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In the BILLION-DOLLAR world of online transactions, one firm is leading the way in security and service. AI caught up with Andy Khawaja of Allied Wallet to hear about his journey to business success and what he has planned for the future. /12
Bestway Acquires Co-operative Group Pharmacies Zameer Choudrey, CEO of Bestway Group, tells us more about the Group and this major deal. /16
Globo acquisition of Sourcebits Inc Costis Papadimitrakopoulos, founder and CEO of Globo, filled us in on the finer points of the deal. /22
Timor Hibiscus Limited Acquires Talisman Resources Mark Paton, Chief Business Development Officer at Hibiscus Petroleum, spoke to AI about the deal and how it will help Hibiscus achieve its goal of producing 10,000 – 15,000 barrels of oil per day by 2016. /26
Also inside this issue...
Creating Value Through Our Knowledge And Experience
Deal of the Month Business Connexion acquires stake in AppZone Nigeria Business Connexion (BCX) acquires a 30% strategic interest in AppZone Limited. / 24 Fox Marble Holdings Plc Chris Gilbert, CEO, Fox Marble talks to AI about the deal. / 18
Acquisition International September 2014
Julius Baer Group Ltd. Matthew Alexander, Head Corporate Development & Strategy at Julius Baer, talks us through the deal. / 20
Cristina Elena Candea, senior legal researcher at Romanian Academy and ACIArb London, tells us how the Romanian economy has shaped up in Q3. / 33
Dealmaker of the Month Arbuthnot Banking Group PLC sale of ordinary shares in Secure Trust Bank PLC. / 11
Anne O’Donoghue, Managing Director of Immigration Solutions Lawyers, gives us her thoughts on how her sector has performed in the last quarter, and her predictions for the coming months. / 30
Acquisition International’s Q3 Review Ramakrishna Damodharan, Managing Director of ADIPVEN, Malaysia, gives us his thoughts on his region’s performance in Q3. / 29
Kevin Uphill, Managing Director at Avondale, gives us his thoughts on Q3’s M&A activity in the UK, and his predictions for the future. / 33
Arthur’s Legal B.V., Amsterdam Data & Technology: The Highway to Sustainable Growth / 31 Asset Finance: The Lending Revolution Steve Moody, Director of SKM Asset Finance Ltd, tells us why asset finance plays an important role in the running of SMEs. / 79 Bulgaria: History of East European success AI presents PwC Bulgaria, a firm that has been present in Bulgaria since 1992 and has long been advising companies on how to establish their business here. / 84
DEEP & FAR Attorneys-at-Law 13th F1., No. 27, Sec. 3, Chung San N. Rd. Taipei 104, Taiwan, R.O.C. Tel: +886-2-2585-6688 Fax: +886-2-25989900/25978989 email@deepnfar.com.tw Deep & Far was founded in 1992 and is one of the largest law firms in this country. The firm is presently focused on the practice in separate or in combination of all aspects of intellectual property rights (IPRs) including patents, trademarks, copyrights, trade secrets, unfair competition, and/or licensing, counseling, litigation and/or transaction thereof. Since this firm edges itself into the IPRs field, the firm quickly comes to fame. As an illustration, this firm often is one of the largest sources from which foreign filing orders originate. The fascinating rise of this firm begins from the founder of Deep & Far attorneys-at-law, C. F. Tsai, who is the one first patent practitioner in this country who both has technological and law backgrounds and is qualified as a local attorney-at-law. The patent attorneys and patent engineers in this firm normally hold outstanding and advanced degrees and are generally graduated from the top five universities in this country and/or the university in the US. Our prominent staffs are dedicated to provide the best quality service in IPRs. As a proof, about one half of top 100 incorporations in this country have experiences of seeking patented their techniques, but more than one fifth of the top 100 incorporations are/ were clients of this firm. Furthermore, Hi-Tech companies in the science-based industrial park located at Hsin Chu play an important role in booming the economy of this country. About one half of which have experiences in seeking patented their techniques, and out of more than 60% of the patent-experienced companies in that park have ever entrusted their IPR works to this firm. We have experienced in seeking IPR-protections for our clients in more than 100 territories all over the world. We have thousands of IPR-cases respectively prosecuted before official Patent Offices of major industrialized countries. This firm not only is the most competent in IPR-related matters in this country but also is very familiar with IPR-practices in major industrialized countries. As a matter of fact, this firm oftentimes tries and makes precedents of new claim-drafting styles. While we might have become wonderfully famed locally with remarkable appreciation and respects, we would like to extend our services for internationalized or quality service-requiring foreign conglomerated giants, corporations or individuals. We strongly believe that we will win more applause from clients all over the world.
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Contents September 2014
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Editor ’s Comment Hello, we’re back again with a brand new and jampacked issue of Acquisition International. As we go to print, it has been announced that global insurance premiums reached a record US$4.9tn in 2013. A new study, by Aon Benfield, highlights that the record premium – a 0.9% increase over 2012 – was driven primarily by growth in the P&C and health insurance segments and global insurance and reinsurance capital has reached a record US$4.0tn. So things are looking bright for the insurance industry. And there’s been plenty of activity elsewhere, too. In this month’s magazine, we look at Fox Marble Holdings plc’s placing of new ordinary shares, the proceeds of which are primarily intended to acquire and develop two additional quarry sites to add further high quality marble to the company’s portfolio and to enhance financial returns through improved economic terms. In another major deal, Bestway Group saw off competition in July from the likes of Lloyds Pharmacy, Alliance Boots and Carlyle, the US buyout firm, to buy The Co-operative Pharmacy from The Co-operative Group for a purchase price of £620m. Zameer Choudrey, CEO of Bestway Group, tells us more about the Group and this latest transaction.
Leading the Way in Online Payment Processing
Allied Wallet, which today serves more than 100 million users globally is the brainchild of Andy Khawaja. Acquisition International caught up with him to hear about his journey to business success and what he has planned for the future. /12 News /4 The Latest News Stories From Around the World.
Elsewhere, we take a look at the firms shaping the way due diligence checks are carried out, and in the same vein, we speak to the private investigations firms that are helping companies gather all the vital info they need during the in-depth M&A process.
Sector Talk /9 Powered by Zephyr/ Bureau van Dijk.
We also speak to a number of firms across the Asia Pacific region to find out why the area is such an attractive prospect for investors and we’ve put together a mid-year review of project finance, in which we speak to the leading players who tell us about their recent accomplishments in this challenging sector, their most prominent deals and their plans for the future.
Dealmaker of the Month /11 Arbuthnot Banking Group PLC sale of ordinary shares in Secure Trust Bank PLC
In our monthly down-time section, PlayHard, we visit the Ranweli Holiday Village in Sri Lanka – the last word in eco-luxury – and we provide you with some advice that may come in useful after a long day at the office: how to mix yourself the perfect gin and tonic.
Deal Diary /98 Introduced by Zephyr/ Bureau van Dijk.
And of course there are our usual regional round-ups, insights and business news from around the world. We hope you enjoy the issue.
PlayHard /115 Acquisition International’s Monthly Lifestyle Review.
Mark Toon, Editor mark.toon@ai-globalmedia.com
How to get in touch AI welcomes news and views from its readers. Correspondence should be sent to; Address/ Acquisition International, Unit 10 Barton Marina, Barton Turn, Barton Under Needwood, Burton on Trent, Staffordshire, DE13 8AS. Tel/ +44 (0) 1283 712447 Email/ reception@acquisition-intl.com Website/ www.acquisition-intl.com
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Deal of the Month - Telekom Austria Deal of the Month - Bestway Deal of the Month - Fox Marble Deal of the Month - Julius Baer Deal of the Month - Globo Group Deal of the Month - Appzone Deal of the Month - Timor Hibiscus Acquisition International’s Q3 Review Ones to Watch in 2014 2014’s Ones to Watch IP Experts On the Rise: Private Investigations 2014 Integrated Structuring and Tax Strategy Introducing 2014’s Most Highly-Regarded Arbitrators Introducing Asia Pacific’s Prime Locations for International Investment Corporate Debt Strategy Captive Insurance: Stepping Out of the Shadows Insurance Linked Securities: An Ever-Evolving Market The USA’s Leading Specialists in 2014 Due Diligence: An Essential Strategy for Corporate Growth Planning on Succession Project Finance Asset Finance: The Lending Revolution The Shipping Industry Bulgaria: History of East European success The Philippines: Immeasurable Strength Nigeria’s Oil & Gas Sector Trends Mauritius: A Gateway to Africa and Asia Kenya: Africa’s Go-To Investment Location Nigeria: A Future Investment Hub? The Gambia: Land of opportunities Paraguay: Looking towards the Future Mexico: A Hot-Spot for Oil & Gas Investment Jersey: Company Law Changes The Underwriting Evolution Industrial Free Zones Global Experts Directory
Acquisition International September 2014 3
NEWS FROM AROUND THE WORLD
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News: from around the world news in brief £7.8bn in Construction Projects “at Risk” If Scotland Says Yes Over £7bn of planned construction works could be in jeopardy if Scotland votes to leave the UK, according to new data from construction intelligence specialists, Barbour ABI. Currently £38bn of construction projects are planned across Scotland; however, with the investors funding these projects headquartered outside of Scotland, the likelihood of activity going ahead as intended may hang in the balance depending on the result of the referendum. Michael Dall, lead economist at Barbour ABI, said: “If Scotland does choose independence, it’s likely that negotiations between UK and Scottish Governments will be prolonged and complex, posing a potential risk to both public and private sector contracts and with the lion’s share of planned works being funded by non-Scottish businesses, the currency question will also have a direct impact.” n
Trust the Most Important Factor in Business, Say over Half of Brits New research shows trust tops the list of qualities people value in their business relationships. According to a poll of 2,000 British adults by energy company E.ON, the most important attributes for maintaining strong relationships with companies are trust (60%), honesty (53%), loyalty (42%) and helpfulness (41%). Over half (53%) of Brits would be “very angry” if they were ignored by a business, while fewer than a third (30%) say they’d be equally as angry if they were ignored by a friend or partner, reflecting the nation’s growing expectation for excellent customer service from organisations. Dr Lynda Shaw, psychologist and relationship expert, said: “When forming any type of relationship, trust is crucial – whether it’s with a romantic interest, hairdresser or an energy company. Trust stimulates the hormone oxytocin in the brain and this enhances trust. This wonderful feedback loop aids bonding and loyalty. It is however, also known to strengthen social memories which means that when we’re let down by those in whom we’ve placed our trust, the effect is amplified. That’s why it’s so important to gain trust and keep it.” Mobile phones, tablets, wearables, internet finance and other new technologies are driving and changing entire industries, creating challenges for regulators which are struggling to keep up with the rapid pace of technological change. How regulators can encourage innovation while ensuring proper regulatory oversight was a key topic discussed on the closing day of the eighth Annual Meeting of the New Champions in Tianjin, China. n
4 Acquisition International September 2014
European Commission Has “Right Structure and Credentials for EU’s Challenges” Growth, better regulation and investment are needed, according to the Association of Chartered Certified Accountants. Commenting on the reorganisation of the European Commission on 10 September, Petros Fassoulas, Head of Public Affairs - Europe for ACCA (the Association of Chartered Certified Accountants) said: “The new Commission has the right structure and credentials to deliver meaningful solutions for the challenges faced by the EU. Growth, better regulation, investment are what’s needed and the new Commission has a big role to play in helping the EU deliver for its Member States and their citizens. “ACCA champions the needs of SMEs especially their access to finance and to the digital agenda, as well as their internationalisation. We therefore welcome the creation of a new internal market, industry, entrepreneurship and SME portfolio, which for the first time includes a specific mention of the backbone of all European economies – SMEs – in the title.” Fassoulas added: “The appointment of Jonathan Hill as Commissioner for Financial Stability, Financial Services and Capital Markets Union, a very important portfolio, demonstrates how our EU partners recognise the importance of the City for Britain and the EU. It’s an endorsement of the central role Britain can play and the way it can constructively contribute towards making the EU and its financial services sector stronger, more sustainable and able to deliver benefits for the economy as a whole. “As a professional body which is committed to diversity we are pleased to see that among the nine women who will take office in November, though they account for only 33% of the college of Commissioners, which just meets the minimum set by the European Parliament; three are EC vice-presidents, who obtained three of the seven powerful new key portfolios - covering competition, internal market, industry, labour and trade.” n
“
ACCA champions the needs of SMEs especially their access to finance and to the digital agenda, as well as their internationalisation. We therefore welcome the creation of a new internal market, industry,
”
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NEWS FROM AROUND THE WORLD
Ignore Geopolitical Risk at Your Peril, Investors Warned Many investors are becoming complacent of the threats to the markets posed by political turmoil in countries such as Ukraine and Iraq, according to deVere Group’s Tom Elliott. Investors are being urged by a leading global analyst to review their portfolios more regularly and to include a small exposure into real assets, such as commodities and precious metals, as a precaution against rising geopolitical risk. Tom Elliott, International Investment Strategist at deVere Group, which has 80,000 clients and US$10bn under advice, believes many investors are becoming complacent of the threats to the markets posed by political turmoil. “There seems to be a growing disconnect between investment and global political tension.” Elliott said. “Russia is at war with Ukraine, the Middle East is engulfed in a Sunni/Shia conflict on multiple fronts, and China is testing the resolve of its neighbours to defend their maritime borders, amongst other situations. All are challenges to the West to defend its interests, and on all scores the West is hesitant to intervene. “Yet real assets, such as commodities, particularly oil and gold, have barely responded to the rise in geopolitical risk this year.” Elliott suggested that the luxury property sector in a number of Western cities in recent years may be a foretaste of things to come for other real assets. He argues that plutocrats in Russia, the Middle East and China, amongst other places, have been buying such properties over the last 20 years “partly as a bolt-hole in case the vagaries of their local legal and political systems mean they have to flee the country.” It is these vagaries, Elliott argued, that are the cause of rising geo-political tensions.
“US shale gas is pushing down American domestic prices and reducing the need for imported energy. Meanwhile the introduction of high quality Russian diesel, and strong North Sea production this summer, has led to over-supply in Europe. In addition, quantitative easing by the US and other central banks has not led to the strong inflation that some economists and politicians had predicted, causing an unwinding of investor appetite for commodities, as a hedge against inflation.” However, Elliott warned: “History teaches us that the geopolitical tide can change demand/supply assessments – and hence prices – very quickly. “If the Sunni/Shia wars in the Middle East result in a closure of the Strait of Hormuz then around 17% of global energy production would be lost and prices would rise sharply, and the global economic recovery would be at risk. And Putin may cut supplies of energy to Europe in retaliation to EU boycotts of Russian companies. “Furthermore, if classic monetarist theory proves correct, inflation will eventually follow on from the quantitative easing programs and all commodities – but especially gold – will be in strong demand as investors seek to protect their portfolios.” Elliott added a second reason to hold commodities in an investment portfolio, perhaps up to 4% of the total value: “Real assets always have a valuable diversification role in an investment portfolio, and rising geopolitical risk may yet trump the factors that keep prices stable. Modern portfolio theory demonstrates that there is good reason for holding real assets.” n
“The most common explanation for flat commodity prices is the strong investment in production that took place during the recent commodities boom, and relatively weak global demand growth.
Dja65 / Shutterstock.com
Acquisition International September 2014 5
NEWS FROM AROUND THE WORLD
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News: from around the world appointments Aviva Appoints Sir Adrian Montague as Chairman from April 2015 Aviva plc has announced that Sir Adrian Montague will become non-executive chairman on the retirement of John McFarlane at the Aviva AGM in April 2015. This follows the announcement that McFarlane will succeed Sir David Walker as chairman of Barclays, following its AGM also in April 2015. Sir Adrian joined the board of Aviva in January 2013, and became senior independent director in May 2013. He is currently non-executive chairman of 3i Group plc, non-executive chairman of Anglian Water Group Ltd, non-executive director of Skanska AB of Stockholm and CellMark Investments AB of Gothenburg, chairman of The Point of Care Foundation (charitable trust), and was recently announced as non-executive chairman of Manchester Airports Group. Sir Adrian Montague said: “It will be a privilege to chair Aviva. The company is recovering strongly and delivering against its investment thesis of cash flow plus growth, under the new, strong management team ably led by Mark Wilson. John McFarlane has been an extraordinary chairman, and has made an immense contribution to Aviva’s recovery. We are disappointed that he is leaving Aviva, but understand his excellent credentials to chair Barclays, and are very appreciative of all he has done for Aviva.” John McFarlane, chairman of Aviva, said: “I am very pleased with the progress Aviva has made, and although it is naturally with some regret that I step down, I am glad to be leaving the company in safe hands. I have great respect for Adrian, having worked very closely together over the past two years. His considerable experience in financial services, including insurance, as well as in government and regulatory matters are invaluable to us. His appointment has my full support as well as that of the board and the senior executive team, and I wish him well.” n Allen & Overy Appoints Richard Punt as CEO of Peerpoint – Launches Client Service and Expands Recruitment Allen & Overy has announced it has appointed Richard Punt, Managing Partner for Clients and Markets at Deloitte, as Chief Executive Officer of Peerpoint, Allen & Overy’s contract lawyer business. Commenting, Wim Dejonghe, Global Managing Partner, said: “Securing someone of Richard’s calibre is a real coup for the business. It shows the scale of our ambition for Peerpoint and our commitment to investing in alternative delivery models for our clients. The fact that some of our major clients have also embraced the service, and are keen to work with us to develop the model further, is a testament to the quality of the business and the people involved. It also demonstrates the demand for a quality offering in this part of the market.” Punt added: “Having led Deloitte’s client relationship strategy and worked extensively in the legal sector, the rapidly changing nature of client demand is very clear to me. I admire Allen & Overy’s ambition in pioneering new ways of working. They have recognised both the opportunity and the imperative presented by the fundamental shift towards new delivery models in the legal market.” When Punt joins Peeerpoint in November he will work with Peerpoint’s COO, Ben Williams, and focus on new business development both with clients and within Allen & Overy itself. This will include international expansion of the business and recruiting lawyers outside Allen & Overy’s alumni network. n
6 Acquisition International September 2014
Leading Innovators Say Regulators Must Tread Lightly Attendees at WEF event said regulators can bring credibility and trust to the internet space, but that companies have the capacity and talent to move much faster. Mobile phones, tablets, wearables, internet finance and other new technologies are driving and changing entire industries, creating challenges for regulators which are struggling to keep up with the rapid pace of technological change. How regulators can encourage innovation while ensuring proper regulatory oversight was a key topic discussed on the closing day of the eighth Annual Meeting of the New Champions – a World Economic Forum event which convenes the next generation of fast-growing enterprises shaping the future of business and society together with leaders from major multinationals as well as government, media, academia and civil society – in Tianjin, China. While technology can be used for nefarious means – such as the way the Islamic State is currently distributing propaganda via social networks – Rapelang Rabana, Founder and Chief Executive Officer, Rekindle Learning, South Africa, said the positives far outweigh the negatives. “The inclusive nature of the internet is far more compelling to me than any of the negatives,” she said. But the negatives and the positive are both creating challenges for regulators. Nathan Blecharczyk, Chief Technology Officer and Co-Founder, Airbnb, said one way to encourage more innovation is for regulators to adapt faster to changing circumstances. “The challenge for policy-makers is how to go through that in a smooth way. We all want more sensible rules. Nobody is saying there shouldn’t be rules around the future of technology, but we should also recognise that the world has changed and we should rethink what is sensible from the ground up,” he said, adding that it is always easier for regulators to say “no” to new ideas. Gao Jifan, Chairman and Chief Executive Officer, Trina Solar; President, China Photovoltaic Industry Association (CPIA), People’s Republic of China, said regulators can bring credibility and trust to the internet space, but added that companies have the capacity and talent to move much faster. “Sometimes internet players are out-regulating the regulators,” he said. The panellists agreed that some of the most exciting technological innovation is happening in places like Africa, where the regulatory framework is still being developed. There have been inroads into a number of fields, such as mobile finance. Paul E. Jacobs, Executive Chairman, Qualcomm, USA, and a Mentor of the Annual Meeting of the New Champions 2014, said: “A lot of innovation will happen in developing and emerging markets precisely because there is a lower regulatory burden.” Ultimately, though, some aspects of internet regulation are not for technologists to answer. “To what extent are people willing to be surveilled? Those are political questions more than technology questions.” n
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Sometimes internet players are outregulating the regulators
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NEWS FROM AROUND THE WORLD
Pensions Guru Calls for Public Pensions Partnerships Closer collaboration needed to mitigate risks, which include rising pensions deficits, according to Ros Altmann. Ros Altmann, the independent pensions expert, has called for closer collaboration and partnership between UK public pension funds in order to reduce deficits and mitigate against recent monetary and political decisions that have negatively impacted the industry. Speaking at the London Pensions Fund Authority (LPFA) annual Fund Member Forum in London, which was attended by more than 500 members of LPFA’s £4.8bn pension fund, Altmann explained how policies such as low interest rates and quantitative easing, combined with lower gilt yields, had caused pensions liabilities to rise by as much as 50% over the past few years. “The policy of ultra-low interest rates has undermined all kinds of pensions,” said Altmann. “Every one percentage point fall in interest rates increases pension liabilities by 20%, while assets only rise by 6-10%. Given that since the financial crisis gilt yields have also fallen sharply, liabilities overall have increased by 50% in a few years.”
Altmann’s speech supports LPFA’s long held position that the solution to eliminating the UK’s public pensions deficit, which equates to at least £50bn across the 89 Local Government Pension Scheme (LGPS) funds, requires funds to work in partnership to access the benefits of Asset and Liability Management (ALM), realise economies of scale in pensions administration and benefit from improved governance. Speaking at the Forum, Sir Merrick Cockell, LPFA Deputy Chairman, said: “The government has been strongly focused on making changes to the LGPS this year, launching a new consultation with the key aim of reducing deficits in public pensions. Working in partnership will help to deliver this, giving us more direct access to asset classes that provide the long term returns that are the best match for our liabilities. We have sent this message very clearly to the government and are encouraging others to embrace this.” n
She went on to propose that a new approach was needed to tackle rising pensions deficits. “There is a real need for more creative investment solutions, for example, smaller funds coming together with larger funds to invest on a collective, active basis. This will bring benefits in diversification and economies of scale, as well as improved governance and greater expertise. It will also allow funds to access asset classes such as infrastructure, which deliver long term returns that match pensions liabilities.”
