only a 6% income tax on domestic earnings of individuals, and because remittances from abroad, i.e., from outside Anguilla, whether in the form of dividends, interest or royalties, are tax-free, Anguilla is an ideal venue for the establishment of a wholly owned first tier subsidiary to own and to license third country patents, trademarks, copyrights and trade secrets. WEBSTER is uniquely positioned to help foreign companies to set up IP operations in Anguilla, having recently retained the services of former VP and General Counsel – Licensing, of a major US corporation. In addition, WEBSTER has vast experience assisting overseas parent companies set up subsidiaries in Anguilla to act as holding companies for their lower tier third country subsidiaries. We look forward to serving your general and your IP needs.

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Santiago R. O’Conor is the the Founder and Managing Partner at O’Conor Power IP Law Firm. ------------------------------------------------------------------------

O’Conor Power is an Argentine Intellectual Property firm developed and strengthened by more than 25 years of local and international experience and expertise in IP Law. “Our team’s broad experience in the management and strategy of patents, trademarks, utility models and designs, copyrights, software, domain names, transfer of technology , franchising, licensing and related issues, representing international, regional and local companies from different industries, makes OCP a unique “stop basis” in an important and growing area in the world’s economy, such as Latin America,” said Mr O’Conor. “We place emphasis on furnishing the client with reliability, experience, efficiency, adaptability, price flexibility, customized services and a personalized touch.” O’Conor Power IP Law Firm represents international, regional and local companies, as well as individuals, from different industries. The firm has advised Forbes and Fortune 500 companies in a variety of industries, such as food and wine, luxury goods, entertainment , technology and telecommunications, among others. “Besides high standards of technical and juridical skills, an IP adviser should understand the nature of the business and client’s needs, in order to guide and offer a good and efficient strategy on IP matters,” commented Mr O’Conor. “IP assets are the key opening to business in a globalized world, in that knowledge and intangible assets are becoming to be the more vital than material goods.”

/ September 2013

“A business and investment can be seriously affected if they are not correctly and sufficiently protected,” explained Mr O’Conor. “The latter is more directly applied in the Latin American region, in which counterfeiting is expanded in many countries. “Our team is capable to act in an agile and cost effective manner in terms of infringement, in Argentina as well as in other Latin American countries.” He concluded: “Understanding the business and nature of the clients’ needs are vital to conduct an efficient process and not to lose time and money in litigation actions.”

Company: O’Conor Power Abogados - Propiedad Industrial Name: Santiago R. O’Conor Email: soc@oconorpower.com.ar Web: www.oconorpower.com.ar Address: San Martin 663, 9th. Floor, Buenos Aires, Argentina. Telephone: +5411 4311-2740 +5411 5368-7192/93

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Albert Ferraloro is a Principal at national IP services firm Wrays and is the Executive General Manager of their Management & Strategic Services division. ------------------------------------------------------------------------

Manufacturers, technology developers and service providers alike require being more cognisant of the importance of and value in their IP assets. IP typically represents anywhere between 50%-85% of the capital value of a company and should be protected and managed just like any other important business asset. Unfortunately, many directors and managers may be exposing their businesses to significant risk and jeopardising potential revenue streams by being ill-informed or complacent when it comes to understanding and harnessing the value in their IP assets.

Company: WEBSTER Name: Pam J. Webster; Walter J. Bayer II Email: pwebster@websterlawbwi.com Web: www.websterlawbwi.com Address: PO Box 58, Victoria House, The Valley, AI-2640 Anguilla Telephone: +1 (264) 461-2060 Facsimile: +1 (264) 461-3096

The firm’s team is highly qualified and has a broad range of experience in helping support businesses in the exploitation and management of their IP to maximise profit and create competitive advantage.

Business managers and directors require an understanding of the IP landscape around their technologies and processes which can inform the protection and exploitation thereof while ensuring that third party IP rights are not infringed. Hand in hand with such considerations are an underlying awareness of the different rights that exist for safeguarding IP assets (i.e. recognising that IP means more than just revolutionary inventions and patents) and of course knowing when to seek specialist IP advice. Such practices should form part of a broader IP strategy which underpins the commercial strategy of the business and more widely addresses issues pertaining to the identification, capture, evaluation, protection and exploitation of a company’s valuable IP assets.

When proactively managed, IP assets have the ability to safeguard proprietary technologies, help maintain a competitive advantage, attract interest and investment, and often enable different income streams to be realised. Accordingly, managers and directors need to ask themselves if their IP is being fully exploited and commercialised to safeguard current operations and provide opportunities for new revenue streams. Not only will a proactive approach to IP management ensure that companies are better placed to extract value from key IP assets, but it will assist in mitigating a range of significant risks which may otherwise result from a poorly considered or reactive approach to IP matters.

Company: Wrays Name: Albert Ferraloro Email: albert.ferraloro@wrays.com.au Web: www.wrays.com.au Address: 56 Ord Street, West Perth, WA 6005, Australia Telephone: +61 8 9216 5147

ACQUISITION INTERNATIONAL

Welcome to

Christodoulos G. Vassiliades & Co LLC

Established in 1984, Christodoulos G. Vassiliades & Co LLC swiftly developed a reputation of excellence and diligence in all legal and business matters, and is now internationally acknowledged as one of the leading law firms on the island. The Firm has a sizeable national and international corporate network with coordinated teams at the Limassol branch office and representative offices in Moscow, Budapest, Athens, Belize, Malta and Seychelles. This complex structure enables Christodoulos G. Vassiliades & Co LLC to provide international perspectives and support for cross-border transactions. It is a pioneer in the concept of providing comprehensive services that meet all client needs. It offers the diverse professional skills of approximately 150 employees including qualified lawyers, legal tax consultants and administrators, all dedicated to the prompt provision of personalised advice and quality services. Christodoulos G. Vassiliades & Co LLC advises high-profile corporate and private clients, both on domestic and international law in matters of Intellectual Property, Corporate and Commercial, M&A, Contractual Drafting, Trusts and Property, Banking and Finance, Admiralty and Maritime, Tax and International Tax Planning, European and Competition, Migration and Dispute Resolution. Specifically, it is a one-stop Firm that personally maintains patent portfolios globally. Consequently, clients do not endure the complexity of maintaining their patents with different firms internationally. The Intellectual Property Department specialises in a broad range of issues including, but not limited to the acquisition and protection of intellectual property rights, actions for infringement and passing off, and Community Trademark matters. Christodoulos G. Vassiliades & Co LLC maintains an extensive international network of correspondent law firms, equipping it to promptly and efficiently cater for international clientele. It is also a member of prestigious associations such as the International Trademark Association, ensuring its lawyers remain abreast of legal and business developments.

15, Agiou Pavlou Street, Ledra House, Agios Andreas, 1105 Nicosia, Cyprus Tel: +357 22 55 66 77 Fax: +357 22 55 66 88

cgv@vasslaw.net

www.vasslaw.com

SECTOR SPOTLIGHT:

Pensions Issues in M&A Transactions

Pensions Issues in M&A Transactions In the current market conditions it is of the upmost importance for purchasers to understand the risks and costs of a potential target’s pension plan, post-retirement medical plan and other benefit plans. Understanding the pension implications of a proposed corporate transaction is essential to reducing and managing the risk associated with pension obligations post transaction, as well as the overall risks posed on the business. Whether buying, selling, restructuring or refinancing a business there is certainly opportunity for reward, the purchaser must also be aware of the potential risks relating to any pension scheme. Failure to consider pension obligations and arrangements can turn a good acquisition into a costly mistake. Dr Boaz Yam, CEO of Ogen Actuarial, Financial and Business Consulting Ltd., gives Acquisition International some insight into pension issues.

According to Dr Yam, the Israeli market has changed drastically over time, with rapid transformation in the past decade alone. “Many organisations have employees who grandfathered employment terms from previous employers, older and more generous regimes, or special ad-hoc arrangements that were made with the Government in the past,” he elaborated. “M&A transactions need to consider all that to harmonise employment terms across the new entities.” Dr Yam stated that advice relating to pension issues is vital when considering the fact that the operators of the pension schemes (local brokers or agents) often try to take a consultancy role as well. “While in direct conflict with their commission based compensation from the insurers or the pension funds, this market practice can lead to misguided decisions that can’t be fixed later, as regulation changes and terms in the market conditions become less favourable,” he observed.

/ September 2013

At the end of 2012, Israel saw yet another important regulatory change, when “guaranteed pension coefficients” - meaning a promise at purchase (even at a young age) to the rate in which pension would be paid upon retirement – was cancelled. Dr Yam explained that this change cancelled the large advantage insurance products (who enjoyed the feature) had over pension funds (who did not). “The comparison between insurance and pension is now much more important as expenses differ dramatically between the two and special attention has to be given to the best possible allocation between the two, especially for people with higher-than-average salaries,” he continued. “A second change was an update to the Commissioner of Insurance mortality tables, thus prolonging life expectancies and changing the price of both risk and pension products across the market.” Dr Yam concluded with a prediction: “The move from Defined Benefit (DB) to Defined Contribution (DC) is going to strengthen and more employers find the

administration of such products simpler and less risky. This will bring about the question of how to manage current plans under the new regime”.

Ogen Ltd. Company: Ogen Actuarial, Financial and Business Consulting Ltd. Name: Boaz Yam, Ph.D., ASA Email: boaz@ogen.co.il Web: www.ogen.co.il Address: 1 Azrieli Center, The Round Tower 23rd. Fl., Tel Aviv 67021 Israel Telephone: Office: +972-3-6911370 Cell: +972-54-7679181

ACQUISITION INTERNATIONAL

www.investigation.com At Kessler International we offer a full range of Forensic Accounting, Computer Forensics and Corporate Investigative services to protect companies against the dangers of fraud, counterfeiting, product diversion, trademark, patent, and copyright infringement, money laundering and the recent explosion in computer crime. Our firm was founded in 1988 by Michael G. Kessler, an internationally respected investigative consultant who has assisted in thousands of successful investigations for corporations and government agencies worldwide. Kessler International is a privately owned, licensed and certified firm with offices throughout the world and a network of established affiliates on every continent.

Where Lies Go To DieSM Kessler International is a world leader specializing in a wide variety of forensic & investigative services, with offices worldwide. Our top services include: FORENSIC ACCOUNTING COMPUTER FORENSICS BRAND PROTECTION CORPORATE INVESTIGATION GOVERNMENT SERVICES If you are in need of a discreet, reputable, results-oriented and thoroughly professional investigation and consulting firm, you have come to the right place.

Kessler International...

Because Their Is A Difference.速

Kessler International World Headquarters 45 Rockefeller Plaza - 20th Floor New York, NY 10111-2099 Phone: (212) 286-9100 Fax: (212) 730-2433 Toll-Free Phone: (800) 932-2221 Toll-Free Fax: (800) 451-4546

SECTOR SPOTLIGHT:

The Importance of Anti-Corruption Due Diligence in Corporate Transactions

The Importance of Anti-Corruption Due Diligence in Corporate Transactions Anti-corruption and anti-bribery issues continue to present significant risks in acquisition and investment transactions as regulators across the globe continue robust enforcement in this area, a trend which is expected to continue. In such an environment, international organisations, particularly those operating in high-risk countries and industry sectors, must ensure that their anti-bribery and corruption compliance programs are comprehensive and effective. Acquisition International speaks to leading experts to discuss the key issues.

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Nick Burkill is Co-chair of Dorsey & Whitney’s AntiCorruption Group and head of the firm’s London office litigation group.

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“Anti-corruption due diligence has become one of the major areas of interest for organisations,” said Mr Burkill. “This is because organisations increasingly recognise the business and regulatory impacts of getting anti-corruption due diligence wrong and want to understand how their procedures compare with those of others.”

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Whilst Mr Burkill believes that too cautious an approach increases the cost of transactions unnecessarily, he stated that the most important dangers of not identifying corruption issues in due diligence are: • •

Buying business based on corruption that is then lost when the acquirer does not continue the corruption Buying a company that is liable to pay a criminal fine or fines, disgorge past profits obtained corruptly, resource an investigation directed by the authorities and to lose the ability to tender for public contracts or multilateral bank funded projects

Loss of individuals involved in corruption because they have to be dismissed and because they are prosecuted as individuals Buying the reputational damage that attaches to a corruption investigation In the UK, the purchaser can commit the criminal offence of dealing in the proceeds of crime by proceeding with the acquisition of a company or business that itself represents or has the proceeds of corruption

Mr Burkill noted that the UK will introduce deferred prosecution agreements when that part of the Crime and Courts Act 2013 comes into force. He explained that this will lead to increased anti-corruption enforcement activity in the UK as the authorities are able to negotiate resolutions with companies under court supervision, enabling the authorities to take on more companies. “However, until the resources available to the Serious Fraud Office for corruption enforcement are increased, it appears likely that its attention will remain focussed on cases where companies are subject to both UK and US jurisdiction. In this way, the SFO will achieve results in anti-corruption enforcement relatively cheaply, because companies exposed

in both jurisdictions that are under investigation in the US will need to reach resolutions with both the US authorities and the SFO. “The authorities will continue to use evidence obtained from corporate investigations in the subsequent prosecution of individuals,” he concluded.

Company: Dorsey & Whitney Name: Nick Burkill Email: burkill.nick@dorsey.com Web: www.dorsey.com Address: 21 Wilson Street, London EC2M 2TD, England Telephone: +44 (0)20 7588 0800

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Terry Braun, P.E., M.S., is the President of SRK Consulting (U.S.), Inc. -----------------------------------------------------------------------SRK began in 1974 in Johannesburg, South Africa as a specialty consulting practice. The company focused on providing solutions for the geotechnical and mining challenges faced by mainly mining clients. From this origin, the company successfully broadened its service offerings, and expanded in South Africa and globally. Today, SRK employs more than 1,600 professionals in 50 offices on six continents. SRK’s traditional clients in mining due diligence are investors interested in acquisitions and/or ownership, and lenders who offer forms of debt financing to operators. Investors include mining, private equity and royalty-type companies. The firm’s client list includes equity and banking interests from around the world. These clients service other industrial sectors as well as mining and continue to innovate in terms of financing instruments and other offerings to the mining sector. “Increasingly, we notice a rise in the number of industry consortiums,” observed Mr. Braun. “These hybrid groups represent downstream industrial users of raw materials

/ September 2013

who are looking to secure supplies of iron ore, uranium, industrial minerals, etc. We find that these groups follow a longer-term supply and extended risk management strategy than our traditional clients in this sector.”

Mr Braun concluded, “Our methodology is to help companies understand the choices available and the risks and opportunities that go with each of those choices. We translate the technical issues into business consequences to illustrate the outcome and impact of each option.”

Mr. Braun referred to recent mining headlines, which confirm that the costs of inadequate due diligence processes are substantial. Between 2011 and 2013, chief executive officers at many of the major and intermediate mining companies came under scrutiny for “failed” acquisition strategies. Aside from the loss of share value, many of these companies also elected to replace their corporate leadership. Common pitfalls noted by Mr. Braun include optimistic pricing and production assumptions. “To be fair, hindsight on many recent transactions is 20/20. Commodity demand and pricing assumptions can look brilliant at their best or delusional at their worst. Investor expectations are often unrealistic in terms of how quickly the value of a transaction will be reflected in a company’s bottom line. Transactions that are considered failures in terms of the short-term benefits to the company can be significant winners over a longer, strategic timeline,”

Company: SRK Consulting (U.S.), Inc. Name: Terry Braun Email: tbraun@srk.com Web: www.srk.com Address: Suite 3000, 7175 West Jefferson Ave, Lakewood, CO, 80235, USA Telephone: +1 303-985-1333

ACQUISITION INTERNATIONAL

12 College Place Expert Legal Mediators 12 College Place are committed to providing you with cost saving solutions to your legal disputes. The Mediation and Alternative Resolution Team (ADR) offer you a quicker, simpler and often less expensive method of resolving disputes out of court. Our qualified mediators will assist you to come to a solution which may not have been available to you at court. A court case can be extremely time consuming and stressful as well as being a highly uncertain process. Mediation ensures that you maintain an active role in the decision making and resolution process. Further details of Mediation and ADR can be found at www.12cp.co.uk, where you can also find details of the individual team members.

12 College Place www.12cp.co.uk

Telephone: 023 8032 0320 Email: clerks@12cp.co.uk

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.

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Leen van Hoogdalem and Peter Paul Buijsrogge are Partners at BrightOrangeTalanton. -----------------------------------------------------------------------BrightOrangeTalanton is an independent corporate finance consultant. It focusses on four disciplines; Business Valuation, Mergers and Acquisitions, Corporate Litigation Support and Education. The company distinguishes itself from its competition by combining state of the art academic knowledge with smart deal making experience.

Mr Buijsrogge stated that mediation as a tool is of growing importance to BrightOrangeTalanton’s services. He explained that most valuation reports that are used in dispute settlement can be very costly and time consuming. The firm uses mediation as an attractive alternative for its clients. “Besides private initiative of clients, courts of justice are using us as forensic mediators,” continued Mr Buijsrogge. “Forensic mediation is a method that combines investigation by an expert with mediation. The expert tries to mediate parties, if that is unsuccessful the expert informs the court so that a court ruling can be given.”

/ September 2013

According to Mr Buijsrogge, the most appealing benefit of mediation is that it empowers and motivates parties to find a solution for their conflict themselves. “Value creation for our clients is embedded in our business principles,” he enthused. “Finding the best solution, against the best price, within a reasonable time contributes to that principle. Mediation can be an effective method in that respect. This value creation for our clients sells itself in the market and provides BrightOrangeTalanton a competitive advantage.” Mr van Hoogdalem highlighted some recent examples of successful mediations for the firm, including settlements of shareholder disputes concerning market value, financial divorce settlements, splitting companies and shareholder buyouts. He concluded with a prediction for the rest of the year: “Mediation turnover will be doubled in 2013 vs. 2011 and shall take a considerable part in the future”.

Company: BrightOrangeTalanton Name: Leen van Hoogdalem & Peter Paul Buijsrogge Email: vanhoogdalem@botcf.nl buijsrogge@botcf.nl Web Address: www.brightorangetalanton.nl Address: Office Houten, Hoofdveste 17, 3992 DH Houten, +31 30 6340008 Office Amsterdam, Barbara Strozzilaan 201, 1083 HN Amsterdam, +31 20 3031222

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Resolving Commercial Disputes through Mediation take sides. Most importantly, each of the parties will have an opportunity to state their grievances during confidential meetings with the mediator so that all of the issues are dealt with. Unlike litigation and arbitration which can lead to a mandatory and possibly binding decision, the mediator doesn’t have the power to force the parties to reach an agreement. The process is entirely voluntary and either party can withdraw at any time.

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Naveen Agnihotri is a Professional Mediator and Barrister specialising in Employment Law.

A mediation agreement is absolutely enforceable in a court of law as long as the authorised parties agreeing to it sign it off once the relevant terms have been properly recorded. This makes mediation an enforceable and cost-effective alternative to litigation.

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As a lawyer, even Abraham Lincoln recognised the pitfalls of litigation; ‘The nominal winner is often a real loser — in fees, expenses and waste of time.’ Fortunately, business owners today have an alternative way to resolve disputes that does not put their fate in the hands of a judge.

As to the actual cost of mediation this will vary with the complexity of the case. Usually however, the parties share the costs. Mediation is most definitely a bargain when you consider that the cost of disputes to organisations in England and Wales is circa £24 billion (based on 2009 figures).

Mediation is considerably cheaper than litigation and also puts the respective parties in control of the outcome. This often results in creative solutions to the conflict - something which even a judge is not empowered to provide. Mediation is a type of alternative dispute resolution, where an independent and accredited mediator assists parties in conflict to resolve their issues - ideally before a court or Employment Tribunal claim is commenced. Mediation is different from arbitration and litigation in that there isn’t a hearing or trial with the parties having to give evidence, and the mediator doesn’t rule on the merits of the case or

Company: 12 College Place Name: Naveen Agnihotri Email: clerks@12cp.co.uk Tel: +44 (0) 23 8032 0320

-----------------------------------------------------------------------Klaus-Olaf Zehle is the Managing Partner of EQUIDIS GmbH and Managing Director of Mediation GmbH. -----------------------------------------------------------------------The German Mediation Law was set in place at the end of July 2012. After a year’s experience with the law, Mr Zehle sees more and more acceptance of mediation in the German market. In the meantime, 85% of the insurance companies who offer legal protection insurance are also covering costs for mediation. The German mediation law differentiates between the “normal” and the “certified” mediator. Currently the conditions to be recognised as a “certified” mediator are under discussion and not finally defined. Nevertheless, the legal framework for both kinds of mediators is the same.

“Using mediation techniques we create transparency and can therefore avoid conflicts in future stages of collaboration between companies who are merging or are going in contractual relations,” explained Mr Zehle. “From our point of view conflict prevention is one of the most ignored benefits of mediation. “If mediation is defined during the contract phase as the standard procedure to solve conflicts in fulfilling any kind of obligations of a contract, this allows parties to find interest based solutions later on and approach each other looking for solutions without fighting. Going to court is than no longer a real alternative.” In one of Mr Zehle’s recent mediations, the managing directors of two subsidiaries of a large construction company were in dispute over the positioning to their customers and the market. After learning about the drivers of each other’s business, the parties were able to find a new business area where they now offer combined services and are no longer in competition. Looking ahead, Mr Zehle anticipates increasing demand for mediation services in all market areas. “On our directory platform the number of searches for qualified mediators has doubled in the last 12 months and I expect this trend to go on,” he concluded.

Company: EQUIDIS GmbH Name: Klaus-Olaf Zehle Email: zehle@equidis.de Web: www.equidis.de www.mediation.de Address: Schlueterstrasse 14, D-20146 Hamburg, Germany Telephone: +49 40 600 928 43

ACQUISITION INTERNATIONAL

September 2013 /

SECTOR SPOTLIGHT:

Managing Environmental Issues in Corporate Transactions

Managing Environmental Issues in Corporate Transactions Environmental risks are certainly a major consideration now more so than ever to investors and businesses looking to embark on a corporate transaction. Investors and management teams alike need to be aware of the ever-expanding and stricter environmental liability laws and regulations in place in the jurisdictions in question. Over recent years there have been some major transactions that have failed to complete as environmental issues have come to light through a comprehensive due diligence process. However, most would prefer this rather than discovering an unpleasant surprise shortly after acquiring or investing in a business. Acquisition International speaks to leading experts to discuss the key issues and how thorough environmental due diligence can save the day.

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Sebastian Katsch is an International Director Transactional Services at Tauw. -----------------------------------------------------------------------“Environmental risks which are determined in advance can have a significant impact on the purchase value,” explained Mr Katsch. “But also undiscovered environmental problems can lead to liability risks and unplanned costs after the transaction that jeopardises the business plan and the expected returns or site development. Tauw provides soil and groundwater, compliance and liability assessments in course of the Environmental Due Diligence to ensure that our clients obtain a high level of security for their deal.”