Acquisition International September 2014 7
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SECTOR TALK www.acquisition-intl.com
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Consumer and Retail The consumer and retail sector posted increased value during the first half of 2014, against a decline in deal volume. In the opening six months of the year there were 1,357 transactions worth an aggregate USD 72,364 million. The second half of the year appears to be starting off on a similar footing as relatively low volume is complemented by promising value. In total there have been 406 deals worth USD 40,899 million in the period from July to the beginning of September, according to Zephyr, the M&A database published by Bureau van Dijk. This means value is more than half way to surpassing the figure for H1 2014, in spite of H2 only being two months old. Volume looks less likely to reach the heights recorded in the first half of the year, which itself represented a decline from 1,425 deals in H2 2013. In spite of the drop in deal volume in H1 2014, values again increased from USD 57,464 million in the second half of 2013 to USD 72,364 million. This means that if H2 2014 continues on its current trajectory it would represent the second consecutive climb in deal volume. In fact, the opening six months of this year represented the best value result since H2 2007, when USD 74,484 million was injected across 1,174 deals. The combination of increasing values and declining volume across the board suggests that of the deals taking place, average considerations are higher than in previous periods. Naturally, the retailing industry has accounted for a large portion of the deals within the consumer and
NUMBER AND AGGREGATE VALUE (MIL USD) OF CONSUMER AND RETAIL DEALS GLOBALLY: 2006-2014 YTD (as at 01 September 2014) Deal half yearly value (Announced date)
Number of Aggregate deals deal value (mil USD)
H2 2014 TD
406
40,899
H1 2014 H2 2013 H1 2013 H2 2012 H1 2012 H2 2011 H1 2011 H2 2010 H1 2010 H2 2009 H1 2009 H2 2008 H1 2008 H2 2007 H1 2007 H2 2006 H1 2006
1,357 1,425 1,205 1,251 1,290 1,185 1,110 982 1,105 1,204 1,197 1,029 1,145 1,174 1,273 1,327 1,390
72,364 57,464 58,192 48,257 71,236 44,556 39,984 40,759 31,428 42,797 22,248 29,015 51,189 74,484 117,207 68,945 82,523
retail field in 2014 to date. So far, there have been 1,718 deals worth a combined USD 106,960 million, representing a vast majority of the transactions for the eight months represented. This dwarfed the secondplaced industry by both volume and value, personal, leisure and business services, which had investment of USD 27,033 million across 149 deals. The consumer and retail sector’s largest deal of 2014 to date was announced early in August. US pharmacy chain operator Walgreen said it will exercise an option to buy the remaining 55.0 per cent share it does not already own in Swiss peer Alliance Boots for around USD 15.27 billion in the form of both cash and shares. Completion of the deal is dependent on the necessary approvals being received from shareholders and regulatory authorities and is expected to follow during the first quarter of 2015. The year’s second-largest deal to date is worth USD 11.18 billion and was Cerberus’ March announcement that it will pick up US supermarket operator Safeway in a bid to better respond to customer needs and provide a more efficient service. Four of the year’s ten highest valued transactions to date had targets based in Western Europe and helped the region to come out on top in terms of both volume and value in 2014 so far. In total the
region was targeted in 561 transactions worth a combined USD 43,976 million, placing it ahead of North America, which ranked second by value on USD 39,995 million. However, the region could only come fourth by volume on 264, behind Eastern Europe with 414 and the Far East and Central Asia with 344. The latter took third place by value with USD 17,330 million, followed some way behind by South and Central America on USD 4,915 million. North America’s contrasting fortunes in volume and value suggest high individual considerations in spite of the relatively low deal numbers, something which is borne out by the fact that four of the year’s top ten transactions by value featured US targets. Therefore we can conclude that the consumer and retail sector has made a promising start to the second half of the year and looks likely to surpass the value result for the opening six months of 2014. By contrast, volume looks odds-on to decline again, but plenty of positives can be taken from the fact that, as with previous sectors looked at in recent months, investors’ confidence appears to be growing as they become more willing to shell out larger amounts to get the companies they want. n
NUMBER AND AGGREGATE VALUE (MIL USD) OF CONSUMER AND RETAIL DEALS GLOBALLY BY DEAL TYPE: 2006-2014 to date (as at 01 September 2014) Deal type
Number of deals
Aggregate deal value (mil USD)
Acquisition
10,632
494,781
Minority stake Institutional buy-out Management buy-out MBI / MBO Management buy-in Demerger Merger
9,410 704 172 7 15 37 116
347,945 154,273 7,380 109 59 3 1
AGGREGATE VALUE (MIL USD) OF CONSUMER AND RETAIL DEALS BY REGION: 2006 - 2014 YTD (as at 01 September 2014) World region (target) Western Europe North America Far East & Central Asia South & Central America Oceania Eastern Europe Africa Middle East
2006
2007
2008
2009
2010
2011
2012
2013
40,144
72,726
39,638
24,123
21,811
34,006
38,257
23,835
2014 TD 43,976
71,672 14,065
50,111 19,409
10,944 11,699
9,968 13,091
22,200 14,196
13,799 14,272
35,508 19,087
52,349 21,112
39,995 17,330
6,948
8,849
3,742
6,985
5,303
10,883
9,136
9,601
4,915
3,316 13,664
19,117 16,102
4,128 7,558
5,740 5,927
2,785 4,351
3,306 7,543
2,734 2,275
4,064 3,203
3,902 2,649
632 77
5,614 1,098
102 250
104 119
537 703
210 144
898 1,049
345 1,148
384 144
Acquisition International September 2014 9
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DEALMAKER OF THE MONTH
Company: Oriel Securities Name: Gareth Hunt Web: www.orielsecurities.com Address: 150 Cheapside, London EC2V 6ET Tel: +44 020 7710 7600
Oriel Securities & KBW In June, Arbuthnot Banking Group Plc announced the sale of 1,041,667 ordinary shares in Secure Trust Bank Plc, at the same time as Secure Trust raised £48.5m of growth capital. Oriel Securities, the UK mid cap specialist, worked as sole placing agent and joint bookrunner with sister company KBW, the FIG specialist. The deal was led by Rob Mann, Gareth Hunt and Nick Gregory at Oriel Securities and Julian Bird and Charles Lucas at KBW and marked the first time that Oriel and KBW had worked together on a deal after Oriel’s acquisition by Stifel earlier in 2014. On 19 June, Arbuthnot Banking Group PLC announced the proposed sale of 1,041,667 ordinary shares in Secure Trust Bank (STB), representing 6.7% of STB’s existing issued share capital to institutional investors at a price of £24.00 per sale share. STB, which is a subsidiary of Arbuthnot Banking Group, also announced the proposed placing of 2,083,333 new ordinary shares in STB to institutional investors, at a price of £24 per placing share.
forecasts that loans can grow by over 3.5 times between H114 and FY16, and that adjusted ROE should be above 30% in FY16. STB operates in the personal loan, car loan and retail loan markets and will also be launching into the SME loan market. Management has a strong historic track record of entering new markets – having launched auto and retail lending from a standing start. SME lending in particular offers a very attractive market to lend into, following the continued contraction of the larger high street banks.
Oriel Securities, the London-based corporate and institutional stockbroking and advisory firm, acted as sole placing agent and joint bookrunner on the deal, which was completed on 9 July.
“Oriel and KBW were sole book runners on the deal, organising meetings with over 40 UK institutions. The deal took approximately four weeks to market and complete.”
Outlining the deal’s two components, Gareth Hunt, Partner at Oriel Securities, says, “First, STB raised £48.5m of new money to fund growth. Second, Arbuthnot Banking Group sold £25m of shares to reduce its holding in STB from 67% to 53%.”
Asked if Oriel encountered any notable challenges as part of the deal, Hunt says, “Markets were shaky during the deal but it is notable that STB raised money at a pro forma valuation of c.3.5x book value, materially higher than similar transactions that were pricing in the market around that time. STB is one of the best capitalised banks in the UK, with a leverage ratio prior to the deal of some 11% – way ahead of the larger banks. The group is also well funded – raising all of its liquidity from retail depositors. It also has no history of conduct authority fines.”
STB launched its IPO in 2011, and since then has performed very strongly, says Hunt, with the shares generating a +300% total shareholder return following 4x loan growth and 30%+ annual return on equity. “Arbuthnot, which owned 67% of STB before the deal and 53% afterwards wanted to allow STB to raise new money to continue growing its balance sheet and also wanted to help STB increase its free float, to make the name more broadly attractive to UK fund managers.”
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The deal’s success, says Hunt, will be measured by the continued profitable expansion of the balance sheet.
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Key to carrying out a successful and trouble-free deal, says Hunt, was the fact that management were very transparent with institutions about how capital would be invested and what returns they required divisional managers to achieve. n
The deal’s success, says Hunt, will be measured by the continued profitable expansion of the balance sheet. “STB raised £48.5m of new money, taking shareholders equity to over £110m. Oriel Research Acquisition International September 2014 11
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Leading the Way in Online Payment Processing
Leading the Way in Online Payment Processing
An exclusive interview with Andy Khawaja - The leader of online payment processing In the billion-dollar world of online transactions, one firm is leading the way in security and service. Allied Wallet, which today serves more than 100 million users globally and has a fraud rate of just 0.02% – the lowest in the industry – is the brainchild of Andy Khawaja, whose own rags-to-riches story is a lesson in how to build a thriving company in an extremely competitive environment. Acquisition International caught up with Khawaja to hear about his journey to business success and what he has planned for the future. Allied Wallet, a global online payments gateway, has over 100 million users around the world. It provides a secure online payment system, as well as peer-to-peer transfers and smartphone card payments. CEO Andy Khawaja, who is often referred to as the “messiah of e-commerce” for his pioneering advances in the industry, aims to make sure all online transactions are carried out safely – providing Allied Wallet is the service provider. He has grown Allied Wallet by employing an elite staff of processing veterans and innovative thinkers to uphold security, deter fraud, and assure users that their financial information is safe. Today, thousands of merchants worldwide today place their trust in Allied Wallet, which has processed over a billion dollars globally in 164 currencies. Khawaja’s rise to the summit of the business world has been nothing short of amazing. Born in war-torn Beirut, Lebanon, he moved as a child to Europe. He later moved to the US, attending college and working a number of jobs, including flipping burgers in a fast food restaurant and serving customers in a supermarket. Those jobs were certainly a far cry from his current lofty position as CEO of a global technology firm. But they were a vital part of his development as a businessman, he says, because they put him in a position where he was face to face with customers. “I love to understand what people need, what makes them happy or upset,” he says. Those early jobs instilled in him an understanding of what customers need, he says, and what they like to buy.
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Khawaja later opened a men’s fashion boutique in Los Angeles, which grew into a chain of stores. Running his stores was, again, a formative experience, he says. “People want to look good. And that gave me a PR-type lifestyle. I had to find out what people are like, in order to be able to provide them with what they want. You need this contact with people,” he says. “Face-to-face contact is vital.” Soon afterwards, after spotting a gap in the market, he moved into online commerce. “When the internet first began to really take off, I realised that something was missing. Websites were being created, but it was impossible to reliably pay for things online. “I thought to myself: ‘Why not build the capacity to transact online?’” The challenge in those early days, when he needed an injection of cash to get his idea off the ground, he says, was convincing banks to work with him. After seeing fraud take place previously online, they were sceptical, he says. “They kept saying to me: ‘How do you know the customers are real?’” Khawaja says. He set out to create a fraud detection gateway, a means of checking whether fraud had taken place during a transaction carried out over the internet. It took around five years to put the system in place, he says. He went back to the banks with his project, which he called Allied Wallet. “But they said there was no appetite for the business,” he says. “Back then, banks weren’t interested in technology. Having witnessed the collapse of numerous dotcom businesses, they would say: ‘The internet is just a bubble’.”
But Khawaja’s payment gateway just grew bigger and bigger. And as it grew, he went back again to the banks to ask for help with handling credit card payments. But as he was a relative newcomer in the business world, the vast majority of them still wouldn’t give him a chance. “Many startups have the same problem,” he says. “The banks won’t work with them. But when they get big, then the banks want them. It was this sense of frustration that inspired him to create Allied Wallet, Khawaja says. Now, to help startup businesses get off the ground, he says Allied Wallet devotes 70% of its time to encouraging new businesses to use Allied Wallet to process online payments. “When you get rejected, you just work harder,” he says. “My advice is this: Never give up. Hope is all around you. Believe in yourself and keep on your dream.” And in the world of business it’s usually when people are on the final straight that they fall, he says. “People who fail have only given 90%. When you’ve almost achieved your goal, you can feel you’re almost drowning in problems.” He was one of the fortunate ones, Khawaja says. “Somewhere down the road we got lucky with a couple of banks, and we managed to get started.” Allied Wallet is different from other payment platforms – with PayPal probably the best known of its competitors – because it is a truly global payment processor, able to handle payments on all websites, both domestically and internationally. “There’s a need to protect consumers all over the world,” he says. Allied Wallet’s built-in online security system offers Level 1 PCI compliance, a secure service which hosts
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credit card numbers and other fragile information. Level 1 PCI is hard to obtain, and offers the best possible level of security. Everything Allied Wallet does is stored on site, in multiple locations across the world. Data is encrypted using tokenisation (which is a process of substituting a sensitive data element with a non-sensitive equivalent, or “token”, which has no extrinsic or exploitable meaning or value). Because everything is turned into numbers and letters, it is impossible to gain access to the server. All this means that Allied Wallet has a fraud rate of just 0.02% – the lowest in the industry. In almost any business, to provide the very highest level of service, it’s vital to maintain a strong and productive – but also friendly and fun – working culture. And Allied Wallet has an “outstanding” working culture, Khawaja says. “We never call our team “employees,” says Khawaja. “The team are like family.” At many other companies, such as PayPal, he says, employees are known by a number, rather than their name. At Allied Wallet, he says, staff aren’t required to arrive at 9 and leave at 5, and they can take breaks whenever they like. As long as the work gets done, Khawaja says he doesn’t mind.
Leading the Way in Online Payment Processing
Allied Wallet has also opened an India base in addition to its UK headquarters overlooking Trafalgar Square in London and offices in the US, Germany, Hong Kong and Macau. Another recent development came this year when Allied Wallet was granted the licence to issue MasterCard and Maestro cards in various European regions.
Looking forward, Khawaja says the next big thing in payment processing will take the shape of a reloadable keychain, which is already in use in Japan, and which is completely fraud-proof. Allied Wallet is currently working on bringing the first similar system to the UK. Asked what challenges are facing Allied Wallet, Khawaja is unequivocal in his response: he says there are none. “We’re winning the race,” he says. “We’re the master in global processing. Today, we’re changing the future of transactions.” n
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I love to understand what people need, what makes them happy or upset.
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“We don’t want staff to be on the clock. That’s what leads to stress,” he says. “At Allied Wallet, they feel like they work for themselves, not for me. We want an environment where you can think outside of the box. Allied Wallet is about being creative.” Within Allied Wallet, Khawaja is a motivator, he says. “In staff meetings, I ask them: ‘Who do you see in the mirror? If it’s you, then you believe in yourself.” In a recent list by global human resources consulting, research and training firm Great Place to Work, Allied Wallet was named the 3rd best company to work at for Millennials (Google was number five). And it’s a working culture that has clearly yielded results: Allied Wallet was recently named for the 2nd time, as an INC 5000 Company, meaning it is one of the fastestgrowing companies in the US. On an international level, earlier this year, the company acquired CloudAsia, one of the largest Chinese payment processors in Hong Kong. The move will give Allied Wallet more access to consumers and local banks in all regions of Asia including Indonesia, Korea, Malaysia and mainland China.
Acquisition International September 2014 13
DEAL OF THE MONTH
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Telekom Austria Group Acquires blizoo
Telekom Austria Group Acquires blizoo At the end of June, Telekom Austria Group, one of the leading communications providers in Central and Eastern Europe, acquired 100% of blizoo, one of the largest cable operators in the Republic of Macedonia. Roland Haidner, Director of M&A at Telekom Austria Group, tells us how this deal will help Telekom Austria fulfil its ongoing convergence strategy in the region. Company: Telekom Austria AG Name: Roland Haidner Function: Director M&A Email: roland.haidner@ telekomaustria.com Web: www.telekomaustria.com Address: Lassallestraße 9, 1020 Vienna, Austria
In June, Telekom Austria Group announced the acquisition of 100% of blizoo Macedonia, one of the largest cable operators in the Republic of Macedonia, offering TV services, broadband and fixed voice. The acquisition represents a significant step in fulfilling the Group´s convergence strategy. It will enable Vip operator (Telekom Austria’s local mobile network operator) and blizoo to offer bundled fixed and mobile services in Macedonia and complements the Group’s existing convergent footprint in Austria, Bulgaria, Croatia and Liechtenstein. Telekom Austria Group, listed on the Vienna Stock Exchange since November 2000, is one of the leading communications providers in Central and South-Eastern Europe, with almost 23 million customers across its markets of operations. The company is currently operating in eight countries: Austria, Bulgaria, Belarus, Croatia, Slovenia, the Republic of Serbia and Macedonia, as well as Liechtenstein. The total market of the eight countries covers approximately 41 million inhabitants. The Group has roughly 16,000 employees as of 30 June 2014, Group revenues were roughly €4.2bn as of year-end 2013. Telekom Austria Group’s portfolio encompasses products and services of voice telephony, broadband Internet, multimedia services, data and IT solutions, wholesale as well as payment solutions. “Our core belief of operational excellence is aiming for highest quality and best services for our customers,” says Roland Haidner, Director of M&A at Telekom Austria Group. With a focus on the premium segment of the market, Telekom Austria offers the best services, the highest quality in its products and excellence in its operations, he says. “Furthermore, we are a convergent multimedia provider with a broad portfolio for our customers coming from one source. Tomorrow’s customer is a challenge for all players on the market. Comprehensive service offering is absolutely necessary. Multiple services and devices, content on every screen and unlimited mobility in a highest quality or capacity framework guided by 14 Acquisition International September 2014
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Our core belief of operational excellence is aiming for highest quality and best services for our customers.
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security and reliability are the future. Our company is the single point of contact for each communication service and we can guarantee immediate access to all offerings via fully automated processes. We already fulfil the demands of tomorrow’s customer today. Moreover, our strong regional anchoring in CEE added by a global backbone network with our partners from América Móvil and the Dutch KPN are a powerful asset in b2b activities.” The acquisition of blizoo was the latest step in a comprehensive convergence and consolidation strategy in Telekom Austria’s existing markets – mobile and fixed line services – which the Group has been following since 2011, says Haidner. “In the last three years we have carried out 12 successful M&A deals, thus increasing the profitability for our shareholders and the satisfaction of our customers.” To implement this strategy, it is important to thoroughly evaluate, before each step, whether it makes more sense to “build” or “buy”, he says. “In the latter option, we always look for a target company that is a nationwide, and not just regional, player. In every country there are one or two of these, and in the case of Macedonia there is just blizoo. The company is an ideal match for our local enterprise Vip operator, the second largest mobile operator in the country.” The deal, Haidner says, took about six months. Although Telekom Austria had a legal and a financial advisor to assist with the acquisition, the Group’s internal resources were decisive in getting the deal done, Haidner says, in particular the Group’s Macedonian personnel as well as experts within the Group’s M&A, marketing and technology units. “As a first step we had to convince our own committees and our board of the added value of this deal. For acquisitions of this magnitude it is furthermore mandatory to get approval by the supervisory board. On the sell-side we were dealing with two investment banks. The entire sales process was originally designed as a relatively strict bidding process. We have managed to strike a good deal in this short time.” Asked whether either party faced any challenges as part of the deal, Haidner says, “Not really. It was a
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normal negotiating position with, as usual, diametrical positions of buyers and sellers. This is in the nature of things and there were no deal-breaking issues. As in other cases we had one or two night sessions or long rounds of negotiations. In short, it was business as usual. Funding, by the way, was covered purely from the cash flow of the Telekom Austria Group.” With the acquisition of blizoo, Telekom Austria is evolving in Macedonia from a mobile only communications company to a converged multimedia provider. “In the future we can offer all services from one source to our customers. Through clever product packages and a pooling of capacities, we offer an even better product experience to an even lower price. This ensures our competitiveness in a highly competitive market. At the same time we reduce the churn, that is, the migration of customers to the market companions. This brings greater stability, lower expenses and, above all, more planning security for our company.”
DEAL OF THE MONTH
Telekom Austria Group Acquires blizoo
The Group’s convergence strategy has been already very successful in other markets where Telekom Austria Group is active, Haidner says. “In Austria, for example, we reached a churn reduction of -80% in less than one year and an increase of the average revenue per customer.”
We will continue to pursue our convergence strategy, and complement it by an expansion strategy into new markets. Here we see as a market potential everything east of Austria and west of Russia. Our clear objective is to become the leading company in the CEE region within the telecom sector.
As for the future, Haidner says the European telecom market is facing a huge wave of consolidation in the coming years. “With around 180 independent companies in the EU, we believe there is enough work on M&A. The comparison with the United States, which has four providers or China, which has three providers, implies this development too. Regulatory influence and tough competition contribute. The Telekom Austria Group though looks very optimistic into the future, because of its strong partnership with América Móvil, one of the largest mobile operators in the world, we are well positioned.
“Last but not least I want to stress, that this optimism is reflected by the financial markets as well. Since the beginning of the year, the Telekom Austria Group share has gained +30%, becoming the best-performing stock on the Vienna Stock Exchange. In a European benchmark, the Telekom Austria Group share also outperformed all other telecom stocks in the first half 2014. Additionally we recently received an upgrade by Standard & Poor’s to BBB with stable outlook, underlining that we are on the right track.”. n”
Acquisition International September 2014 15
DEAL OF THE MONTH
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Bestway Acquires Co-operative Group Pharmacies
Bestway Acquires The Co-operative Group’s Pharmacy Business Zameer Choudrey, CEO of Bestway Group, tells us more about the Group and their acquisition of the UK’s 3rd largest pharmacy business. In July, Bestway saw off competition from the likes of Lloyds Pharmacy, Alliance Boots and Carlyle, the US buyout firm, to buy The Co-operative Pharmacy from The Co-operative Group for a purchase price of £620m. Zameer Choudrey, CEO of Bestway Group, tells us more about the Group and this major deal.