Mr Katsch stated that professionals involved in an assessment require a combination of skills but mainly the ability to quantify potential liabilities and appreciation of financial impacts during transaction. Further, as it is important to understand local issues and being sensitive to cultural differences in multi country assessments, the need to have in-country expertise is mandatory. Through Tauw’s joint ownership of CAT Alliance, Tauw has access to local, highly trained environmental professionals

/ September 2013

understanding country-specific regulations in context with international expectations and corporate requirements throughout the world. Over the years, Tauw has developed an optimised assessment system to prepare and execute the transactional services based on international accepted standards such as the American Society for Testing and Materials – ASTM E 1527. “The system guaranties a high standard quality and the completeness of the assessment,” continued Mr Katsch. “An elaborated approach guarantees fewest efforts as possible for the client and makes our work efficient and resilient. Finally our reports match our client needs, from a short table report to a comprehensive report.” Mr Katsch noted that without an adequate level of diligence, environmental liabilities can emerge unexpectedly in the final stage of a transaction process; as a result risks can be unclear and may develop into a potential deal breaker. In a recent case, Tauw provided advice in the takeover of five sites of a metal manufacturer with sites in northern Europe and South America. “At one location the handling of a relevant contamination of soil and groundwater

was not in compliance with the country regulations. Tauw conducted an in-depth assessment on short term. Together with a lawyer we developed an approach to handle the liabilities in the contracts in a suitable way. The deal took place,” he concluded.

Company: Tauw GmbH Name: Sebastian Katsch Email: sebastian.katsch@tauw.de Web: www.tauw.com, www.tauw.de Address: Richard-Löchel-Straße 9, D-47441 Moers, Germany Telephone: +49 28 41 14 90 0

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Managing Environmental Issues in Corporate Transactions

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Philip Newton is the President and CEO of GaiaTech, Inc. Eric Brousseau is Vice President – Transaction Advisory Services at the firm. ------------------------------------------------------------------------

GaiaTech is an environmental risk management firm. The company was founded 20 years ago on the simple premise that technical environmental information needed to be presented to its clients in a meaningful non-technical way in order for them to make informed business decisions. GaiaTech evaluates known and potential environmental risks in the context of a business transaction, primarily for Private Equity sponsors. “More recently, we have focused on enhancing our Private Equity Clients Return-On-Investment (ROI) by improving portfolio company environmental performance and resource management,” said Mr Newton. “Our understanding of the financial and business implications of environmental issues and focus on opportunities to improve ROI is what differentiates GaiaTech from our competition.” According to Mr Brousseau, professionals involved in transactional environmental due diligence require an understanding of the client’s business, their objectives and risk tolerance. They also need to be responsive and exhibit a sense of urgency; be an advocate for the client; provide consistency; manage expectations; be reliable and develop trust; communicate risk in the appropriate context; and anticipate the next steps needed to successfully complete a transaction. GaiaTech‘s clients retain the firm to identify environmental risk, help them understand the risk (cost, timing, probability), and then develop a plan to manage or mitigate the risk going forward. “Given our interactions with the target’s staff, our feet on the ground at the target’s facilities globally, and interactions with regulators and other third parties, we are ideally positioned to help frame the environmental risks associated with the target business,” elaborated Mr Newton. “Consequently, and often more importantly, we are often in a unique position to opine on other risks and opportunities associated with the target outside of environmental matters. We often identify material cost saving opportunities associated with process optimisation, and can inform clients of space, use or permit restrictions that may limit growth.”

/ September 2013

When assessing the liabilities of each party, GaiaTech conducts: facility inspections; management interviews; internet research; existing documention reviews; agency interviews and document reviews; public and subscription database reviews; industry profile comparisons; and corporate archaeology reviews. “When the focus is increasing ROI/profit/stock price/ public relations, there are significant and immediate benefits to be gained from improved environmental management and awareness and a proactive approach to understanding environmental risks and liabilities associated with a business,” said Mr Brousseau. “Waste and energy reduction, chemical substitutions, recycling, improved health and safety practices, improvement in these areas allow for positive public relations and can lead to significant operational cost savings – from both a raw material and overall liability perspective. This often leads to other improvements in corporate communication and behaviour and consequently increased business value.” Due to GaiaTech’s business focus, practicality, and solution orientated approach to managing risk, Mr Newton stated that the firm is often in the position to obtain favourable contractual protections and even significant purchase price reductions for our clients. “If we get to the point where we are “saving the day”, it means we have not managed the process or client expectations well and are possibly dealing with a surprise – we seek to eliminate surprises associated with environmental matters in a transaction,” he explained. “Our goal is not to have to save the day, but to manage the process and information flow effectively.

get ahead of known and potential environmental issues, frame them within the appropriate context, eliminate surprises, ensure a smooth process and maximise the businesses value.” Additional changes on the regulatory front include a change to the the US standard that governs the Phase I Environmental Site Assessment process (ASTM). The anticipated changes are expected to bring some clarity to the classification of findings and, most significantly, for the first time will recognize vapour intrusion as a potential exposure pathway and require consultants to consider VI in the assessment of risk at a site. There are also recently promulgated regulatory changes to the hazard communication standard – the Global Harmonized System – coming into effect later this year. And there are significant advancements in product stewardship and supply chain management developing in California that are influenced largely by existing European directives – principally REACH. Finally, GaiaTech’s unique market position allows them to be a barometer of sorts with regard to middle-market deal activity. Based on GaiaTech’s intelligence, deal activity has been increasing substantially in the US since the July 4th Holiday. Based on current backlog and market intelligence, it appears the second half of 2013 will see strong deal activity. The majority of GaiaTech’s first and second quarter engagements were associated with preparing many of their clients businesses for sale – it’s expected that the third and fourth quarter will be spent representing many of the same in acquisitions of new platform businesses and add-ons as the supply of companies on the market is expected to increase.

“It is often the case; however, where GaiaTech’s analysis and subsequent mitigation plan is critical to the completion of a deal.” In conclusion, Mr Brousseau noted that the paradigm of environmental due diligence in a transaction setting is changing from that of only identifying and concentrating on environmental risk and liability to that of identifying and exploiting opportunity to improve business performance as well as identify and manage environmental risk. “No longer are businesses taking a reactive approach to environmental due diligence, there is a dramatic shift in the US to conducting vendor due diligence to proactively

Company: GaiaTech Inc. Name: Philip Newton Email: philnewton@gaiatech.com Web: www.gaiatech.com Address: 135 South LaSalle Street, Chicago, IL 60603 Telephone: 312-541-4200

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Managing Environmental Issues in Corporate Transactions ------------------------------------------------------------------------

Chris Birch is the Director of Sustainability at Hilson Moran. ------------------------------------------------------------------------

Hilson Moran is a leading independent multidisciplinary consultancy for the built environment. Established in 1977, the practice has over 200 employees located out of five offices working across the UK, Europe and the Middle East.

“We plan, design and manage property assets in a wide range of sectors and are known for our quality of service which is reflected in our high profile client portfolio and project experience,” said Mr Birch. Much of the company’s experience in environmental due diligence lies within its Sustainability Group, under the direction of Mr Birch. He believes that that the environmental due diligence consultancy market has become rather commoditised in recent years. “However at Hilson Moran, we have steered clear from offering a discounted-rate-box-ticking approach to environmental due diligence offered by some of our competitors,” he explained. “We offer a service where our consultants are embedded within the real estate team offering strategic advice that can be used to drive a successful transaction. “We appreciate that environmental due diligence now encompasses a broad range of disciplines from the traditional contaminated land, ecology and flood risk issue through to more recent transactional concerns such as those associated with the acquisition of buildings with poor Energy Performance Certificates which cannot be sold or let after 2018. Such breadth of understanding is proving very valuable to our clients and allowing the team to grow at an unprecedented rate.” Mr Birch stated that early appointment in the M&A cycle seems to yield the best results for the company’s clients, as early strategic advice regarding the environmental and sustainability constraints and opportunities can often avoid significant financial and programme risks. “Hilson Moran’s extensive design experience ensures that our due diligence advice is practical, realistic and financially viable,” he continued.

“Our most valuable method of assessment is our staff. We only employ experienced and commercially aware consultants with excellent communication skills to ensure that all risks are identified, quantified and communicated alongside potential solutions.” The team utilises a wide range of environmental tools such as contaminated land, flood risk, air quality and building energy models to predict future use scenarios, however Mr Birch believes that, practically, nothing beats consultants with an extensive knowledge of environmental sciences, legislation and solutions. Hilson Moran sees many companies who recognise and have closely aligned their corporate property acquisition strategy to minimise both environmental and sustainability risks. The company also sees a

ACQUISITION INTERNATIONAL

number of others where issues such as climate change, energy efficiency and natural resource scarcity remain marginalised and are not prioritised alongside traditional strategic issues such as marketing and profitability. “This misalignment is completely understandable as companies often lack the internal mechanisms to value the benefits of managing environmental sustainability, such as reduced exposure to energy price inflation, risks to water resources and environmental impacts of operations and supply chains,” explained Mr Birch. “Hence the real costs to their business, which includes the external costs of environmental degradation, are excluded from their balance sheet. In a property market where sustainability is increasingly analogous with good management and profitability, companies who align their corporate policies to address the full spectrum of corporate risks should incrementally improve their long term financial performance.” Hilson Moran recently helped a major investment company with a large UK property portfolio understand the risks associated with property with poor energy performance certificates. At the outset of the project the company was actively disposing of low performance buildings and ignoring potential property acquisitions if the building had an EPC rating of F or G and therefore unlettable after 2018. Hilson Moran was employed to review the energy performance of these properties and advise of those which could be easily and cost effectively refurbished to a higher EPC rating. This allowed the company to acquire certain properties which would have previously not been considered, sometimes at reduced prices, while disposing its high risk assets. Discussing legislative changes, Mr Birch highlighted the Energy Act 2011, which contains a number of provisions which may impact owners and occupiers of property. He believes that, from the due diligence perspective, the proposed minimum energy standards are a major concern. “From April 2018, the proposed legislative changes would make it unlawful to let residential or commercial properties with an Energy Performance Certificate rating of F or G (i.e. the lowest two grades of energy efficiency,” he elaborated. “This could have very significant implications for landlords and for occupiers who wish to assign or sublet space. Hilson Moran has aligned our environmental due diligence services to address these risks to our clients.” He concluded: “The UK acquisitions market is certainly warming up especially in the South East. We expect to see continued growth in the environmental due diligence consultancy especially in the residential market in H2.”

Company: Hilson Moran Name: Chris Birch Email: cbirch@hilsonmoran.com Web: www.hilsonmoran.com Address: Shackleton House, Hay’s Galleria, 4 Battlebridge Lane, London, SE1 2HP Telephone: +44 (0) 7880 705140

Bogotá, Colombia

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Lina Uribe García is a Partner at Gómez-Pinzón Zuleta Abogados S.A. ------------------------------------------------------------------------

Gómez-Pinzón Zuleta is an international business law firm with more than 20 years of experience, highly ranked and very well known in Mergers & Acquisitions, among others. As a result, GPZ serves as a guide for environmental affairs by giving advice based not only on its knowledge of the legal environmental frame, but also in its experience negotiating contract provisions defining and allocating environmental risks and assets in multiple domestic and cross-border deals. Not many Colombian firms can say they have a partner who is an Environment Law specialist with a master degree in Energy and Environment and with broad experience in Meger & Acquisitions. The key skills required when conducting environmental due diligence are to identify material issues, prioritize findings and quantify economic impact of major findings. These skills are paramount to address M&A transactions making environmental due diligence indispensable in almost any transaction. Environmental compliance may easily break a deal if too much importance is given to a finding or may impose great liability to a future buyer that could have been avoided with a good due diligence environmental assessment. In a port deal once, environmental due diligence saved the day when the client decided not to invest in a port construction project near an indigenous occupied area as neither the current regime nor the seller were able to offer guarantee that the prior consultations with these communities were duly made. Businesses must align their management of environmental exposure with their strategic decision considering that the Colombian environmental sanctionatory proceeding has become very strict, imposing statute of limitations of 20 years, penalties that could up to 1.6 million USD a day and guided under the strict liability principle. Not to mention the criminal liability in which a legal representative of a company may incur linked to environmental liability.

Company: Gómez-Pinzón Zuleta Abogados S.A. Name: Lina Uribe García Email: luribe@gpzlegal.com Web: www.gpzlegal.com Address: Calle 67 No. 7-35 Oficina 1204 Bogotá - Colombia Telephone: +571 319 2900 Ext. 204

September 2013 /

SECTOR SPOTLIGHT: Preparing for Exit

Preparing for Exit Most business owners are at some point faced with the challenge of selling their company. A business is often the product of many years; even decades of hard work and the sale is often one of the largest financial transactions that the owner will ever undertake. Whatever the reason for exit; be it a straightforward sale, going public or generational succession, it is essential to make a solid exit plan. For owners and investors, the most crucial element of the sale process is the valuation and getting the right price is crucial. Determining a company’s worth is a difficult task; value can be based on much more than just earnings and assets. Acquisition International speaks to leading figures in business law, valuation, and private company services to discuss how to prepare for exit.

Software Solutions ------------------------------------------------------------------------

Peter Hickey is the CEO of Maus Business Systems. ------------------------------------------------------------------------

Mr Hickey is the founder and CEO of MAUS Business Systems, a company that has one of the largest ranges of business management software titles in the world. The award winning company is one of the market leading publishers in Business Planning, Consulting, Exit Planning, and HR applications provided to SME’s.

“Business Advisors should be using software to help prepare their clients for exit” says Peter Hickey “It will save time, provide a more comprehensive process and standardise client reporting” MAUS publishes a range of software targeted to Business Advisory firms engaged in the exit planning process. These tools are divided into 3 categories

TOOLS TARGETED AT THE EXIT PLANNING ADVISORY MARKET

Lead Generation & Marketing Software Tool

Primary Purpose

Description

Your Exit Planning Success

Lead generation and credibility for the advisor

Cloud based platform that delivers business diagnostics, calculators and resources.

Exit Planning & Audit Software Tool

Primary Purpose

Description

Exit Planner Pro

Impress your clients with professional exit and succession plan reports

This tool provides you with a structured process to analyse your clients’ business & provide a detailed exit action plan.

Information Memorandum

impress your clients with professional information memorandum reports

This tool provides you with a structured process to analyse your clients’ business and provide a detailed information memorandum

Valuation Methodology

Calculate the probable value of your clients business, while also educating the client about how this figure is reached.

This tool provides you with a structured process to value your clients business using two different methodologies; multiples of earnings and discounted cash flow.

1. Lead Generation & Marketing Software: Helping business advisors to generate leads from their website. MAUS publishes a range of interactive calculators and reports that engage prospects and generate leads. Its goal is to educate the advisors’ clients and prospects on the exit planning and succession process. 2. Exit Planning Audits & Reports: At the very beginning of an assignment a business advisor will need to conduct an audit and a gap analysis of the clients business. The MAUS software is designed to automate this process and produce automatically client reports. 3. Value Enhancement Process: MAUS has also developed a range of software targeted at smaller type businesses (Under 100 employees) that require systems, processes and strategic planning and monitoring. Over 60,000 MAUS systems have been shipped around the world. MAUS is supported by an international network of accredited MAUS business partners. These accredited partners are business advisors that advise SME’s on business development, growth and exit strategies. MAUS has developed an entire methodology and business advisor processes around the exit planning and value enhancement process.

Value Enhancement Process - Software Tool

Primary Purpose

Description

Your Business Success

Methodology to structure monthly engagement

Cloud based KPI management & Project Planning. 7 step methodology to project manage your client toward becoming a high performance business.

Masterplan

Prepare professional business & marketing plans in 50-90% of the time.

Provides expert guidance and examples to effortlessly write the business plan. Simply add in your opening financial assumptions and the program will automatically calculate cashflow, profit and loss, and break even reports.

ACQUISITION INTERNATIONAL

Company: MAUS Business Systems Name: Peter Hickey Email: sales@maus.com.au Web: www.maus.com.au Address: Level 2, Suite 209, 117 Old Pittwater Rd Brookvale NSW 2100, Australia Telephone: +61 1300 300 586

September 2013 /

SECTOR SPOTLIGHT: Preparing for Exit

Preparing Your Exit Strategy: Business Valuation

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R. Scott Brace, Jr., ASA is a Managing Director of Empire Valuation Consultants, LLC. ------------------------------------------------------------------------

At some point in time, a business owner will need to begin planning for an exit strategy for the business. In most cases, the business has been built and developed over many years, or even decades, and the exit event may be the largest financial transaction that the owner will undertake. After all of those years of hard work, it is critical that the business owner devotes sufficient time to exit strategy and understanding the value of the business. For any exit strategy, getting a business valuation prepared for the business is an important step. Depending on the size and scope of the company, the following options are potentially available as exit strategies for a business owner: (1) sale to a strategic or financial buyer; (2) management buyout; (3) initial public offering; and (4) employee stock ownership plan. Some key considerations in planning for an exit event include: (1) identifying potential buyers (both financial and strategic); (2) maintaining good, clean, accurate books and records; (3) identifying and understanding your companyâ&#x20AC;&#x2122;s competitive advantages and weaknesses; and (4) getting a business valuation prepared for the company. The three primary approaches used in valuing a business are the income approach (i.e., capitalization of earnings or discounted cash flow analysis), market approach (i.e., guideline company or guideline transactions), and asset or cost approach (based on replacement value). The business valuation may utilize one or more primary methodologies to value the business. Additionally, one or more secondary methodologies may be utilized as a reasonableness assessment of the conclusion developed via the primary methodology. The valuation of a profitable operating business will generally be based on an income and/or market approach as the primary methodology. Asset-driven businesses and holding companies are more suited to the asset approach. Business valuation is a highly technical field and the various steps involved in developing a proper business valuation are complicated. The use of an income or

/ September 2013

market approach will generally include the consideration of normalizing adjustments to develop a base that is a reasonable proxy for expected future results. The valuator will work with management to develop these adjustments. Consideration should be given to any non-operating assets/liabilities or contingent assets/ liabilities. In developing the business valuation, a business owner should allow for sufficient management time for data gathering, discussion, etc. In an asset approach, the businessâ&#x20AC;&#x2122;s assets and liabilities are adjusted to reflect their estimated market values. The market values of the assets and liabilities may be publicly available (i.e., publicly traded securities) or additional appraisals may be required (i.e., machinery and equipment appraisal, real estate appraisal, etc.) The cost of business valuation services varies significantly depending on the size, complexity, and operations of the business being valued, and the scope of the engagement. Generally, the cost of business valuation services can range from as little as $3,500 to upwards of $50,000, or more. Like any other professional service, such as legal services, medical care, and financial advisory services, the price of a business valuation service should not be the only consideration in selecting the provider. Careful consideration should be given to the credentials, experience, and reputation of the valuator. Only a qualified full-time valuator should be selected. Again, business valuation is a highly technical discipline that requires more than part-time attention. Several well regarded business valuation credentials include: (1) Accredited Senior Appraiser (ASA), certified by the American Society of Appraisers; (2) Accredited in Business Valuation (ABV), accredited by the American Institute of Certified Public Accountants; (3) Certified Valuation Analysts (CVA), certified by the National Association of Certified Valuation Analysts; and (4) Certified Business Appraiser (CBA), certified by the Institute of Business Appraisers. While this article provides only a cursory overview of business valuation for exit planning, planning ahead can help a business owner avoid many pitfalls that can arise when a decision to sell has been made. Business valuation is an important part of this planning process.

Empire is a full service business valuation provider with over 25 years of service. With a commitment to accuracy and transparency, Empire has prepared numerous valuations for purchase price allocations, goodwill impairment testing, employee stock ownership plans, pre-IPO options, hedge fund and private equity mark to market (fair value) financial reporting, merger and acquisitions (including fairness opinions). Empire has valued all types of assets including private equity, debt investments, options, warrants, etc. We provide a focused approach to business valuation and deliver thorough and well supported conclusions that can with stand the scrutiny that investors demand and regulators require. We are confident that Empireâ&#x20AC;&#x2122;s level of service, responsiveness, and professional manner will surpass expectations. R. Scott Brace, Jr. is an Accredited Senior Appraiser (ASA) of the American Society of Appraisers, Scott is a Managing Director of Empire Valuation Consultants, LLC. Scott has 17 years of experience providing financial analysis, consulting, and due diligence on valuation matters and portfolio management. His areas of expertise include the valuation of common and preferred stock, debt (including senior and subordinated debt, bonds and promissory notes), employee and incentive stock options, warrants, partnership and limited liability company interests; and intangible assets.

Company: Empire Valuation Consultants, LLC Name: R. Scott Brace, Jr., ASA Email: SBrace@empireval.com Web: www.empireval.com Address: 777 Canal View Blvd., Suite 200, Rochester, N.Y. 14623 Telephone: +1 585 475 9260

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Preparing for Exit

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Robert Fesnak is a Partner at Fesnak and Associates, LLP. -----------------------------------------------------------------------Fesnak and Associates (FA) is an accounting, tax and consulting firm. According to Mr Fesnak, one of the main considerations when planning an exit strategy is the utilization of proper advisers. He noted that many transactions fail to close due to “deal fatigue”. “The attorney and accounting firm should specialize in transactions and the investment banker should be knowledgeable and have experience in the company’s industry and the size of the selling company,” he explained. A second key consideration is early planning. Mr Fesnak stated that by planning early enough, the seller can actually enhance the value of the business between the time they decide to exit and when due diligence starts by a buyer. “Value can be enhanced by either increasing cash flow or reducing company specific risks or both,” he elaborated. “Risk can be mitigated through additional depth of management, more diversification geographically, product lines, by reducing dependency on owner, certain customers, certain vendors, etc. The company should also protect, optimize and monetize its intellectual property (IP), which enhances business value.” Mr Fesnak noted a number of common mistakes and deal killers, including: • Unrealistic seller expectations of the value of the business. • Improper accounting records, accounting irregularities and lack of documentation on policies and procedures, which makes profitability difficult to determine and increases the risk profile. • Corporate culture issues between buyer and seller, including role of the seller post-transaction – will the owner stay with business and what will be his/her role? • Decline in operating results during sales process; seller takes their “eye off the ball”. • Not planning enough in advance, causing delays in the sales process as financials need to be audited, records need to corrected or reconciled, etc.

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George Zitter is the President of FG Consulting SC. ------------------------------------------------------------------------

In 2013, Mr Zitter has been approach by two mid-sized companies for support in preparing the company for future sale, in both cases because the founder/owner wanted to retire. He stated that the mind-set was to accomplish a well-structured retirement fund which ensures that the owner and the family secure a cherished life while withdrawing in time from the business. “Both exits are age related and show that the baby boomer generation is getting ready to hand over the control, with the mind-set to be financially well protected for the future – this trend will continue to grow,” he commented. “One other group of businesses have reached a state of maturity where additional funds are required, but there is no acceptable or economically sound financial support from the lending institutes. This situation forces the owners to rethink their growth plan and enter a merger or acquisition deal to continue growing.”

• •

The seller not fully understanding and articulating the “value” to the buyer, ie: synergies and IP. Not addressing or mitigating company specific risk factors.

He stated that using an experienced team of advisers can keep the transaction moving and efficiently address buyer or seller concerns. Experienced advisers can also ensure the transaction is structured correctly – asset v stock transaction, earn-outs, seller note, etc. “Understanding the tax impact on both sides is an important factor when determining which type of transaction has the best chance of success,” he explained. The right team of advisers can not only improve cash flow and/or reduce risk factors, if there is enough time, but also prepare the seller’s management team for the buyer due diligence process. In conclusion, Mr Fesnak offered a prediction for company exits in 2013/14: “We expect sale transactions to be strong due to cheap cost of capital (even though rates have started to increase they are still historically low), eager sellers, inquisitive buyers and liquidity in the marketplace.”

-----------------------------------------------------------------------Ted Gavin, CTP is the Managing Director & Founding Partner of Gavin/Solmonese LLC. -----------------------------------------------------------------------Mr Gavin explained that, within the corporate distress environment, the sale of a company is driven primarily by external factors. For example: a company’s cashflow has worsened and it can no longer meet covenants on a secured loan; vendors are tightening credit as a troubled company is stretching payables; some regulatory or other external event occurs which renders the company unviable in its current configuration or circumstance. “In each of these circumstances, a sale of the business is often the only way to move the business forward to its next chapter of development,” he commented. “When secured lenders lose confidence in ownership of a closely held company, or cashflow is insufficient to fund a turnaround of the distressed business, then owners are often left with only a sale as an alternative to closure and liquidation.” When planning an exit strategy, Mr Gavin stated that a distressed business’ ultimate value will be driven by asset value or some multiple of the business’ cash-producing capabilities. The cash-poor business cannot increase asset value, but expense cutting and right-sizing of the operation can increase EBITDA and Free Cash Flow numbers, which drive up sale value multiples. “Be brutal,” he advised. “In a distressed situation, one must make the cuts that need to be made to preserve the whole of the business. If one finds that they cut too deep after the sale, employees can be brought back or services can be reinstituted.”

Company: Fesnak and Associates, LLP Name: Robert W. Fesnak Email: rfesnak@fesnak.com Web: www.fesnak.com Address: 1777 Sentry Parkway West, Dublin Hall, Suite 300, Blue Bell, PA 19422, USA Telephone: +1 (267) 419-2201

“Establish a written exit plan, including goal statements, gap analysis and back up strategies,” he continued. “Define the position of the company taking into account the actual and future market growth, including new projects which have not been introduced in the market. “Calculate the added value for the new company after the merger or acquisition – this could increase the value of the deal considerably. Define the wealth transfer strategy right after the sale and for a long term period to avoid shortfalls; this should focus on family, management and employees.” The most common mistake noted by Mr Zitter is having no strategy on when, how and who will plan and execute the exit. “Planning the best possible timing for the exit taking into account the economic cycles is of great benefit for both sides, but mainly for the exit party, therefore it is necessary to base and include the exit strategy into a five year business plan,” he concluded.

Discussing the most common mistakes, Mr Gavin noted that owners often believe that their relationships are portable and valuable – they’re not. An acquirer will often discount significantly the value of business relationships, trade terms or other aspects beneficial to the business if the holder of those relationships is part of a change in control or not subject to a long-term contract. “The other common mistake is not seeing the shape of the business objectively – plenty of businesses do okay, plodding along with great people and hovering around breakeven,” he observed. “Just because a company has a long and storied history and is generating razor-thin profit margins on a consistent basis doesn’t make it a good business. An acquirer will focus on the razor thin margins, not the long and storied history.” To ensure that a company’s worth is accurately valued, Mr Gavin recommends letting “routine” be a guide. He stated that company value is driven by characteristics that are readily observable and acceptable by third parties. “Sales revenue is sales revenue,” he added. “Accounting Principals are just that – and they can be applied objectively. Understand the routine business aspects that comprise value and what moving parts change value. If the business is seasonal and the sale is taking place in the slow season, be able to show what the busy season will look like, objectively, with verifiable proof – order commitments, purchase contracts, etc… Conversely, if something has been driving down value but is an aberration, be able to quantify that, as well.” In conclusion, Mr Gavin noted that banks in the US are getting ready for a new regulatory framework that will start rolling out in 2014-15. “We should expect troubled portfolios to be cleared out – by force, if necessary – leading to sales. Until the lenders start acting, however, it will likely by slow, smooth sailing.”

According to Mr Zitter, defining and evaluating an exit strategy is one of the key considerations when preparing for exit. “First of all exiting is not an event, it is a process which involves many individuals and in most cases it is a complete change of life from before and after,” he explained. Mr Zitter recommended setting objectives and defining clear goals, as well as bringing an M&A adviser on board to define market value, terms and consider adequate pricing. He suggested selecting a multifunctional team which can advise and protect in legal, tax or financial matters.

ACQUISITION INTERNATIONAL

FG Consulting SC Company: FG Consulting SC Name: George Zitter Email: fgsolution@gmail.com Address: Puebla, Mexico Telephone: +52 1 222 356 8307

Company: Gavin/Solmonese LLC Name: Ted Gavin, CTP Email: ted.gavin@gavinsolmonese.com Web: www.gavinsolmonese.com Address: 919 N. Market Street, Suite 600 Wilmington, DE 19801, USA Telephone: +1 (302) 655-8997 ext. 151

September 2013 /

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SECTOR SPOTLIGHT:

The Rise of Alternative, Sustainable Financing

The Rise of Alternative, Sustainable Financing Following on from the recent economic crisis, the financing landscape continues to undergo massive transformational change. The debt crisis proved that along with traditional financial risk, we must give equal consideration to environmental and social impacts in order to ensure that lending is managed sustainably, beyond this; it has also paved the way for a number of alternative financiers to enter the market. Acquisition International speaks to Pegasus Intellectual Capital and Robinia Invest GmbH to discuss the rise of alternative methods of funding and the challenges that face these institutions. ------------------------------------------------------------------------

Charles Smith is the Managing Partner of Pegasus Intellectual Capital Solutions LLC (Pegasus).

-----------------------------------------------------------------------Pegasus was recently named “2013 Boutique Investment Banking Boutique of the Year” by ACQ Magazine. As they reported, the firm: • advises companies on mergers and acquisitions including cross-border - exit planning, capital raising, restructuring and workout, and creating and executing shareholder value maximization strategies. • operates across the U.S. and internationally. • has distinguished itself from its peer set in the following areas: o Its partners have a history of putting capital at-risk and of operating companies o Their analytical work and recommendations are founded on first-hand experience of employing risk capital as principals that few other investment banking firms offer. o Advising clients is all they do. They do not manage funds, lend, trade, invest or underwrite. Unlike most investment banks, they have no conflicts of interest. o They serve a wide range of clients and have ranged in size from lower-middle market to the Fortune o They work to increase shareholder value in each of their engagements. Their goal is always to uncover hidden opportunities to maximize the value of their clients’ companies. o are innovators in advising clients on how to design corporate governance structures for the increasingly challenging Knowledge Era, an in advising clients on how to improve value creation via knowledge management through the use of their proprietary Intellectual Capital AuditTM . o has outstanding specialties in Healthcare, Food and Agriculture.

Commenting on the trends that are driving the increased demand for alternative methods of funding, Mr Smith stated that Pegasus foresaw the rise of so-called ‘alternative financing’ in 2009, as the legislative backlash developed as a result of the crisis. “The financial crisis was disruptive, and created a void in the market,” he observed. “Nature hates a void, and it was clear to us that non-banks would enter the market and create products in niches, which is happening.” In terms of the most popular forms of alternative financing, Mr Smith stated that Pegasus is seeing mezzanine at the lower end of the middle market in amounts as small as $13mm, as well as subordinated debt without warrants. He added that neither existed in the U.S. a year ago.

that the company in questions has the ability to withstand both economic and technological volatility, what Nassim Taleb calls “Antifragile”. “This is knowledge management along with an early warning system to identify disruptive technologies and capitalise on them rather than being victimised by them,” explained Mr Smith. In conclusion, Mr Smith offered a prediction for alternative finance in 2013/14: “Unless we have another nasty surprise on the Continent, or in China, we will see a continuation of the trend towards lower pricing and terms tilting towards borrowers and issuers.”

Mr Smith believes that as a result of the financial crisis and the rise of alternative funding, receivables lending aside, a fallacy was exposed about the security of using tangible assets as collateral. “If long-term assets were collateral held by lenders during the crisis, there was no market in liquidation,” he commented. “Lenders are waking up to the fact that they have to focus on the long term volatility and viability of the business model, and that requires thinking about the intangible assets of the company, the “intellectual capital’, the creation of which is the result of knowledge management, which is our area of expertise.” Pegasus has a trademarked due diligence deliverable, the Intellectual Capital AuditTM, which is used by company boards, trustees, management teams and PEGs to ensure

Company: Pegasus Intellectual Capital Solutions LLC Name: Charles Smith Email: csmith@pegasusics.com Web: www.pegasusics.com Address: 70 West Madison Street, Suite 1400, Chicago, IL 60602-4270 Telephone: 312-951-0100

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Wouter Bakker is a Director at Robinia Invest GmbH. ------------------------------------------------------------------------

Robinia Invest GmbH is a specialist seller of European based forestry investments. Founded in January 2007 and registered in Germany as a limited liability company, Robinia Invest GmbH has been offering forestry investments in the UK since 2009 and is still one of the few European companies exclusively setting up hardwood plantations located in mainland Europe. The location of the plantations in the European Union is paramount in the current economic climate. The economic and political stability of an asset location increases in importance the longer an asset is being held. Compared with other more exotic locations such as the Americas, Africa or Asia, the purchase of forestry investments within Germany ensures long-term security, sustainability and capital growth. The objective of the forestry investments is to achieve medium to long-term capital growth by acquiring, developing and trading interests in Robinia and Paulownia tree plantations located in Germany.

ACQUISITION INTERNATIONAL

The forestry investments target a minimum compounded annual return of 7% with a benchmark of 12%. The forestry investments are classed as unregulated, direct investments. Clients can purchase directly for a minimum commitment of £20,000 with a rotation of 10-12 years for a forestry investment with freehold title in Germany. Key benefits: • Long term capital growth: The older the trees are, the more valuable they become. • Security through ownership of the land • Tax incentives for UK clients: No Income Tax , no Capital Gains Tax and no Inheritance Tax after two years. • Ethical and sustainable. Harvested trees will regrow from the stumps and can thus provide the owner with a second rotation at reduced cost. • Clients can harvest their trees whenever they wish, there is no fixed term. • We can recommend 3 management companies to manage your trees for you, or you can choose to manage your trees yourself.

The following marketing material is available: • Company brochure • Company prospectus • Tax report made by a UK forestry accountant • German farmland report • Timber report

Company: Robinia Invest GmbH Name: Wouter Bakker Email: info@european-forestry.com Web: www.European-Forestry.com Address: Am Rittergut 3, 14715 Milower Land, Germany Telephone: +49 30 920 383 3498

September 2013 /

SECTOR SPOTLIGHT:

Investing in the Gaming Industry – A Smart Move or a Risky Business

Investing in the Gaming Industry – A Smart Move or a Risky Business M&A for gaming companies broke a new record last year, rising to $4 billion and showing an 18% increase from the previous year. In 2013 so far, mobile games have dominated the sector, making up more than 80% of the game industry investments in Q1. More and more investors are now starting to realise that the gaming industry is a promising global growth industry offering a wealth of opportunities. There is however still very little information available about investment opportunities in the gaming industry, as a result such businesses rarely make it into the portfolios of investors. Acquisition International speaks to some of the leading players to offer their expert advice to those working in or looking to invest in the gaming industry ------------------------------------------------------------------------

Olivier Cousi, Avocat au Barreau de Paris, is a Partner and Head of the Media Entertainment practice group of the international law firm Gide Loyrette Nouel.

of the first players in online poker services have to close their sites.”

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Discussing regulatory updates, Mr Cousi noted that there will be some expected evolutions in the French regulation, such as authorisation for Pan-European players and betting/or authorisations of new offers for various poker games – currently only Texas Hold’em and Omaha 4 are authorised in France.

As advisers to one of the main incumbent sports betting companies in France, the firm has been involved in almost all the main competition disputes regarding free/ fair access to sports betting data in the last two years, assisting the company in front of the French and EU Competition authorities and jurisdictions. Mr Cousi stated that the gaming industry in France enjoyed spectacular growth over the last three years after the liberalisation of the market in 2010. However, he noted a decline in growth in 2013, especially in gambling and to a lesser extent in sports betting. “The situation of sports betting is much better than the online gambling,” he observed. “The most recent trend in Online Poker for example is not so successful as awaited. In France, the gaming industry is claiming for less taxation and against unfair competition from the non-located in the EU gaming sites and players. Some

Commenting on how the firm can assist those looking to invest in the sector, Mr Cousi said:

“Our IT/IP integrated offer and the fact that our firm is a full service international law firm makes us able to assist any kind of investors for any kind of issue, from the gaming authorisation filing to the display and content of the internet site design and related technology licenses as well as financing, corporate or tax structuration of their investments.”

Clients include start-ups seeking help with business plans to raise capital or more established companies requiring additional resources to improve financial performance and operational efficiencies via diversification. The consultancy has advised, among others, Vodafone, BBC, BT (OnLive), Sony, Jagex, Nintendo, Microsoft, Electronic Arts, Activision, BSkyB (Sky TV), UbiSoft, Codemasters, CCP, Gaikai, Game Group, publishers, developers, VCs, banks, lawyers and accountants.

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Nick Parker has been in the video games industry for over twenty years, serving at executive level for Nintendo, Sony PlayStation (VP) and Atari (VP). ------------------------------------------------------------------------

For the last ten years, Nick has been running Parker Consulting, the industry’s foremost strategic business consultancy, specialising in building business plans, due diligence and raising capital through research, facilitation, planning and forecasting, as well as assistance with online games strategies.

/ September 2013

In conclusion, Mr Cousi offered a prediction for the gaming industry in 2013/13: “Should the European regulation evaluate, we could contemplate a process of mergers and acquisitions among the European players.”

The video games industry is still in transition, from a predominantly packaged goods value chain with software CDs sold at retail to an online business model driven by the proliferation of social networks and mobile devices. This has fostered an entrepreneurial breeding ground for new technologies and games content resulting in the significant growth of new businesses both at home and abroad. Consequently, funding outside of the traditional publishing model has been sourced from new investors looking to exploit this growth. Fortunately, robust exits have been recorded, primarily through acquisition but with a few IPOs, that has only served to endorse the sector as a viable target for investment.

Company: Gide Loyrette Nouel AARPI Name: Olivier Cousi Email: cousi@gide.com Web: www.gide.com Address: 22-26 Cours Albert 1er 75008 PARIS Telephone: +331 40 75 61 73

Parker Consulting has positioned itself to assist both investors and investee companies. Through its deep industry network, it provides deal flow and then due diligence services to VCs, high net worth individuals and project finance vehicles. For early stage companies, Parker Consulting builds business plans and offers facilitation opportunities to secure funding for growth while larger corporations enjoy strategic advice to create long term road maps.

Company: Parker Consulting Name: Nick Parker Email: nick@parkerconsulting.biz Web: www.parkerconsulting.biz Telephone: +44(0)1730 823770

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Ship Registration

Ship Registration International law stipulates that every merchant ship has to be registered in a specific country; registration gives the ship a nationality and allows it to travel internationally. Each ship is bound to the law of its flag state, which makes selecting a flag a complex process; there seems to be an ever increasing number of flags available and the best choice is becoming increasingly difficult for owners to make. The best choice often takes into account a number of factors; namely: cost, eligibility, tax benefits, local maritime infrastructure, political considerations and requirements regarding crew and safety. A.I. examines the benefits of registration under a number of flag states and wider shipping issues with commentary from leading experts. ------------------------------------------------------------------------

Mark J. Buhler is the Principal of Buhler Law Firm P.A.. -----------------------------------------------------------------------After practicing law for almost 27 years at the U.S. & international firm of Holland & Knight LLP, including almost 25 years handling both maritime litigation and transactional work, Mr Buhler established Buhler Law Firm P.A. in early 2009. Since then he has provided personalised service to clients, principally in transactional matters involving large yachts and commercial vessels. He has been Board Certified in Admiralty and Maritime Law by The Florida Bar since 1996. According to Mr Buhler, if a vessel meets the rather restrictive eligibility requirements to engage in either the “coastwise” or “fisheries” trades in the United States, the primary benefit of documentation under the U.S. flag (with either a “coastwise” endorsement or “fisheries” endorsement) is obtaining the right to engage in the “coastwise” trade, or the “fisheries” trade, respectively, in the United States. “The “coastwise” trade is similar to the concept of “cabotage” trade in many other coastal states, and is defined as the carriage of merchandise or passengers for hire from any point or place within the waters of the United States embraced within the “coastwise” laws to any other point or place within the waters of the United States embraced within the “coastwise” laws,” he explained. “It is very important to note that pleasure yachts that wish to offer crewed charters must have a “coastwise endorsement”. Without a “coastwise endorsement” their commercial use is limited to either (i) legitimate bareboat charters for pleasure purposes only, (ii) voyages to a foreign port, or (iii) so-called “cruises to

nowhere”, in which the vessel sails from a U.S. port out into international waters and returns to the same point in the U.S. from which it departed.”

(vii) prohibitions on trading with ever-expanding lists of countries, entities or persons as designated by various U.S. federal government agencies, etc.”

The general eligibility requirements for registration with a “coastwise endorsement” are that the vessel must (i) have been built in the United States (with certain very limited exceptions), (ii) be owned by a citizen or citizens of the United States, or by an entity that meets the applicable statutory definition as a citizen of the United States, (iii) be documented under U.S. flag, and (iv) never have been sold foreign or registered under the flag of a foreign country (with certain very limited exceptions).

According to Mr Buhler, the market seems to have passed the bottom in the recreational vessel industry and there appear to be some modest recoveries in the sale of both new and used recreational vessels. As a result, he believes that there may be some modest increases in the number of registrations of such vessels in 2013/14.

“Other than for establishing the right to engage in the desirable but restrictive “coastwise” or “fisheries” trades, perhaps the main benefits of documentation under U.S. flag are very low registration costs (both initial and annual), and strong support for U.S. flag vessels globally by the U.S. Coast Guard and U.S. Navy,” said Mr Buhler. “On the other hand, there are several significant disadvantages of U.S. documentation of vessels, particularly commercial vessels, such as (i) restrictive U.S. citizenship requirements for vessel ownership, (ii) U.S. citizenship requirements for vessel crewmembers, (iii) high crew costs, and significant obligations to seafarers, including Jones Act “maintenance and cure” obligations, (iv) very vigorous inspection and monitoring of vessels for compliance with domestic laws and international conventions, (v) increasing criminalization of various acts relating to the operation of vessels, (vi) taxation of shipping income, and

“There may also be some modest increases in the number of registrations of commercial vessels, particularly in the offshore energy services industries,” he concluded.

Buhler Law Firm P.A.

Company: Buhler Law Firm P.A. Name: Mark J. Buhler Email: mark.buhler@earthlink.net Address: 475 W. Lake Brantley Road, Altamonte Springs, FL 32714, USA Telephone: +407 681 7000

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Mr V. Hariharan heads the Ship Finance practice of Haridass Ho & Partners.

-----------------------------------------------------------------------Haridass Ho & Partners is a full service law firm with areas of specialisation in maritime law, corporate and commercial law, banking law, arbitration and litigation, insurance law and conveyancing. The firm has built a strong reputation in its Admiralty practice and advises and acts in all areas of admiralty law. The practice in the area is comprehensive and deals with all aspects of both ‘wet’ and ‘dry’ work. The department deals with all shipping related issued, including issues relating to the carriage of goods by sea, transportation law and contractual arrangements for the hire of vessels and affreightment of goods. Only Singapore citizens or Singapore-incorporated companies whose paid-up capital is at least S$50,000.00 and in which 51% of the issued shares are owned by a Singapore citizen or a Singapore permanent resident may register a vessel whose GRT is less than 1600 m.t., or a vessel which is not self-propelled, at the Maritime and Port Authority of Singapore (“MPA”). Save as stated, vessels may be registered at MPA by Singapore citizens, or Singapore-incorporated companies whose paid-up capital is at least S$50,000.00. For a vessel to qualify for registration at MPA:(a) the vessel must be less than 17 years in age from the date of keel laying; and

ACQUISITION INTERNATIONAL

(b) the vessel must be classed with one of the following classification societies, namely, American Bureau of Shipping (ABS), Bureau Veritas (BV), China Classification Society (CCS), Det Norske Veritas (DNV), Germanicher Lloyd (GL), Korea Register of Shipping (KRS), Nippon Kaiji Kyoki (NKK), or Registro Italiano Navale (RINA). Owners of Singapore-flagged ships are to maintain and operate their ships according to the requirements which are contained in the Merchant Shipping Act of Singapore, the Prevention of Pollution of the Sea Act of Singapore, the ISM and ISPS Codes (if applicable to the vessel) and the shipping circulars issued by the MPA. The MPA ensures that Singapore-flagged ships comply with international and national rules and regulations covering marine safety and security, marine environmental protection and living and working conditions for crew on board. The MPA issues minimum safe manning certificates for Singapore-registered vessels. Singapore is a party to the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW Convention) which, in Singapore, is implemented by the MPA. The MPA currently recognises certificates of competency for officers issued by about 60 countries. There is no restriction on nationality of crew working on board Singapore registered vessels. Foreign

officers (with certificates of competency are issued by any of the 60 countries recognised by MPA) and foreign ratings may sail in any capacity in Singapore registered vessels provided that they are qualified in that capacity. Profits derived from the operation of a Singapore-flagged vessel outside the port of Singapore are exempt from income tax in Singapore. The dividends declared by a Singapore shipowning company out of such shipping profits are also exempt from income tax in Singapore.

HARIDASS HO & PARTNERS Company: Haridass Ho & Partners Name: Mr V. Hariharan Email: hariharan@hhp.com.sg Web: www.hhp.com.sg Address: 24, Raffles Place #18-00, Clifford Centre, Singapore 048621 Telephone: +65-65332323

September 2013 /

SECTOR SPOTLIGHT: Cartel Enforcement

Cartel Enforcement

Businesses are under increased pressure to deliver positive results to management and shareholders in what remains a very challenging economic environment. More eyes are watching for cartel offenses and more jurisdictions are eager to prosecute cartel offenders than ever before. As a result, large corporate enterprises whose products are sold abroad are increasingly likely to face antitrust investigations characterised by a variety of authorities. Competition law is now actively enforced in more than 100 jurisdictions throughout the world, and policies can be vastly different across the different regions. It is not uncommon for cartel investigations to be coordinated among the authorities in two, three, four or more jurisdictions. It is therefore of the upmost importance that businesses seek the advice and expertise of those familiar with procedure and regulation in the jurisdictions in question to ensure their compliance. Acquisition International speaks to leading players for their expert knowledge and advice on cartel enforcement.

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Fernando de Magalh達es Furlan, Ph.D. is the Managing partner of Furlan Associados. -----------------------------------------------------------------------Furlan Associados is a consultancy firm specialized in Antitrust & Competition, Economic Regulation and Trade. Based in Brasilia, it has a lean and experienced team to offer designed, integrated and global services through a worldwide network of partners. Its managing partner, Fernando M. Furlan, Ph.D., is former President, Commissioner and Attorney General of CADE, as well as Chief of Staff for the Minister of Industry and Trade and Director of the Department of Trade Remedies (DECOM). CADE is the Brazilian Competition Authority, an independent federal agency associated with the Ministry of Justice. CADE role is to adjudicate alleged violation of the competition law and make a final review for M&A. It is composed of the Administrative Tribunal, the General Superintendence, and the Department of Economic Studies. Concerning cartels in Brazil, Article 36 of Law N. 12.529/11 deals with all types of anticompetitive conduct, including collusion among competitors, agreements to fix prices or terms of sale, divide markets, rig bids, and limit R&D.

/ September 2013

In relation to leniency, the new law brings significant changes, including the possibility of leaders of a cartel to start or join a leniency agreement.

with the U.S. Additionally, Brazil has created regulatory and procedural conditions to bring legal certainty and confidence to cooperating agencies.