Company: Bestway Group Name: Mr Zameer M. Choudrey Email: chief.executive@bestway.co.uk Web: www.bestwaygroup.co.uk Address: 2 Abbey Road, London, UK, NW10 7BW Tel: +44 (0)20 8453 1234
Earlier this year, Bestway Group’s impressive diversification strategy led to the addition of an exciting 4th pillar for the Group when they acquired The Co-operative Pharmacy. The pharmacy business is the third largest in the UK and the largest in Wales. It has over 770 branches across the UK and over 7,000 employees. In 2013 it reported total revenues of £760m and EBITDA of £70m. Throughout its history, Bestway has shown that it is not a company that is happy to stand still. “As planned, the Group was deleveraging rapidly and we knew we would soon be in the strong position of being debt-free. So we began to look at opportunities in other sectors, with a view to diversifying once again,” says Choudrey. As a result, over the last one and a half years, the Group had started to identify key sectors which they felt had potential. According to Mr. Choudrey, Bestway identified the healthcare sector as being particularly attractive for a number of reasons. “Firstly, it is backed by strong demographic fundamentals, with trends showing an ever greater demand for healthcare services due to the increasing size of the population and longer life expectancy. Moreover, the healthcare sector is very fragmented and dominated by independent players, thus presenting an opportunity for consolidation and growth.” While the Group was considering various options within the healthcare sector, The Co-operative Pharmacy opportunity was brought to their attention. “We found it to be a strong, competitive business that is well run by the existing, and very experienced, management team. It is the third largest Pharmacy in the UK, and it has great potential to grow and further improve its business. The business enjoys the highest service levels in the industry. It also has a similar business ethos to that of Bestway Group and a strong focus on being community led. And significantly, it is a defensive, asset-backed business with good growth potential, fulfilling our investment mandate criteria.” With the acquisition of the pharmacy business (as well as a substantial acquisition the Group completed in the cement sector just days later) the diversified conglomerate now has an annual turnover of approximately £3.6bn and a global workforce of more than 33,600 people. The acquisition, which is due to complete in October 2014 is the latest chapter in a phenomenal story which
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stretches back over five decades; a story characterised by hard work, incredible business acumen and an unwavering commitment to giving something back to the community.
History Retail Bestway was founded in 1963 by Sir Anwar Pervez when he opened his first ethnic-focussed convenience store, “Kashmir” in Earls Court, London. Having gained recognition, Sir Anwar decided to take the strategic decision to enter the mainstream retail market to cater to a wider customer base. This move proved to be successful, and by the early seventies, he had 10 well-stocked convenience stores in and around west London.
Wholesale A retailer himself, Sir Anwar shrewdly observed that, with independent retailers being charged a margin of 10-12% by wholesalers, they would have no chance of surviving against the big supermarket chains. He devised a strategy of operating a wholesale company profitably on a 4% margin in order to help customers, passing the savings onto the customer and building business for the independents. Thus Bestway established its first warehouse in Acton, West London in 1976 and entered the UK wholesale market. The move changed the face of the wholesale sector in the UK, and, since then, the company has gone from strength to strength.
Karachi Stock Exchange in February 2001 and since listing its market capitalisation has grown by approximately 850% making Bestway Cement one of the largest companies by market capitalisation. In February 2004, owing to the growth in market demand, Bestway Group took the strategic decision of expanding its operations and setting up its 2nd cement plant, the business’ 2nd greenfield development project. To this day, the plant still holds the record for the fastest transformation from Greenfield development to completion in the country. In 2005, Bestway Cement acquired its 3rd cement plant, Mustehkam Cement for $70m, whilst in 2008, the Group’s fourth cement plant commenced commercial production at a cost of $180m. Most recently, in July 2014, just a week after the acquisition of The Co-operative Pharmacy business, the Group acquired Lafarge Pakistan Cement Limited for an enterprise value of $329m, making it the largest cement manufacturer in Pakistan.
Banking In 2002, the Bestway Group once again looked to diversify and identified an opportunity within the banking sector. Along with the Abu Dhabi Group, Bestway successfully bid for a controlling share in United Bank Limited (UBL), Pakistan’s fourth largest bank at the time for a total investment of approximately US$210m.
Whilst successfully continuing to grow its business organically, Bestway has completed a number of acquisitions over the last decade that have served to consolidate its position as both the second largest overall wholesaler and the largest independent wholesaler in the UK. They cemented their position through their acquisition of Batleys Limited in 2005 for £100m. Bestway then set their sights on Scotland and acquired Bellevue Cash & Carry’s two warehouses in Edinburgh and Stirling in June 2010. In November 2010, the Group went on to acquire the Martex Group of three cash & carry warehouses, along with its foodservice operation from C J Lang, in a move which further served to consolidate its presence in Scotland.
The bank has proven itself to be a real leader in its market and at the forefront of innovation over the years. In August 2003, UBL launched Pakistan’s first derivative money market product, and in 2005, the bank acquired the status of Authorised Derivative Dealer – the only domestic bank to achieve this status. It is also the first institution from Pakistan & third in South Asia to be accredited with Primary Membership of International Swaps & Derivatives Association.
Cement
UBL once more demonstrated their innovative approach to banking when in April 2010 they launched UBL Omni, an in-house developed project designed to provide banking facilities to the unbanked population of Pakistan. As of June 2014 UBL Omni had a customer base in excess of 6.8 million, with over 1.5 million active cards in issue and
In 1995, Bestway made its first significant move to diversify when it entered the cement manufacturing industry in Pakistan with Bestway Cement Limited. The cement plant was a Greenfield project completed in what was then a record time in Pakistan. Bestway Cement was listed on the
In June 2007, the Global Depository Receipts of UBL were listed on the London Stock Exchange. The offering targeted institutional investors and raised in excess of US$650 million.
DEAL OF THE MONTH
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Bestway Acquires Co-operative Group Pharmacies Emi Cristea / Shutterstock.com
5 million monthly transactions, valued at over US$253 million. Through the success of UBL Omni, 1.55 million individuals who did not previously bank have opened mobile bank accounts with UBL in Pakistan. Today, the Omni network has grown to 17,000 agents in over 800 cities and towns of Pakistan. Bestway Group proceeded to increase its shareholding in UBL to 51% by buying out its joint venture partner in June 2011 at a cost of US$220 million, becoming the majority shareholder in UBL. In December 2013, Bestway Group once again announced that it had increased its shareholding in United Bank Limited (UBL), now to 61.37%, by acquiring an additional 10.3% of the shares from the Abu Dhabi Group. Since then, through an investment of over $120 million, Bestway Group has acquired the entire shareholding of its former joint venture partner, the Abu Dhabi Group. During the last decade, UBL has emerged as an industry leader by offering a dynamic portfolio of products through imaginative delivery channels. The bank has a significant presence throughout the Middle East; subsidiaries in UK, Switzerland and Tanzania; a branch in New York and Representative Offices in Beijing and Kazakhstan. The bank has achieved much recognition and has now been awarded Banker Magazine’s “Bank of the Year” for two successive years.
The Bestway Group today At present, Bestway Group is a diversified conglomerate with an annual turnover of approximately £3.6bn and a global workforce of more than 33,600 people, with over 11,900 people in the UK. It is the UK’s eighteenth largest privately owned company and seventh largest familyowned business. The Group’s wholesale arm is the UK’s second largest independent wholesaler with an annual turnover of £2.4 billion and a workforce of 5,000 people. It serves 125,000 independent retailers and caterers from 64 warehouses nationwide, with over 6 million square feet of selling space and offering a product range of over 25,000 items. Furthermore, Bestway’s retail club business, made up of Best One and Xtra Local, is the largest in the UK with over 4,000 members.
Strategy for Success Since its inception, the Group has always looked to operate as a long-term investor in whatever sector it operates in, looking to grow businesses over the long run. “We are fortunate that we are not a plc because our investments will not work if our performance was judged every quarter”, says Choudrey. “You have to take a longer term view, especially with cyclical businesses like cement. Some investments have a long gestational period and that is one of the main challenges we have faced as part of our diversification strategy.” Bestway also maintains a strong ethical stance, something Mr. Choudrey firmly believes stems from the company being a family business. “Our social values are very important to us. Bestway Group is very active in supporting local communities in the areas in which it operates.” With regards to where the Group is going in the future, Choudrey says, “in line with our growth strategy, going forward Bestway will continue to look for opportunities in new sectors which are stable and show growth potential.”
The Deal Mr. Choudrey was pleased to find the process very smooth and with no real issues or challenges. The deal process was structured as a two round auction. The first round consisted of submitting an indicative offer, before having to reconfirm initial offers halfway through the second round and then submit a final offer with all diligence and financing completed. Following this, Bestway went into exclusive talks with the vendor and, after agreeing terms, signed on 18thJuly 2014. “Bestway Group was successful because its values and ethos are closely aligned with that of Co-op Pharmacy,” explains Mr. Choudrey. “We were also less likely to make radical changes to the existing business and its people, at the same time ensuring that there would be no job losses at head office.”
KPMG acted as lead financial advisor for Bestway Group on this transaction, with Hogan Lovells for Legal and JP Morgan/Nomura/Barclays for Acquisition Finance. The KPMG team was led by James Murray, the Corporate Finance Partner who heads up the sector. “We were provided excellent strategic and tactical advice each step of the way in what was a very competitive auction process involving a number of large international companies and private equity.” “Fundamentally, the success of the deal was down to price, speed of execution and reliability. These were the key factors and we successfully met the vendor’s criteria. KPMG, along with Hogan Lovells, JP Morgan, Nomura and Barclays, did a great job on the execution whilst also helping us meet what was a tight timetable. “
Future Plans for the Pharmacy business The Co-operative Pharmacy is a well-known and trusted name on Britain’s high streets, and Bestway’s plan, Choudrey says, is to allow the business to continue to operate as it has done on a stand alone basis. “From the outset, we have been impressed with the business and the way it is run. In fact, the business has the highest service levels in the industry,” says Choudrey. “We shall endeavour to further enhance the service levels, improve OTC range and product availability, and also look into the possibility of launching B2B.” And looking to the future, he goes on to say, “Our focus for now will be on bedding in the acquisition and separating the pharmacy from its previous parent company. We are working closely with the management team to ensure we put the pharmacy business in an even stronger position than it is already in, to help us achieve even greater growth for years to come.” n
As of June 2014, Bestway Cement turnover stood at US$ 283 million with an EBITDA of US$120 million. Following the Lafarge Cement Pakistan acquisition, Bestway Cement has become the largest player in the Pakistan cement industry with an annual capacity of 8 million tonnes and a work force comprising over 4,000 employees. The Group is also the largest exporter of cement to India and Afghanistan. Meanwhile, UBL is the second largest private bank in Pakistan with assets under management as of December 2013 US$10.3bn (having more than tripled in size from US$3.12bn in 2002) and profit before tax of US$275m. A workforce of 17,700 employees operates its network of 1,400 branches serving over 5 million customers. And the Group can now add the third largest pharmacy business in the UK to its ever-growing portfolio of businesses. The Group has built up a successful global business over 50 years due to a strong ethos and a core set of values. The Group prides itself on being at the heart of local communities. A key indicator of this commitment is the philanthropic arm of the group, the Bestway Foundation. Through the Foundation, Bestway Group annually donates 2.5% of its post-tax profits to spend on social projects in the countries in which it operates. To date, the Bestway Foundation has donated in excess of £13.5 million to charitable causes in the UK and abroad.
Acquisition International September 2014 17
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DEAL OF THE MONTH
Fox Marble Holdings plc Placing of New Ordinary Shares
Company: Fox Marble Holdings Plc Name: Chris Gilbert Email: ir@foxmarble.net Web: www.foxmarble.net Address: 15 Kings Terrace, London NWI 0JP Tel: 0207 380 0999
Fox Marble Holdings plc Placing of New Ordinary Shares In July, Fox Marble plc, which focuses on marble quarrying in Kosovo and the Balkans region, announced plans for a share placing with the aim of raising approximately £4.75m. the proceeds are to be used to acquire two new quarries. Chris Gilbert, CEO, Fox Marble, gives Acquisition International the inside story on the deal. Fox Marble Holdings plc, the AIM-listed company focused on marble quarrying in Kosovo and the Balkans region, announced in July plans to raise approximately £4.75m (before expenses) by way of a placing of new ordinary shares at 18 pence per share through investment bank Fox-Davies Capital. The placing proceeds are primarily intended to acquire and develop two additional quarry sites to add further high quality marble to the company’s portfolio and to enhance financial returns through improved economic terms, said the company. These sites, in Macedonia and Kosovo, are sources of two types of marble for the company: Sivec and Bianco Illirico. Commenting on the placing in July, Chris Gilbert, CEO, Fox Marble, said, “We believe this year is to be pivotal for the company, and the acquisition of these additional quarry interests represents a significant opportunity for Fox Marble. The potential higher margins provided by the Sivec marble and anticipated demand for Bianco Illirico, we believe, will enhance the position of the company both financially and within the global marble market.” Fox Marble is a marble company focused on the extraction and processing of dimensional stone from quarries in Kosovo and South East Europe. Established in 2011, it has acquired rights over 300 million cubic metres of a range of premium quality marble. It is the first UK-quoted company investing and operating primarily in Kosovo, and the first to be
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producing and marketing high quality marble from the region. The company’s long-term strategy, says Gilbert, is to expand its portfolio of marble quarries in South East Europe and to widen its geographic reach and commercial presence as it looks to build a profitable marble quarrying and production business. “The company has made substantial progress in the period since admission to AIM in August 2012 towards this strategy. The company now operates four quarries and is currently erecting a processing plant in Kosovo. Moreover, the company has made progress in developing relationships in key markets through strategic alliances with groups that distribute marble in the UK, USA and Europe.” The Company identified the two potential new quarries prior to the share placing, says Gilbert. The first, the new Omega Sivec marble quarry at Prilep in Macedonia, is adjacent to Fox’s existing operations in Prilep. Sivec marble is currently amongst the most desirable marble in the market, and it is in short supply. Fox Marble says, as far as it is aware, there is only one other quarry that currently produces commercial quantities of Sivec marble, and the supply of the highest quality material is being exhausted. Sivec marble prices begin from €500 per metric tonne (unprocessed) for the lesser grades. It is the highest value marble in Fox’s range. The second site, in Malesheva, Kosovo contains Cremo Olta and Bianco Illirico marble, and Gilbert says the company has found that demand for the latter is
strong, particularly in North American markets. The company believes that this marble could become the largest volume seller of its mid-priced marble range. “The company identified a 300-hectare site close to the company’s existing licence resource in Malesheva that the directors believe contains a large deposit of Bianco Illirico marble, which would provide the company with a secured source of highly sought-after marble,” he says. Once the company had identified the new quarry sites it wished to acquire, it began the process of fundraising via a placing of ordinary shares. “Key to the process was our broker, Fox Davies Capital Limited,” Gilbert says. The company was under significant pressure to complete the deal in a timely fashion, Gilbert says, to ensure it was finished before the summer lull. The deal took three months to complete, he adds. Gilbert believes that the two new quarries will significantly increase Fox’s standing in the industry. “These marbles will help establish Fox Marble and Kosovo within the industry and generate significant sales,” he says. The new quarries will take approximately six months to bring into operation, and Gilbert says that, further down the line, the deal will be considered to have been a success if both new quarries produce significant quantities of high quality marble, and Fox Marble achieves increased visibility within the marble industry. n
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DEAL OF THE MONTH
Fox Marble Holdings plc Placing of New Ordinary Shares
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These marbles will help establish Fox Marble and Kosovo within the industry and generate significant sales.
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Acquisition International September 2014 19
DEAL OF THE MONTH
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Julius Baer Group Ltd.
Company: Julius Baer Group Email: info@juliusbaer.com Web: www.juliusbaer.com Address: Bahnhofstrasse 36, 8010 Zurich, Switzerland Tel: +41 (0)58 888 1111
Julius Baer Group Julius Baer, the leading Swiss private banking group, with a focus on servicing and advising sophisticated private clients and a premium brand in global wealth management, announced in July that it has entered into a strategic cooperation agreement with the Israeli Bank Leumi. Matthew Alexander, Head Corporate Development & Strategy at Julius Baer, talks us through the deal. In July 2014, Julius Baer and Leumi announced that they have entered into a strategic cooperation agreement. Under the agreement, Leumi will refer clients with international private banking needs to Julius Baer, while Julius Baer will refer clients to Leumi’s domestic banking services in Israel. In addition, Leumi also decided to exit its Swiss- and Luxembourg-based private banking businesses and will transfer its respective international private banking clients to Julius Baer. In Switzerland this will be in the form of a business transfer from Leumi Private Bank AG (‘LPB’), while in Luxembourg the intention of the parties is that Julius Baer will purchase Leumi’s local subsidiary. At the end of June 2014, LPB and Leumi Luxembourg had around CHF 7 billion of Assets under Management (“AuM”). The transaction underscores Julius Baer as an active market consolidator in the Swiss private banking market and strengthens its presence in the Israeli market. LPB and Julius Baer will cooperate closely to ensure a seamless transfer of most of the client relationships in Switzerland, including the transfer of associated RMs and staff required to ensure the continuity of the client business. The transfer of the majority of AuM is expected by the end of 2014 / early 2015. Deal negotiations began earlier this year and took approximately six months to conclude. The transaction structure was carefully designed and negotiated to ensure the transfer of clients and related advisers is optimised to the benefit of clients as well as Julius Baer and Leumi, says Matthew Alexander, Head Corporate Development & Strategy at Julius Baer. “Given this was not a more traditional share deal but a bulk transfer between two Swiss entities, we invested significant time optimising the structure to best balance the risks and rewards for Julius Baer. The negotiations were led by Julius Baer’s in-house M&A team along with our corporate M&A legal professionals, supplemented by external legal advisors.” “Given private banking is a relationship business and both parties were public companies, significant
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attention was paid to communication and discretion. As such the communication of the transaction including the affected clients and employees was prepared in detail well in advance of the contract signing.” “The integration of the acquired business remains ongoing and requires significant effort from both parties in the transaction. Considering neither systems nor back office processes are in the scope of the transaction there needs to be a smooth process defined to transfer the clients to the platform of Julius Baer avoiding any negative client impact. Our significant experience gained in prior acquisitions is being put to very good use in this transaction.” The current Julius Baer business and clients will benefit from the deal in multiple ways, Matthew says. “As such, the transaction will allow Julius Baer to strengthen its exposure in key markets like Israel and Latin America while at the same time the clients will benefit from the strategic cooperation and referral agreement with a leading Israeli bank.”
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The transaction will allow Julius Baer to strengthen its exposure in key markets like Israel and Latin America while at the same time the clients will benefit from the strategic cooperation and referral agreement with a leading Israeli bank.”
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The amount of client relationships and the number of relationship managers transferred within the transaction will provide a first indication of how successful the deal has been, Matthew says. “Moreover, there will be an assessment of the new client relationships generated through the cooperation and referral agreement.” There were many challenges which needed to be overcome during the transaction process, requiring flexibility from both parties in the negotiation, says Matthew. “With the choice of a bulk transfer to transition the private banking client relationships and client facing staff, both parties were faced with a transaction type which was complex and not entirely familiar to all involved,” he says. “As a consequence, close collaboration between the parties was required to understand the operational restrictions attached to bulk transfers and anticipate in drafting of the transaction contract the myriad issues to come during the subsequent integration.” Global responsibility for Julius Baer Corporate Development & Strategy (CD&S) rests with Matthew and his team of seven. CD&S combines the functions Strategic Business Development, Cooperations & Joint Ventures, Mergers & Acquisitions, and Strategic Analysis that contributes to an effective implementation of Julius Baer’s strategy, mainly focusing on developing and adapting its business model as well as capitalising on growth opportunities, both organic and through external transactions. As for the future, Julius Baer is currently in the final phase of integrating Merrill Lynch’s International Wealth Management business outside the US, Matthew says. “This will increase the Group’s presence to more than 25 countries and 50 locations.” n
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DEAL OF THE MONTH
Julius Baer Group Ltd.
Acquisition International September 2014 21
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DEAL OF THE MONTH
Globo Acquisition of Sourcebits Inc
Company: Globo Name: Costis Papadimitrakopoulos Email: info@globoplc.com Web: www.globoplc.com Address: 2191 E Bayshore Rd Suite 200, Palo Alto, CA 94303-3236 Tel: +1 650 433 7920
Globo Acquisition of Sourcebits Inc Globo, an international leader and technology innovator delivering Enterprise Mobility Management and Mobile Application Development solutions, acquired the services division of Sourcebits Inc, a leading developer of mobile applications and proprietary products for enterprise customers. Costis Papadimitrakopoulos, Founder and CEO of Globo, filled us in on the finer points of the deal. Globo focuses on helping businesses take advantage of the tremendous benefits that mobility has to offer, says Costis Papadimitrakopoulos, founder and CEO of the Globo Group. “Enterprise mobility is a complex field, and having a partner like Globo can help any business get to the core of a mobile strategy and its benefits. We satisfy the need for device management either for corporateliable devices, or in a BYOD-oriented environment. We provide a secure workspace where all mobile device users can securely access company data and be more productive without any risks for the IT. We also offer a unique application development solution, which can be either used by the customer as a development platform (using an in-house development team) to create custom-made apps, or even take the form of professional services that can consult on all stages of the application creation from design, development, deployment and management. We are actually one of very few vendors that can cover all Enterprise Mobility needs in a seamless and fully integrated way, while at the same time remaining very flexible. “Our direct sales and our extended partner network have allowed us to approach tier-1 customers and provide a very diverse set of solutions depending on customer needs. Oracle has now full control of mobile devices used by employees with our Mobile Device Management (MDM) solution. First Data uses mobility solutions to secure corporate data and increase employee productivity; all business-related apps (like email, contacts, files) are managed within a secure container in employees’ mobile devices, 22 Acquisition International September 2014
while at the same time they have created businessto-employee apps to enable productivity while on the go. On the apps business side, Coca-Cola, P&G and TUI are only a few of many customers that have had tailor-made applications designed and developed in order to empower their workforce or engage their customers.” Globo was included in 2014 Gartner’s Magic Quadrant for Enterprise Mobility Management suites, mostly recognised for its “completeness of vision”. Globo’s inclusion in Gartner’s Magic Quadrant for Enterprise Mobility Management suites represents a major win for the firm, says Papadimitrakopoulos. “Especially because of the fact that we were the only new vendor in the quadrant, selected from over 100 vendors who were evaluated against a set of very demanding criteria based on revenue, number of customers, and so on. Another win was the fact that this year the Magic Quadrant changed from a narrower scope (Mobile Device Management) to a wider one (Enterprise Mobility Management), matching Globo’s existing strategy and positioning. “Our vision is to continue delivering a leading endto-end Enterprise Mobility Management solution. Our EMM product sits alongside our Mobile Application Development Platform, making us one of the few companies in the world that can offer both capabilities in a single, fully-integrated product. This is a fantastic validation for Globo and our competitive strength. “Today, we have positioned ourselves as leaders in Enterprise Mobility Management, but we have also
developed our Application Development solutions, so we are able to provide end-to-end support to any mobility project, from security-oriented solutions (like MDM) to revenue-generating activities (like endcustomer app development).” Globo is in a position to claim that it has the most complete enterprise mobility offering, and it can address any business mobility need a company of any size may have, says Papadimitrakopoulos. “In essence, we have products and solutions that cover both Enterprise Mobility Management and Mobile Apps Development. On top of that, our EMM offering is the only extensible solution where practically one mobile container can host both EMM and MADP GO! Apps, based on the client’s needs. “Our latest acquisitions have helped us become very strong at both ends of Enterprise Mobility. Last year we acquired Notify, a very strong player in the MDM market. This year, Sourcebits added to the Application Development side of our business and product portfolio with their app design and native development expertise. Both acquisitions add value at multiple levels including expansion in the US, product enhancement and expertise, and very solid Tier-1 portfolio of clients.” Speaking about Globo Group’s acquisition of Sourcebits Inc, Papadimitrakopoulos says, “Globo has been recognised for its unique proposition that merges enterprise mobility management with mobile application development. The application development market has been gaining momentum the last few years, and although we were among
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the very few Enterprise Mobility vendors to focus on this area, we knew that we had to expand that market even more, especially towards native app development that was a growing trend which we could not satisfy. “Sourcebits was a perfect match, as it has a very strong skillset in app design, a strong R&D team located in India, and in-depth experience in application development, not to mention their list of very important customers. Sourcebits has also been recognised by Gartner as a “Cool Vendor” in its April 2014 Survey, for its competence in application development. “This acquisition enabled us to provide a complete range of application development services, meeting customer demands for mobile application design and development through our Mobility Business Solutions division, augmenting Globo’s competitive advantage in the industry. “It is a win-win situation where Sourcebits gains access to Globo’s global business network, while Globo expands its footprint in North America and completes its app development portfolio.” From the initial discussions to the completion of the deal, the deal took about six months to complete, says Papadimitrakopoulos. “Our expectation – or desire, if you wish – was for it to be over in four months, but we do understand that this type of deals
DEAL OF THE MONTH
have several technicalities that may take time, so we concentrated our efforts in doing it right rather than doing it fast. Overall, I believe that it was within very reasonable time frames.” Papadimitrakopoulos does not expect to see any major changes in the way either Globo or Sourcebits interact with their customers due to the deal, given the fact that both firms’ strategic decision has been to continue operating with autonomy, just as they did before the acquisition. “What will change, though, is the fact that we will be able to provide a much more complete and integrated solution to our customers when it comes to application development. Whether it is cross-platform or native, we will be able to provide a solution tailormade to each customer. “An obvious – and immediate – opportunity is the additional revenue stream for Globo Group. As discussed earlier, it is an expansion of the application development market, with a great pool of existing customers and an even greater one of potential customers. “An additional opportunity that holds true for both Globo and Sourcebits is cross-selling. Globo will be able to cross-sell native apps to its existing customers and Sourcebits will be able to provide Globo with prospects from existing and new clients having additional needs in the Enterprise Mobility spectrum.
Globo Acquisition of Sourcebits Inc
“Finally, Sourcebits will benefit from Globo’s global reach which will allow them to create business opportunities easily and less costly.” The evaluate the success of the deal in 12 months’ time, there is a number of criteria Globo will have in mind, says Papadimitrakopoulos. “Revenue is the most straightforward one. We would also like to see Sourcebits further grow their operations in North America as well as worldwide, using Globo’s existing sales and marketing network. “At the same time, we’d like to see the extend of the contribution that will come from this acquired skillset and expertise to the growth of the Globo’s Mobility Business Solutions division, providing an all-in portfolio of solutions that will include native apps and cross-platform apps, from design to support, and also consulting services based on our experience and skills.” Asked about Globo’s future, Papadimitrakopoulos says at present Globo is focused on the seamless integration of Sourcebits to the Globo Group, in terms of synergies, corporate culture and market opportunities. “Within the next year our targets are to further grow our reach in North America, to make sure that our offering exceeds customer expectations and adds value to their business, and to expand our mobile application development business while maintaining the momentum of our Enterprise Mobility Management solutions.” n
Acquisition International September 2014 23
DEAL OF THE MONTH
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Business Connexion Acquires Stake in AppZone Nigeria
Company: AppZone (Nigeria) Name: Emeka Emetarom Email: eEmetarom@ appzonegroup.com Web: www.appzonegroup.com Address: No. L4, Iron Bar Street, Lekki Phase 1, Lagos, Nigeria Tel: +234 803 336 1087
Business Connexion Acquires Stake in AppZone Nigeria In June, South African Business Connexion (BCX) acquired a 30% stake in Nigerian financial IT solutions provider AppZone. Headquartered in Lagos, AppZone provides solutions to financial institutions and businesses. Acquisition International talks to the Executive Director and COO of Appzone, Emeka Emetarom, about the deal and how it will propel his company and Africa’s biggest economy forward. In response to the growing need and demands of the Nigerian market, AppZone was created for the increasing number of financial institutions required to serve the country’s customers. Providing greater accessibility to market leading IT software solutions, the firm was created to take advantage of, promote and facilitate the emerging market. Recognising the performance and reputation of AppZone in the marketplace, BCX said the strategic investment to acquire a 30% holding was made with clear objectives. According to the South African technology services company, the deal will allow both companies to better leverage their experience and expertise in the sector. Addressing the industry on the back of the stake acquisition being announced to the industry, the chief operating office of BCX, Matthew Blewett, said: “BCX is pleased to be associated with AppZone. They have a remarkable asset-base of e-payment software products and intellectual property, and we’re looking to jointly seize the financial services opportunities within Nigeria and ultimately across Africa,” A big attraction for BCX was AppZone’s command of multi-level technology platforms that cater to the financial services sector. Bringing the same level of access to retail customers that private banking customers enjoy, Appzone’s solutions allow full access to accounts, services and providers through an entirely connected network. Accessible from almost any computer and mobile device, the deployment of service powered by Appzone’s technology across Nigeria has no compare. Its Intellectual Property was also an attraction for BCX, with the 60-plus talented employees, across two Lagos offices expected to add to the collective strength of the partnership. A naturally innovative company, AppZone recognises that Nigeria today is an exciting economic environment to be operating in. The team here are eager to further exploit the strong potential that Nigeria, and the rest of
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Africa offers. The partnership with BCX will enhance our ability to tap into that potential. With financial inclusion a clear focus for the Nigerian government and state’s all across the continent, it is in the development and delivery of our cloud platform that we see the greatest growth area. For major commercial banks and institutions as well as Microfinance Banks, these new, dynamic and modifiable platforms will be the next big trend for the retail sector. This message, Appzone intends to carry beyond the shores of Nigeria as it will be among several emerging and innovative technology solution providers, across Africa, which will participate in the upcoming My-World-Of-Tomorrow Event which will take place on 16th-18th October in Sandton, South Africa. This is exactly what our premier product offers. Lauded by the industry and with commentators and analysts extolling its performance, our BankOne service caters perfectly for financial and transaction processing.
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At AppZone, we want to continue to play an integral part in boosting the numbers of people using electronic payment systems.
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A revolutionary platform, BankOne delivers market leading banking modules and best practice incorporated standards. Easily integrated with existing networks and systems, the software provides customers with seamless transaction process, via a user friendly, intuitive, efficient and trendy interface. Affordable and scalable, there are a myriad of benefits to the world of micro-finance and retail banking.
For the financial sector, BankOne provides a reliable accounting, collation and reporting tool. Automated, it cuts through administration time delays and costs, achieving accuracy and efficiency which ultimately streamline daily operations. A real-time connected network, it gives round the clock access to financial services to all customers by enabling client financial institutions issue debit, credit, and prepaid cards, as well as making it possible for customers to check their balances, pay bills, and buy airtime conveniently from their mobile phones. These, ultimately, allow revenue streams to be optimised, customer patronage, confidence and retention to be increased, and compliance to be achieved while enhancing brand reputation, all at affordable initial and on-going operational costs. For the customer, Bankone also delivers. From offering greater levels of convenience to reducing the time it takes to process a transaction, in an increasingly fast-paced world, this basic requirement is met with perfectly. It is also worthy to note its effectiveness in combating crime, by allowing its users to carry less cash on them, at all times. Helping improve people’s lives and positively affect the chances of social mobility in Nigeria, it is helping the under privileged benefit from the vast array of financial options the modern world can provide. Ideal for the more than 130 Micro-finance banks using the solution, the cloud-based service delivers impressively already but can and will deliver a great deal more, to Nigeria, and the rest of Africa. Most particularly, the cloud-strategy is going to be successful on mobile devices. Already Nigeria is one of the leading markets for mobile payments, with the technology first released country-wide in 2011. Introduced by the Central Bank of Nigeria to connect with the numbers of ‘unbanked’ Nigerians, it was heralded as a revolution. And it still is but, the CBN and industry commentators have admitted that the challenge to attract people to use the platform is still a significant one. At AppZone, we want to continue to play an integral part of boosting the numbers of people using
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DEAL OF THE MONTH
Business Connexion Acquires Stake in AppZone Nigeria
electronic payment systems. Offering greater growth potential to the country and empowering thousands for the first time in their lives, the company and their team of experts in Lagos are perfectly placed to reduce the numbers of unbanked. A perfect dovetailing with the stated Business Connexion Group mission, it is all about enriching society through technology and financial freedom. The additional strength, flexibility, options and penetration that BCX offers us is a key part of engaging with greater numbers of people without traditional bank accounts. With around 30% of consumers comfortable with mobile payments, yet less than 15% actively using the systems, we see the challenge as an exciting and inspiring one. The importance of it is also not a factor lost on anyone in the team. n
Acquisition International September 2014 25
DEAL OF THE MONTH
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Company: Hibiscus Petroleum Berhad Name: Mark Paton Email: mark@hibiscuspetroleum.com Web: www.hibiscuspetroleum.com Tel: +6 03 2092 1300 Address: 2nd Floor, Syed Kechik Foundation Building, Jalan Kapas, Bangsar, 59100 Kuala Lumpur, Malaysia
Timor Hibiscus Limited Acquires Talisman Resources
Creating Value Through Our Knowledge And Experience
Timor Hibiscus Limited Acquires Talisman Resources In June, Timor Hibiscus Limited, a wholly-owned subsidiary of Hibiscus Petroleum Berhad, executed a share sale agreement for the acquisition of 100% of the shares in Talisman Resources (JPDA 06-105) Pty Limited, an indirect wholly-owned subsidiary of Talisman Energy Inc. Mark Paton, Chief Business Development Officer, Hibiscus Petroleum, spoke to Acquisition International about the deal and how it will help Hibiscus Petroleum achieve its goal of producing 10,000 – 15,000 barrels of oil per day by 2016. Timor Hibiscus Limited is a wholly-owned subsidiary of Hibiscus Petroleum Berhad (Hibiscus Petroleum), the Malaysian independent oil and gas exploration and production company which was listed in July 2011 as a Special Purpose Acquisition Company (SPAC). “Hibiscus Petroleum was the first SPAC under the listing rules of Bursa Malaysia Securities Berhad (Bursa Malaysia) then,” says Mark Paton, Chief Business Development Officer at Hibiscus Petroleum, “and its stated intention was to build an oil and gas exploration and production company with a balanced portfolio of assets including exploration, development and producing assets.” The company raised around US$85m at IPO and acquired a 35% interest in Lime Petroleum Plc (Lime Petroleum) for US$55m. Lime Petroleum holds assets in four concessions in the Middle East including Oman, Sharjah and Ras Al Khaimah, and 13 licences in the Norwegian Continental Shelf (two of which are subject to regulatory approval). Hibiscus Petroleum’s wholly-owned subsidiary is the operator for these Middle East assets. In late 2013 and early 2014, Hibiscus drilled two wells in Block 50 in Oman with the second of the two wells discovering light oil which produced over 3,000 stock tank barrels of dry oil per day on a short term test. This was the first offshore oil discovery east of Oman after more than 30 years of exploration and has potentially opened up a new petroleum province.
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By September 2013, the company raised an additional US$30m via the issue of convertible redeemable preference shares. This was used to wholly acquire 50.1% of the VIC/P57 permit offshore Australia and 13% of 3D Oil Limited, the company which previously owned 100% of the permit. The permit contains an undeveloped oilfield called West Seahorse which has certified 2P reserves of around 6.5 million barrels. It is Hibiscus Petroleum’s intention to develop this field as operator in the next 18 months.
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In the three years the company has been listed we have achieved our objective of becoming an exploration and production company with a balanced portfolio of assets.
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Paton says the company’s five-year mission (to be completed by July 2016) is to establish an upstream exploration and production company with production of 10,000 – 15,000 barrels of oil per
day and 100 million barrels of proven and probable reserves that has the capacity to fund at least three exploration wells per year at around a 30-40% participating interest. To distinguish itself from its competitors in exploration Hibiscus Petroleum augments its conventional geoscientific analysis with an overlay of Rex Virtual Drilling, says Paton. “The company, via its interest in its jointly-controlled entities, Lime Petroleum and HiRex Petroleum Sdn Bhd (HIREX) has access to the Rex Technology for 15 countries in the Middle East, in Norway, and in 11 countries within the Asia Pacific region respectively. We believe that our rigorous approach to exploration will give us an edge in finding oil and gas in our areas of focus.” The company also adopts a ‘planning for success’ methodology which is a philosophy whereby it plans the steps to production prior to making an exploration discovery. “This way we can significantly reduce the time taken from discovery to commercial production with a small up-front investment,” Paton explains “We can do this because our strong management team intuitively knows the best way to develop the fields we are exploring for and that the Rex technology focusses on oil prospects and hence makes an oil discovery more likely.” In June, Hibiscus Petroleum announced that its wholly-owned subsidiary, Timor Hibiscus Limited, had executed a conditional share sale agreement for the acquisition of 100% of the shares in Talisman
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Resources (JPDA 06-105) Pty Ltd, an indirect whollyowned subsidiary of Talisman Energy Inc. The main asset of the company acquired is a 25% participating interest in the Kitan Oilfield in the Joint Petroleum Development Area between Timor Leste and northern Australia. This asset will be acquired with the proceeds from the conversion of warrants. “In the three years since the company was listed, we have achieved our objective of becoming an exploration and production company with a balanced portfolio of assets,” says Paton. “We were the only exploration & production company listed on the Bursa Malaysia although the path we have trodden is now being followed by other new SPACs.” “Hibiscus Petroleum needed to create a sustainable organisation by acquiring a producing asset,” Paton continues. “The revenue from production may be reinvested in the exploration activities we are engaged in without having to continuously seek funding from shareholders. The proceeds from the conversion of our warrants were available for the transaction, estimated to be approximately US$40m.” The target company’s sole asset is a wholly-owned subsidiary of Talisman Energy. “The target owns a 25% interest in the Kitan oilfield,” Paton says. “The interest in the field is a non-operated stake with a first class operator” The transaction was the right size for Hibiscus to be able to finalise the transaction using the warrants proceeds which was available in end July 2014. “Talisman and Hibiscus Petroleum were able to complete this transaction quickly and within each other timeframes. The deal was hence concluded within three months of our commencement of the evaluation of the asset,” Paton says. The major challenge the deal presented was the timeframe established by the vendor, says Paton. “The independent assessment of the remaining reserves and likely future performance of the field always takes the most time. We engaged RPS Energy to perform the technical assessment of the asset and this work took longer than anticipated due to the complexity of the task.
DEAL OF THE MONTH
“Once we were satisfied and understood the range of possible values, we were quickly able to reach agreement with Talisman on the consideration for the acquisition. “The negotiation of the Share Sale Agreement was fairly straight forward with both parties being committed to resolving any differences by the end of June. The deal was concluded and executed one week early on 23 June. It is a credit to both the legal team at Talisman and our legal counsel Gilbert and Tobin and Murad Yee Partnership that the agreement was concluded so quickly.” The acquisition came with the usual oil and gas exploration and production risks, Paton says. “Oil price risk may be mitigated by taking out hedge contracts which are currently being investigated. There are also reserves risks where the field does not perform to expectations and the revenues received are much lower than planned. This could also precipitate early field abandonment. This is a risk which is difficult to mitigate other than by completing a thorough technical reserves analysis. We are of the view that the consideration we paid correctly reflects the balance of risk and reward taking into consideration the reserves risks. There are also facility integrity risks where the field may be shut in for extended periods due to breakdown or damage to the production facilities or wells. These risks are mitigated by property damage and business interruption insurances. “Finally, there are capital and operating cost risks where the ongoing costs significantly exceed budget. To some extent these risks are mitigated via the cost recovery mechanism within the production sharing contract for the asset. The risk is also mitigated by a competent approach to the operation of the asset by the operator and the use of cost effective and competent subcontractors.”
Timor Hibiscus Limited Acquires Talisman Resources
“The deal which is still subject to certain conditions precedent including government/regulatory approvals, has already started to increase the profile of Hibiscus Petroleum within the financial community”, says Paton. “We recently engaged UBS AG and Maybank Investment Bank Berhad to advise us on how we should fund our future planned activities. We expect to have resolved how we should fund the company’s near term exploration and development projects in the near future. “We hope that our improved profile and financial standing will eventually allow us to acquire assets in our home country, Malaysia.” “Hibiscus Petroleum will continue to grow rapidly over the next 12 months,” says Paton, with the cash flow from Kitan to be used to fund the company’s exploration programme. “We expect to drill a well in Sharjah, Australia and Norway within the next 12 months. “We are also currently working on the funding of and early production system to execute an extended well test of our discovery in Oman and the full field development of the West Seahorse field in the Bass Strait Offshore Australia which should further diversify our sources of revenue by the end of 2015.” n
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We hope that our improved profile and financial standing will eventually allow us to acquire assets in our home country, Malaysia.
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“The second challenge was to understand the unique fiscal and taxation regime that applies in the Joint Petroleum Development Area between Timor Leste and Australia.
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SECTOR SPOTLIGHT www.acquisition-intl.com
Q3 Review
Q3 Review The third quarter of 2014 has been, for many businesses, overwhelmingly successful. As the global markets continue their recovery, companies are beginning to see demand for their products and services rise once again. Things are looking up for global business, and this month we’ve spoken to a range of companies operating in a wide range of sectors and regions to find out more about heir recent performance at the outlook for the future.
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SECTOR SPOTLIGHT www.acquisition-intl.com
Q3 Review
Company: ADIPVEN (M) Sdn. Bhd. Name: Ramakrishna Damodharan Email: rama@adipven.com Tel: +603 2201 4023 +603 2201 4026 Web: www.adipven.com Address: A-33-3A, Menara UOA Bangsar, No. 5, Jalan Bangsar Utama 1, 59000 Kuala Lumpur, Malaysia
ADIPVEN (M) Sdn. Bhd. is a boutique Intellectual Property firm, headquartered in Kuala Lumpur, Malaysia. The firm handles all IP matters in Malaysia and also IP matters in other countries through their network of associate firms throughout the world. Ramakrishna Damodharan, Managing Director of ADIPVEN, gave us his thoughts on his region’s performance in Q3. The current business environment in Southeast Asia, says Ramakrishna Damodharan, Managing Director of ADIPVEN (M) Sdn. Bhd, is very competitive. “Southeast Asia currently enjoys good economic and political stability that was not seen a couple of decades ago. Indonesia, with one of the largest populations in the world, leads the economic growth and it is strongly supported by new economies such as Myanmar. Countries like Singapore and Malaysia have a good legal and support system in place and this has encouraged many multinationals to invest in Southeast Asia on a large scale.” The demand for ADIPVEN’s services has increased tremendously in recent times, despite the unstable global economic situation, he says. “The most important assets of businesses are human capital and their IP rights. During unstable economic situations, it is a prerequisite for companies to invest and protect their IP rights to ensure that they are in a step ahead of their competitors so that they can lead the pack when the economy recovers. The weaker Malaysian Ringgit (MYR) is also a pull factor which encourages foreign applicants to file more patent, trade mark and industrial design applications in Malaysia.” But despite the global economy’s somewhat uneven growth in 2014, Damodharan feels the economic situation in his jurisdiction is stable. “The Malaysian economy is rather diversified, and therefore Malaysia is not dependent on a few export markets only. Whilst traditional export markets such as Singapore, United States, China, Japan, Europe and so on remain as important as ever, new markets such as South America, Africa, West Asia have opened room for
Malaysian businesses to explore untapped markets for the products and services.” Damodharan says China, followed closely by India and Indonesia, are the economies he feels have had the greatest influence on global growth so far in 2014. “Of course, economies like United States, Russia, Europe will have continuously strong influence,” he adds. Damodharan describes the Q3 2014 deal appetite as “uneven” compared with the same period last year. “We have seen a bit of extremity this year. Malaysia Airlines, after a disastrous year, has been nationalised and there are major revamp activities which will take place to ensure its competitiveness and existence. On the other hand, we have seen new companies doing very well and giving big boys a run for their money.” But the level of investor confidence in Malaysia is steady, he says. “Investors strongly believe that the place to invest at the moment in Southeast Asia, and in particular in Malaysia, which has been enjoying a quite successful economic turnaround for the last 30 years or so.” As for the future, Damodharan expects the region to continue on its upward trend. “I do anticipate continued positive growth in Malaysia and all of the Southeast Asian countries for the remainder of 2014 and beyond.” n
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Southeast Asia currently enjoys good economic and political stability that was not seen a couple of decades ago. Indonesia, with one of the largest populations in the world, leads the economic growth and it is strongly supported by new economies such as Myanmar.