The law also extends the effects of leniency to the same group of companies and employees involved in the conduct. Such change brings more legal certainty to possible applicants, including in multi-jurisdictional cases.

With the new Competition Law and its new merger thresholds and review system, CADE has repeatedly announced that its priority now shifts to cartel fighting, bringing renovated challenges.

On the other hand, recent CADE regulations have modified the basis for settlements in cartel cases. Under the new regulations, parties involved in a cartel practice now must mandatorily confess guilt or, at least, admit participation in the practice in order to be able to start negotiating a settlement. The growing rigor of CADE in anticompetitive sanctions associated with a reliable leniency program, useful investigative tools and a strategic relationship with public prosecution officials have contributed to an effective anti-cartel policy. Regarding coordinated cartel investigations across multiple jurisdictions, Brazil has successfully implemented initiatives in relation to most traditional jurisdictions. An example is the well-known compressors cartel investigation, carried out

Company: Furlan Associados Name: Fernando de Magalh達es Furlan Email: f.furlan@furlanassociados.com.br Web: www.furlanassociados.com.br Telephone: +55 61 92874609

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: Cartel Enforcement

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Sergiy Shklyar, PhD. is the Founding Partner of Arzinger. ------------------------------------------------------------------------

Arzinger is one of the leading independent law firms in Ukraine providing high quality legal services to top international and local companies. “The competitive advantage of our team is our lawyers’ deep expertise in the field of various business sectors, exceptional experience in clients’ representation in courts as well as in relations with public authorities, cooperation with leading national and European economic experts as well as with consultants specialising in antitrust & competition law worldwide,” said Mr Shklyar. Cartels are not referred as such by Ukrainian laws, but are covered with regulation of anticompetitive concerted actions and parallel activity of the undertakings. Mr Shklyar explained that the Antimonopoly Committee of Ukraine, and authority responsible for antitrust laws enforcement, qualifies anticompetitive concerted actions as concerted actions which led or may lead to prevention, elimination or restriction of competition. The parallel activity is defined as simultaneous identical activities of undertakings lacking economic justification which can be exercised in absence of collusion. “Currently Ukrainian antitrust laws are lacking specific methodology of cartels handling,” observed Mr Shklyar. “The absence of specific law and of the advisory document of the AMCU on penalty for cartels provokes significant layout to discretion in antitrust regulation.” In a recent case, Arzinger’s team represented a major buckwheat producer in a buckwheat price-fixing investigation conducted by the Antimonopoly Committee of Ukraine. “This high-profile case involved the politically sensitive

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Evgeny Voevodin is the Managing Partner at Antimonopoly Law Office, LLC (AMLO). ------------------------------------------------------------------------

AMLO’s slogan is “one hundred per cent committed to competition”. The firm specialises in competition law, which is at the core of its practice. Throughout the years Mr Voevodin, the firm’s Managing Partner, and his team have acquired extensive experience having worked on a number of significant cases in the field of antitrust and competition.

“We have substantial experience in representing clients in cartel cases in the FAS as well as before courts, when the FAS decisions are appealed,” said Mr Voevodin. “One example is representing a large pharmaceutical distributor in an on-going high-profile litigation against the FAS decision on collusive tendering.” Cartels are prohibited in Russia by Law No.135-FZ ‘On the Protection of Competition’, which provides the primary framework and defines the cartelling activity. At the same time, cartels which result in large damages or significant profit for the offender entail criminal liability. The Federal Antimonopoly Service (or the ‘FAS’) is in charge of application of the Law ‘On the Protection of Competition’ while criminal investigations are carried out by the Investigative Committee of Russian Federation.

ACQUISITION INTERNATIONAL

and socially important grain market, which experienced a sudden deficit in buckwheat in early 2011 causing enormous legal pressure on the client,” said Mr Shklyar.

Brussels / Belgium

Arzinger built the client’s case on expert advice and relevant market studies from RBB Economics, which opposed the Committee’s findings and established the objective market factors leading to the simultaneous price increase by major market players. In conclusion, Mr Shklyar noted that the AMCU is currently conducting an investigation on the food retail market, the results of which are expected this autumn.

“Given the recent tendencies of the authority the major market players may face unprecedented fines.”

Company: Arzinger Name: Sergiy Shklyar Email: Sergiy.Shklyar@arzinger.ua Web Address: www.arzinger.ua Address: Eurasia Business Centre, 75, Zhylyanska St., 5th Floor; 01032, Kyiv, Ukraine Telephone: +38 044 390 55 33 Fax: +38 044 390 55 40

“In order to provide adequate and up-to-date counsel we keep track of the legislative initiatives in this field since it is very dynamic,” said Mr Voevodin. “Concerning the application of legislation, our current participation in a number of principal cases brings us to the forefront of forming law enforcement practice in relation to such crucial issues as standards of proof and due procedure. Mr Voevodin explained that most of the cartel investigations in Russia still target primarily domestic companies. He stated that this is partly due to a lack of cooperation agreements between Russia and other states. “However, there is a significant level of integration within the CIS in order to tackle down cartels on inter-state level. We have extensive relations with our colleagues in other countries, being active in the Nonprofit organization for ‘Promotion of Competition in the CIS Countries’,” he concluded.

Company: Anti-monopoly Law Office LLC Name: Evgeny Voevodin Email: voevodin@antimonopolylawoffice.com Web Address: www.antimonopolylawoffice.com Address: Office № 2009, 21/5, Kuznetsky most St., 107996 Moscow, Russia Telephone: +7 495 626 02 26

-----------------------------------------------------------------------Claire Harris, Senior Director, Head of Competition FTI Consulting, works in the Brussels office of the international business advisory firm. FTI’s Strategic Communications division is dedicated to helping businesses protect and enhance enterprise value. -----------------------------------------------------------------------Cartel investigations have become far more complex in recent years with concurrent cases in multiple jurisdictions and settlement negotiations. This presents challenges for the conduct of the investigation, legal case and communications around it. This complexity can also impact the length of cases in the EU. This year, according to recent statistics issued by the European Commission, only one decision was adopted: a settlement in the wire harnesses sector. But there’s an estimated 20 cases all at differing levels of maturity being handled by DG Competition. This is a real problem for companies forced to make provision for the liability and plan strategies around a potentially damaging and drawn out investigation, when there is no certainty over the final outcome. While lawyers are busy handling the legal case, consultants can build an outreach strategy to create a favourable environment when the decision will finally be taken. In response to the financial crisis, Vice-President Joaquín Almunia, European Commissioner for Competition, outlined his approach to imposing fines in cases where the company pleaded inability to pay. In the Bathroom Fittings case, for example, ten companies applied for a reduction on these grounds, and five were accepted. These changes arguably would not have come about were it not for a great deal of discussion with Commission officials, testing the ways in which the rules were being applied. There is always a role for discussion around topical policy issues to contribute to the debate. The next focus could become the highly sensitive area of fine calculation particularly value of sales where the sands appear to be shifting.

Company: FTI Consulting S.A. Name: Claire Harris Email: claire.harris@fticonsulting.com Web Address: www.fticonsulting.com Address: Avenue Marnix 23, 1000 Brussels Telephone: +32 2 289 09 44

September 2013 /

MAT Audit and Professional Services (A member of ASNAF-ASEAN Accounting Firms)

l Advisory Services on Corporate Governance l Accounting Services and System Set-up l Internal Audit and Risk Management l HRM Consulting l Software Solutions (SAGE-ACCPAC-ERP SOLUTIONS, MYOB SOLUTIONS) l Transaction Tax l Payroll Management l Legal Advisory l Due Diligence l Business Valuation and Share valuation services l Assets Valuation l All kind of supporting services in The process of FDI, JV, Rep Office

355 Thein Phyu Road, Thein Phyu Tower, Mingalar Taung Nyunt Township, Yangon, Myanmar Office Ph 951-242431, 951-246618 Mobile: 95-9-5010563 Web: www.asnafgroup.com Contact: Dr Tin Latt (Managing Partner) Email: drtinlatt@gmail.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.

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Laurence Goodman is a Group Managing Director at Bridgebank Capital. -----------------------------------------------------------------------According to Mr Goodman, the bridging industry can be perceived as being opportunistic throughout 2013. He stated that those lenders in the market who have access to investment capital backing have recognised and exploited growth opportunities both organically and through acquisition. “The first three quarters of 2013 have demonstrated a period of stability within the bridging finance industry with a level of natural growth occurring throughout the sector,” he observed. “This development has produced a sense of optimism for future stability and controlled levels of growth capability across the industry. There are identifiable and achievable opportunities for exponential growth for bridging finance organisations in the sector who have corporate and institutional processes and supporting funding structures.” Throughout 2013, there has been continuous growth in the bridging finance sector. Whilst institutional banks have remained and continue to remain incapable or reluctant to fund the more specialist areas of property finance, Mr Goodman noted that bridging and short term lender have stepped in to fill the void. He believes that this is a market that continues to offer significant growth and lending opportunities.

ACQUISITION INTERNATIONAL

“A month on month improvement in long term mortgage debt for residential and commercial properties can be seen,” he continued. “This improvement is filtering through to the bridging and short term lending sector, and creating a greater degree of confidence for lenders who are able to identify realistic and achievable exit strategies being provided.” In terms of the ease of doing business and completing deals, Mr Goodman stated that the level of confidence held in the property investment and development arenas continues to grow month on month. “This is supported by a number of lenders willing to provide finance, resulting in a greater level of competition between providers,” he added. “Whilst this is the case, Bridgebank Capital has only experienced growth in its level of deal flow received.” In terms of transactions over the last quarter, Mr Goodman highlighted the significant institutional investment secured by Bridgebank Capital from Pamplona in May this year. Discussing regulatory updates, Mr Goodman noted that the change from the OFT to the FCA will have a profound effect on the bridging loan market. “It is clear that eventually all credit business will be “regulated”,” he elaborated. “Firms are having to apply for interim licences but between now and April 2016 will have

to have gone through an approval process similar to the FSA authorised firm application. This will result in more open and transparent business dealings.” Looking ahead, Mr Goodman anticipates that the steady and sensible growth activity that has taken place in the previous three quarters of the year will continue and develop. “In line with this growth, we predict that the confidence currently experienced in the market will continue to develop alongside the liquidity of long term mortgage debt, therefore fuelling further growth of lenders in the bridging and short term property market,” he concluded.

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

September 2013 /

SECTOR SPOTLIGHT: 2013 Q3 Review

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Christopher Kiermayr is a Partner, Transaction Services, at ERM GmbH. ------------------------------------------------------------------------

ERM is the world’s leading global sustainability consultancy providing environmental, health and safety, risk and social consulting services. We deliver innovative solutions for business and government clients, assisting them in managing their environmental and related risks. Established almost 20 years ago, ERM’s Warsaw based team, which is Part of ERM’s Central European unit headquartered in Frankfurt Germany, is bi-lingual and has a strong experience on projects for national as well as global clients. The office includes personnel trained in civil and environmental engineering, geology, hydrogeology, and environmental science. ERM Polska combines an international perspective with local regulatory knowledge. We have a thorough understanding of multinational corporate cultures, EU and Eastern European standards, regulations and authorities requirements. ERM Polska offers services in four main Practices: • Transaction Services • Performance and Assurance • Impact Assessment and Planning • Contaminated Site Management ERM understands that every M&A deal presents a unique set of environmental, health & safety, and sustainability risks and liabilities which require rapid and rigorous quantification as part of the transaction process. Ion Warsaw we have been providing critical, time-sensitive advice on Environmental Health

& Safety (EHS), Social and Governance as well as Product Stewardship risks to assist companies execute their most important transactions for over 20 years. ERM’s M&A Transaction Services provide unrivalled global capabilities and in-depth understanding across the financial, commercial, industrial, and extractive sectors. ERM’s Performance and Assurance teams work across the globe and locally, helping clients address their needs in Training; Product and Supply Chain Sustainability; Health & Safety; Safety Intervention Services; EHS Compliance; Management Systems; Information Systems; Corporate Reporting; Audit and Assurance. ERM supports sustained business success in a context where environment, health, safety and social performance expectations are rapidly increasing. We focus heavily on performance improvement (accident and incident prevention, enhanced regulatory compliance and reducing impacts on people and the environment arising from stable operations) as well as the processes, leadership and behavioural dynamics that underpin the achievement of these ends. ERM’s Contaminated Site Management team helps clients safely develop sustainable solutions to their contaminated land management challenges. We strive to achieve our client’s technical goals for remediation while helping them to protect human health and ecology, satisfy their regulatory obligations, control costs and manage stakeholder expectations. Our global services include decommissioning, demolition and redevelopment strategies to help capture value from discontinued operations across the globe. Our skill sets combine remediation technology, risk assessment,

financial and project management, negotiations and field services.

regulatory

ERM’s Impact Assessment and Planning Team provides high-end advisory services to projects in the oil and gas, mining, land development, transport, infrastructure, and power sectors assisting our clients to get their projects planned, built and operated on schedule, while meeting their own expectations for management of impacts on the local population and environmental, social and cultural resources. ERM combines experience with global standards, such as the Equator Principles and International Finance Corporation’s Performance Standards, with a thorough understanding of local regulatory systems and cultural sensitivities. We apply state of the art assessment tools, from GIS to noise and air dispersion modelling and visualization techniques. Where appropriate, we can also integrate social and health impact assessments into the process.

Company: ERM GmbH Name: Christopher Kiermayr Email: christopher.kiermayr@erm.com Web: www.erm.com Address: D - 63263 Neu-Isenburg, Germany Telephone: +49 6102 - 206-220

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Matvey Levant is the Managing Partner of Levant & Partners Law Firm. ------------------------------------------------------------------------

Mr Levant believes that Russia remains a country with enormous investment opportunities, which has been confirmed by the slow but stable growth of M&A, including in 2013. In the firm’s experience, the most activity by number of transactions is shown in the telecommunication and IT, retail and real estate development sectors. “However, the personal touch of the Russian economy is the dependence of investors from the government and this factor is strengthened,” he commented. “Largescale infrastructural projects carried out in the format of Private-Public-Partnership (PPP) are the locomotives of economy. Such projects include the construction of the Sochi Olympics in 2014, the construction of the innovation center “Skolkovo” or the development of transport and logistics infrastructure. Such projects receive a “green light” from the government, a favorable atmosphere for foreign investors and attract the best human resources.”

Discussing the legislative landscape in Russia, Mr Levant believes that, to some extent, the legislation is moving in a better direction. He noted that forthcoming recodifications of private and corporate law will lead to a significant improvement in Russia’s business-friendliness.

“Activity of players will be affected also by political events, first of all autumn governor’s elections in key Russian regions. Possibly, many transactions which have been slowed down for political reasons at last will be finally realized,” he added.

On the other hand, the unpredictable nature of local regulations and instructions relating to enforcement practices is an increasingly important factor.

“Growth in sector of telecommunications and media will turn again the attention of investors to venture projects in the innovative sphere. It is thought, acquisition of the assets filled first of all with high technologies, IP rights will be one of tendencies of the next years.”

“A new reality faced by investors in the year 2013 is the strengthening of banking measures to counter the laundering of capital, such as the bank’s adoption of the International Standards on counteraction to money laundering (FATF recommendations),” he elaborated.

In 2013, a large share the volume of transactions in monetary terms has still been seen in the commodity sector, however the role of infrastructure sectors (transport, communications, IT, retail) has significantly increased. During this time, the number of transactions in the industrial sector has fallen.

“As is often the case in Russia, investors face the prospect that, according to requirements «Rosfinmonitoring» (financial investigation service), the bank can stop any suspicious transaction. Therefore, by preparation of transactions, receiving credit resources to lawyers, consultants come to consider that M&A had to be taken into account in such factors.”

“In many respects it is connected with a situation in Russian economy as a whole,” explained Mr Levant. “The statistics shows that in the Russian industry practically stagnates. Indexes of growth show 2-3%. It is affecting the flexible Russian market of M&A deals which is instantly reacting to any changes of political and economic environment.”

Looking ahead to Q4, Mr Levant predicts that the trends seen over the last year will proceed. He believes that major commodity companies will probably continue to sell non-core assets to optimise profitability. Also, foreign companies will continue to attempt to obtain access to the rich Russian stocks of raw materials and minerals, through acquisitions or joint ventures.

/ September 2013

Company: Levant & partners law firm (LLC) Name: Matvey Levant Email: info@levantlegal.com Web: www.levantlegal.com Address: Tverskaya St., 7, Moscow, 125375, Russia Telephone: +7 495 740 03 73

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT: 2013 Q3 Review

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Dr Michael J Freestone. B.Comm. MBA. DBA. FCIS. is the CEO of MJF GROUP. ------------------------------------------------------------------------

According to Dr Freestone, South Africa’s success in reforming its economic policies is probably best reflected by its GDP figures, which reflected an unprecedented 62 quarters of uninterrupted economic growth between 1993 and 2007, when GDP rose by 5.1% “With South Africa’s increased integration into the global market, there was no escaping the impact of the 2008-09 global economic crisis, and GDP contracted to 3.1%,” he explained. “While the economy continues to grow – driven largely by domestic consumption – growth is at a slower rate than previously forecast. It is projected to grow at 2.7% in 2013, 3.5% in 2014 and 3.8% in 2015.” The long-term potential growth rate of South Africa under the current policy environment has been estimated at 3.5%. Dr Freestone stated that per capita GDP growth has proved mediocre, though improving, growing by 1.6% a year from 1994 to 2009, and by 2.2% over the 2000-09 decade, compared to world growth of 3.1% over the same period. In its 2012-13 Global Competitiveness report, the World Economic Forum ranked South Africa second in the world for the accountability of its private institutions, and third for its financial market development, “indicating high confidence in South Africa’s financial

markets at a time when trust is returning only slowly in many other parts of the world”. The country’s securities exchange, the JSE, is ranked among the top 20 in the world in terms of size. According to figures from the National Treasury, total government spending will reach R1.1- trillion in 2013. This represents a doubling in expenditure since 2002/3 in real terms. Dr Freestone explained that the government is putting in measures to strengthen the efficiency of public spending and too root out corruption, to ensure that there is a similar improvement in service-delivery outcomes. “The New Growth Plan, launched in November 2010, builds on plans to restructure the economy to ensure more inclusive and sustainable growth – and sets a target of creating five million new jobs by 2020,” he elaborated. “The road map to do this is provided by the Industrial Policy Action Plan, which proposes multi-sector interventions across agriculture, mining, manufacturing, tourism and other high-level services to create substantial employment. “Trade and industrial policies (DTI) encourage local firms to explore new areas of growth based on improved competitiveness. China, India and Brazil offer significant opportunities. Infrastructure, mining, finance and retail developments across Africa are helping to fuel a growth trajectory in which

South Africa can participate. The Vision of the DTI: A dynamic industrial, globally competitive South African economy, characterised by inclusive growth and development, decent employment and equity, built on the full potential of all citizens’.” Looking ahead in 2013, Dr Freestone predicts that the impact of the slow growth internationally will continue to keep South African growth at bay.

“In addition, the late delivery of our new Power Station, Madube, will continue to hold back any growth as electrical supply is under serious constraints until this is online,” he concluded.

Company: MJF GROUP Name: Dr Michael J Freestone Email: info@mjfgroup.biz Web: www.mjfgroup.biz Address: P.O. Box 449 Halfway House South Africa 1685 Telephone: +27112387858

M&A in Germany: Relocation Services as a risk management solution ------------------------------------------------------------------------

Helmut Berg is the Founder of RSB Deutschland GmbH. ------------------------------------------------------------------------

Due to its economic success in spite of the financial and the Euro crisis, an increased level of growth-driven M&A activity in Germany can be seen. The drivers are not cost, they are access to new markets, knowhow and a wide skills pool. It is quite obvious that during the M&A phase company leaders focus on strategic and financial factors and can’t take enough care of the human element. However, this should be valued equally important. Often a relocation following the merger or the acquisition is necessary, therefore mobility of whole groups of employees including their families is mission critical. Retention of talented people will be the decisive competitive advantage for future economic success and will maximize potential and profitability. A well-planned and personalized group move support program increases the likelihood that top skilled personnel can be retained and will also say yes to relocation. It is important to realize that this approach is more than just a feel-good-strategy. It is risk management with the clear goal to lower reluctance to relocate. During the earliest possible stages an experienced relocation service should be involved in strategic discussions identifying potential problems and preparing possible solutions. Budgets, timelines, deadlines and compliance rules

ACQUISITION INTERNATIONAL

can be established before rumor mills start to churn. Alternative options like extreme commuting allowances as well as retention and stay bonus agreements could be developed to retain key employees. Germany is a country where words like “Heimat” (there is no English expression) mean more than just a home, more than a feel-good-place. And it is a country where critical skill shortages intensify competition for recruiting and retaining the best and smartest employees. In this environment professional group move relocation services is key throughout the M&A process. Some standards in consulting and implementation that have emerged due to the over twenty years’ experience of RSB, form the framework. We have developed core strategies that can be implemented in group moves. We know success factors as well as failure factors. However, each project requires flexible adaptation, it is important to win the hearts and minds of employees for the move to the new location. The main task is to objectify the emotionally dominated and supposedly adverse theme. This should allow the employees to come to a rationally motivated and satisfying decision for both the employee and the company – with no impertinent interference by the organization. The basis for this is as much neutral communication and information as possible, dealbreakers will be removed, increasing likelihood that key talent will follow the company.

RSB Deutschland GmbH Founded in 1990 by Helmut Berg RSB Deutschland GmbH is one of the first and leading providers of relocation services in Germany and Austria. 30+ staff at headquarters and more than 140 freelancers in over 70 cities form a dense network of social and local expertise. At an international level RSB can support companies on assignments in over 100 countries through membership in various global mobility networks.

Company: RSB Deutschland GmbH Name: Helmut Berg Email: helmut.berg@rsb-relocation.de Web: www.rsb-relocation.de Address: Dreieichstr. 59, 60594 Frankfurt, Germany Telephone: +49 (0) 6961 0947 - 0

September 2013 /

SECTOR SPOTLIGHT:

Global Expertise Directory

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

Over the last 25 years, Ghellal & Mekerba has been the trusted legal counsellor of prominent foreign and domestic corporations operating in Algeria. Constant efforts to achieve outstanding performance substantiate Ghellal & Mekerba’s leading law firm status, particularly in the following specialties: investment, commercial, corporate, mining and natural resources, financing and mergers and acquisitions. One of the partners (Amine Ghellal) is also a leading expert in Algeria on law relating to oil and gas, investment and international commerce, financing and project financing, telecommunications, joint ventures, mergers and acquisitions and international commercial arbitration. Several of our attorneys have corporate experience at highlevel posts. This particular feature has allowed our firm to build an extensive professional network and has ensured its thorough understanding of the Algerian, North African and international business environment. Our team is truly international. It comprises Algerian, European and American trained members. All our lawyers are (at least) bilingual. We work in French, Arabic, English, Spanish and German. Our firm’s key practice areas include but are not limited to: mining and natural resources, investment, privatizations, telecommunications, financing construction, international arbitration, litigation, economic regulation, employment, intellectual and industrial property, insurance, exchange control, customs, environment, health and pharmaceutics. Company: Ghellal & Mekerba Name: Amine Ghellal Email: amine.ghellal@ghellal.com Web: www.ghellal.com Address: 7 Rue Doudou Mokhtar, Lot. 2, Ben Aknoun, 16000, Alger, Algeria Telephone: +213 21 91 42 30

/ September 2013

Knightsbridge is one of the UK’s leading and most respected Business Brokers. We have extensive knowledge across a broad range of market sectors, including Retail, Catering, Licensed and Leisure, Care, Franchising and Commercial. We operate from our Head Office in Greater Manchester and offer national coverage through our Regional Managers and Directors. They possess a wealth of experience blended with local knowledge and specific sector expertise to ensure the best advice and guidance are available to you our client. Our approach is very different from that of our competitors; we have developed a reputation for being pro-active, innovative and forward thinking, providing an allencompassing service to both buyers and sellers. We have invested heavily in recent years in both our staff and technology to ensure our vendor and purchaser clients receive an industry leading service and the highest levels of confidentiality, expertise and marketing exposure.