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Acquisition International September 2014 29
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Q3 Review
Company: Immigration Solutions Lawyers Name: Anne O’Donoghue Email: anne@ immigrationsolutions.com.au Tel: +61 (2) 9264 6432 Web: www. immigrationsolutions.com.au Address: Suite 1304, World Tower, 87-89 Liverpool Street, Sydney NSW 2000
Immigration Solutions Lawyers, formerly known as Anne O’Donoghue & Associates, has been providing high quality legal services since 1993, and is experienced at providing assistance with navigating the often complex pathways of migration into Australia. Anne O’Donoghue, Principal Lawyer and Managing Director of Immigration Solutions Lawyers, gives us her thoughts on how her sector has performed in the last quarter, and her predictions for the coming months. Immigration law is a very niche profession and has fewer than 5000 individual Registered Migration Agents in Australia, says Anne O’Donoghue, Principal Lawyer and Managing Director of Immigration Solutions Lawyers. “As such, the competition is very high. There are varying degrees of professional expertise ranging from experienced accredited specialist immigration lawyers to newly-registered migration agents. This is because there are both migration agents and immigration lawyers; the dual regulation means immigration lawyers must also have migration agent licenses. Currently there is an independent review being conducted by Dr Christopher Kendall of the Office of the Migration Agents Registration Authority.” Immigration Solutions Lawyers, which is a registered trade mark in Australia (number: 915219), consists of three streams; corporate migration, family migration, judicial and administrative merits reviews. “Our corporate stream has significant expertise in dealing with sponsoring overseas employees, student visas, distinguished talent visas and business innovation and investor visas (inclusive of SIV),” says O’Donoghue. “Our family stream maintains a high quality of spouse/partner applications, child visas, and carer visas. Our review stream also provides forensic review of clients’ immigration histories and lodges detailed submissions at Ministerial Intervention level. ISL conducts a very robust merits review practice before the Migration Review Tribunal and Administrative Appeals Tribunal.”
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O’Donoghue says Australia’s economy is steady. “We have a stable economy that is among the strongest performing in the world; in 2013 we had the twelfth largest economy coupled with a strong commitment to free trade and investment. Australia is perceived as a safe market which has had a positive impact on investment. This is reflected in the rise of applications for the Significant Investor Visa in 2014, for example, which requires candidates to invest a minimum of AUS$5 million in the Australian economy.” In terms of technological changes in 2014, the Department of Immigration and Border Protection have introduced online lodgement for electronic visa applications, which has benefited the application process, says O’Donoghue. “There have also been some significant policy changes in 2014 such as the Partner visa Schedule 3 requirements which restricted the scope of compelling circumstances. This has changed the nature of submissions within this area.” As for the future, O’Donoghue feels the Australian government will become more open about its activities. “We predict that there will be increased transparency in government. For example, after the spying scandal involving Australia and Indonesia last year (when allegations were made that the Australian Signals Directorate attempted to monitor the mobile phone calls of Indonesian president Susilo Bambang Yudhoyono, his wife Kristiani Herawati, and senior officials) Minister for Foreign Affairs Julie Bishop has travelled to Indonesia to sign a spying code of
conduct. We also predict this will bring a heightened sense of security and unprecedented intelligence sharing between Australia and its neighbours which will no doubt impact upon Australian immigration.” n
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Australia is perceived as a safe market which has had a positive impact on investment. This is reflected in the rise of applications for the Significant Investor Visa in 2014, for example, which requires candidates to invest a minimum of AUS$5 million in the Australian economy.
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Q3 Review
Company: Arthur’s Legal B.V., Amsterdam Name: Arthur van der Wees, Managing Partner Email: vanderwees@ arthurslegal.com Web: www.arthurslegal.com Tel: +31 20 305 49 50
Data & Technology: The Highway to Sustainable Growth Today, electronic data is a vital part of the global business landscape. Arthur van der Wees, Managing Partner at Arthur’s Legal B.V. in Amsterdam, tells us how companies can benefit from the digital revolution. Data has been the new asset for many decades. When a company combines such data in a structured way, this may result in valuable business intelligence, and even know how and intellectual property. Technology has accelerated this evolution, and converted it into a disrupting revolution: the total amount of data humankind has generated in 2,000 years, is now generated every 10 seconds. The first algorithm has already joined as non-executive board member of a midsized company. One of the top benchmark requirements of a major investment firm is the cyber security risk of its portfolio companies: cloud computing, financing and risk management come together. One can either watch it happen, and be overtaken by current or new competitors, or engage in and benefit from these new opportunities. The landscape of building your company, acquiring other companies, and managing exit strategies has changed dramatically as a result of technology. For once, much more data and information are processed and available than ever before, both within your company as about your relevant market. However, it is not about quantity, but about combining useful data towards business and market intelligence of high quality. Structuring and using these numerous information and documentation flows in order to establish and secure your current market and conquer new, is generally not a business focus at most companies. For instance, some companies reinvent the wheel and build new businesses from the ground up when instead buying an existing business may have been a better alternative. Or vice versa. A proper buy or build
strategy requires a profound in-depth, multi-angle 3D view. Arthur’s Legal assists with such challenges and opportunities in a state-of-the-art way. Arthur van der Wees, attorney and managing director, heads this internationally operating law firm, founded in 2001. Arthur’s Legal, with its headquarters in Amsterdam, has an international practice, mainly focusing on the markets of private equity and venture capital, M&A, high tech, IT, cloud computing, (petro)chemical, pharma and bio tech, healthcare and clean tech and energy. Generally, it represents its clients as counsel, external (add-on) legal department and attorney at law. As official member of the European Commission (EC) Cloud Select Industry Group on B2B cloud computing and SLA’s (C-SIG SLA), Arthur’s Legal advises and contributes to the digital agenda at the highest level possible in Europe about topics such as cloud computing, data management, data protection, cyber security and SLA performance. As a consequence, the EC Cloud SLA Standardisation Guidelines are available on the website of the European Commission. Being passionate about law, having strong market knowledge and effectively using the possibilities new technologies offer, Arthur’s Legal has a leading multiangle 3D position in the global legal profession. To be specific, Arthur’s Legal optimizes results for its clients by using state-of-the-art technology in the field of customized document generation and deal cycle management. For this, it cooperates with innovative partners such as Zapplied and Salesforce.com and uses the enterprise application Zapplied Platform. This unique tool is designed to automate complex
knowledge work and supports global teamwork and knowledge sharing by making use of social collaboration, workflow management, and audit trail functionalities. Therefore it frees up resources and time which enables Arthur’s Legal’s clients to focus on innovation and strategy instead of repetitive work. Concerning VC/PE and M&A transactions, and related preparations prior to such transaction, as well as the PMI (Post Merger Integration) thereafter, these kind of tools are helping expediting deal cycles, increasing success and minimising transaction cost and risks. The road to growth and beyond has become a highway; why not use it and enjoy the ride? n
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Technology has accelerated this evolution, and converted it into a disrupting revolution: the total amount of data humankind has generated in 2,000 years, is now generated every 10 seconds.
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Acquisition International September 2014 31
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Q3 Review
Cristina Elena Candea, senior legal researcher at Romanian Academy and ACIArb London, tells us how the Romanian economy has shaped up in Q3, and why arbitration continues to be an important part of the business landscape. Like the rest of the world, Romania has, in the last twenty years, seen rapid progress in the legislation and practice of foreign investment and the regulation of international commercial arbitration, says Cristina Elena Candea, senior legal researcher at Romanian Academy and ACIArb London.
Company: Legal Research Institute at Romanian Academy Name: Cristina Elena Candea Email: cristina@legalrecovery.ro Web: www.cdcinsol.ro Address: Bucharest, Romania Tel: +40747178888
“Romania is a good choice for investment due to the advantages it offers,” says Candea. “Firstly, Romania has a significant geostrategic position: it lies at the crossroad of three large international markets: the European Union, the Balkans and the Commonwealth of Independent States. “Romania presents itself as the access gate of the East to the single market of the European Union, being crossed by three Pan-European transport corridors: corridor IV connecting Europe from West to East, corridor IX connecting the North to the South and the corridor VII that facilitates the continental fluvial transport (the Danube River). Romania itself is an important consumption market on a European level: ranking 9 in Europe, 2 in Eastern Europe and 7 in the European Union in terms of population. “Therefore, the economic development was significant, resulting in the adjustment of the commercial arbitration, as the preferred way to settle differences. Since the 1990s, when the first arbitration award was given in an investorto-state case under the umbrella of a modern treaty on foreign investment, both the number of such treaties and the number of the arbitrable disputes in the field has
Avondale are specialists in business sales and acquisitions. They are proud to have one of the largest and longest established, specialist corporate teams in the UK with the highest success rate in the industry. Kevin Uphill, Chairman of Avondale, gives us his thoughts on Q3’s M&A activity in the UK, and his predictions for the future. In recent years, the UK has been a highly volatile market with economic uncertainty and the presence of its largest deficit still looming. However, the government’s more prudent approach to public spending, a pragmatic acceptance of this, combined with London’s financial services’ underlying strength, has led to a faster recovery than originally anticipated.
Company: Avondale Name: Kevin Uphill Email: av@avondale.co.uk Web: www.avondale.co.uk Address: Chapter House 33 London Road, Reigate, Surrey, RH2 9HZ Tel: +44 01737 240888 Fax: 0872 1107656
This rapid recovery has a clear and obvious impact on accelerated M&A activity as the business community no longer feels uncertain, and can feel secure with economic growth becoming a reality and no longer merely a fantasy. Whilst the economy was recovering, organic business growth became increasingly difficult. This has also positively affected the M&A industry as resilient business leaders began to look for an alternative to combat the increasing pressure on margins and to create and accelerate shareholder value.
significantly increased. For Romania, the ‘90s marked the realistic doctrinaire beginning of what can be seen as the first signs of an evolution in this area as well.” 2014’s global economic growth has been quite uneven. Asked how she would describe the situation in her jurisdiction, Candea says, “There are no constraints now in the Romanian arbitration system, which is undergoing a process of refreshment and tailoring to the requirements of the subjects who become parties to international arbitration cases. The global recession has continued to be felt in Q3 2014,” says Candea.Nevertheless, “the Romanian economy is relatively steady,” she says. “But we have to carefully maintain it in order to encourage and protect investments.” Candea says arbitration will continue to play an important role in business in 2014. “In my capacity as an enlisted arbitrator of the Court of International Commercial Arbitration, I believe that arbitration is an elegant and much quicker way to settle disputes than in a court of law, by which a given dispute is resolved by final and mandatory award for the parties. Arbitration gives the parties the opportunity to choose their arbitrator, thus having a say on the composition of the arbitral tribunal. This way, those who opt for arbitration are entitled to choose their specialist, thus making sure the arbitration is governed by genuinely reliable and legal arbitration procedure and solutions. “In the entire arbitration practice, both myself as arbitrator and my colleagues in the List of Arbitrators have been ensuring equal treatment, fairness and respect for the right to defence and the principle of contradictoriality to all parties.” n
a further 33% saying that they would consider an acquisition within the next two years. As the economy continues to stabilise, M&A activity has visibly increased within a number of sectors and markets. Whilst large market deals have for the most part remained steady, it is the mid-range deals that have been able to really flourish in the shifting economy. We continue to see considerable growth and an influx of deals being made within this market. Whilst the upcoming Scottish Referendum could have a considerable impact on the industry, with the interest rates now at an all-time low meaning that acquisitions are easier and more cost effective to fund, the increase in M&A activity looks set to carry on steadily rising throughout 2014 as business owners continue to look to M&A as a key route to growth. n
Avondale recently carried out a survey that found that 67% of UK businesses were in a mode of growth rather than survival. This apparent period of growth, aided by the stabilising economy, has had a considerable effect on M&A activity as 20% of respondents to the survey said that they considered acquisition as one of their main routes to growth, with Acquisition International September 2014 33
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Q3 Review
Ayhan Üstün is a tax partner at KPMG in Turkey. He tells Acquisition International how the Turkish economy has shaped up in Q3. Ayhan Üstün leads the international tax and mergers acquisition tax advisory practice at KPMG in Turkey. The team consists of more than 20 specialists who are fully dedicated to these service lines and also includes specialists in key sectors like energy, financial services and private equity.
Company: KPMG Turkey Name: Ayhan Üstün Email: ayhanustun@kpmg.com Web: www.kpmg.com.tr Tel: +90 216 6819100
“Investors observed a vibrant market in Turkey throughout 2013, despite the expected negative influence of global monetary policy changes on emerging economies and the domestic challenges faced by Turkey, such as the rising social and political conflicts in the shadow of the chain of elections in 2014,” Üstün says. “The net FDI to Turkey stood at US$12bn in 2013. The net FDI to Turkey in H1 2014 was reported as US$6.5bn with an expectation that the FY2014 results will be 10% to 20% over FY2013 FDI. “M&A activity in Turkey has stood at a level between US$15bn to US$20bn annually for the last four years,” he continues. “The estimate for the current year still remains to be within this range despite the fact that the share of foreign investors in the M&A market has been relatively declining over years” “The above facts and figures imply that, despite lowered growth forecasts for the Turkish economy and slow recovery in global markets, Turkey’s
MilleniumAssociates AG is an independent M&A and corporate finance advisory firm based in Zurich and with a subsidiary, MilleniumAssociates (UK) Limited, in London. The firm told us more about the services they offer and their recent activity.
Name: Ray Soudah Tel: +41 58 710 47 00 Email: info@ milleniumassociates.com Web: www. milleniumassociates.com Address: Kreuzstrasse 54, 8008 Zurich, Switzerland
MilleniumAssociates’ financial services Practice focuses on M&A and corporate advisory for the financial services industry with particular emphasis and experience in the global wealth and asset management, fund management, alternative investment management and securities brokerage sectors. The team has significant experience and a proven track record on Swiss, European and US assignments in particular. MilleniumAssociates’ newly developed Entrepreneur & Corporates Practice specialises in supporting institutional and entrepreneurial business owners in their M&A needs. The team has worked on numerous transactions and understand the unique issues that organisations and entrepreneurs face and incorporates this with MilleniumAssociates’ significant M&A capability across industries and global markets. Assignments include supporting clients with both global and national strategies as well as supporting those clients seeking to determine their ideal strategic options including partnerships and alliances or asset disposals. The firm’s clients are global, national and regional financial institutions, manufacturing, industrial, resources, business services and technology
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dynamic middle market, privatisation process and keen private equity interest lead to an active investors market.” n
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Investors observed a vibrant market in Turkey throughout 2013, despite the expected negative influence of global monetary policy changes on emerging economies and the domestic challenges faced by Turkey, such as the rising social and political conflicts in the shadow of the chain of elections in 2014
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organisations as well as business entrepreneurs and private equity groups who are seeking independent advice with regard to mergers, acquisitions or divesture of companies. As it is not part of an integrated investment house, MilleniumAssociates is uniquely positioned to offer independent and un-conflicted advice in order to maximise shareholder value for its clients. The firm does not carry out related financial activities that often lead to conflicts within financial services groups. MilleniumAssociates is in the sole ownership of its employees and is thus fully independent. MilleniumAssociates augments its offering through a worldwide network of investors and partners including institutional, sovereign and private investors, enhanced by international of strategic partners, ensuring access to all key market players globally. The team has participated in numerous recent transactions, including the acquisition of Lloyds Banking Group’s international private banking business by Union Bancaire Privée, UBP SA, one of Switzerland’s leading private banks. n
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Q3 Review
Ketut Budi Wijaya, a President Director of PT Lippo Karawaci, Tbk, Indonesia’s largest listed property company by Total Assets and Revenues, offers a round-up of the Q3 economic activity in his region.
Company: PT Lippo Karawaci, Tbk Name: Ketut Budi Wijaya Email: ketut@lippokarawaci.co.id Web: www.lippokarawaci.co.id Address:Menara Matahari, 22nd Floor, 7 Boulevard Palem Raya, Lippo Village, Tangerang 15811, Indonesia Tel: 62-21-25669000
2014’s global economic growth has been quite uneven, how would you describe the situation in your jurisdiction? Indonesia’s economic growth is projected to be slower in FY 2014 compare to FY 2013 but still within the range 5.1-5.5% as projected by Bank of Indonesia. The slowdown were mainly driven by balance of payment performance that has fallen short of expectations due to contraction in export led by mining commodities.
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In Indonesia, we are optimistic for the rest of 2014 particularly in Q4 2014
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How would you describe the deal appetite compared with the same period last year? Compared to the same period last year, the deal appetite slowed down due to major political events in Indonesia in 1H 2014 How would you describe the level of confidence in your local market? Based on the survey conducted by Central Bank, Bank of Indonesia, in July 2014, the Consumer Confidence Index marked renewed gains as indicated by the 119.8 level, up from 116.3 in the previous month and representing for the highest level ever in the past two years. The upswing in consumer optimism was spurred by more buoyant consumer perceptions about current economic conditions and economic c0nditions in the next six months. What are your predictions for the rest of 2014? In Indonesia, we are optimistic for the rest of 2014 particularly in Q4 2014, whereas many developers have held back their project launching, amid political uncertainty due to presidential election in Q2, yet many were planned to launch their pending projects in Q4 2014. n
Paul Swindale, Director at Döhle Corporate and Trust Services Limited, takes a look back at Q3. As the summer ends, the TT races are finished and the children are on their way back to school this is a good time to draw breath and look at where we are in terms of our business.
Company: Döhle Corporate and Trust Services Limited Name: Paul Swindale Email: pswindale@ doehlecorporatetrust.com Web: www.doehlecorporatetrust.com Address: Fort Anne, Douglas, Isle of Man, IM1 5PD Tel: 01624 649735
How stable is your local economy? How does this affect investment? Indonesia’s macro-economic conditions were pretty stable during Q2 2014, whereas Inflation were curbed within the target range 4.5% +/_ 1% and is expected to reach 5.45% by FY 2014, much lower than inflation in FY 2013: 8.38%.
Our core business of luxury asset work continues to perform strongly and remains our core strength. The only change we are seeing is that we are placing more business into our Maltese business which has been in situ for over 12 months and is currently going through the process of obtaining its licence to offer fiduciary services, something we expect to complete in the final quarter of the year. Our Managing Director in Malta, Keith Fenech is working on our local infrastructure and we are in the process of moving to beautiful new offices in Smart City which will help to continue our growth over coming months and years
which will help us achieve a strong close to 2014 and a very positive 2015. n
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Whilst Malta is a key jurisdiction for Döhle Corporate and Trust Services Limited (DCTS), our headquarters in the Isle of Man is also performing strongly.
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Whilst Malta is a key jurisdiction for Döhle Corporate and Trust Services Limited (DCTS), our headquarters in the Isle of Man is also performing strongly. One of the key changes for our Isle of Man office has been a recent “explosion” in referrals from the crypto currency world which has been very encouraging both for the Isle of Man and DCTS. Over a very short period of time, we have built a very high quality network of intermediaries and active client structures
Acquisition International September 2014 35
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Ones to Watch in 2014
Ones to Watch in 2014 Acquisition International continues to search the globe for the firms and experts leading the way in their respective sectors and regions.
36 Acquisition International September 2014
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Ones to Watch in 2014
Tadmor & Co, based in Tel Aviv, provides insightful and strategic commercial advice to a diverse range of clients both in Israel and internationally. Dr. David E. Tadmor, Managing Partner of Tadmor & Co, told Acquisition International how the firm is leading the way in competition law in Israel and beyond. Ranked in all professional surveys (including Chambers, GCR and Legal 500) as a Tier 1 competition law firm, Tadmor & Co.’s competition law team leads the local competition practice in Israel. A highly trained professional staff of twelve partners and associates counsels and represents local and foreign clients before the Israel Antitrust Authority, the Antitrust Tribunal and in civil and criminal proceedings before other Israeli courts.
Company: Tadmor & Co Name: David Tadmor Email: david@tadmor.com Web: www.tadmor.com Address: 5 Azrieli Center The Square Tower 34th floor 132 Begin Road, Tel Aviv 6701101, Israel Tel: +972 3 684 6000 Fax: +972 3 684 6001
The firm’s specialisation covers all civil and criminal aspects of competition law, as well as regulation in areas such as telecommunications, oil & gas, mining & minerals, aviation, price supervision, food production & chains and the environment. Many of Tadmor & Co’s lawyers are former staff members of key regulatory bodies. By understanding the way in which regulators operate and the intricacies of antitrust rules and regulations, the firm provides its clients with commercially focused and targeted advice that minimises risk and maximises commercial benefit. The competition group was established by Dr. David E. Tadmor, a former Antitrust Commissioner of Israel (IAA) and the managing partner of Tadmor & Co. During his time as a General Director, the IAA trebled in size and much of the foundation for Israel’s competition law and enforcement policies was laid. Dr. Tadmor was named by Chambers as being in the top class of antitrust lawyers in Israel and as being “in a league of his own” and “the first port of call”. Dr. Tadmor leads the team together with Shai Bakal, former head of the mergers team in the IAA. Prior to joining Tadmor & Co., Shai practised law at the legal department of the IAA
Dr. Ittai Paldor, who heads the firm’s litigation department, is a former IAA senior prosecutor. Ittai represents clients in notable criminal antitrust cases, as well as civil litigation involving complex antitrust issues. Nava Karavany joined the firm in 2012, having spent several years at the IAA’s legal department, where she was lead prosecutor in criminal cases and lead counsel in several key litigation of the IAA. Nava was also section chief in the IAA’s legal department. Dr David Tadmor and Shai Bakal are both Who’s who legal nominees. They lecture together at the Tel Aviv University School of Law in the area of antitrust law and intellectual property. Tadmor & Co’s antitrust team was involved in most leading antitrust cases of recent years. Recent notable work includes representing Siemens AG in an appeal against the Commissioners decision in the alleged GIS cartel case, representing Israel Today newspaper in the high profile acquisition of Makor Reashon, representing First International Bank of Israel in the appeal over the Commissioner’s landmark determination regarding information exchange between banks, and representing Azrieli Group before the Supreme Court in the first ever decision of accepting an appeal against the Antitrust Tribunal verdict that was not brought forth by the General Director, but against him. The team regularly represents in major mergers that requires the IAA approval and involves leading International Companies, such as Blackstone group, Lenovo Group, Novartis International AG, Colgate Palmolive, Nestle S.A., Apax Partners, AbbVie and many others. n
Ana Menéres is Managing Associate in charge of the Life Sciences Department SRS Advogados in Lisbon. SRS was the first Portuguese law firm to establish a partnership with an international law firm, Simmons & Simmons. The practice has expanded significantly in recent years and is now one of the largest and most highly respected in Portugal with a team of over 80 lawyers.
Menéres has been focusing on the developments in the Portuguese legal framework for stem cells and on the rules applicable to the storage and cryopreservation and the services related to stem cells and their applications.
The SRS team advises clients on all aspects of domestic as well as international law, with particular expertise in commercial, competition, corporate, dispute resolution, employment, energy, environment, EU, finance, infrastructure, life sciences, public, real estate, regulatory, shipping, tax and TMT.
Menéres has advised many international pharmaceutical medical devices and other life sciences companies on regulatory and transactional issues, as well as multinational European and North American companies who engage in all types of business and industry (particularly in the pharmaceutical and life sciences industries). The legal support given to these clients includes accompanying all corporate and commercial law issues related to the establishment of a corporate structure and the implementation of projects in Portugal.
Ana Menéres joined SRS Advogados in 2011, as Managing Associate in charge of the firm’s Life Sciences Department. Before this, she was a partner at Cuatrecasas, Gonçalves Pereira & Associados RL., responsible for the Pharmaceutical Law Department. Company: SRS Advogados – Sociedade Rebelo de Sousa & Advogados Associados RL Email: ana.meneres@srslegal.pt Web: www.srslegal.pt Address: Rua D. Francisco Manuel de Melo, n.º 21 1070-085 Lisbon Tel: +351 21 313 20 00
(2002-2007), where he was in charge of different sectors including the food sector, retailing and IP. He was later appointed as the head of the IAA’s mergers team. Shai has unique expertise and vast experience in merger control issues and in particular cross-border transactions.
Menéres specialises in the pharmaceutical, biotechnology and other life sciences practices. Her experience also includes commercial, corporate, mergers and acquisitions, real estate and contractual legal matters. From the beginning of her career, Menéres’s work has focused on providing legal advice in corporate and commercial law matters to international clients and on conducting international projects. Menéres advises Portuguese and international clients on legal matters related to all stages of the life cycle of medicinal products, for inpatients and outpatients, in what respects clinical trials, financial protocols, licensing agreements, launching of products, pricing and reimbursement, marketing, commercial protocols, general sale terms, advertising and promotions. For clients that are not at those stages, Menéres provides legal support for creating a corporate structure in Portugal.
Her professional experience also includes commercial and regulatory issues related to cosmetics, food supplements and medical devices.
Menéres works with US and European law firms (mainly from the UK and Germany) on Portuguese pharmaceutical law matters. Menéres has contributed to several publications, including the chapter on Portugal in “Property in Europe: Law and Practice” (Author: Hurndall, Anthony, Editor: Butterworths) in Company Law in Europe (Lexis Nexis/Butterworths), “The International Comparative Legal Guide to: Pharmaceutical Advertising 2008” (Global Legal Group), Getting the Deal Through “Pharmaceutical Antitrust 2009”, “Pharmaceutical Advertising” (Corporate INTL, February 2010) and Getting the Deal Through “Life Sciences” (2012, 2013 and 2014). Menéres has lectured in several seminars on pharmaceutical and health matters and is a member of the Portuguese Bar Association and of the International Bar Association. n
Acquisition International September 2014 37
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Ones to Watch in 2014
Trevisan & Cuonzo Avvocati, established in 1993, is one of the leading Italian law firms and its clients include many of the most technologically advanced and innovative businesses in the world. The firm offers a complete range of commercial services and specialises in a wide range of industrial sectors. Julia Holden, partner at Trevisan & Cuonzo, tells Acquisition International how the firm is flourishing in Italy’s still fragile business environment.
Company: Trevisan & Cuonzo Name: Julia Holden Email: jholden@ trevisancuonzo.com Web: www.trevisancuonzo.com Address: Via Brera 6, 20121 Milan (Italy) Tel: +39 02 86463313
How would you describe the current business environment in your region? The current business environment in Italy is still fragile following the dramatic downturn in the economy over recent years, with high unemployment, especially in the 18-35 category. In the last six months however – with a new government in place and a new leader at the helm – there is the strong sense of a change for the better with the beginnings of a new dawn in Italian business prospects in sight. Which sectors have seen the most activity and has this changed compared to the previous year? Where do the greatest opportunities for investors lie? The most active sectors this year have been automotive, pharmaceutical and technological with a number of key clients in all these sectors taking strong initiatives to protect their business interests in IP through active enforcement of their intangible assets. What do you think the key challenges are for your region’s economy and how do you think these challenges can be met? The key challenges for the Italian economy are to create a more flexible working environment so that
Andrey Voevodin, from antitrust law firm Antimonopoly Law Office LLC, Moscow, Russia, discusses the dynamic economic situation in his country, and how his firm provides a comprehensive legal service to Russian business and overseas companies. Russia has seen record levels of investment in recent years, with US-based firms alone ploughing over$37 billion into our country up until December last year. That is double the investment value from just three years previously. A key country in the BRICS emerging national economies, our firm is in an enviable position to find opportunities in Russia that can still generate excellent returns. Company: Antimonopoly Law Office LLC Name: Andrey Voevodin E-mail: avoevodin@ antimonopolylawoffice.com Web: www. antimonopolylawoffice.com Tel: +7 495 626 02 26 Address: 107031 ul. Kuznetsk Bridge 21/5, Entrance 1, Office 2009, Moscow, Russia
Indeed, with the stock market in the country sliding in recent weeks, our expertise in Russian business and economy can help highlight areas for significant and short-term gains, as well as longer term projects. Many of our existing clients are already taking advantage of our skills to this end, attracted by what many perceive as an ‘irresistible’ buyers’ market. A number of investors we are working with are even more bombastic in their enthusiasm. Russian bonds are still said by many to represent a ‘great’ opportunity. Indicative of this is the upcoming debt issuance by Alfa-Bank. Our sources suggest a postsummer break confirmation is likely for example. The Austrian property group Immofinanz is also considering a further sizable investment into our
38 Acquisition International September 2014
employers and employees are able to operate in a more agile manner and job opportunities are not stifled by unnecessarily rigid rules. Italy still needs to cut down on unnecessary governmental bureaucracy and take on board – to an even greater extent – the need to fully digitalise operations for a modern 21st century fully-functioning economy. On a private level this is already well advanced, particularly in the north, but on a State Entity level large strides in the right direction are still needed to bring Italian government institutions up to speed. How does your business stand out in your field? What areas do you specialise in and what do you do differently from your competitors and peers? Our business stands out for its keen ability to understand the urgent needs of our clients and to respond to complex issues in a relatively short timeframe using small teams of highly qualified lawyers. We are used to adopting internationally accepted and recognised standards to our legal work – whether through opinion work or civil actions before the Italian courts. What should clients be looking for when searching for a firm in your sector with which to work? When searching for a firm in the IP sector it is good to look at the previous experience of the attorneys: have they worked on similar matters in the past? Have they got an experienced team in the specific sector of interest in place? Are sufficient qualified attorneys available to handle the project? Have they clarified budget issues with you early on? Do they inspire confidence, and ultimately are these people you would feel really comfortable working with? n
country. The biggest market for the firm, it has benefited from the changing landscape in Russia for a number of years and said it will look for other suitable investment in and around Moscow on announcement of its latest financials. With the help of our expertise some of the biggest Russian companies are also managing to be opportunistic with our help. In November last year we were tasked with the responsibility of Gazprom’s acquisition of Prof Media, in recognition of our work with other large investors from home and abroad, for example. Manoeuvring in Russia is still complex, challenging and needs dedicated expertise and application of knowledge. From ensuring transactions are approved by the Federal Antimonopoly Service of Russia (FAS Russia) and meets with all other consents, to helping our clients stay compliant and up to date with the latest regulations, we are a partner that can be trusted, relied upon and partnered to profitability. Other BRICS countries are investing heavily in Russia too and using our tacit knowledge of this information stream we are helping clients recognise the less obvious, or ‘hidden’ and profitable deals that can still be found with the right guidance and support. n
SECTOR SPOTLIGHT www.acquisition-intl.com
Company: Baker & McKenzie Web: www.bakermckenzie.com Address: Edificio Scotiabank Inverlat, Piso 12 Blvd. M. Avila Camacho 1 México, D.F. 11009 Mexico Tel: +52 55 5279 2900
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Baker & McKenzie defined the global law firm in the 20th century, and we are redefining it to meet the challenges of the global economy in the 21st.
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Ones to Watch in 2014
Baker & McKenzie has been delivering comprehensive and commercially pragmatic legal solutions to clients in Mexico City since 1961, providing a range of services across a number of practices, including employment, environmental, tax, financial, real estate, infrastructure, litigation, intellectual property and foreign trade matters Baker & McKenzie defined the global law firm in the 20th century, and we are redefining it to meet the challenges of the global economy in the 21st. We bring to matters the instinctively global perspective and deep market knowledge and insights of more than 4,200 locally admitted lawyers in 76 offices worldwide. We have a distinctive global way of thinking, working and behaving – “fluency” – across borders, issues and practices. We understand the challenges of the global economy because we have been at the forefront of its evolution. Since 1949, we have advised leading corporations on the issues of today’s integrated world market. We have cultivated the culture, commercial pragmatism and technical and interpersonal skills required to deliver world-class service tailored to the preferences of world-class clients worldwide.
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KPMG operates in 34 locations across Canada. The firm’s more than 700 partners and more than 6,000 employees provide crucial services to many of the top business, not for profit and government organisations in Canada.
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We have been delivering comprehensive and commercially pragmatic legal solutions to clients in Mexico City since 1961. Our multidisciplinary team enables us to provide the right talent across a number of practices, including employment, environmental, tax, financial, real estate, infrastructure, litigation, intellectual property, and foreign trade matters. Our partners are seasoned practitioners who are widely recognised for their skill and leadership in their fields of practice. As a global firm, we have colleagues and resources in every country with which Mexico has trade agreements. Within and across borders, we help clients adopt international best practices to capture opportunities for growth while minimising risks. Baker & McKenzie has offices also in Monterrey, Guadalajara, Ciudad Juarez and Tijuana. n
Ours is a passionately collaborative community of 60 nationalities. We have the deep roots and knowledge of the language and culture of business required to address the nuances of local markets worldwide. And our culture of friendship and broad scope of practice
KPMG LLP (Canada) provides assurance, tax, and financial advisory services, with over 30 offices across the country. Company: KPMG LLP (Canada) Web: www.kpmg.com/ca Address: 333 Bay Street, Suite 4600, Bay Adelaide Centre, Toronto, ON M5H 2S5 Canada Tel: +1 416 777 8500
enable us to navigate complexity across issues, practices and borders with ease.
KPMG operates in 34 locations across Canada. The firm’s more than 700 partners and more than 6,000 employees provide crucial services to many of the top business, not for profit and government organisations in Canada. We work closely with our clients, helping them to manage risks and take advantage of opportunities. Major Services and Practice Areas KPMG is a Canadian leader in delivering Audit, Tax, and Advisory services. KPMG responds to clients’ complex business challenges across the country and around the world. Audit Our audit opinion is the end result of a powerful combination of professional integrity, independence, and ethical behaviour, underpinned by rigorous quality control procedures. This approach is supported by some of the leading methodologies, technologies and tools that assist our teams to access knowledge, focus on the issues that impact on our audit judgments, and help enhance the efficiency of the audit. The overall result is an independent and incisive view attesting to the quality of the information provided. Tax KPMG’s Tax practice addresses the unique needs and objectives of each client, helping them to balance compliance and value creation. We offer
a broad range of international and domestic tax services, as well as private-company tax services through KPMG Enterprise. Our multidisciplinary approach gives clients the right mix of services and professionals who think past the present and look beyond borders to address your tax needs and opportunities. Advisory Advisory offers industry-specific financial, transactional, and technical experience in management consulting, risk consulting, and transactions and restructuring to help you enhance your organisation’s financial performance and reporting, regulatory compliance, and business value creation. KPMG Enterprise™ KPMG Enterprise is devoted exclusively to delivering value to privately held businesses. Our professionals have many years of experience addressing the financial, tax, business, and compliance issues that private companies face. Key Industries Served Industry focus is fundamental to KPMG’s business approach. We believe that we add value for our clients by having a thorough understanding of their industries, and we invest continuously to build our knowledge of the industries we serve: consumer and industrial businesses; energy and natural resources; financial services; information, communications and entertainment; mining, public sector; real estate, building and construction, and private equity. n
Acquisition International September 2014 39
SECTOR SPOTLIGHT www.acquisition-intl.com
Ones to Watch in 2014
VISCHER is an influential, innovative Swiss law firm, dedicated to providing effective legal solutions to business, tax and regulatory matters Company: VISCHER AG Web: www.vischer.com VISCHER AG, Zürich Address: Schützengasse 1, Postfach 1230, 8021 Zürich, Switzerland Tel: +41 58 211 34 00 VISCHER AG, Basel Address: Aeschenvorstadt 4, Postfach 526, 4010 Basel, Switzerland Tel: +41 58 211 33 00
The earliest roots of VISCHER’s continued success story can be found in 1857 at the offices of Lichtenhahn & Heusler, which flourished into Gloor, Schiess & Partner and ultimately, in 1999, into Gloor & Christ. A year later, in order to gain a foothold in Zurich, Gloor & Christ merged with the renowned Zurich law firm of Pestalozzi Haegi & Partner and, from that point on, traded as VISCHER. Today, we are an influential, innovative Swiss law firm, dedicated to providing effective legal solutions to business, tax and regulatory matters. Our attorneys, tax advisers and public notaries are organised under the direction of experienced partners in practice teams, covering all areas of commercial law. Our breadth of practice ensures we have the right team available for every mandate and client. Clients demand and deserve impartial, unbiased advice. Our conflict of interest standards set us apart from other firms. The fact that we are not tied to an association of law firms or attorney network means that our ability to select and instruct counsel in international transaction is not compromised. We have spent decades building up networks with attorneys and firms that meet our standard. We can choose freely from that network, according to the demands of the matter at hand.
The attorneys, tax advisers and civil law notaries of VISCHER are organised in practice teams which continuously improve our legal and industry knowhow. Often we work in specific client teams to ensure continuity of service for our clients in long term or complex mandates. Each client team is led by a partner who acts as the client’s main point of contact. n
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Today, we are an influential, innovative Swiss law firm, dedicated to providing effective legal solutions to business, tax and regulatory matters.
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Our offices can be found in Zurich and Basel, the two largest business centres of Switzerland.
P&A Law Offices Company: P&A Law Offices Name: Anand Pathak Email: apathak@palaw.in Address: 28 Barakamba Road, Gopal Das Bhawan, 1st Floor, New Delhi, 110 001, India Tel: +91 9810049049
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I have personally worked with Diebold, Toyota, Mitsui, Mitsubishi, General Electric, Ingersoll-Rand and PepsiCo recently to successful conclusions.
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40 Acquisition International September 2014
India is gearing up for what it hopes will be a vibrant investment future. With this underpinned bySeptember’s move by the country’s Prime Minister Narendra Modi to accelerate privatisation plans for three state-backed companies, Anand Pathak the most widely respected and recognised member of P&A Law Offices talks to us about where he sees the country is headed. The business landscape in India is moving at a rapid rate, with the government’s action to shore up its fiscal measures proving effective. This is seeing the appetite for mergers and acquisitions and inward investment into Indian firms pick up. Much of this activity has been spurred on by domestic companies. Much in keeping with the trend in other rapidly emerging markets, the growing number of middle-class consumers in India is helping drive a change in attitude. Overseas firms are nothing new to the market of course. I have personally worked with Diebold, Toyota, Mitsui, Mitsubishi, General Electric, Ingersoll-Rand and PepsiCo recently to successful conclusions. I was also a key member of the team which saw through the joint ventures between TRW and Satyam Computer Services. More foreign organisations are starting to take a greater interest too though, while September’s visit by the UK Minister of Courts and Legal Aid, Sailesh Vara, in which he called for a relaxing of India’s legal sector, has started an interesting debate. Always welcoming increased competition to drive
up standards in India’s legal sector, P&A feel that our expertise and experience will only add to the demands of foreign firms and create very profitable relationships with any law firms operating here from abroad. As was demonstrated in the EY 2014 attractiveness survey, the country remains as one of the top foreign investment destinations in the world. With an increasingly solidifying domestic market, a globally competitive workforce and an upward trend in talent and education, this is only going to get stronger. With half of all foreign business leaders admitting they are targeting India for investment, we expect significant growth in the Consumer, Industrials, Infrastructure, Life-sciences and Technology, Media and Telecom (TMT) sectors. With our experience in Competition Law, Joint Ventures, Litigation, M&A, Outsourcing and Private Equity, we would be honoured to partner you to investment and acquisitions success. n
SECTOR SPOTLIGHT www.acquisition-intl.com
Company: TRLPLAW Email: lagos@trlplaw.com Web: www.trlplaw.com Address: D96 Landbridge Avenue, Oniru Estate, Victoria Island Ext., Lagos, Nigeria Tel: +234 816 3135
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Described by a national newspaper as the “quintessential lawyer”, Managing Partner at TRLPLAW, Ralph Ajibola Oluyede has effectively traversed the entire gamut of legal practice in Nigeria as a litigator.
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Company: Jensen | Neugebauer Email: info@jnlaw.dk Web: www.jnlaw.dk Address: Frederiksgade 21, 3rd, 1265 Copenhagen K Denmark Tel: +45 33 34 80 00
Ones to Watch in 2014
TRLPLAW is a union which consummates the vision by various international law firms based in Africa, Europe and America to forge a multinational law practice of the highest quality, capable of delivering excellent, diverse legal services to businesses and businesspersons globally, particularly within emerging economies. For effective global reach, TRLPLAW has full-service, administrative head offices (comprising the finest available legal minds globally), currently located in Nigeria (Lagos, Abuja, Akure, Port-Harcourt), the United Kingdom and the United States. Described by a national newspaper as the “quintessential lawyer”, Managing Partner at TRLPLAW, Ralph Ajibola Oluyede has effectively traversed the entire gamut of legal practice in Nigeria as a litigator. Admitted to the Nigerian Bar in 1981, he began legal practice in Benin City and quickly came to public attention in the lawsuit filed to contest the “quota system” of admission of students into public funded Federal Universities in 1982. During the years of military dictatorship in Nigeria, he argued landmark cases in habeas corpus and fundamental human rights enforcement.
Having been a pioneer Partner at TRLP Solicitors, a London based commercial law firm established in 2002, Oluyede has been consulted and acted in respect of high profile matters in the UK involving the assets of Nigerian political figures. Highly respected in banking, finance and investment circles, he represented the interests of the Nigerian creditors of the London Trust Bank in its administration by Price Waterhouse Coopers London and led the Creditors Committee in the eventual CVA of that entity. His advice and influence was pivotal in the record recovery of Nigerian funds tied up in the institution when the UK Financial Services Authority withdrew its license. Oluyede has also been involved in advising the major actors in the ongoing banking reform in Nigeria and has written prolifically on the subject. He has been involved in the Nigerian energy sector as legal adviser, consultant to private sector interests in the rehabilitation and concessioning of hydroenergy installations, privatisation and liberalisation process and as an investor himself since 1992. Has hands-on experience in project financing. n
Gravitating eventually to commercial litigation, he has firmly established his reputation as a tough litigator and commercial lawyer with special interest in cross border financial transactions and compliance with money laundering as well as other regulations.
A new name in the Danish market, Jensen | Neugebauer is a merger of CNP Advokater and Jonquières & Jensen – two firms which both come with a strong legacy. The firm provides both a specialised service within insurance, tort and maritime/ transport law and a general practice in the field of commercial law. Acquisition International caught up with the firm for a quick Q&A session on Denmark’s growing economy, the opportunities the region presents and the specific Jensen | Neugebauer provides How would you describe the current business environment in your region? Denmark came out of the credit crunch fairly unscathed and is headed for better times. Economic activity is on the rise. Which sectors have seen the most activity and has this changed compared to the previous year? Where do the greatest opportunities for investors lie? M&A is coming back, as are IPOs. Crisis handling and insolvency issues are less prevalent. There is a notion that the economy is improving and so spend will probably increase, which provides opportunities in a large range of business areas. What do you think the key challenges are for your region’s economy and how do you think these challenges can be met? The improved economy is still vulnerable though even the latest developments in the Ukraine and Middle East have apparently not affected economic development adversely to a decisive degree. Tell us about any recent trends or development in your field. How have these affected your business and have they presented challenges or opportunities? There have been a number of new entrants in the insurance market. Whilst this has led to increased competition
between insurers, the fields of law that Jensen | Neugebauer advises on have not been affected as such. Litigation, which forms the mainstay of insurance cases, emanate from claims which arise regardless of the economy. How does your business stand out in your field? What areas do you specialise in and what do you do differently from your competitors and peers? Jensen | Neugebauer focuses on insurance, maritime and transport law and offers a highly experienced staff. As the company is a niche practice it is able to offer competitive rates. Since, however, other partners and colleagues work in the fields of general commercial, construction, family, criminal, tax and IP law, there is an avid exchange of experience which is useful particularly in the fields of professional liability/financial lines, where claims are often related to certain business conduct or practices among the insured business executives or advisors in these fields of law. When working with clients, what are the main factors and areas to consider to bring about a successful result? We do not seek to break new ground, but have a serious mind to providing clients with the best possible result from both a legal and commercial perspective, without incurring unnecessary costs. These simple guidelines are ever true and the best way to ensure that clients come back. What should clients be looking for when searching for a firm in your sector with which to work? Whether looking for a specialised insurance or maritime lawyer, whether looking for general commercial advice or other advice, clients should look for a firm with modest overheads and in which the case handler is also the person with whom they have primary contact. This is often the case in smaller firms such as Jensen | Neugebauer dedicated to certain fields of law or a smaller, manageable practice. n
Acquisition International September 2014 41
SECTOR SPOTLIGHT www.acquisition-intl.com
Ones to Watch in 2014: IP Experts
Ones to Watch in 2014
IP Experts
Protection of intellectual property rights is a hot topic in today’s increasingly globalised world. We speak to a number of firms, operating around the world, who are helping their clients keep their ideas safe.