Ligerion Group is a consulting, trading and investment group residing in Moscow, Russia focusing on legal representation of foreign clients in Russia and CIS, business development and investing to challenging and prospective projects. The Group comprises three divisions, operating in key business areas – legal support, business development and investments: Ligerion Legal is the legal division specializing in representing of foreign clients’ interests in Russia and Russian clients’ interests worldwide. We base our work on the key areas of commercial activity: corporate, M&A, finance, litigation and dispute resolution and tax. Our clients receive full legal coverage in Russia, CIS and abroad. Ligerion Trade is the business development division. Its goal is to guide the clients’ products and services to the new markets and open new business opportunities abroad. Essentially, what Ligerion Business Solutions offers is: to expand the clients network, to enhance the distribution development, to boost the products or services advantages in the new markets, to open new business opportunities in areas where the business is not yet present.

Knightsbridge’s partners include: Royal Bank of Scotland; NatWest; Lloyds TSB; Acorn; Business Lawyers Direct; and Clear Business Mortgages.

Ligerion Capital is an investment division of the Group. Its investment strategy focuses on early-stage and middlemarket businesses with a significant growth potential based in Russia and CIS. Ligerion Capital acts as investor as advisor to investors and business.

Company: Knightsbridge Email: enquiries@knightsbridgeplc.com Web: www.knightsbridgeplc.com Address: Oceanic House, Navigation Park, Waters Meeting Road, Bolton, BL1 8SW, UK Telephone: +44 (0) 8447 011 888

Company: Ligerion Group Name: Dmitry Berdnikov Email: dmitry.berdnikov@ligerion.com Web: www.ligerion.com Address: World Trade Center Moscow, Krasnopresnenskaya Nab., 12, Moscow 123610, Russia Telephone: +7 495 210 3123

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Global Expertise Directory

Sullivan & Cromwell LLP provides the highest quality legal advice and representation to clients around the world. The results we achieve have set us apart for more than 130 years and become a model for the modern practice of law. Today, S&C is a leader in each of its core practice areas and in each of its geographic markets. Our success is the result of the quality of our lawyers, the most broadly and deeply trained collection of attorneys in the world. We work as a single partnership without geographic division. We hire the very best law school graduates and train them to be generalists within broad practice areas. We promote lawyers to partner almost entirely from among our own associates. The result is a partnership with a unique diversity of experience, exceptional professional judgment and a demonstrated history of innovation. Clients of the Firm are nearly evenly divided between U.S. and non-U.S. entities. They include industrial and commercial companies, financial institutions, private funds, governments, educational, charitable and cultural institutions, and individuals, estates and trusts. Our client base is exceptionally diverse, a result of our extraordinary capacity to tailor work to specific client needs. S&C comprises approximately 800 lawyers. They serve our clients around the world through a network of 12 offices, located in leading financial centers in Asia, Australia, Europe and the United States. We are headquartered in New York. Company: Sullivan & Cromwell LLP Web: www.sullcrom.com Address: 125 Broad Street, New York, New York 100042498, United States Telephone: +1-212-558-4000

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

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.

SecurIT is a specialized System Integrator in the field of IT Security, in particular in the Identity & Access Management domain, targeting large organizations.

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.

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.

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

ACQUISITION INTERNATIONAL

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.

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

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

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 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. 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

September 2013 /

DEAL DIARY:

M&A from around the world

Deal Diary

Welcome to September’s Deal Diary, Acquisition International’s round up of recent M&A activity. This month, we’re highlighting two major transactions in the Energy & Resources and TMT sectors. Our Energy & Resources Deal of the Month is YILDIRIM GROUP’s acquisition of Mechel Chrome, the chrome division of Russian Mechel. As a result of the transaction, YILDIRIM now owns Mechel Chrome’s vertically integrated Voskhod Mining Plant in Kazakhstan and Tikhvin Ferroalloys Plant in Russia; reaching a consolidated 520,000-ton production capacity for high-quality high carbon ferrochrome in Turkey, Sweden and Russia. We spoke to Att. Ozgur Kocabasoglu, Corporate Partner, who led the Erdem & Erdem team representing YILDIRIM on the deal for the details turn to page 102 to learn more. Dimension Data’s offer for up to 100% of the issued shares of AccessKenya Group is our TMT Deal of the Month. The offer recently became unconditional with respect to shareholder acceptances, having received acceptances from shareholders of over 75% of the 218m ordinary AccessKenya shares in issue. We spoke to Pamoja Capital Limited; The Systems House; Hamilton Harrison & Mathews; and Africa Consulting LLP, all of whom advised on the deal, for some insight into the offer - find out more on page 110. September’s Deal Diary includes reports on a huge range of deals in a variety of sectors, including Danone’s acquisition of 100% of YoCrunch’s share capital (Consumer Sector – page 101); Victoria Mutual Group’s acquisition of Prime Asset Management Limited (Financial Services Sector – page 105); and Annuity Properties’ acquisition of Clarins SA’s property portfolio (Real Estate Sector – page 108). Have you done a deal recently? If so, we want to hear from you – head to our website and submit the details.

/ September 2013

CONSUMER 100 CALISTOGA’S ARAUJO ESTATE WINES 100 CHEF MIDDLE EAST 100 DELSWA GROUP MBO 101 MERIGUET-CARRERE GROUP 101 PARK RESORTS 101 YOCRUNCH ENERGY & RESOURCES 102 MECHEL - Energy & Resources Deal of the Month 103 CHI.NA.CO S.R.L. 103 KAINJI POWER PLC 103 KRISENERGY IPO 104 M7 OFFSHORE 104 PETROIVOIRE 104 THE RENEWABLES INFRASTRUCTURE GROUP LTD FINANCIAL SERVICES 105 ABSA AND BARCLAYS AFRICA MERGER 105 GENERALI PORTFOLIO MANAGEMENT 105 PRIME ASSET MANAGEMENT LIMITED HEALTHCARE 106 CHOICE CARE 106 FORTIS - HOAN MY 106 SHELBOURNE SENIOR LIVING INDUSTRIAL 107 G.T. ATTUATORI ITALIA 107 INNOSCAN 107 STENI REAL ESTATE 108 CLARINS SA 108 REDEFINE INTERNATIONAL 108 HILLSTREET SHOPPING CENTRE SUPPORT SERVICES 109 DOMSJÖ FABRIKER 109 MANDATA 109 OAG TMT 110 ACCESSKENYA - TMT Deal of the Month 111 ARSYS 111 BONAIRE SOFTWARE SOLUTIONS 111 CAPTIFY MEDIA 112 HAMILTON RENTALS MBO 112 KEYNOTE 112 NALCO 113 POWER2SME 113 SECONDSYNC 113 THINSPACE 114 VERITEK GLOBAL MBO 114 VIDEOLAND

ACQUISITION INTERNATIONAL

DEAL DIARY:

M&A from around the world

Acquisition International’s round up of recent M&A activity in the Energy & Resources sector, with data from Zephyr, published by Bureau van Dijk Mergers and acquisitions in the energy and resources sector in the Number and Aggregate Value (mil USD) of opening six months of 2013 failed to improve on results recorded Energy and Resources Sector Deals Globally: in H1 2012, according to Zephyr, the M&A database published by 2006 - 2013 YTD (as at 09 September 2013) Values Bureau van Dijk. In total there were 2,154 transactions worth USD Deal half No. of deals No. of deals with Aggregate 228,151 million over the period as volume and value weakened yearly value known values deal value by 6 per cent and 2 per cent, respectively. (Announced date) (mil USD) Mergers and acquisitions (M&A) activity in the energy and resources sector has started 2013 disappointingly, with declines recorded across the board and value falling to the industry’s lowest level since H2 2008 (USD 222,221 million). H2 2013 to date does not appear to be improving much; so far there have been 793 transactions worth a combined USD 56,070 million. Should results continue on this trajectory, values could decline again. The most commonly targeted region in energy and resources deals in 2013 to date has been Western Europe, which notched up 746 transactions. This was followed by Eastern Europe with 651, while the Far East and Central Asia, North America and Oceania came next with 454, 435 and 423, respectively. It was a different story by value, with North America topping the bill with investment of USD 86,820 million. Eastern Europe came second with USD 77,067 million and was trailed by Western Europe with USD 45,353 million. In conclusion, the energy and resources sector has been in a state of decline since H2 2010, when investment of USD 381,050 million was recorded. Results for the second half of 2013 to date suggest the trend could be about to continue, but a blockbuster deal is still a possibility and could change everything.

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

3,210 3,036 3,420 3,172 2,836 2,551 2,945 3,105 2,935 2,749 2,600 2,425 2,341 2,301 2,154 793

2,250 2,074 2,564 2,374 2,058 1,852 2,162 2,329 2,231 2,122 2,031 1,797 1,738 1,674 1,571 576

252,143 411,481 481,375 491,731 261,276 222,221 287,574 233,308 249,560 381,050 308,095 271,964 242,425 231,627 228,151 56,070

Acquisition International Awards Celebrating Excellence, Innovation and Performance

Since 2010, Acquisition International Magazine’s annual awards have been celebrating excellence, innovation and performance across the business, legal, financial and investment communities. Acquisition International prides itself on the validity of its awards and its winners. They are given solely on merit and recognise leaders in their respective fields. We are currently accepting votes for the 2013 Finance Awards, and voting for the 2014 Hedge Fund Awards opens soon. Make sure your opinion counts – pre-register to receive voting forms on our website now. We want to hear from you, so get voting and have your say!

2013 LEGAL AWARDS

ACQUISITION INTERNATIONAL

2013

FINANCE AWARDS

September 2013 /

DEAL DIARY:

Consumer Deals CALISTOGA’S ARAUJO ESTATE WINES CONSUMER

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. 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.

CHEF MIDDLE EAST l Gulf Capital has acquired 100% of Chef Middle East L.L.C (“Chef”), an importer and distributor of high-end, specialty and fine food products from around the world, from Vintage Holdings. The Deloitte Corporate Finance Limited (“Deloitte”) team, led by Declan Hayes, Managing Director and head of the Transaction Services group, provided financial, tax and information technology due diligence to Gulf Capital Pvt. Jsc. (“GC”) in their acquisition of Chef Middle East. Mr Hayes commented: Building on Deloitte’s long-standing relationship with GC, Deloitte delivered exceptional client service and have continued to support GC throughout the acquisition process; assisting with the sale and purchase agreement negotiations and undertaking completion procedures. Deloitte demonstrated strong private equity credentials and a thorough knowledge of the consumer business sector, providing valuable insights into working capital and cash management, as well as detailed profitability analysis. Marsh Private Equity and M&A Practice were engaged by Gulf Capital to provide risk and insurance due diligence services, led by Dominic Moody the ME Regional Leader for M&A based in the UAE. Marsh have provided specialist risk and insurance due diligence to Gulf Capital on a number of their investments over the last Dominic Moody five years. Marsh help Gulf Capital assess how Chef Middle East manage the risks to their business and assess if they are correctly protected by insurance. Dominic commented that Chef management were extremely helpful in providing all the information and answers to questions requested of them. PwC provided commercial due diligence on Chef Middle East as well as supporting Gulf Capital in developing a business plan to take Chef forward post-acquisition. PwC’s work included site visits and interviews with over 50 restaurants and hotels in the UAE and Qatar. The firm identified restaurants’ purchase volumes, process and criteria, and gathered direct feedback on Chef’s capabilities and market positioning. The work was led by Matthew Alabaster from PwC’s Deals Strategy business in the Middle East, which focuses on commercial due diligence, business planning and growth strategy for clients across the region.

Michael Clain

ARTEMIS GROUP ACQUIRES CALISTOGA’S

ARAUJO Finance ESTATE WINES DRV Corporate

Legal Adviser to the Debt Provider

Matt Alabaster

The team drew on specialist knowledge of the food distribution industry from PwC’s sector team in the UK. matt.alabaster@ae.pwc.com www.pwc.com/m1/en/services/deals/ deals-strategy.jhtml

GULF CAPITAL ACQUISITION OF

CHEF MIDDLE EAST DRV Corporate Finance

DELSWA GROUP MBO l National Empowerment Fund (NEF) has funding the buyout of Delswa Group, a niche corporate clothing manufacturer. The R35m funding from the NEF will enable Delswa Group’s management to acquire a 42.3% stake in the business and staff to acquire 9.1%. Nehawu Investment Holdings (NIH) will take a 25.1% stake. NEF was established by the National Empowerment Fund Act No 105 of 1998 in order to promote and facilitate black economic equality and transformation. Its mandate and mission is to be a catalyst for Broad-Based Black Economic Empowerment (BB-BEE) in South Africa. The objectives of NEF are to finance and support business enterprises owned and managed by black entrepreneurs, as well as to promote savings and investment schemes for black people and, in so doing, to develop an understanding of equity ownership and a culture of savings amongst its beneficiaries. Until the Asonge Share Scheme was launched in June 2007, the activities of the NEF centred principally on providing financing and support for black empowered business and entrepreneurs. The establishment and promotion of a savings and investment culture amongst all black people, supported by clear and accessible savings and investment products, is key to assisting South Africans to move to full participation in the first economy. Siyaka Beja Inc represented members of senior and middle management of Delswa in their acquisition of all the issued shares in Delswa that were held by Delswa’s previous management (and other) shareholders. The team was led by Mr Xolisa Beja (Director), assisted by Ms Neo Talane (Associate). Mr Beja commented: Prior to this transaction, we did not have a relationship with Delswa and/or any of our clients. “We encountered various structural, negotiation and implementation challenges that are common to MBOs and similar transactions. We utilised our experience garnered from negotiating with development funding institutions and multi-party transactions to assist our clients to overcome these challenges. We also ensured that our turnaround times for our deliverables were short and aimed at expediting the negotiation, drafting and execution of various documents involved in the various facets which this transaction entailed.

NEF FUNDS R35M DELSWA BUYOUT

DRV Corporate Finance

Financial Due Diligence Provider & Tax Adviser Legal Adviser to the Purchasers Commercial Due Diligence Provider

Legal Adviser to the Purchaser Financial Adviser to the Purchasers & to the Equity Provider Debt Provider

Virtual Data Room Provider

Legal Adviser to the Vendor Legal Adviser to the Vendor

Debt Provider / Financial Due Diligence Provider Legal Adviser to the Equity Provider and to the Debt Provider Legal Adviser to the Purchaser

Environmental Due Diligence Provider

100 / September 2013

Legal Advisers to the Debt Providers

ACQUISITION INTERNATIONAL

DEAL DIARY:

MERIGUET-CARRERE GROUP

PARK RESORTS

YOCRUNCH

l Qualium Investissement has become a shareholder of the Mériguet group, a renowned decorative paintwork specialist, alongside the group’s founder, Antoine Courtois, the company’s management team and IDI.

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 Danone has acquired 100% of YoCrunch’s share capital.

Founded in 1960, Mériguet has a French State “livingheritage company” label and has gradually extended its know-how to include other decorative arts (stonework and masonry, locks, metalwork, panelling, adornment, etc.), with a constant focus on maintaining the excellence of its new creations and renovation work, underpinned by its team of master craftsmen. Mériguet has a very high-end positioning, with a prestigious public and private clientele that includes the Château de Versailles, Opéra Garnier, Metropolitan Museum of Art, the White House and Shangri-La, among others. Alongside the diversification strategy implemented since 2006, the group is continuing to move forward with its ambitious international expansion, particularly in Europe, North America, Russia and the Middle East, through organic growth and targeted acquisitions. Mériguet currently employs more than 370 people, including 324 master craftsmen, and generated nearly €70 million in revenues in 2012, of which one third outside France. Jean Eichenlaub, Chairman of Qualium Investissement, states: We are very pleased to be investing in a prestigious French firm with an unparalleled level of excellence in its various crafts. Mériguet perpetuates traditional French decorative arts techniques, while at the same time developing and using the most innovative processes. It has managed to forge a position at the very top end of the international market, working on some of the most prestigious public and private sites in the world. In a fragmented market, our support will enable the company to step up its expansion, particularly through acquisitions. Paul Costa de Beauregard, Managing Director of Qualium Investissement, says: We were attracted not only by the group’s business project, but also by its growth outlook, management strategy and the exceptional quality of its workforce. Antoine Courtois, Chairman of Mériguet, explains: Qualium Investissement is the perfect partner for our needs in terms of resources, but above all it also meets our equally demanding requirements in terms of quality. We will be able to benefit from its know-how and network to meet future challenges firmly and ambitiously.

QUALIUM INVESTISSEMENT ACQUIRES A STAKE IN MERIGUET

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.

With net sales of $110 million and sustained double-digit growth in recent years, the company is now the market leader of the yogurt with toppers segment. This acquisition will advance Danone’s ambition to further develop yogurt consumption by notably expanding the various ways in which Americans can enjoy yogurt. It will strengthen its offer in the United States by widening its range of products. The move will also enable Danone to benefit from YoCrunch’s unique expertise in compartmentalised packaging, developed in the company’s plant in Naugatuck, Connecticut. Danone is an international company present on five continents. The group holds top positions in healthy food through four businesses: Fresh Dairy Products, Baby Nutrition, Waters, and Medical Nutrition. Its mission is to bring health through food to as many people as possible. Danone has more than 190 production plants and around 102,000 employees. In 2012, the company generated sales of over €20 billion, with more than 50% in emerging countries. Listed on NYSE Euronext Paris, Danone is a component stock of leading social responsibility indexes including the Dow Jones Sustainability Indexes, ASPI Eurozone and the Ethibel Sustainability Index.

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

PARKFinance RESORTS DRV Corporate

Financial Provider

Financial Adviser to the Debt Providers

Legal Adviser

Legal Adviser to the Debt Providers

Tax Due Diligence

Founded in 1985, YoCrunch makes yogurt with crunchy toppings packaged separately, in part through licensing agreements with well-known national brands such as M&Ms and Oreo.

DANONE ACQUIRES YOCRUNCH Virtual Data Room Provider

Legal Adviser to the Management Team

Financial Adviser to the Company

Financial & Tax Due Diligence Provider

Insurance Due Diligence Legal Adviser to the Equity Provider Financial Due Diligence

Insurance Due Diligence Provider

Legal Adviser to the Company

ACQUISITION INTERNATIONAL

September 2013 /

101

CONSUMER

Consumer Deals

DEAL DIARY:

Energy & Resources Deals

Energy & Resources Deal Of The Month MECHEL l Turkish conglomerate YILDIRIM GROUP’s latest acquisition is Mechel Chrome, the chrome division of Russian Mechel. After a very competitive international tender among eight bidders, YILDIRIM is now the owner of Mechel Chrome’s vertically integrated Voskhod Mining Plant in Kazakhstan and Tikhvin Ferroalloys Plant (TFP) in Russia. Located in northwest Kazakhstan, the Voskhod chrome ore mines and chrome concentrate plant, which began production in July 2009, feature an underground state-of-the-art mine and a modern ore processing plant. The mine has total reserves of 21 million tons of chrome ore. The plant’s chrome ore boasts one of the highest Cr/Fe ratios in the world, at 3.5-3.8. Voskhod is also responsible for sourcing chrome concentrate for TFP. The plant currently has an annual beneficiation capacity of 1 million tons of raw ore, which can be increased up to 1.5 million tons. Meanwhile, TFP, which is located 200km southeast of St. Petersburg in Tikhvin, is one of Russia’s largest producers of high-carbon ferrochrome (HC FeCr) with a chrome content of 69.5%, accounting for 22% of the country’s production volume. As a relatively young plant that began production in April 2007, TFP is also renowned for being the most modern ferroalloy plant in the CIS, with advanced facilities like a gas cleaning system for the furnace, briquetting line and slag processing unit, as well as one of the lowest power consumption per ton rates in the CIS. Combined, Voskhod and TFP’s assets supply the ferrochrome, chrome chemicals, alloy steel, foundry and stainless steel markets of Russia, Europe, US, China and Far East Asia.

After the acquisition of Mechel’s chrome division, YILDIRIM GROUP reached a consolidated 520,000-ton production capacity for high-quality high carbon ferrochrome (HC FeCr) in Turkey, Sweden and Russia,” said Robert Yuksel YILDIRIM, President and CEO of YILDIRIM GROUP, about the investment. “Therefore, YILDIRIM GROUP is the only global high carbon ferrochrome producer in three different countries in order to hedge the political, economic and other risks for its global long-term stainless steel customers. In addition, YILDIRIM GROUP’s total annual chrome ore production will now reach 2.5 million tons in Turkey and Kazakhstan for its internal ferrochrome production and chrome ore exports. As the owner of Eti Krom Inc. in Elazig, Turkey, as well as Vargön Alloys AB in Vargön, Sweden, YILDIRIM GROUP is already the world’s largest hard lumpy chrome ore producer and the second biggest high-quality HC FeCr producer, after Eurasian Natural Resources Corporation (ENRC). YILDIRIM GROUP is also active in port, shipping and shipbuilding, fertilizer, coal and coke, energy, real estate development and private equity businesses.

Energy & Resources Deal Of The Month YILDIRIM GROUP ACQUIRES MECHEL`S CHROME ASSETS Legal Adviser to the Purchaser and to the Equity Provider

YILDIRIM GROUP is one of the leading globally diversified industrial groups in Turkey with pioneer establishments in their respective industries. The company has more than 6,000 employees on five continents. YILDIRIM GROUP has committed more than 2 billion dollars to finance modernisation and improvement of its factories and made strategic acquisitions to grow the company and continue serving its global clients. Erdem & Erdem is representing Yildirim Holding AS (“Yildirim”), which is a leading group of companies active in diversified industrial such as mining, port management, fertiliser, ship building and transportation. The Firm has had a working relationship with Yildirim since 2007. The team was led by Att. Ozgur Kocabasoglu, who is the corporate partner of the Firm.

Financial Adviser to the Vendor

Mr Kocabasoglu commented:

Our Firm assisted Yildirim in all steps of the project: tender, negotiations and preparation of the share purchase agreement, obtainment of guarantee letter, financing, competition filing both in Russia and Kazakhstan and will also assist Yildirim within the closing. Financial Adviser to the Purchaser and to the Equity Provider

102 / September 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

CHI.NA.CO S.R.L.

KAINJI HYDROELECTRIC POWER PLC.

KRISENERGY LTD IPO

l A2A has accepted an offer from BKW for the acquisition of the fully owned subsidiary Chi.Na.Co S.r.l., owner of five small hydro run-of-river plants, with total installed capacity of approximately 8 MW.

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 KrisEnergy Ltd., an independent upstream oil and gas company focused on the exploration for, and development and production of, oil and gas in Southeast Asia, completed its initial public offering.

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.