42 Acquisition International September 2014
SECTOR SPOTLIGHT www.acquisition-intl.com
Ones to Watch in 2014: IP Experts
Fraserburgh was formed in 2005 to provide growth companies with strategic business support and advice. The company emerged from its founders’ frustration with the limited capacity of traditional consulting firms to address key issues in business development. These included human and financial capital, sales growth and IP. Since 2009 the firm has executed over $400m of IP-related transactions, establishing a niche as a “venture catalyst” for clients including management teams, investors and operating companies in the UK, Russia, USA and Europe.
Company: Fraserburgh Consulting Limited Name: Dr. Chris Donegan Email: chris.donegan@ fraserburgh.uk.com Web: www.fraserburgh.uk.com Address: 84 Brook Street Tel: 0207 866 6177
We believe that the opportunities for companies to articulate and leverage their unique inventiveness and differentiated market position through the strategic use of IP have never been greater. This also presents significant opportunities for investors who have the ability to recognise, value and monetise intangible assets – which now comprise over 80% of corporate valuations. The key challenge for companies and investors alike is finding a common language and protocols that allow non-specialists to grasp IP-related opportunities with some degree of comfort. This is a real hurdle since even the boards of major companies are often poorly educated about the intangible value drivers in their organizations. The market is growing rapidly (over 15% CAGR) and an increase in media interest in IP has generated a great deal of unsolicited enquiry from diverse sources such as hedge funds seeking data for risk
Dr Bruce Rubinger, Managing Director of Global Prior Art, Inc., a pioneering intellectual property research and analysis firm, tells us how his company is helping firms worldwide safeguard their IP interests.
Company: Global Prior Art, Inc. Name: Dr Bruce Rubinger Email: rubinger@ globalpriorart.com Web: www.globalpriorart.com Address: 21 Milk Street, 6th Floor, Boston, MA 02109, USA Tel: +1 617 574 9574
With a worldwide client base, Global Prior Art, Inc. has, in addition to its many US clients, long-standing relationships with law firms and leading companies in Japan, Korea, Germany and other regions. And, with the business world placing an increasing emphasis on safeguarding intellectual property, the firm is busy, says Dr Bruce Rubinger, Managing Director of Global Prior Art. “The growing recognition of the importance of IP has created a growing demand for our services.” As for the sectors showing the most activity, Dr Rubinger says, “The explosion of demand for mobile phones has created a huge demand for software and infrastructure technology to support the next generation systems, creating significant opportunities for investors.” Global Prior Art is a global business, and this creates numerous opportunities, says Dr Rubinger. “We operate in a global economy. Investors are sifting opportunities from many locations (California, Britain, Israel, Germany, Russia, etc.). This has created many opportunities for those who think globally.” Global Prior Art stands out from the competition through the high quality of its work, says Dr Rubinger. “Benchmarking by Joint Defence Groups and
arbitrage trading and insurance specialists exploring underwriting of litigation risks. I would summarise our firm as a small but expert business with a good international network. Our perspective is as business people and investors. Our specialism is the intersection of IP and finance. We have five rules for working successfully with our clients: 1. Have a clearly defined goal and end point. 2. Communicate what is happening on a daily basis. 3. On assignment there are no office hours. 4. Don’t sugar coat the report. 5. When the assignment is over the client relationship is not over. For clients seeking assistance in their IP strategy I recommend: Interview people face to face. Explore how much they know about your industry, and you. We won a recent mandate from a client because we were one of only two firms to travel to the home country to meet the client and we were the only firm who bothered to understand what their business strategy was before we arrived. In a nutshell IP strategy is a business issue not a legal issue. Remember the most valuable IP is often what the key employees have in their heads. Investors should evaluate the IP in a business since it can provide significant downside protection and also give strong guidance as to its sustainable edge. n
companies found that Global Prior Art provides the highest quality patent research. What sets us apart is experience, institutional knowledge gained over the last 30-plus years, worldwide coverage, and deep technical expertise in the fields of Electronics, Telecom, Software, Biotechnology and Medical Devices.” Dr Rubinger says that when working with clients, there are a number of steps which lead to a successful outcome. “Taking the time upfront to benefit from the client’s familiarity with a matter and goals; high quality research and analysis to ensure the client has an accurate analysis of the IP landscape; presentation of the findings in a way that is easy to assimilate (for example, our GlobalMap visualises a complex landscape so senior decision makers know within 30 minutes the critical patents and players that must be considered); clear actionable steps; and a knowledge transfer call or meeting to ensure the client is aware of the IP issues and desired actions.” Dr Rubinger says there are several important characteristics clients should look for when choosing an IP firm to work with. “First, understand the background of the team members who will be providing support; inquire about the accuracy of the IP search; confirm whether they have a solid track record providing accurate findings for other clients; and lastly confirm how the findings are delivered and if you have access to the team members for knowledge transfer.” n
Acquisition International September 2014 43
SECTOR SPOTLIGHT www.acquisition-intl.com
Ones to Watch in 2014: IP Experts
Company: Schiweck Weinzierl Koch Name: Dr Wolfram Schiweck Email: wolfram.schiweck@ ip-matters.de Web: www.ip-matters.de Tel: +49 89 1894 7690
With a strong technical background across the chemical, pharmaceutical and life science sector, IP law firm Schiweck Weinzierl Koch, in Munich, specialises in patent infringement and litigation proceedings both within Germany and throughout the world. Schiweck Weinzierl Koch is a dynamic, relatively young, but very experienced team with a strong technical background across the chemical, pharmaceutical and life science sector. It is particularly experienced in antibody inventions and inventions relating to artificial binding molecules with antibody-like properties. These technologies have become the driver in pharmaceutical development, including diagnostic applications. One aspect of the firm’s practice is advising clients on patent infringement and litigation proceedings where its advice is based on actual experience in numerous national and international disputes. It has an additional focus on opposition and appeal proceedings before the EPO and on freedom-tooperate work. It also prepares and files many patent applications for top tier companies, mid-sized companies and many universities, coordinating and prosecuting these cases worldwide. Wolfram Schiweck, Schiweck Weinzierl Koch partner, has been practising IP law since 1997. The main focus of his work is the drafting and worldwide prosecution of patent applications in the chemical and pharmaceutical field, including opposition and invalidation proceedings and the examination of intellectual property rights’ portfolios of companies (due diligence). He also manages the trademark portfolios of his clients. Due to his long stay in Asia, Mr Schiweck is very familiar with patent prosecution in all Asian countries. Since 2003, he has held lectures on Intellectual Property Law at the Technological University of Munich, Germany. His partners, Dr Gerhard Weinzierl and Dr Andreas Koch, are adjunct professors at the LudwigMaximilians University Munich (Department of
44 Acquisition International September 2014
Genetics), where they lecture on Intellectual Property Law. Schiweck Weinzierl Koch’s aim is to have as much direct contact with its clients, to engage them in discussion to work as a team and to get the best possible result for them. In addition, it is a multicultural team with, for example, English, Chinese (Mandarin), Italian, Polish, Russian and German native speakers, and therefore has the ability to overcome potential communication barriers. The firm’s clients are all very focused on research and innovation regardless whether it is an academic institution, a start-up company or a top tier company. It has a good mix of clients from academic institutions, small and medium enterprises as well as multinational corporations. One of Schiweck Weinzierl Koch’s biggest achievements of the last 12 months was successfully handling a complex multi-country litigation for one of its clients, allowing them to continue selling key products while preventing others from copying their products. In 2014, the firm will be further expanding and taking on additional attorneys in its present technology area as well as in mechanical engineering / physics, where it plans to start a new term early this year. These new attorneys will complement Schiweck Weinzierl Koch’s expertise with their technical background and multi-lingual background – fluency in two mother tongues. n
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Schiweck Weinzierl Koch is a dynamic, relatively young, but very experienced team with a strong technical background across the chemical, pharmaceutical and life science sector. It is particularly experienced in antibody inventions and inventions relating to artificial binding molecules with antibody-like properties.
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Today, S&K Vertical has more than 30 attorneys and lawyers; its offices are located in Saint-Petersburg and Moscow, and since 2011, a representative of S&K Vertical has been working in Beijing, China. Over the 11-year period S&K Vertical has become one of the recognized leaders in the market of legal services in the areas of litigation, corporate law, M&A transactions, bankruptcy, intellectual property, and defense for business in the sphere of criminal law, which is confirmed by Russian and international ratings and appreciation expressed by the Clients. Effective dealing with complex legal matters, litigation and conflict situations that requires a high level of professionalism and ability to find the right legal solution has become the distinctive feature of S&K Vertical. Over the11 year period our attorneys and lawyers took part in more than 1,500 judicial contests and corporate disputes, the value of protected assets exceeds USD 5 billion in total, while the percentage of successful cases reaches 90%. S&K Vertical have extensive and proven expertise in litigation at the higher judicial authorities of Russia, that is the Constitutional Court, the Supreme Commercial Court, and the Supreme Court. In several instances the higher Courts rendered precedent-setting decisions.
SAINT PETERSBURG
MOSCOW
2nd floor, 40 Vosstaniya str., 8th floor, Northern block, MFC Saint-Petersburg, Russia, 191123 «Capital City», МIBC «Moscow-City», bld.1, Tel./fax: +7 (812) 719-69-06 8 Presnenskaya emb., (for corporate Clients) 123317, Moscow, Russia Tel./fax: +7 (812) 611-11-59 (for private Clients)
Tel./fax: +7 (495) 788-8662
BEIJING A2202, Jianwai SOHO, 39 East 3rd Ring Road, Chaoyang District, Beijing, 100022, PRC Tel./fax: + 86-10-59001637
www.skvlaw.ru
SECTOR SPOTLIGHT www.acquisition-intl.com
Ones to Watch in 2014: IP Experts
Xie Guanbin co-founded Lifang & Partners in Beijing and is now the firm’s Managing Partner. He is one of the Top 10 IP Lawyers in Beijing, having successfully represented clients in a number of important IP cases over the past decade.
Company: Lifang & Partners Name: Xie Guanbin Email: guanbinxie@lifanglaw.com Web: www.lifanglaw.com Address: Level 11, Tower A, Nan Xin Cang International Building, No. A22 Dongsishitiao, Dongcheng District, Beijing, China, 100007 Tel: +86 10 6409 6099
46 Acquisition International September 2014
Lifang & Partners, founded in 2002, is headquartered in Beijing and has three other offices in Guangzhou, Wuhan and Seoul. The firm provides comprehensive, efficient and professional legal services centering on intellectual property and extending to antitrust, corporate law and dispute resolution in other commercial law areas. For IP matters, Lifang provides one- stop services from right acquisition to enforcement, with a full spectrum ranging from licensing, transfer, financing and other IP transactions to advice on corporate IP portfolios. Xie Guanbin co-founded Lifang and is now the firm’s Managing Partner. He is one of the Top 10 IP Lawyers in Beijing, a Band 1 IP Lawyer on Chambers Asia Pacific and a winner of a National Sci-Tech Law Academy Award. His achievements stem from his solid academic background, experience with governmental branches and professional dedication. Prior to starting his private practice, he worked with the Policy and Legislation Division of the State Science Committee and Intellectual Property Rights Conference Office of the State Council, where he participated in the drafting and revision of intellectual property and technology legislations. He was later appointed Director of the Huake Judicial Examination Centre for Intellectual Property, an appraisal institution authorised by the Ministry of Justice, providing a great number of advisory and appraisal opinions on complicated IP cases to the Supreme People’s Court and local courts. In the past decade, he successfully
represented clients in a number of important IP cases. Clients have found him “very strategic, experienced and responsive” and praised him for his “standout presentation, attention to detail and sound advocacy skills.” IP Protection in China Mr Xie is optimistic about intellectual property protection in China. He believes that, during the Chinese economy’s journey to its current stage of development, there have been increasingly more incentives and less resistance to strengthening IP protection. He says a piece of advice to international claimants seeking to enforce their IP rights in China is to work with experienced intellectual property professionals. Previous research on IP litigation in China led by Mr Xie indicates that more than half of the failed litigations were due to incompetent representation by lawyers who did not specialise in IP matters. On the other hand, the Chinese government is becoming less tolerant to the abuse of intellectual property rights. China is now a major intellectual property importer but a starter in antitrust enforcement. The recent investigations into Qualcom and InterDigital by China’s National Development and Reform Commission (NDRC) for abuse of patent licensing are clear signals of this trend. Mr Xie has been involved in these two and other patent-related antitrust cases, representing the government or the private party involved. n
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On the Rise: Private Investigations 2014
On the Rise: Private Investigations 2014 With the demand for private investigations in business on the rise, we caught up with a number of firms paving the way in the industruy to find out how the services they provide can help firms grow while minimising their exposure to risk.
Company: The Surveillance Group Ltd & Netwatch Global Ltd Name: Timothy Young, CEO / Michael Clough, Business Development Manager Email: info@ thesurveillancegroup.com enquiries@netwatchglobal.com Web: www.thesurveillancegroup.com www.netwatchglobal.com Tel: 0800 5870170 0800 5870175 Address: Brook Court, Whittington Hall, Worcester, WR52RX
Today, criminal activity in the financial world is constantly evolving, while law enforcement is increasingly under-resourced. Tim Young, CEO of The Surveillance Group and Netwatch Global Ltd, tells us how his company is meeting UK businesses’ need for innovative investigatory companies. The Surveillance Group (TSG) is the largest provider of manned and unmanned surveillance in the UK. Our core business involves undertaking profiling and surveillance for many of Europe’s financial institutions, particularly in the insurance space. To emphasise the scale of fraud we encounter in the financial sector, in 2013 we undertook surveillance on just over 5000 claimants. 78% of all of those individuals surveyed proved to be either exaggerating their symptoms or were involved in some other element of fraud. Our surveillance has been central to many of the landmark cases in the High Court, which have changed the way financial institutions can prosecute fraudsters. The company also undertakes brand protection work for many of the world’s most famous brands whose markets are increasingly under threat from illicit trade. Our work in this area involves the identification of entire global supply chains used by serious organised crime, rather than just the vendor of those products. With an overstretched UK police force it is essential that we acquire and process all of the necessary evidence required in order to prove the scale of the criminal activity and all individuals
48 Acquisition International September 2014
involved within the supply chain. Gaining such a high level of evidence is often the only way to guarantee that law enforcement will assist our corporate clients and as such evidential integrity is critical. We have also seen an increasing trend for our completed files to be used by law enforcement to seize the assets of those involved using The Proceeds of Crime Act. Corporate clients should not view law enforcement as the only means to prosecute fraudsters and an increasing number of clients are instructing us to provide evidence direct to their corporate lawyers in order to bring prosecutions against those involved, again with The Proceeds of Crime Act being central to this activity. The advantage for corporate clients is that they receive compensation for any losses they may have sustained, rather than just the short lived gratification of knowing that those involved have received custodial sentences. The new battleground relative to fraud and misrepresentation is social media, and in response TSG’s own software company Netwatch Global Ltd has created cutting edge tools to mine open source
social network data in order to identify illicit trade, map fraud trends and protect High Net Worth Individuals and corporate assets. The same software has been embraced by the legal professional to provide additional due diligence on key individuals relative to M&A activity. It is also being applied to validate corporate absenteeism and is increasingly becoming an essential tool for HR departments. Most recently the software has successfully been used as part of a government contract to trace directors of insolvent businesses and investigate some of the reasons for business failure. TSG is also the largest provider of specialist surveillance and intelligence training in the UK and in 2007 created a BTEC Level 4 in Advanced Surveillance Practice which is provided to numerous military, government and corporate entities. More recently the company has become an approved training provider for the BTEC Level 3 Professional Investigators course which will form the key learning required when the licensing of the private investigation sector occurs within the UK late in 2014.
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On the Rise: Private Investigations 2014
With the Levenson Enquiry and phone hacking scandal still fresh in the minds of the UK public, the private investigation industry has clearly come under considerable scrutiny and criticism. We fully support the move to licence the industry and hope that this will go some way to remove those individuals who systematically breach both the Data Protection Act and individuals’ right to privacy under the Human Rights Act. These rogue firms will no doubt still find a way to operate and it is often the small scale of their businesses that allows them to operate under the radar of the relevant authorities. The decision to instruct a corporate investigator should lay with senior management and the industry has evolved to such an extent that it is perfectly acceptable for a senior executive to ask for a potential supplier for a free feasibility study with clearly defined outcomes. Sadly, irrespective of the inception of licensing, the onus will still be on corporate entities to undertake sufficient due diligence on any firm they are considering using and be sure that any information supplied has been gained legally and is ultimately admissible in court. Central to any company’s decision to instruct an investigator rather than the police should be the requirement to gain timely information upon which sound commercial decisions can be made. It may also be the case that a corporate entity does not want their dirty linen aired in public and an investigator is often the best way of obtaining critical intelligence before any decision is made relative to the involvement of law enforcement. Similarly, in the M&A market, investigators will often add clarity relative to trading relationships and be able to identify latent liabilities within targeted businesses that may not come to light during the normal due diligence processes and which certainly would not be volunteered by the vendors. With law enforcement increasingly under-resourced, and with criminal activity evolving so rapidly, there is clearly a need for innovative investigatory companies within the UK. Market growth within this specialist area of the security sector has been strong with many traditional manned guarding, monitoring and facilities management companies seeking to add value to their clients through offering the capability to investigate internal and external threats to their businesses. n
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TSG is also the largest provider of specialist surveillance and intelligence training in the UK
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Acquisition International September 2014 49
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On the Rise: Private Investigations 2014
William Hickman, COO at CSI Corporate Security and Investigations, Inc., outlines his firm’s work in security and investigations, an increasingly vital field in the world of business With over 400 employees and offices across the US, CSI’s core professional services are investigations, research and background checks, surveillance, security consulting, training, executive protection and security guards. CSI’s customers are corporations, law firms, insurance companies and financial and governmental institutions. CSI distinguishes itself by having inhouse counsel as well as a deep and diverse stable of employees, who are at the peak of their careers. Company: CSI Corporate Security and Investigations, Inc. Name: William Hickman Email: whickman@ csiinvestigators.com Web: www.csiinvestigators.com Address: 3645 Brodhead Road, Monaca, PA 15061, USA Tel: +1 866 587 4274
A Professional Investigator is that person or group of people who provide professional services to clients who have problems or issues that can be resolved through the arts and sciences of investigations. The PI first seeks to understand a client’s problem. Then through any number of techniques aims to resolve or support the resolution of the client’s problem in a manner that is legal, ethical, efficient, unbiased and truthful. The pursuit of information, facts, truth, understanding, safety and security are all part of an investigator’s daily regime. Business decision-makers increasingly call upon professional investigators because of the sophistication and competitiveness of today’s business environment. Finding and/or protecting information has gained value and as investigators identify and secure information, businesses are able to take advantage.
50 Acquisition International September 2014
Deal makers have incorporated CSI investigations into their due diligence equation. It was clear that our clients were not satisfied with the information that was provided to them. They needed more information to make sure what they knew about the deal was truthful and accurate before they could move forward. CSI provides necessary insight into target businesses, its principles and their assets. And while not all bad information leads to a deal breaking apart, it certainly provides leverage to deal makers. The competitiveness and uncertainty businesses deals are increasingly acute. Having a professional investigator in your corner can increase your confidence in deals by creating advantages and mitigating risks. n
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CSI provides necessary insight into target businesses, its principles and their assets.
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Watchdog Company: Watchdog Consultancy & Investigation Pvt. Ltd. (India) Name: Dinonath Malick Email: watchdogdetective@ gmail.com Address: Ashutosh Villa, Chak Ram Nagar, Near Joka1, Panchayet Office, P.O.-R. C Thakurani, Kolkata, West Bengal - 700104, India Tel: +91 3324383665
On the Rise: Private Investigations 2014
At Watchdog Consultancy & Investigation we are in the business of gathering intelligence. From tracking down stolen assets to completing high level hire background checks, from completing compliance and due diligence reports to protecting executive offices from electronic bugs, Watchdog offers India’s growing corporate landscape the assurance and protection it needs. With India boldly and confidently heading into a steady stream of national and international investment, it is essential that firms protect themselves from the more spurious elements. Whether this is at a corporate, board or C-tier hire level, the increasing rate of business activity needs to go hand-in-hand with an increased awareness. This is why the number of requests we are getting from our clients for corporate fraud investigations and resume verification is rising at a rate never seen before. Since 2008, the industry has seen a 500% increase in business. Advising blue chip companies and high performing domestics in every sector, from pharma and healthcare to manufacturing, we ensure due diligence checks and fiscal studies are as extensive as they are reliable. It is through this work and through our partnerships with our clients that we ensure mergers and acquisitions, acquihires and key talent appointments process smoothly.
this time we have seen the corporate environment change in the country rapidly and excitingly. From our Kolkata base, this experience allows us to guide and consult firms with confidence. Our dynamism allows us to keep up with key trends in the field too, such as the recognition of the increasing threat of cyber fraud, which numbers us among the leading investigative agencies in India. n
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Advising blue chip companies and high performing domestics in every sector, from pharma and healthcare to manufacturing, we ensure due diligence checks and fiscal studies are as extensive as they are reliable.