Allen & Gledhill LLP acted as Singapore legal adviser to CLSA Singapore Pte Ltd and Merrill Lynch (Singapore) Pte. Ltd., the Joint Issue Managers, Global Coordinators, Bookrunners and Underwriters for the KrisEnergy Ltd.’s (“KrisEnergy”) initial public offering (the “IPO”) and listing on the Main Board of the Singapore Exchange Securities Trading Limited. The IPO, together with a cornerstone tranche, raised gross proceeds of approximately S$270.8 million. KrisEnergy’s market capitalisation at listing is approximately S$1.15 billion.

The offer price is 38 million euro, with possible additional 1.6 million subject to certain conditions by the end of next year. The plants in 2012 generated 37GWh with revenues of 4 million euro and Ebitda of 3.1 million euro. The transaction will be completed by July 5, 2013, once the necessary documentation is completed. A2A, supported by Banca IMI in the competitive sale process, has selected BKW’s offer not only on the basis of value but also taking into account as a priority the continuity of plant operations, considering the concerned geographical area. BKW is a leading international energy group with more than 3000 employees and has been directly present in Italy for more than 13 years. With this transaction, A2A further proceeds with its strategy of rationalization of the industrial portfolio and debt reduction, in line with the Economic and Financial Plan 2013-2015. A2A is the multiutility born on 1st January 2008 as a result of the merger between AEM SpA Milan and ASM SpA Brescia with the contribution of Amsa and Ecodeco, the two environmental companies acquired by the Group. At present, A2A is: one of the main players in the environmental sector in Italy with approximately 3 million tons of waste treated; in 1st place between the former Italian public utilities companies in terms of clients and turnover; in 1st place in Italy in the district heating sector; in 2nd place in Italy in terms of installed electric capacity and volumes of sales; and in 3rd place in Italy in terms of gas sold. A2A SELLS FIVE SMALL

RUN-OF-RIVER PLANTS DRV Corporate Finance

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 KAINJI HYDROELECTRIC POWER PLC Financial Adviser to the Purchaser

KrisEnergy is headed by a team of highly experienced industry professionals with an established track record of value creation within the region. At listing, the company has a diverse portfolio comprising 14 contract areas in four countries.

Partners Tan Tze Gay and Rhys Goh led the team from Allen & Gledhill LLP on the transaction. Makarim & Taira S. acted as the Indonesian legal counsel of KrisEnergy Ltd (the Issuer) with whom the firm has a long standing relationship. Benny Bernarto (Partner) and Guy Des Rosiers (Foreign Legal Consultant) led the team assisted by Valiska Nathania (Associates), Irina Anindita (Associates) and Heru Mardijarto (Senior Associates). Mr Bernarto commented: KrisEnergy Ltd is actively developing its resources in Indonesia, so major due diligence work was involved. A challenge was to understand the implications of the dissolution of BP MIGAS (the previous oil and gas supervisory body) and the duties and functions of the newly established oil and gas special task force (SKK MIGAS). Walkers represented KrisEnergy in this deal. Walkers (Singapore) Limited Liability Partnership acted in relation to Cayman Islands and British Virgin Islands law. The team was led by Thomas Granger, Partner, supported by Stuart Baldwin, Senior Counsel, and Casheen Van Halder, Associate. Walkers Jersey office acted in relation to Jersey law. The team was led by Nigel Weston, Partner, supported by Christophe Kalinauckas, Associate. thomas.granger@walkersglobal.com stuart.baldwin@walkersglobal.com nigel.weston@walkersglobal.com www.walkersglobal.com

KRISENERGY LTD. LAUNCHES

DRV Corporate Finance

Financial Provider

Financial Adviser to the Purchaser

Legal Adviser to the Purchaser

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Financial Adviser to the Vendor Legal Advisers to the Debt Providers

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ACQUISITION INTERNATIONAL

September 2013 /

103

ENERGY & RESOURCES

Energy & Resources Deals

DEAL DIARY:

Energy & Resources Deals M7 OFFSHORE l Citec has strengthened its competence and offering within the oil and gas segment with the acquisition of Norwegian engineering company M7 Offshore AS.

ENERGY & RESOURCES

M7 provides engineering and project management services to the oil & gas industry, including liquefied natural gas (LNG). The focus is on process plants (topsides) as well as floating production, storage and offload units (FPSO). M7 with its experienced personnel offers services covering the complete value chain from feasibility studies, FEEDs, detail engineering and fabrication management and coordination. The company has a solid customer base consisting of oil companies, ship owners, contractors and equipment suppliers. M7 is headquartered in Asker, just outside Oslo, Norway and has an engineering office in Singapore. The company currently employs 31 professionals and in 2012 the turnover was 43 million NOK. Through this acquisition, Citec’s expertise and offering towards our customers within the oil & gas industry is strengthened further. Oil & gas - and LNG - are important focus areas in Citec’s growth strategy. There are great prospects for the global oil & gas markets, and with this acquisition we gain foothold in Norway and Singapore, both important drivers within this industry. We also strengthen our service capabilities to our customers with these new locations, says Martin Strand, CEO of Citec. The law firm of Aabø-Evensen & Co represented and advised the collective shareholder group of M7 Offshore AS in their structured sale of M7 Offshore AS (and its Singaporean subsidiary M7 Offshore Pte. Ltd.) to Citec Group OY. During the initial process, the legal team, comprised of Harald Blaauw and Harald Blaauw Nils Olav Årseth, advised the sellers on commercial and strategic aspects relating to the various bidders and the transaction as a whole, herewith carrying out vendor due diligence as well as ancillary process-related work. In the transactional process up until signing, the team negotiated and drafted all pertinent agreements and documents, herewith included the exclusivity agreement, the share purchase agreement w/schedules, financial calculations with adjustment mechanisms, various corporate documents and other required release letters and legal statements. hbl@aaboevensen.com www.aaboevensen.com

CITEC ACQUISITION OF M7 OFFSHORE

DRV Corporate Finance

PETROIVOIRE l Amethis Finance has purchased 39% of the capital of PetroIvoire, a leading Ivorian distributor of oil and gas products. DFA Investment Services Ltd was mandated as financial advisors by the group of private individual shareholders for the sale of their 38% equity stake in the company. The firm’s principal has known the client for a long time and has a good knowledge of the company since the start of its activities years ago. Sylvain Angaté, Founding Partner and CEO of the firm, was the selected financial advisor in charge of the structuring of the information memorandum for the transaction and led the negotiations with the other shareholders and with representatives from Amethis Finance. Sylvain Angaté commented: The challenges faced are related to complexities in dealing with diverse groups of shareholders, private individuals and institutional investors, and the impact of local environmental factors in the process of valuing the transaction. Jean Jacques Lecat, partner and co-head of the African practice at the law firm of CMS Bureau Francis Lefebvre, with Nicole Marielle and Diane Pallez, associates, advised Amethis Finance and in particular Aurélie Pujo, Amethis General Counsel & Compliance Officer. Jean Jacques Lecat, who is also chairing Jean Jacques Lecat the legal and tax committee of the Board of French Investors in Africa (CIAN), said: The specific feature of our multidisciplinary African practice team, established since the independence of the African States, its in depth knowledge and understanding of the economic and legal environment of Francophone African countries, enables us to deliver integrated solutions, including due diligence and drafting documentation governed by local laws. jean-jacques.lecat@cms-bfl.com Amaury de Féligonde and Thomas Léonard, Okan Consulting co-founders provided financial advisory to the two families who wanted to sell their stakes in PetroIvoire, a 30 million Euros gas distribution business based in Côte d’Ivoire. Okan Consulting was in charge of selecting international investment funds who could be interested in taking a 40% stake in PetroIvoire. Okan Consulting has been playing a facilitator role all along the process of this private placement, for a 10-months period which ended with Amethis Finance investing in Okan’s client. Amaury de Féligonde commented: This operation was facilitated by the fact Okan Consulting is an advisory firm focused exclusively on Africa and has been completing several assignments both for private operators (corporates, private equity funds) and for local governments in Côte d’Ivoire for the past three years, allowing Okan Consulting to get a wide local network, an intimate knowledge of this African region and a good sense of the african financial context. amaury.defeligonde@okanconculting.com thomas.leonard@okanconculting.com A. de Féligonde benjamin.romain@okanconsulting.com www.okanconsulting.com

AMETHIS FINANCE ACQUISITION

OF STAKE Finance IN PETROIVOIRE DRV Corporate

Legal and Financial Adviser to the Vendor

DFA Investment Services Ltd

THE RENEWABLES INFRASTRUCTURE GROUP LTD (TRIG) IPO l The Renewables Infrastructure Group (TRIG), a new investment company focusing on onshore wind and solar photovoltaic energy generation assets, was admitted to listing on the London Stock Exchange, having successfully raised its maximum IPO fundraising target of £300 million. The IPO proceeds are being used to acquire a 100%-owned diversified initial portfolio of fourteen onshore wind farms and four solar PV parks in the UK, France and Ireland. Dexion Capital (Guernsey) Limited (‘DCG’) was appointed as administrator and company secretary to TRIG, and worked with InfraRed Capital, Renewable Energy Systems Limited and their appointed lawyers on the successful IPO. The DCG team was led by Chris Copperwaite, with support from Gillian Newton. DCG and InfraRed Capital already have a working relationship through HICL Infrastructure Company Limited. With both companies having experience in this field, and of working together, the Chris Copperwaite TRIG IPO proceeded smoothly and according to the set timetable. chris.copperwaite@dexioncapital.com www.dexioncapital.com Redpoint Energy, as part of Baringa Partners LLP, provided market reports and revenue projections in support of the launch of TRIG. The work was commissioned by InfraRed Capital Partners. The work was led by Andrew Nind, a Director in the firm. Mr Nind commented: We provided separate reports for the wholesale electricity markets in Great Britain, Ireland and France. Our projections, comprising a number of scenarios for power prices and renewable benefits, cover the timeframe 2013-2035. We also advised on the evolution of wind and solar site-specific revenues and the terms of future Power Purchase Agreements (PPAs).

Simon Luby

SgurrEnergy provided an independent technical report on the renewable assets that were acquired by the TRIG fund and advisory services to both RES and IRCP throughout the transaction. The project was directed by Simon Luby, Director of Advisory Services at SgurrEnergy and managed by Flora Pastre and Simon Barker. The deal was led at InfraRed by Richard Crawford and James Hall-Smith.

The team at Renewable Energy Systems (RES) was led by Donald Joyce, Chief Financial Officer, Jaz Bains, Director of Risk and Investment, and Dominic Hearth, Legal Counsel.

LONDON STOCK EXCHANGE WELCOMES THE RENEWABLES INFRASTRUCTURE GROUP

DRV Corporate Finance (TRIG) TO THE MAIN MARKET Adviser’s

Legal Adviser to the Equity Provider & Tax Adviser

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Financial Adviser to the Equity Provider & Financial Due Diligence Provider

Vendor Due Diligence Provider

Environmental Due Diligence Provider

104 / September 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

ABSA AND BARCLAYS AFRICA MERGER

GENERALI PORTFOLIO MANAGEMENT

PRIME ASSET MANAGEMENT LIMITED

l Britain’s Barclays has sold eight of its African businesses to Absa Group. The scope of the transaction includes Barclays interests in Botswana, Ghana, Kenya, Mauritius, Seychelles, Tanzania, Uganda and Zambia as well as the Barclays Africa Regional Office in South Africa.

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 Victoria Mutual Group has acquired Prime Asset Management Limited. The acquisition will see the VM Group’s share ownership move from 18% to 100%, making PAM a wholly-owned member of the Victoria Mutual Group.

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.

Richard Powell, President and CEO of Victoria Mutual said we are excited about the acquisition, as it forms part of the strategic efforts to diversify our product portfolio and boost total assets under management. He highlighted that, Prime Asset Management is a market leader and currently the fifth largest pension fund investment manager and administrator in Jamaica. Mr Herbert Hall, Chairman of Prime, noted that the organisation has been providing exceptional pension fund investment advisory services for the past 16 years and will remain steadfast in its commitment to trustees, active members and pensioners.

Under the proposed transaction Absa Group will acquire 100% of Barclays Africa Limited, the holding company of the Barclays African portfolio, for a consideration of 129,540,636 Absa Group ordinary shares, representing a value of R18.3 billion. As a result, Barclays’ stake in Absa Group will increase from 55.5% to 62.3%. As part of the transaction Absa Group will be renamed “Barclays Africa Group Limited” to reflect its greater portfolio of African business and it is Barclays intention that Barclays Africa Group Limited will be the platform for the management and growth of its business in Africa going forward. The transaction is expected to complete in the first half of 2013, subject to fulfilment of the conditions precedent including Absa Group shareholder approval.

Stephen Hales

Sanjay Thakkar

John Bowen

EY were engaged to advise Barclays on structuring the consolidation of their African interest under a single African holding company as part of Barclay’s “One Africa” Project. The team was led by Stephen Hales, senior partner in EY’s corporate M&A tax practice in London. Stephen was assisted by Craig Miller, head of Transaction Tax in Africa. The transaction spanned a large number of transactions in Africa and Mautitius. shales1@uk.ey.com craig.miller@za.ey.com www.ey.com KPMG provided financial, IT, regulatory, operational and tax due diligence services alongside SPA assistance and integration advice on the creation of a pan-African business to long-standing client Absa Group. The team was led by Sanjay Thakkar (UK) and John Bowen (South Africa) who were supported by a wider KPMG team including various technical specialists and local South African, East African and UK banking expertise. Linklaters advised Absa on the deal, led by Tracey Lochhead (Corporate Managing Associate) and Charlie Jacobs (Corporate Partner). Lynne Walkington (Tax Partner) and Nikhil Dhokia (Corporate Associate) were the other key members of the team.

SOUTH AFRICA’S ABSA TRADES AS

BARCLAYS AFRICA AS DEAL CONCLUDES DRV Corporate Finance Financial Due Diligence Provider & Tax Advisor to the Purchaser

Tax Adviser to the Vendor & Independent Reporting Accountant

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

Prime Asset Management will continue to operate as a separate entity under the stellar leadership of Managing Director, Mr Rezworth Burchenson. Allan Lewis, Senior Vice President Group Strategy Victoria Mutual stated that the VM Group has been committed to the provision of exceptional financial services to its Members at home and in the Diaspora for over 134 years. With an asset base in excess of $80 Billion, the Group provides a range of financial services that includes savings, mortgages, securities trading and brokerage, asset management, money transfer and real estate services. Pension fund management and administration is an important addition in the drive to help Jamaicans achieve financial independence. HMF acted as counsel to selling shareholders in this transaction; preparing sale documentation and structuring escrow arrangement for sellers and purchasers along with purchaser’s counsel. The HMF team was led by M&A Partner N. Patrick McDonald, with specialist support from pensions specialist PartPatrick McDonald ner, Sanya M. Goffe. Mr McDonald commented: The vendors are a group of individual and corporate strategic investors, some of whom have been represented by HMF for some time. The company had originally been part of a group of companies, and thus a challenge in the transaction was crafting appropriate group pension withdrawal provisions that were fair to both sides and employees. www.hmf.com.jm

VICTORIA MUTUAL GROUP ACQUIRES

PRIME ASSET MANAGEMENT DRV Corporate Finance LIMITED

Virtual Data Room Provider

Legal Adviser to the Vendor Legal Adviser to the Vendor

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ACQUISITION INTERNATIONAL

September 2013 /

105

FINANCIAL SERVICES

Financial Services Deals

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.

FORTIS - HOAN MY l Fortis Healthcare Limited (“Fortis”), one of India’s largest healthcare companies, has entered into an agreement with Viva Holdings Vietnam (Pte.) Ltd., a wholly owned subsidiary of Chandler Holdings Limited and a Chandler Corporation company, to sell its entire stake in Fortis Hoan My Medical Corporation (“Hoan My”), Vietnam, for a total consideration of US$ 80m. The offer price provides a premium to the purchase price paid by Fortis for the acquisition of Hoan My. Commenting on the development, Mr. Vishal Bali, Group CEO, Fortis, said, In keeping with our current priorties in allocation of resources and further strengthening our balance sheet we have decided to accept this unsolicited offer from Viva Holdings. The transaction is EPS accretive to Fortis Healthcare and post this divestment the Net debt to equity ratio of the company is expected to go down to less than 0.6x.

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

Brian Ng

R&T Vietnam LLC is representing Fortis Healthcare Group on this deal, with whom the firm has a long-standing working relationship, led by Brian Ng, partner. The core team includes Giao Nguyen (senior associate) and Hoan Bui (senior associate) from R&T Vietnam LLC.

Rajah & Tann’s Singapore office assisted with some aspects of the transaction and the partner on the Singapore side was Evelyn Wee. Other lawyers and paralegals assisting include Hoon Chi Tern (Singapore associate), Jackie Thia (Singapore associate), Thuyen Bui (Vietnam paralegal), Tran Truong (Vietnam paralegal) and Cang Nguyen (Vietnam paralegal). Mr Ng commented: Challenges included aspects of Vietnam law (and in particular, the Investment Law and Enterprise Law of Vietnam) which had to be harmonized with the cross-border nature of the transaction. We advised clients on almost all the aspects of the deal, including working with the tax and financial advisers to come up with a structure that was amenable to both our clients and the acquirer, Chandler Corporation. http://vn.rajahtann.com/Brian_Ng.html http://vn.rajahtann.com/vietnam_law_firm.html http://www.rajahtann.com/

CHANDLER CORPORATION

FORTIS - HOAN MY DRVACQUISITION CorporateOF Finance

Commercial Due Diligence Provider

SHELBOURNE SENIOR LIVING l Gracewell Healthcare has acquired Shelbourne Senior Living.

Gary Watson

Jones Lang LaSalle acted on behalf of the vendor Shelbourne Senior Living Limited to effect a successful transaction with Gracewell Healthcare acquiring the asset for their premium care home portfolio. The Jones Lang LaSalle team was led by Gary Watson – Consultant and responsible for the agency side within Jones Lang LaSalle’s Healthcare Department.

The transaction represents a prime acquisition for Gracewell but also a clean divestment for Shelbourne’s parent company. Whilst the asset was premium grade the challenge faced by the vendor was to achieve maximum proceeds for a business that had yet to mature. This process was greatly assisted through Jones Lang LaSalle’s ability to identify and communicate a turnaround for the business which all parties could buy into and this contributed greatly to the successful outcome that was achieved. Jones Lang LaSalle is uniquely placed to offer a full M&A advisory service through its dedicated Healthcare and Corporate Finance divisions. Carterwood advised Gracewell Healthcare on the deal, led by Ben Hartley, Director and Co-Founder of Carterwood. The firm has a long standing relationship with Gracewell Healthcare, having worked for them since 2010. Mr Hartley commented: The subject home was in a semi-rural location and had taken nearly four years to fill despite offering exceptional quality accommodation. The client was keen to identify that there was sufficient demand for the service. Our bespoke demographic analysis and a market survey of competing care homes identified a substantial shortfall of market standard bed spaces within a highly affluent catchment area. Ben Hartley

“The home was operating at below levels we would expect for a unit of its quality, with both staff and non-staff costs significantly above market norms. We identified that there was scope to increase profitability given that mature trade had been reached. We also advised on the 14 cottages situated within the grounds of the home, to determine their future potential. “The home remains of outstanding quality and is currently occupying a position close to the top of its local market.

GRACEWELL HEALTHCARE ACQUISITION OF

SHELBOURNE SENIOR LIVING CARE VILLAGE DRV Corporate Finance Sell Side Adviser

Adviser to Fortis

M&A Adviser Commercial Due Diligence Provider

Insurance Due Diligence Provider

Legal Adviser

Advisers to Chandler

Property Valuer

Tax Adviser

Debt Provider

106 / September 2013

ACQUISITION INTERNATIONAL

DEAL DIARY:

Industrial Deals

l Rotork Plc (“Rotork”) has acquired the entire issued share capital of G.T. Attuatori Italia S.r.l. based in Milan, Italy, together with G.T. Attuatori Europe GmbH and Max Process GmbH (“GTA”), both based near Bonn, Germany. Rotork has also acquired Renfro Associates, Inc. (“Renfro”), a valve adaption and mounting business based in Broken Arrow, Oklahoma, U.S.A. Commenting on the acquisitions, Peter France, Chief Executive, said: The acquisition of GTA brings to the Rotork family of companies one of the longest established, best regarded, pneumatic rack and pinion manufacturers in our markets. The acquisition will further enhance the range of products Rotork offers to our customers. “Renfro is another long established business with an excellent reputation for delivering high quality product and service to its customers. The acquisition provides us with the opportunity to repeat the success of our U.K. based valvekits business by expanding the Renfro offer across the U.S.A. Osborne Clarke, with a team led by managing partner Riccardo Roversi and composed by senior associate Alessandro Villa and senior lawyer Daniela Latorre, assisted Rotork Plc in the acquisition of an Italian company G.T. Attuatori S.r.l., and two German companies G.T. Attuatori Europe GmbH Riccardo Roversi and Max Process GmbH. The German part of the transaction has been advised by the Koln office of Osborne Clarke with a team led by the German managing partner Carsten Schneider. Mr Roversi commented: The transaction has been particularly challenging due to time constraint and the need to coordinate the activities among Italian and German transactions, completion of which was regarded by Rotork as a single and simultaneous transaction, despite of the fact that the sellers where different in the two jurisdiction. “Closing the deal within the narrow timeframe indicated by Rotork is another successful chapter of the long standing and mutually satisfactory business relationship between Osborne Clarke and the Rotork Group. For further information, please contact Riccardo Roversi. riccardo.roversi@osborneclarke.com www.osborneclarke.com

ROTORK PLC ACQUISITION OF

G.T. ATTUATORI ITALIA S.R.L. DRV Corporate Finance

INNOSCAN l Stevanato Group, leading manufacturer of primary glass containers for pharmaceutical use, glass tube forming machines and visual inspection systems, strengthens its market position by acquiring the majority stake of InnoScan, a Danish manufacturer of state of the art high-speed inspection machines for the pharmaceutical industry. Through this acquisition InnoScan will widen its international presence and the Stevanato Group, adding InnoScan competencies and portfolio alongside its Optrel range of machinery, strengthens its business in the inspection technologies for pharmaceutical filled containers. Stevanato Group is now able to provide its current and future pharmaceutical customers with a full range of visual inspection technologies and market coverage breadth. This acquisition is completely in line with our Strategic Growth plan and goes in the direction of strengthening our technological leadership in primary packaging products and related technologies, specifies Cav. Sergio Stevanato, President of the Group. The addition of InnoScan to the Stevanato Group allows both current and future Clients to benefit from the joined technological knowhow and innovative process approach and from a complete available range of products for the inspection of all type of containers, including syringes, for a wide range of speed, mode of use and filled products. The two co-founders, Gert Nielsen and Tonny Jervelund, as well as CEO Mads Peter Lübeck will continue in their current positions and functions as well as remain shareholders in InnoScan. InnoScan is fortunate to enjoy an increased demand from both long term repeat customers as well as from new customers, said Mads Peter Lübeck, InnoScan CEO. The entry into the Stevanato Group will allow InnoScan to make the necessary investments to continue the technological and market growth and maintain the high level of service. Gert Nielsen continued: Tonny Jervelund and I have always believed that InnoScan had the possibility of going from the technological niche leader to becoming the preferred supplier of Automatic Inspection Machines with the right management and ownership structure. Partnering with a professional CEO in 2009 was part of a long term strategy, which now is taken one step further by transferring the majority ownership to a carefully selected group.

STEVANATO GROUP ACQUIRES INNOSCAN

DRV Corporate Finance

STENI l Accent Equity 2012 has acquired, together with Steni’s Management, 100% of the shares of Steni from the previous owners. Steni’s CEO, Tom Rønning, and the new Chairman, Olav Kjell Holtan, are investing in parallel with the Accent fund. Steni is the leading Norwegian façade panel company. The company’s turnover is expected to amount to approximately NOK 300 million in 2013. The company employs some 120 people and has subsidiaries in the Nordics, the Netherlands and the UK, and distributors elsewhere in Europe, the USA and Canada. The products (façade, interior and roof panels) are manufactured by fibreglass reinforced polymer composite with various surfaces depending on design and appearance. Since the material is chemically neutral and can be recycled, Steni is described as one of the most environmentally friendly façade panel solutions on the market. The products are resistant to impact, water and UV, and come with up to 40 years warranty. Steni has developed and produced façade panels since 1965. The company, which started almost 50 years ago, has today its head office and production situated in Steinsholt, southwest of Oslo. Since the start, Steni has developed a wide range of products and has up until today delivered al-most 30 million square meters of façade panels to buildings all over the world. Please see www.steni.no for more information. Steni is a great company, and we have followed its development for several years,” said Niklas Sloutski, CEO of Accent Equity Partners, advisor to Accent Equity 2012. “Steni’s façade panels are unique when it comes to durability, environmental friendliness and possibilities for the design of the panels. The company is well positioned for further growth on both existing and new markets. The goal is to see Steni’s products being used by more property developers, architects, constructors and DIY homebuilders.

ACCENT EQUITY 2012 ACQUIRES STENI Advisers

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ACQUISITION INTERNATIONAL

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INDUSTRIAL

G.T. ATTUATORI ITALIA

DEAL DIARY:

Real Estate Deals CLARINS SA

REDEFINE INTERNATIONAL

HILLSTREET SHOPPING CENTRE

l Annuity Properties has acquired Clarins SA’s property portfolio, including Clarins’ head office and the Clarins industrial property in Johannesburg as well as the Carins office property in Cape Town. Clarins SA is a subsidiary of Clarins Group, the international luxury cosmetics company.

l Redefine International, the diversified income focused property company, has acquired the entities (“Target Entities”) owning three shopping centres (the “Properties”) in Germany from various funds managed by CMC Capital Limited (“CMC”) valued at €189.0 million (the “Transaction”) and reflecting a blended net initial yield of 5.5%.

l NewRiver Retail, the retail-focused UK REIT, has completed its acquisition of the Hillstreet Shopping Centre in Middlesbrough. NewRiver and LVS II Lux IV S.a.r.l. have each taken a 50% equity stake in this acquisition.

Glyn Marais Incorporated represented Annuity Properties Limited on the deal, with whom the firm has a long standing working relationship. The team which was involved in this deal comprised of Mr Brian Frank, who is a director and the head of the commercial property department at Glyn Marais Incorporated, and Ms Ashleigh Dawson, who is a senior associate with Glyn Marais Incorporated. Glyn Marais Incorporated was involved in the preparing and negotiating of the acquisition agreements and is currently attending to the transfer of the properties into the name of Annuity Properties Limited. Mr Frank commented: In any transaction, there is some challenge in negotiating the particulars of the relevant agreements and the positions of the parties, however in this matter both parties were eager to conclude the deal. Sasfin Capital, a division of Sasfin Bank Limited provided financial advice to Annuity for the deal, led by Angela Teeling-Smith and Leonard Eiser, Corporate Finance Executives. The firm has been advisers to the company since it was founded and listed the company. Ms Teeling-Smith stated that there were no unusual challenges for a transaction of this nature. Tenurey Bespoke Advisory acted as lead due diligence advisors to Annuity in the acquisition of the Clarins SA property portfolio, the Coricraft Distribution Centre and the McCarthy/Unitrans Property Portfolio. In addition to conducting and managing the due diligence process and financial modelling, Panos Zagaretos Tenurey provided negotiation support and worked with the purchasers and their legal advisors on the transaction documents and the fulfillment of the suspensive conditions. Panos Zagaretos, Executive Director of Tenurey and assisted by Omar Khan, led the due diligence.

Completion of the Transaction was fulfilled on 30th August 2013. This Transaction will substantially expand Redefine International’s portfolio of European assets to approximately £360 million or 30% of the Company’s total portfolio by value (February 2013: 197.9 million or 19%), and which is focused on income producing assets in Germany and Switzerland. The Properties, located in the core German investment markets of Berlin, Hamburg and Ingolstadt, are all situated within established prime retail destinations. The Transaction is expected to produce an initial yield on equity in excess of 12.0% with strong rental growth potential as well as opportunities to add income and value through asset management opportunities. The consideration for the equity in the Target Entities of approximately €47.1 million will comprise a fixed cash payment of €5.4 million with CMC having the option to elect to receive the remaining consideration either entirely in cash, at a discount of approximately 4.0% to the equity value of the Target Entities, or partly in cash and up to approximately €34.3 million by the issue of up to 74.9 million new ordinary shares in the Company at an effective issue price of 40.0 pence per share (the “Consideration Shares”). Greg Clarke, Chairman of Redefine International, commented: The acquisition of these three shopping centres represents the first of two significant planned transactions for the Company flagged in our recent Interim Management Statement. These well located shopping centres will be attractive additions to our portfolio which will enhance the overall quality of our assets and provide the opportunity to create both strong income returns and long-term capital growth for our shareholders.

REAL ESTATE

Tenurey prides itself in having the ability to integrate seamlessly with its client’s business processes ensuring that objectives are met within timeframes provided. For more information, visit www.tenurey.com or contact the firm at info@tenurey.com.

The legal team at Jeffrey Green Russell Ltd. was led by director Jan Hoppe who heads up the firm’s German Desk. For more information visit www.jgrweb.com or contact Jan at jkh@jgrlaw.co.uk.

ANNUITY ACQUISITION OF CLARINS SA

REDEFINE EXCHANGES ON 3 GERMAN SHOPPING CENTRES

Finance and Commercial Due Diligence Provider

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Debt Provider

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The centre has a weighted average lease expiry of a pproximately nine years and is anchored by Primark, Debenhams and Marks & Spencer with other key tenants including Sports Direct, Home Bargains, Superdrug and Argos. It has annual footfall of approximately 12.6m ensuring high occupancy, currently at 98%. NewRiver has identified extensive asset management opportunities to unlock additional value including potential improvement of the entrances, increased commercialisation initiatives and potential reconfiguration of units within the Centre. The company is funding its share of the purchase out of cash resources from the placing proceeds and the joint venture has agreed a new debt facility from a UK lending bank. Jonathan Milburn, Partner at Jackson Criss advised the purchaser (NewRiver Retail), with whom they have a longstanding working relationship, upon the acquisition. Jonathan commented “the key to the deal from our perspective was to obtain a thorough and complete Jonathan Milburn understanding that the underlying occupational fundamentals of the asset, particularly in the context of the wider often maligned geographical catchment, were entirely robust to further endorse the highly attractive income yield at purchase.”

NEWRIVER RETAIL ACQUIRES HILLSTREET SHOPPING CENTRE IN MIDDLESBROUGH FOR £50 MILLION (UK) Commercial Due Diligence Provider

Debt Provider

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Joint Financial Adviser to the Purchaser

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108 / September 2013

The centre is a covered, single level shopping complex comprising 224,000 sq ft of retail accommodation and a 753 space car park. NewRiver has acquired the centre from Ignis Asset Management, on behalf of its Phoenix Assurance fund, for a total consideration of £49.4m, reflecting a net initial yield of 9.6%.

Legal Adviser to the Purchaser

Property Valuer

Joint Financial Adviser to the Purchaser

The REIT said the acquisition supported its stated intention to “efficiently deploy the proceeds of its recently oversubscribed £67 million equity fundraise and the centre is NewRiver’s largest single asset acquisition to date”.

Virtual Data Room Provider Legal Adviser to the Equity Provider

ACQUISITION INTERNATIONAL

DEAL DIARY:

Support Services Deals DOMSJÖ FABRIKER l Standard Chartered Bank has granted a credit facility to Domsjö Fabriker. Domsjö’s main product, specialty cellulose, is used for the textile material viscose, which is an environmentally sound alternative to cotton and synthetic textile fibres. Domsjö is a biorefinery that produces products and energy with a clear environmental profile from renewable raw material from the forests. As well as specialty cellulose, Domsjö produces lignin and bioethanol. Our unique process also gives us the opportunity to produce complementary products such as carbonic acid, biogas and energy. The bioenergy generated by the process is used internally and makes Domsjö virtually independent of fossil energy sources. The raw material mainly consists of spruce and pine. The company’s manufacturing takes place in Domsjö, just outside Örnsköldsvik. The number of employees is 400. The products are mainly sold outside Sweden. The largest markets are in Asia. The head office is located in Domsjö and the turnover is over 1.9 billion SEK. There are subsidiaries in Latvia and Lithuania with altogether 25 employees. Domsjö Fiber, a company jointly owned with Övik Energi, is responsible for supplying raw materials to both Domsjö and Övik Energi. Trilegal acted for Standard Chartered Bank in connection with (i) the refinancing of the debt undertaken for the original acquisition and (ii) a separate capex facility provided to the target entity (Domsjö Fabriker). The firm has a long-standing relationship with Standard Chartered Bank and has acted for them in a number of acquisition financing transactions The team at Trilegal was led by Ameya Khandge. He is a partner in the banking and finance practice at the firm’s Mumbai office.

MANDATA

OAG

l Synova Capital LLP, a private equity investor in UK growth companies, has acquired Mandata (Management & Data Services) Ltd., a leading provider of software as a service (“SaaS”) to the UK haulage and logistics market, for an undisclosed amount.

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

The Business provides cloud hosted software solutions on a subscription basis to owners of commercial vehicle fleets. Mandata’s suite of solutions allows clients to manage their data and resources more efficiently, reducing emissions and fuel consumption, and providing end customers with increased visibility over the movement of their goods. The core solutions are a fully integrated traffic management system and telematics service which together provides an end to end Enterprise Resource Planning system. Mandata’s solutions position the Business to benefit significantly as the UK haulage and logistics market invests further in technology to deliver efficiency savings, environmental improvements and increased visibility for end customers. Transport Intelligence is the leading provider of expert research and analysis dedicated to the global express, mail and logistics industries. A team of the company’s senior analysts, led by Joel Ray and Ken Lyon, undertook an ‘operational due diligence’ study, advising Synova on its successful acquisition of Mandata. Transport Intelligence has developed a range of market leading web-based products, market reports and bespoke consultancy services used by the world’s leading logistics suppliers, consultancies and banks as well as many users of logistics services.

Mr Khandge commented: The transactions involved a springing guarantee from the Indian parent which got trigAmeya Khandge gered upon the occurrence of certain identified events. This was different from the traditional forms of credit support for outbound acquisition financings such as a corporate guarantee, pledge or shortfall undertaking.

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

www.trilegal.com Ameya.Khandge@trilegal.com

STANDARD CHARTERED BANK INVEST IN DOMSJÖ FABRIKER

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.

SYNOVA ACQUIRES MANDATA

DRV Corporate Finance

ELECTRA PARTNERS ACQUIRES OAG

DRV Corporate Finance

Commercial Due Diligence

Virtual Data Room Provider

Financial Due Diligence

Vendor Due Diligence Provider & Tax Adviser

SUPPORT SERVICES

Legal Adviser to Debt Provider

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Legal Adviser to Domsjö Fabriker AB

ACQUISITION INTERNATIONAL

Technical Adviser

September 2013 /

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DEAL DIARY: TMT Deals

TMT Deal Of The Month ACCESSKENYA l Dimension Data has announced that its offer for up to 100% of the issued shares of AccessKenya Group has become unconditional with respect to shareholder acceptances, having received acceptances from shareholders of over 75% of the 218m ordinary AccessKenya shares in issue. The Group also confirmed that the proposed transaction has received approval from the Competition Authority of Kenya. Both the 75% shareholder acceptance threshold and the approval from the Competition Authority of Kenya are key conditions of the transaction. Geoffrey Gangla, Managing Director at Pamoja Capital Limited, Dimension Data’s advisor on the take-over bid said: With the Offer Period closing on 15 August 2013, we are extremely pleased that the 75% acceptance threshold has been reached, and based on the feedback we are receiving from brokers and shareholders, we expect the rate of acceptances to increase between now and the close of business tomorrow. Receiving approval from the Competition Authority of Kenya is also one of the most important pre-conditions of this transaction. Gangla pointed out that Pamoja and various stockbrokers has been contacted during the offer period by a number of individuals who had mislaid their documentation, or recently changed addresses and therefore had not received their documents. Our team is working round the clock to help these shareholders receive and complete Geoffrey Gangla their forms. If you need your forms please contact ourselves or your stockbroker or investment bank and we will assist you as time is running short. Pamoja Capital Group Limited was mandated to offer Dimension Data trading through its division Internet Solutions to offer financial advisory services in relation to the Offer for the acquisition of AccessKenya Group Limited’s equity share capital. Dimension Data is a first time client of Pamoja Capital. The team was led by Geoffrey Gangla, CFA, Managing Director, and Cynthia Omondi, Corporate Finance Associate. Mr Gangla commented: Being a cross border transaction, the transaction faced challenges including the different legal and regulatory environments in which (i) the companies operate and (ii) corporate transactions are executed Secondly, this is first takeover of a listed company in Kenya by new shareholder to acquire 100% and delist the company. The regulatory framework around mergers and takeovers was tested severly. Also, we started the transaction with only 30% acceptances Cynthia Omondi and had to work to achieve 75% in less than 6 weeks. Most Kenyan shareholders tend to make decisions towards the closing date making the whole deal quite nervewracking. Most of the shareholders have small holdings and its therefore difficult reaching them. AccessKenya has 28,000 shareholders. This required consistent engagement with shareholders across the country and in other jurisdictions. In each of these situations we offered strategic and tactical advise as well as just plain old fashion execution to ensure the outcome was achieved. Eventually, we achieved acceptance level of 89% at first close and now working towards the 90% threshold. “We are grateful to Dimension Data for appointing us on this prestigious transaction and we look forward to a continued and fulfilling relationship with them. We also thank all the regulators including the Capital Markets Authority, the Competition Authority of Kenya and the Communications Commission of Kenya for working with the transaction team with speed and diligence to ensure the transaction timelines are achieved. “The transaction team was also very supportive and we thank each of them for working so hard throughout the transaction. The team included: - Standard Investment Bank (Sponsoring Broker) - Kenya Commercial Bank (Receiving and Paying Bank) - Comprite Registrars (Share Registrar) - CoulsonHarney Advocates (Legal Advisors) - Other licensed investment banks and stockbrokers in Kenya “Kenya is rich with opportunities for growth and expansion in almost every sector. We would like to encourage companies such as Dimension Data that are looking for expansion and investment opportunities to talk to us and we’ll guide them through the process leveraging on our professional expertise and strong willpower to succeed. gangla@pamojacapital.co.ke cynthia@pamojacapital.co.ke

TMT Deal Of The Month DIMENSION DATA ACQUISITION OF ACCESSKENYA Tax Adviser

Financial Adviser’s to the Purchaser & the Equity Provider

The Systems House was contracted to analyse and assess the wireless access networks, wireless backhauls and satellite assets of Access Kenya, including high site infrastructure and data centres. Operational aspects including element and circuit monitoring were also reviewed. The Systems House has provided consulting services to Dimension Data (Internet Solutions) for the past six years.

Systems House

The firm commented: Access Kenya were very forthcoming with information requested and a good working relationship was established, which implied that minimal challenges were experienced. www.systemshouse.co.za Hamilton Harrison & Mathews represented the target, AccessKenya Group Limited, led by Paras Shah, Partner. The firm has advised AccessKenya from the time it started its business, through its IPO in 2006 until now.

Paras Shah

Legal Adviser to the Target

Mr Shah commented: The only challenge in the deal was a timing one – the negotiations coincided with our general elections, and we had to go past the date of the elections to make the deal go forward. www.hhm.co.ke pshah@hhm.co.ke On the exciting and challenging acquisition, Viva Africa Consulting LLP, led by Kairo Thuo (Partner), provided fiscal advice on the deal and in particular with regards to resolution of legacy issues and structuring the transaction for fiscal efficiency. Viva Africa Consulting congratulates Dimension Data on the acquisition and also all the consultants on the team as well as the directors and management of Access Kenya for their assistance and in the growth of the company.

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Legal Adviser to the Purchaser and Equity Provider

/ September 2013

Financial Adviser to the Target

Systems Due Diligence Provider

Environmental Due Diligence Provider

ACQUISITION INTERNATIONAL

DEAL DIARY: TMT Deals

ARSYS

BONAIRE

CAPTIFY MEDIA

l Global Alternative Asset Manager The Carlyle Group (NASDAQ: CG), and leading Spanish Private Equity firm, N+1 Mercapital, has agreed to sell Spanish ICT Service provider Arsys to the United Internet (ISIN: DE0005089031) subsidiary 1&1, a global leader in web hosting and domain services.

l Broadridge Financial Solutions, Inc. (NYSE:BR) has closed of its acquisition of Bonaire Software Solutions, LLC – a leading provider of fee calculation, billing, and revenue and expense management solutions for asset managers including institutional asset managers, wealth managers, mutual funds, bank trusts, hedge funds and capital markets firms. Terms of the transaction were not disclosed.

l Panoramic Growth Equity (“Panoramic”), the leading equity investor in fast growing, entrepreneurial companies, has invested £1.2 million of growth capital in digital marketing business, Captify Media Limited (“Captify”). Panoramic will take a minority stake in the business and partner, Malcolm Kpedekpo, will join the board.

Arsys is amongst the leading European providers of web hosting and domain registration services and a pioneer in Cloud Computing, having developed one of the first European Cloud Hosting platforms. Founded in Logroño, Spain, in 1996 by Luis Ignacio Cacho and Nicolás Iglesias, Arsys employs around 300 staff and has over 150,000 paying customers across 100 countries. With commercial activity in Spain, France and Portugal, Arsys generated revenues of over €40 million in 2012. The Pan-European growth capital and buyout fund Carlyle Europe Technology Partners, L.P and N+1 Mercapital reached an agreement to acquire Arsys in February 2008 as a platform for industry consolidation in the ICT Service sector. Carlyle’s investment in Arsys helped improve the professionalization and the delivery of industry leading products and services. Faustino Jimenez, CEO at Arsys, said: We are delighted to have partnered with Carlyle. Carlyle’s investment has supported our growth, helped us to consolidate our loyal customer base and realised the potential of the company by strengthening our competitive position. Arsys has come a long way in the last few years, something which would not have been possible without strong shareholder engagement and support for the company’s management and Arsys’ employees. Fernando Chueca, Director with Carlyle Europe Technology Partners, commented: Arsys is a good example of Carlyle value creation. Partnering with the management team in 2008 we had the joint vision to evolve the company’s activities through strong commitment to quality services and product innovation, particularly in the field of Cloud Computing where the company has positioned itself as a market leader. David Estefanel, Managing Partner of N+1 Mercapital , added: The integration of Arsys is 1&1 has been possible due to the strengths of the company, and the success of the strategy carried out since our entry.

THE CARLYLE GROUP AND MERCAPITAL

TO SELLFinance ARSYS TO 1&1 DRV Corporate Virtual Data Room Provider

The addition of Bonaire is a great advancement in our strategy to offer expanded fee and expense management solutions to the financial services industry, said Gerard Scavelli, President, Mutual Funds and Retirement Solutions Group, Broadridge. The combined Broadridge and Bonaire solutions will help create the transparency, automation and audit trails that firms need as they respond to increased regulatory scrutiny of fee calculations around the globe. Bonaire will operate as part of Broadridge’s mutual fund and retirement solutions group, with current management remaining at the firm and reporting to Mr Scavelli. Bonaire Software Solutions, LLC., based in Boston, MA, and London, UK, is a privately held company founded in 1999. Bonaire is focused on providing Revenue and Expense Management software and services solutions to investment managers, mutual funds, wealth managers, banks/trusts and capital markets firms. Bonaire’s principal product lines are REVPORT – a revenue and expense management platform that performs fee billing and expense calculations, PAYPORT – for receivables management and collections with payment matching, and EMPOWER BI – a business intelligence & management information platform. Broadridge Financial Solutions, Inc. (NYSE:BR) is the leading provider of investor communications and technologydriven solutions for broker-dealers, banks, mutual funds and corporate issuers globally. Broadridge’s investor communications, securities processing and operations outsourcing solutions help clients reduce their capital investments in operations infrastructure, allowing them to increase their focus on core business activities. With 50 years of experience, Broadridge’s infrastructure underpins proxy voting services for over 90% of public companies and mutual funds in North America, and processes more than $5 trillion in fixed income and equity trades per day. Broadridge employs approximately 6,400 full-time associates in 13 countries.

BROADRIDGE COMPLETES ACQUISITION

OF Finance BONAIRE DRV Corporate

Rory Paterson of Ampelm, a strategic business consultancy specialising in commercial due diligence in the digital sector, was appointed by Panoramic Growth Equity in relation to the Captify Media deal. The commercial due diligence involved in-depth interviews with key Captify team members, interrogation of current and prospective revenue models aligned to the market dynamics of the programmatic media sector. Market and customer perceptions were measured via key client, publisher and technology partner engagements, an extensive global competitor analysis was undertaken and technological observations documented. www.ampelm.com HBJ Gateley acted for Panoramic Growth Equity (PGE) in relation to PGE’s recent investment into Captify Media Limited. David Kirchin led the team at HBJ Gateley working on the deal with David Anderson, Senior Associate and Ashleigh Bruce, Solicitor. David Kirchin commented: It was great to work with the Panoramic team to provide growth capital to this exciting digital business. A mark of the deal was the collaborative approach adopted by the teams through to deal completion. Jago Capital represented Captify and continues to do so as its exclusive corporate advisor, led by Lee Cory, Founder and Partner. He commented: Captify are a cutting edge technology business in a very new high growth sector. Getting investors Lee Cory to appreciate the potential in such a situation is always a challenge, one that Jago met head on by receiving multiple funding offers. “Jago sources, structures and promotes investment opportunities. Jago has extensive expertise and experience across a wide variety of asset types and sectors and work with a broad range of investors, including private individuals, family offices, and venture capitalists. Lee.cory@jagocapital.com

PANORAMIC BACKS CAPTIFY MEDIA

Virtual Data Room Provider Commercial Diligence Advisers to PGE

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Corporate Finance Advisors to Captify Project Legal Adviser to the Purchaser Financial Adviser to the Vendor

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PGE Lawyers Legal Adviser Anti-Trust to the Purchaser

ACQUISITION INTERNATIONAL

September 2013 /

111

DEAL DIARY: TMT Deals

HAMILTON RENTALS MBO

KEYNOTE SYSTEMS

NALCO

l Hamilton Rentals, the UK s largest independent provider of IT rental and asset management solutions, has completed a management buyout from its previous owner Xchange Technology Group (XTG), a multinational corporation with regional offices in the United States, Canada, United Kingdom, Germany, Switzerland, Japan, Macau (China) and Australia.

l Keynote® (Nasdaq: KEYN), the global leader in Internet and mobile cloud testing & monitoring, has entered into a definitive agreement to be acquired by an affiliate of leading private equity investment firm Thoma Bravo, LLC in an all-cash transaction valued at approximately $395 million. Under the terms of the agreement, pending shareholder approval, Keynote stockholders will receive $20.00 in cash for each share of Keynote common stock. This represents an approximately 48% premium over the company’s closing price on June 21, 2013.

l The Power Industrial Group has acquired NalcoMobotec LLC from Ecolab Inc., a multi-billion dollar world leader in Water, Hygiene & Energy technology services.

The move will allow the business to focus on the UK market and to expand its range of solutions. Led by established MD Martin O Connor, who has led the business since 2007, Hamilton Rentals remains the largest independent provider of IT rental and asset management solutions in the UK. Commenting on the buyout, Martin O Connor said: This is excellent news for Hamilton Rentals, our customers, partners and hard-working staff. We’ve enjoyed great success over the past years and this now allows us to focus on and invest in the areas where we’re experiencing the greatest demand and success. We will capitalise on our 40 years of industry experience to reinforce our market-leading position. Jeff McFarlane, CEO of XTG added: We wish the team at Hamilton Rentals all the best in the future and look forward to maintaining a strategic relationship and partnership with Hamilton Rentals going forward. Smithfield Partners, led by Nick Foster on this transaction, represented Hamilton Management (London) Limited (HML) on the acquisition of the entire issued share capital of Hamilton Rentals Limited. Smithfield Partners have a long standing relationship with the directors of HML.

Nick Foster

The acquisition of Hamilton Rentals Limited spanned four different jurisdictions and included the participation of seven companies and three law firms,” said Mr Foster. “The transaction was subject to strict time constraints which meant that the teams were focussed on the core issues and the commercial imperatives of each of the respective parties. Open communication between the parties was integral given the varying locations and time differences. This often meant long hours spent in the office by our dedicated team committed to closing the deal. “Given the nature of our successful relationship with the clients and the commercial and pragmatic approach we had during the process, the transaction was completed successfully.

HAMILTON RENTALS COMPLETES

BUY OUT FROM XTG DRVMANAGEMENT Corporate Finance smithfield signv2:Layout 1

22/01/2010

11:52

Legal Adviser to the Purchaser

For over a decade, Keynote has been focused on building a company to last and has established best-in-class offerings across all of our businesses: Internet cloud, mobile telecom and mobile enterprise,” said Umang Gupta, Chairman and CEO of Keynote. “We believe becoming a private company will provide additional flexibility and better position us to strategically invest in our nascent mobile enterprise business, further our sales programs and accelerate the next stage of the company’s growth and industry market leadership. Our board of directors is pleased to sign an agreement that provides stockholders with immediate and substantial cash value, as well as an attractive premium to our share price. We look forward to working closely with Thoma Bravo and all parties to complete this transaction, concluded Gupta.

Nigel Weston

Stuart Baldwin

Keynote is the established leader in the internet and mobile testing & monitoring market and is currently at the forefront of a very compelling macro environment, said Orlando Bravo, managing partner at Thoma Bravo. The increasing complexity of websites combined with the proliferation of mobile devices is creating new markets for the company’s enterprise business, while the real-time shift to 4G and LTE networks will continue to benefit its mobile telecom business. Thoma Bravo is excited to partner with Keynote to accelerate the growth of the company through our proven buy-and-build strategy.

Based in the USA and Canada, Nalco-Mobotec is a world leader in advanced emissions control and combustion optimisation solutions for utility and industrial applications; its patented technology allows plant operators to meet their emissions requirements while allowing for greater fuel flexibility, including the use of fossil and renewable fuels, whilst maintaining or improving current capacity. The newly acquired business will be a standalone entity within the Group. The transaction provides the basis to accelerate the expansion of the offering both in terms of geography and technology; building on over 90 existing worldwide contracts in North America, Europe and Asia. The acquisition comes after a period of sustained growth for the Power Industrial Group, which has grown rapidly over the past five years through a mixture of organic growth and acquisition. Following a MBO in 2007, the acquisition of Grayton Engineering in 2010 was augmented by significant investment from LDC, one of the UK’s leading Private Equity firms. On an annualised basis, the enlarged Group’s turnover will have increased to almost £70m, delivered by a full-time workforce of over 250 nationwide. Laborelec was recommended to the Power Industrial Group by some of their UK clients and Xavier Henry, Technology Manager, lead the Laborelec team in the Technical Due Diligence process. Mr Henry commented: Laborelec is indeed independent from both parties involved, and Laborelec gained a lot of experience with both project development and operation of large scale NOx reduction projects in continental Europe since the nineties. Also, Laborelec had already specific experience with the Nalco technology on several markets, including return of experience of Nalco’s clients in Europe and in North America.

At closing, Thoma Bravo will acquire 100% of Keynote’s outstanding shares. Upon closing, Keynote will become a privately-held company. Keynote senior management is expected to continue with the company and its headquarters are expected to remain in San Mateo.

“The main challenges of the technical due diligence were on one hand to translate the technical and technology risks/opportunities in financial terms, and on the other hand to clearly explain to our client, being not a DeNOx technology provider, the potential of Nalco technology with regards to the clients and markets types. www.laborelec.com

THOMA BRAVO SIGNS DEFINITIVE AGREEMENT TO ACQUIRE KEYNOTE SYSTEMS DRV Corporate Finance

ACQUISITION OF NALCO DRV Corporate Finance

Thomas Granger

Virtual Data Room Provider

POWER INDUSTRIAL GROUP Technical Due Diligence Provider

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SmithfieldPartners Solicitors and Notaries

Debt Provider Financial Due Diligence Provider

Legal Adviser to the Vendor

Legal Adviser to the Purchaser

Tax Adviser

Legal Adviser to the Vendor

Tax Adviser

Legal Adviser to the Equity Provider IP Due Diligence Provider

Financial Due Diligence Provider TMT

Seller’s VC’s (Callidus Corporation) Solicitor

Risk & Insurance DD provider

Debt Providers

Virtual Data Room Provider

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ACQUISITION INTERNATIONAL

DEAL DIARY: TMT Deals

POWER2SME

SECONDSYNC

l Power2SME, the first ‘Buying Club’ for SMEs in India, announced that it has raised USD 6 million in Series B funding from their existing investors. The funding round was led by Accel Partners with participation from Kalaari Capital and Inventus Capital. The funding will help Power2SME to scale up their current business by extending its footprint to South India, increase their product portfolio, expand their sourcing channels to include direct imports for their SME customers and make additional investment in technology & marketing.

l Kantar Media has acquired a minority stake in SecondSync, a UK-based social TV analytics company.

Legal Orbit, a full service Delhi based law firm, was involved in the Series B funding transaction of Power2SME, as a sole legal advisor to the transaction. Legal Orbit team, in the leadership of its partner Neelam Vats, has lead the transaction to a successful closure and assisted in the preparation and Neelam Vats execution of the transaction documents, fulfilment of the conditions precedent and achieving the successful closing. The team comprised: Surbhi Agarwal, Senior Associate; Bhupender Sharma, Senior Associate and Sumit Kumar, Associate Legal Orbit acted as a sole counsel for all the parties to the transaction (i.e., the Company, Promoters as well as the three Investors). Legal Orbit has been associated with the Company from its early growth stages and has been a trusted legal advisor of the Company in its day to day matters to its strategic business dealings and growth plans. Legal Orbit has also represented the Company and the Promoters in all the Series A investment transactions. Ms Vats commented: Being chosen as the sole counsel for the transaction by the Promoters and all the Investors has entrusted Legal Orbit with the responsibility to act fair and reasonable for all the parties to ensure a win-win proposition for all the parties. Team tried to understand the issues and concerns of each of the parties in a realistic manner and focused on addressing the same by proposing workable solutions acceptable to all the parties. www.leglorbit.co.in neelam@legalorbit.co.in

POWER2SME RAISES $6 MILLION

IN SERIES B ROUND DRV Corporate Finance

The move extends the existing relationship between the two companies, who entered into a data sharing agreement earlier this year. The two companies will now work closely together to deliver a range of TV measurement and analytical tools to the UK market. Kantar Media delivers audience measurement and analysis in over 60 markets worldwide, and is a contractor to BARB, the official source of UK TV viewing data. SecondSync focuses on analysis of social media conversations around TV broadcasts to provide audience insights for media planning, audience research and commissioning. Richard Asquith, Global CEO, Kantar Media Audiences said: Today’s announcement will strengthen our social TV capabilities. We will be working ever more closely with SecondSync so that our clients across the world will have access to the talent and resources to understand their audiences more fully and therefore make better advertising and programming decisions. Andy Littledale, Managing Director of SecondSync commented: We broke new ground in the UK with our Social TV Dashboard, helping broadcasters and advertisers make sense of the big data coming out of social media. Rebecca Steer Cementing a close partnership with the leading player in audience measurement will enhance our existing products and help Kantar Media bring to market something that will really make an impact in TV planning. Steer and Co represented SecondSync Limited, with whom the firm has a longstanding relationship. The team was led by Rebecca Steer, Director. She commented: The deal ran smoothly, despite having to reschedule my holiday slightly! We have been involved with the client since very early days and as investment was always part of the business plan we were always focused on ensuring any due diligence would be successful and ‘pain free’. Specifically we have carried out a legal audit of the way the business operates, the way the platform works and ensured that all contracts were in place with customers and suppliers to support and protect the business. We have also advised on the creation and protection of the company’s intellectual property rights. Rebecca.steer@steerandco.com www.steerandco.com

KANTAR ACQUIRES MINORITY STAKE

IN SECONDSYNC DRV Corporate Finance

THINSPACE l Propalms, a global leader in application delivery and virtualisation technology, has acquired Thinspace, a leading cloud client solution provider headquartered in Cheshire, UK, with an extensive public sector customer base. Robert Zysblat, President of Propalms, said, There are tremendous growth opportunities in our sector. The acquisition of Thinspace is a strategic step forward for Propalms to expand its cloud centric offerings. The addition of Thinspace’s highly customisable thin client and zero client solutions will enable Propalms to provide best-fit solutions, further simplify application and desktop deployment, and offer fully integrated long-term support to its customers. Under the terms of the transaction, Propalms will take over all cloud client related business and assets from Thinspace, including products, websites, brand names, customers, and all on-going contracts. All Thinspace existing and future customers will be supported by Propalms. We are pleased to be joining Propalms, a rising star in the virtualisation world, said Lisa Layzell, CEO at Thinspace. We share the same vision with Propalms and believe simplicity is at the core of our value proposition. The enterprise market, dominated by the more established brands, can now expect a refreshing and better alternative in application delivery and virtual desktop provisioning. Propalms is a global provider of application delivery, secure remote access and desktop virtualisation infrastructure. Thinspace is a specialist provider of cloud client technology, with a growing list of private and public sector clients who use its solutions to gain substantial financial, security and carbon benefits. Crowe Clark Whitehill LLP represented Lisa Layzell & Paul Gittens on the deal, led by David Kitson, Partner. The firm advised on the proposed structure and in particular whether it would be tax efficient for the vendors, having advised Thinspace for the past five years. Mr Kitson commented: This was one of the most straightforward deals I have been involved in recently. I consider that says a lot about the integrity of both sides to the deal which went very smoothly. In our view, the deal gives Thinspace a fantastic platform for growth of their offering to the market place and we look forward to both sides benefitting from that. David Kitson

PROPALMS ACQUISITION

OF THINSPACE DRV Corporate Finance

Legal Advisers Legal Adviser to the Purchaser

Tax Adviser

Legal Adviser to the Vendor

Financial Adviser to the Purchaser Financial Adviser

Legal Adviser to the Purchaser

ACQUISITION INTERNATIONAL

Virtual Data Room Provider

TMT

Financial Due Diligence Provider

September 2013 /

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DEAL DIARY: TMT Deals

VERITEK GLOBAL MBO

VIDEOLAND

XRADIA

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.

l RTL Nederland has acquired a majority stake in Videoland, a pay video-on-demand (VOD) platform owned by The Entertainment Group (TEG), a leading film content provider in the Benelux.

l ZEISS, the international leader in the fields of optics and optoelectronics today announced the planned acquisition of the US-based Xradia, Inc. Xradia is a medium-size company providing innovative 3D X-ray microscopes for industrial and academic research applications. The closing of the transaction is subject to the fulfillment of customary closing conditions including a required filing with the U.S. competition authorities. After closing, Xradia, Inc. will operate under the new name Carl Zeiss X-ray Microscopy, Inc.

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

Bert Habets, CEO RTL Nederland commented: We see this acquisition as a logical next step in the development of our on-demand offer. RTL Nederland is currently undergoing a digital transformation. The business-to-business model driven by advertising remains RTL’s most important source of income. At the same time, we are seeing steady growth in the business-to-consumer business model involving paid services. Our VOD and ventures activities are the best examples of this. Moreover, we have noticed that consumers are now more willing to pay for the right offer. So this acquisition thus puts us in the right spot at the right time. Arno Otto, Managing Director Digital Media at RTL Nederland, added: At this point Videoland is only a pay-per-view service. This autumn we will introduce the country’s first all-you-can-watch subscription. The consumer will profit directly from our on-going investments in Dutch film rights and also in the exploitation of rights to our Dutch and international series and programmes. This new service, paired with our VOD platform RTL XL, enables us to offer a service unmatched on the Dutch market. Main Capital Partners acted as advisor to the shareholders of The Entertainment Group (TEG) during the entire process as they sold a majority of their shares to RTL Nederland. The team was led by Lars van ’t Hoenderdaal, Partner and included Floris Kool, Senior Corporate Finance Consultant and Laurens Asselbergs, Consultant.

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.

MOBEUS EQUITY PARTNERS

BACK VERITEK GLOBAL MBO DRV Corporate Finance

Floris Kool

Lars van ’t Hoenderdaal

Mr van ’t Hoenderdaal commented: Since inception of TEG in 2009, we advised the company on several strategic and financial cases. Our unique market position within the media & entertainment sector was the key factor to successfully advise the shareholders of TEG in this transaction.

“The acquisition process was characterised by transparency of both parties and their strong intention to successfully close this deal. We believe TEG and RTL combined will form a strong partnership and will enhance their market leadership in Video on Demand in the Netherlands. lars@main.nl floris@main.nl laurens@main.nl Laurens Asselbergs www.main.nl

RTL NEDERLAND ACQUIRES

MAJORITY STAKE IN VIDEOLAND DRV Corporate Finance

During the last years Xradia recorded strong growth in revenue, profits, and number of employees based on its excellent technology position meeting customer needs worldwide. Xradia has become a provider of established solutions for advanced material research, natural resources and geology, semiconductor process optimization as well as the life sciences. Both parties have agreed to keep the purchase price confidential. For ZEISS the microscopy business is a strong pillar in its portfolio. The investment in Xradia underlines our strategy to grow with the most innovative and future-oriented technologies, stated Dr. Michael Kaschke, President and CEO of Carl Zeiss AG. The decision to acquire Xradia was made after careful consideration of its product lines as well as sales and service coverage. By combining the product lines, ZEISS will be able to better serve the growing demands in multimodal microscopic imaging and to develop solutions which create new values for our customers in science and industry.

Constantin Gall

EY performed Financial and Tax due diligence services, supported the SPA negotiations as well as performed the Closing Accounts review. The overall engagement was led by Constantin M. Gall, TAS Partner at EY Stuttgart, Germany. EY has advised other Carl Zeiss transactions in the past. The overall project management resided with Jens Brajer, Head of M&A at Carl Zeiss.

The appropriate and comprehensive consideration of equity/owner structure of the target in the overall transaction structure was a key challenge in this transaction, said Mr Gall.

ZEISS ACQUIRES XRADIA

Adviser Financial Adviser to the Vendor & Vendor Due Diligence Provider

Financial and Tax Due Diligence & Valuation Support

Legal Adviser to Mobeus Equity Partners

Adviser

Legal Adviser to the Vendor

TMT

Legal Adviser to the Buyer Financial Due Diligence Provider to Veritek

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ACQUISITION INTERNATIONAL

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. This month’s section starts with a look at Brown’s Luxury 5 Star Hotel in London. The hotel has a fascinating history and has hosted many distinguished guests since it opened as London’s first ever hotel in 1837. Next up, we present a report on Lang Atholl’s Island Adventure at Mount Stuart. This fantastic experience provides the opportunity to get behind the wheel of an Aston Martin Vantage, a Ferrarri F430, Audi R8 and a Porsche 997 turbo Cabriolet on a tour of Scotland’s magnificent countryside. Finally, we profile the Jaguar XJR, recently unveiled at the New York Auto Show. The XJR is the first ‘R’ model in the latest generation of the XJ range and is powered by a 5.0-litre supercharged V8 engine that boasts 550PS and 680Nm.

Hotel Review

playHARD

uxury don L s ’ n Brow l, Lon e t o H 5 Star Famous for theatre, shopping, dining and the arts, with beautiful parks and a rich, varied history, London is a place where you can experience the best of everything. Mayfair is in the heart of London and the luxury 5 star Brown’s Hotel is in the heart of Mayfair, boasting one of the most prestigious addresses in the city. The hotel is located within walking distance of key shopping streets such as Bond Street and Regent Street in addition to major theatres, art galleries and all key central London landmarks. It also sits on the doorstep of the stunning green spaces of Green Park and Hyde Park. The hotel has a fascinating history and has hosted many distinguished guests since it opened as London’s first ever hotel in 1837 and to this day this glamorous, fivestar establishment welcomes guests ‘in-the-know’. Brown’s Hotel personifies the refined sophistication of modern British luxury. Each room and suite is individually decorated and many feature antiques and contemporary artworks, creating an elegant and fashionable air. The Donovan Bar and HIX Mayfair celebrate British art and cuisine, and the award-winning afternoon tea is ideal for those seeking a quintessential English experience. A luxurious spa and state-of-theart gymnasium offers a discreet sanctuary within this vibrant city. Brown’s Hotel is also home to six unique private dining rooms offering the perfect location for intimate meetings to lavish celebrations. Nothing is too much trouble for the dedicated staff who ensure that every guest leaves feeling that they were the most important person to ever experience this exclusive hotel. Rooms and suites Brown’s offers guests a choice of 117 stylish bedrooms, including 29 luxurious suites. Each of the rooms and suites has been individually designed by Rocco Forte Hotels’ Director of Design Olga Polizzi in a contemporary and comfortable style, whilst maintaining the refined English charm for which Brown’s is famous. All of the rooms are air-conditioned and have dual-line phones, voice messaging, broadband Internet connections and digital flat-screen LCD televisions with interactive video on demand, in-room bars and personal safe.

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Car Review

playHARD

Lane: t s a F In utahreXJR UnveilAeudto Show 2013 ork Jag New Y at the

The first ‘R’ model in the latest generation of the XJ range, and the latest in a long line of high-performance, luxurious Jaguar sports saloons, the XJR incorporates bespoke chassis and aerodynamic developments to create the most focused, agile and responsive member of the XJ family. Ian Callum, Design Director, Jaguar, enthused: “This XJR is the flagship XJ and I’m delighted we’ve got it back into the range. This is a premium luxury supercar that also has an extremely purposeful look to it. This car will surprise, there’s no doubt about it.” Seamless performance is provided by a 5.0-litre supercharged V8 engine that boasts 550PS and 680Nm. Subtle exterior styling cues, which also optimise the flow of air over and around the car, have given the XJR a distinctively assertive appearance. A front splitter, special ‘R’ bonnet louvres and quad tailpipes also add to the car’s stealthy yet purposeful demeanour. Combined with an eight-speed transmission that extends the performance characteristics of the car, the XJR is capable of accelerating from zero to 60mph in 4.4 seconds (0-100km/h in 4.6 seconds) and on to an electronically limited top speed of 174mph (280km/h). The unique 20-inch lightweight forged alloy ‘Farallon’ wheels are shod with specially developed Pirelli rubber, giving the XJR a muscular stance and increasing its grip and stability. Allied to the tyre technology are tuned dampers and spring rates which both optimise the handling and stability of the car when driven at speed and increase the feeling of connectivity with the road surface, providing a controlled, supple ride which still retains the expected Jaguar XJ ride comfort. The settings for the active electronic differential and Dynamic Stability Control system have been calibrated in order to allow the enthusiastic driver to make the most of the huge performance potential of the XJR. In addition, the steering hydraulics and calibration have been engineered to enhance steering feel, response and feedback under all driving conditions. The car’s dynamic intent is underlined by the technical palette of materials used on the interior. This includes optional semi-aniline leather and veneers in either Carbon Fibre or Piano Black. Providing a further unique touch is a choice of contrasting colour stitching to bring out the design of the front and rear seats.

The Experience

playHARD

olla: t Mount Stuart, h t A g Lan venture 2013 ly Ad Island sday 31st Ju e n d e W

THERE’S being driven to distraction. And then there’s being driven to distraction.... superstyle. Just imagine being able to sit behind the wheel of a Supercar – an Aston Martin Vantage, a Ferrarri F430, Audi R8 or perhaps a Porsche 997 turbo Cabriolet? Even better, what’s it like to sit in and drive all four of these machines over some of Scotland’s most testing A and B routes while trying to take in some truly amazing scenery? Before the day had even started, I was whisked off from Glasgow Airport in the Ferrari – the black one that wasn’t too unlike the Batmobile – and off across the Erskine Bridge on to Loch Lomondside and a start-the-day breakfast at the luxurious Cameron House. Then it was time for “gentlemen, start your engines” and head for the twisting, climbing pass for a dazzling panorama of Garelochhead and a swift right turn over the hills and z-bends towards Arrochar, a road sometimes described as the longest nine miles in the country – but not in these babies. For once, climbing out of a Ferrari is not a heartbreaker – for waiting is the next in line, that Audi R8 with its 4.2litre motor slugging out 420 break horsepower. Further along the route, it’s time to take a breather at Colintraive for one of the shortest ferry hops in Europe – just a few minutes to land on the island of Bute. More driving, this time in the Porsche, more scenery in great weather. Had there been a rainbow, it would have been no surprise to find at the end of it the historic and awe-inspiring Mount Stuart House where, admiring the work done and the money involved in a bygone era, there’s plenty of time to marvel at the marble. This ultra-impressive pile is no ordinary stately home. Yes, the public can take tours, but the place also manages to remain an authentic, 21st-century home lived in and used by the current Marquis and family. The Marquis himself would have loved a test drive in any of the cars being used on this trip – he is, after all a former Le Mans 24Hours winner, Johnny Bute. You might also know him as Johnny Dumfries, just some of the 17 titles this ex-racing driver has at his disposal. In fact, if you’d care to splash the cash, the estate can be tailored to suit your own high-speed requirements with roads closed off to the public for the occasion. I settled instead for a relaxing lunch in the ultra-modern restaurant/visitor centre before touring the magnificent main building. The luxury, however, just kept coming. Lunch WAS good, yet our hosts insisted on serving up a mouthwatering afternoon tea in, where else of course, but the Purple Dining Room! After these calorie counts, that was the closest we came to a spare tire and soon it was drivetime again, to try out the Aston Martin – you know, the one lusted after by schoolboys when Sean Connery made the James Bond role his own. While you might feel the sporty Ferrari could be driven in jeans and trainers, the Aston somehow sends out the message of someone booted and suited to take the wheel. That’s the thing about these cars - even when they aren’t moving, there’s still that special feeling about them – just ask the young lads who gathered round while we waited for the Rothesay-Wemyss Bay ferry. Then again, no one, not even envious petrolheads, seems able to pass near the elite fleet without some comment or question.

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