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We have been delivering our broad array of services to Indian firms for nearly two decades. Through
Acquisition International September 2014 51
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Integrated Structuring & Tax Strategy
Integrated Structuring & Tax Strategy
Company: Northia Corporate Ltd Name: Demetra Papachilleos Email: demetra@ northiacorporate.com Web: www.northiacorporate.com Address: 18 Theophilou, Flat 21, CY – 3075 Limassol, Cyprus Tel: +357 2533 5022
Demetra Papachilleos, Managing Director of Limassol-based Northia Corporate, which provides services in company and corporate law, corporate governance, local and international tax planning and corporate and financial administration, says that, in the wake of Cyprus’s financial crisis, tax planning has never been so important. The past year or so has been a challenging time for Cyprus. The nation’s crippling financial crisis – from which it is still recovering – has resulted in the implementation of a stricter fiscal and tax policy. Major changes included the raising of the corporate tax rate from 10% to 12.5%, as well as an increase in the VAT rate which currently stands at 19%. However, Cyprus’s corporate tax rate is still one of the lowest within the EU, notes Demetra Papachilleos, Managing Director of Northia Corporate, headquartered in Limassol. “This, teamed with generous tax allowances, a broad range of DTTs (with currently over 50 countries) as well as the treatment of certain specialised tax structures, such as special provisions for what is known as an IP Box, make the effective tax rate in certain cases as low as 2%.” These changes, says Papachilleos, have made tax planning even more imperative. “Following Cyprus’s bailout we did notice reluctance from businesses to choose Cyprus. It was as if everything came to a halt and froze in time. There were no new company registrations for quite a while, and that, teamed with the additional fiscal measures, gave a bleak outlook. Confidence seems to have returned, however, with statistics showing that new company registrations are on the increase.” To ensure that clients do not miss opportunities when it comes to creating long-term tax savings, Northia 52 Acquisition International September 2014
Corporate takes each client case individually, says Papachilleos. “We always aim to have a person-toperson meeting both with the client and the client’s advisors and we try to see the bigger picture in the long run. Locally, we maintain a good working relationship with the tax authorities, enabling us to gauge a reaction before a tax structure is implemented and also where necessary obtain a prior tax ruling.” And with a team of staff drawn from around the world, Papachilleos says Northia is able to communicate with the majority of its clients, including any from multinational corporations, in their own language. “Added to that, many disciplines are combined so we can offer a complete package. We believe that we are more than able to advice major multinational that would wish to operate in our jurisdiction.” To stay ahead of the competition, Northia tries to get regular updates on current and upcoming legislation, says Papachilleos. “We also attend seminars and conference both locally and internationally. Several members of our staff are members of their corresponding professional bodies, such as the Cyprus Bar Association, the Institute of Certified Public Accountants of Cyprus and so forth. “We also scrutinise for any interesting bits of upcoming legislation and announcements both
locally and internationally so as to be able to gauge any upcoming trends and jurisdictions that might tie in well with the benefits and advantages that Cyprus has to offer.” Furthermore, Northia’s compliance department is fully digitalised, thus enabling the firm to have client records virtually on tap, says Papachilleos. “We are also fully compliant with the compliance procedures set down by our regulatory body. We also have a full-time compliance officer whose only job is to scrutinise every client and case, both before and during the relationship with the client.” “We also subscribe to databases where we can refer to any existing sanctions against countries or individuals, and where we can also verify the identity and good standing of any prospective and existing client.” As for the future, Papachilleos says Cyprus’s primary aim must be to maintain its position as one of the primary financial and service centres in the region. “To this extent, and even though there is talk about increasing the corporate tax and VAT rates, as well as increasing SI contribution and so forth, we very strongly believe that the government will be keen for Cyprus to retain its attractiveness. We believe that the government will keep on announcing measures to benefit international businesses which choose Cyprus as their base.” n
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Integrated Structuring & Tax Strategy
Company: Ernst & Young Name: Yuri Nechuyatov Email: yuri.nechuyatov@ru.ey.com Web: www.ey.com
Yuri Nechuyatov, Partner, Head of CIS Transaction Tax at Ernst & Young in Russia, gives us an overview of recent trends in Russian tax law. EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. EY works together with companies across the CIS and assists them in realising their business goals. Our tax and law department in Russia employs over 400 professional staff, including a transaction tax team of about 20 and other groups specialising in international tax, customs and indirect tax. The Major Trends in Russian Tax The relatively new transfer pricing regime (in effect since 2012) has led to increased demand for tax services. Under the old regime there was a 20% safe harbour for pricing, no statutory requirement to maintain transfer pricing documentation and the burden of proof was on the tax authorities. Consequently the transition to the new regime has significantly increased transfer pricing risks for taxpayers in Russia and created a strong demand for advice and assistance with implementing procedures and drawing up documentation to mitigate these risks. The first audits under the new transfer pricing regime commenced in 2014. With respect to M&A activity, the most noteworthy change enacted in the last year has been the replacement with effect from 1 January 2015 of general limits on the deductibility of interest with provisions relevant to controlled debts only. The amendments also introduce rules as to amounts to be recognised as interest income from 2015, whereas currently the relevant clauses concern deductions for interest expenses only. Amendments to the thin capitalisation rules relevant to highly geared companies have been proposed in draft legislation published in September 2014. Draft laws drawn up in 2014 include some fundamental changes to the Tax Code which, if enacted, will have effect from 1 January 2015. Many initiatives are linked to so-called “deoffshorisation” of the Russian economy which has been the main goal of Russian tax policy development since late
2013. The proposals, outlined below, are aimed at stimulating the repatriation of profits generated abroad by Russian investors, curtailing perceived abuses of Russia’s network of bilateral tax treaties and stemming capital flight. • Controlled foreign company rules • Defining “beneficial ownership” and limiting the availability of treaty benefits • A Russian tax residence concept for foreign companies based on some form of place of effective management test • Taxation of indirect transfers of ownership in Russian property-rich companies Another draft law proposes a framework for the reintroduction of sales tax in Russia from 2015 while a third proposes an increase in the tax rate on dividends received by Russian companies from 9% to 13% and changes to taxes and duties paid by the oil and gas industry. What are the Trends in Technology and Processes Concerning Tax? There is an ongoing shift towards electronic filing, for example, since 1 January 2014 VAT payers have been required to submit VAT returns in electronic form. More importantly, there is strong demand for automation of internal processes and controls related to management of the tax function. EY is one of the market leaders in delivering such solutions to Russian businesses. The tax authorities are also looking at new models for relations between tax authorities and taxpayers. In December 2012, the first four agreements concerning enhanced communication (based on a cooperative compliance format implemented in the Netherlands) were signed by representatives of the FTS and large taxpayers including EY Moscow. On 1 July the State Duma (lower house of parliament) approved a draft law setting out a legislative basis for the wider use of the regime (Draft law No. 529630-6) in the first reading.
What Does EY Do to Distinguish Itself from Competitors in Russia? EY distinguishes itself from the competition by being organised in groups with a strong industry focus. We work closely with government bodies on the one hand (e.g., the Ministry of Finance, the Federal Tax Service) and business on the other to share knowledge of best practices and achieve greater understanding of the issues faced by all parties to facilitate the development of legislation which does not create unreasonable barriers to legitimate business activities or undue harm to the investment climate. We also provide thought leadership on potential developments in legislation and practice in the form of seminars, alerts and publications. n
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there is strong demand for automation of internal processes and controls related to management of the tax function. EY is one of the market leaders in delivering such solutions to Russian businesses.
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Acquisition International September 2014 53
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Integrated Structuring & Tax Strategy
Company: EY Kuwait - Al-Aiban, Al-Osaimi & Partners Name: Alok Chugh Email: alok.chugh@kw.ey.com Tel: Mobile: +965 9722 3004 Direct: +965 2295 5104
Recent Developments in Kuwait’s Tax Laws Alok Chugh, Tax Partner at EY Kuwait takes us through the changes happening in Kuwait’s tax landscape.
The Kuwaiti Government favours a free market, with little official intervention. Kuwait has a small, open economy that is dominated by its oil industry, because of which other non-oil sectors of the economy, such as agriculture and manufacturing, play a lesser role in the economy.” Currently, the following taxes are imposed by the Ministry of Finance on companies operating in Kuwait: Corporate income tax at on foreign entities, at a rate of 15%; National Labour Support Tax on entities listed on the KSE, at a rate of 2.5%; and Zakat on Kuwait Shareholding Companies, at a rate of 1%. Corporate Income Tax and Related Developments Decree No. 3 of 1955 (Decree No. 3) as amended by Law No. 2 of 2008 (Law No. 2) and the Executive Bylaws (the Bylaws) thereto (hereafter referred to as the “income tax law”) provide that every corporate body should pay tax in Kuwait on the income earned from ‘carrying on trade or business in Kuwait (including the Neutral Zone between Kuwait and Saudi Arabia) either directly or through an agent. In practice, however, no income tax is imposed on corporate bodies incorporated in any of the GCC countries that are wholly owned by the citizens of these countries. In case of mixed ownership of a GCC incorporated company, tax is imposed on the share of the non-GCC shareholders share of profit earned from Kuwait operations. Foreign companies can operate in Kuwait either through an agent or as a minority shareholder in a locally registered company. In principle, the method of calculating tax is the same for companies operating through an agent and for minority shareholders. For minority shareholders, tax is levied on the foreign company’s share of the profits 54 Acquisition International September 2014
(whether or not distributed by the Kuwaiti company) plus any amounts receivable for interest, royalties, technical services and management fees. In a move to encourage foreign investment into Kuwait, the Kuwait government approved the issuance of Law No. 2 in February 2008 wherein the tax rate was reduced to a flat rate of 15% of the net taxable income. Law No. 2 became effective for the fiscal periods commencing after 3 February 2008. Subsequent to the issuance of Law No.2, the Ministry of Finance (MOF) has issued further regulations in the form of Executive Bylaws and Executive Regulations (the Bylaws) for implementation of amendments approved under Law No. 2 in late 2010. The MOF has also issued amendments to the Executive Regulations in December 2013. Following are some of the key changes that were introduced through Law No. 2 and various other implementing legislations: • The definition of taxable income has been extended to specifically include amounts collected from sale, rent or granting of a franchise, profits from disposal of assets and income resulting from granting of loans in Kuwait. • A foreign principal carrying on business in Kuwait through an agent is now considered subject to tax in Kuwait. Agent is defined as a person authorized by the principal to carry out business, trade or to conclude binding agreement with third party on behalf and for the account of his principal. • Possible tax exemption of profits generated from dealing in securities on the Kuwait Stock
Exchange (KSE), whether directly or through investment portfolios. • 15% withholding tax on dividends earned by entities investing in securities listed in Kuwait Stock Exchange (KSE). Furthermore, as per the legislation. Kuwait-based investment companies or banks who manage or act as custodians for portfolios or funds must deduct (withhold) corporate tax of 15% on the profits and distributions on behalf of the foreign investors and deposit the tax within 30 days from the date of deduction of tax together. The amendments also require custodians/portfolio managers to register with the tax authorities and submit information relating to their investors. • Tax authority is now more aggressive in ensuring compliance with the 5% retention regulations. Under these rules, all ministries, authorities, public institutions, companies, any private entities (and the similar) or any natural person that contract with any incorporated body whether through contracts, agreements or any transactions shall retain 5% from each payment to the incorporated body. Furthermore, amounts retained from such bodies shall not be released unless under a letter from the MOF or a certificate issued to the incorporated body evidencing release of its amounts retained. We have seen the MOF chase a number of local institutions including all banks and other institutions in order to enforce strict compliance with the 5% retention rule. • A new system of tax cards has been introduced and all tax payers are required to obtain tax cards which would be renewed annually. All government departments and public authorities would be prohibited from dealing with companies that do not hold an active tax card. The information required to be completed in the tax card application form broadly contains
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information that is provided to the tax authorities at the time of registration. • The MOF is also now insisting on strict compliance with executive regulations (similar to transfer pricing regulations) which require adjustments to material costs, design/engineering costs and consultancy costs incurred and/or paid outside Kuwait by the head office, affiliates and third parties. It appears that the MOF may in due course adopt formal transfer pricing legislation similar to some of the other jurisdictions in the region. • The MOF has also issued Circulars for the implementation of self-assessment procedures by tax payers with a view to issue assessments in a more timely fashion for taxpayers which comply with certain requirements. A tax payer is required to file its tax declaration within 3.5 months of its fiscal year end and may settle the tax due in four equal instalments. If a company has a fiscal year end of 31 December then the tax declaration should be submitted by 15 April. In case of non-adherence with the timelines a penalty of 2% for each 30 days or fraction thereof is imposed upon the tax payer. In case of non-compliance with the above regulation, the DIT may issue and arbitrary assessment as it deems fit. The 5% tax regulation and the taxes to be paid, directly affects the management decisions and involves planning at the very initial stages of decision to set up business in Kuwait.
Integrated Structuring & Tax Strategy
National labour support tax (NLST) As per Law No. 19 of 2000, Kuwaiti companies listed on the Kuwait Stock Exchange (KSE) are required to pay an employment tax of 2.5% of the net annual profits per financial statements, whether or not such annual profits are distributed to shareholders. All companies subject to the provisions of the Law are required to submit a declaration audited by one of the accounting and auditing offices approved by the Ministry of Finance on or before the 15th day of the fourth month following the end of the fiscal period. Zakat The Ministry of Finance has issued Law No. 46 of 2006 for the implementation of Zakat in Kuwait. According to the law, public and closed Kuwait Shareholding Companies (KSC’s) are subject to Zakat on the basis of 1% of gross income of operations of the company after deduction of costs incurred by the company.
A number of above changes have encouraged the tax payers to fully comply with the regulations. We have seen an increasing trend for the tax payers to engage with the tax consultants ahead of time and seek necessary clarification or support to ensure their tax and accounting team are ready for the compliance. EY is well prepared to help our clients meet the tax challenges that their businesses face. With a clear and deep understanding of the latest changes in the tax laws and compliance practices, our tax partners and directors look forward to helping our clients by providing them with up to date thought leadership insights, tax updates, information and tax solutions.
Recent Developments in NLST and Zakat The MOF has become extremely stringent in the recent past in respect of issuance of tax assessments on company’s submitting NLST and Zakat declarations. The MOF not only now requires extensive documentation to be submitted along with the declarations, they have also become strict in respect of the disallowance of various expenses.
EY has the only consistent, time-tested, global strategy focused on high growth companies and have developed proprietary methodologies. Our relations with the officials at the department and proactive approach in dealing with the upcoming issues helps us stay ahead of the game to ensure we offer our clients a better service compared with competitors. n
Attorneys Dina Korper Zemva and Zdenko Haramija founded the firm now known as Korper & Partneri in 1979, and since then the firm has grown to become one of the most respected middle-sized law firms in Croatia.
long-term tax savings, says Korper Zemva. “There are a number of pieces of advice we’ve found clients find helpful in their doing business in Croatia, and we never miss an opportunity to provide valuable information to our clients. Sure, the scope of that advice depends on the client’s business, but in any case is given having in mind the client’s individual position.”
Korper & Partneri has a broad practice not only as full corporate service and intellectual property firm, but in all aspects of the law – litigation, prosecution, and counselling, particularly in the area of taxes. Dina Korper Zemva gave Acquisition International her thoughts on current changes to the region’s tax framework and how companies can make sure they stay on top of the regulations. Name: Dina Korper Zemva Company: Korper & Partneri Law & IP Firm Email: korper-partneri@ korper-partneri.com Web: www.korper-partneri.com Address: Prilaz Gjure Dezelica 16, Zagreb, Republic of Croatia Tel: +385 1 4846 261
In addition to the above, the MOF has now started pursuing a number of non-Kuwaiti GCC entities carrying on operations in Kuwait to comply with Zakat regulations in Kuwait on the basis that equal treatment should be granted to Kuwaiti and other GCC entities. This is on the basis of reciprocal treatment of Kuwaitis in other GCC states.
The most significant changes to corporate tax regulation in Croatia over the last 12 months have clearly been the relatively recent Republic of Croatia’s accession in the EU, says Dina Korper Zemva. “This is still felt as the main driver for the regulatory changes and its impact on doing business in Croatia. It also spurred changes in the legal framework the companies are faced with.” As a result of these changes, businesses have seen an increase of transnational exposure, says Korper Zemva, both in terms of competition and the opening of new market for companies interested in doing business in Croatia. “This shift has especially led clients to request advice on taxation issues in connection to their business.” There are a number of ways to ensure that clients do not miss opportunities when it comes to creating
As in most regions, compliance in Croatia is vital, she says. “The penalties mainly depend on the severity of the infringement, but generally speaking penalties are significant enough to be avoided as much as possible.” In terms of technological advances, tax authorities remain focused on transitioning to a paperless, digital environment thereby streamlining compliance procedures, says Korper Zemva. “Nevertheless, clients (especially foreign based) still do complain over bureaucracy issues, and find our related advice helpful.” Asked for her thoughts on the form future changes to regulation ought to take, Korper Zemva says, “I firmly believe that all changes to the Croatian taxation system should be aimed at its simplification, and be as business-oriented as possible.” n
Elizabeth Castle, Jersey Acquisition International September 2014 55
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Introducing 2014’s Most Highly-Regarded Arbitrators
Introducing 2014’s Most Highly-Regarded Arbitrators Miriam Driessen Reilly Name: Miriam Driessen Reilly Email: arbitration@driessen-reilly.net Tel: +32 496 682 777
Brussels based Solicitor and Arbitrator, Miriam Driessen Reilly is a Fellow of the Chartered Institute of Arbitrators. With a focus on international commercial disputes, Miriam also has concrete experience in the application of EU competition and procurement law, with sectoral experience inter alia in retail, energy, pharmaceuticals, chemicals, metals, automotive and research. She told Acquisition International about recent regional developments in arbitration. Belgium recently updated its arbitration law (September 2013) to bring it into alignment with the UNCITRAL Model Law on International Commercial Arbitration. In addition, CEPANI also issued new procedural rules with a view to making arbitration under its auspices even more efficient. Taken together, these reinforcements to an already arbitration friendly framework are likely to make the country more attractive as a seat for international commercial arbitration. One of the main changes includes the introduction of an emergency arbitrator provision, which allows parties to request the appointment of an arbitrator to decide on interim and conservatory measures within a 15-day period. On a broader note, there is also a new EU Directive on Actions for damages in relation to competition law infringements in the pipeline. Voted by the EU legislature on 24 April 2014, the Directive will likely be adopted with very minor adjustments later this year. Whilst various factors currently make it difficult for parties to obtain damages for harm caused by infringements of EU competition law, the Directive sets out some minimum ground rules which should make it easier to actually pursue such actions and claims successfully. The Directive also promotes the effective use of consensual dispute resolution, including arbitration, to enable victims of EU competition law infringements to obtain compensation. n 56 Acquisition International September 2014
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One of the main changes includes the introduction of an emergency arbitrator provision
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Introducing 2014’s Most Highly-Regarded Arbitrators
Company: TRLPLAW Email: lagos@trlplaw.com Web: www.trlplaw.com Address: D96 Landbridge Avenue, Oniru Estate, Victoria Island Ext., Lagos, Nigeria Tel: +234 816 3135
TRLPLAW is a union which consummates the vision by various international law firms based in Africa, Europe and America to forge a multinational law practice of the highest quality, capable of delivering excellent, diverse legal services to businesses and businesspersons globally, particularly within emerging economies. For effective global reach, TRLPLAW has full-service, administrative head offices (comprising the finest available legal minds globally), currently located in Nigeria (Lagos, Abuja, Akure, Port-Harcourt), the United Kingdom and the United States. Let’s take a look at the services we offer… Structuring of corporate entities This includes preparation and processing of documents relating to all manner of commercial vehicles including amongst others, incorporation of companies, partnerships, business names, mergers, acquisitions, private placement for shares as well as public issues of shares. Intellectual Property We are vastly experienced and knowledgeable in practical protection of intellectual property rights. Our clients in this regard are from diverse fields of business including providers of services as well as manufacturers of products for whom we deploy appropriate strategies for the protection of Intellectual Property interests globally. Cross-border Investments We offer a ‘one stop’ service to foreign investors entering the investment market worldwide. Our services in this regard cover the establishment of localised subsidiaries or corporate vehicles, organising suitable local JV Partners, procuring all relevant licenses, assisting with immigration matters such as business permits and expatriate quotas etc., advising on regulatory compliance and taxation issues, acquisition of properties, advising on exchange control issues. We are also actively involved in assisting Nigerian organisations in expanding to foreign jurisdictions. Energy & Natural Resources TRLPLAW’s Energy and Natural Resources Group has broad experience in diverse transactional, regulatory, and litigation matters for producers such as MOBIL OIL, equipment vendors, suppliers and contractors, distributors, independent power contractors, indigenous oil and gas companies. The development and expansion of our practice in response to client needs remain the core focus of our leadership. Our attorneys in the Energy and Natural Resources Group understand the relationship between energy and the environment. We are experienced and can advise companies regarding energy projects, involving environmental, land use, compliance and regulatory issues.
TRLPLAW attorneys also have substantial contract experience in drafting of variety of upstream oil and gas agreements, including but not limited to production sharing contracts, association contracts, memoranda of understanding, participation, joint operating, farm in & farm-out, lifting and technical services agreements. Our attorneys are uniquely conversant with regulation of the oil and gas industry and pertinent government agencies and departments, including Department of Petroleum Resources and the Nigerian National Petroleum Corporation. We also counsel clients on the application or bidding process for oil blocks and provide opinions regarding oil-prospecting licenses and oil mining leases, and permit requirements for interpretation of various contract provisions involving termination dates, force majeure clauses and other matters. TRLPLAW’s attorneys have broad experience in litigating a variety of disputes. We litigate contested proceedings before federal and state administrative bodies and handle both trial court and appellate court appeals, including the Nigerian Supreme Court. Shipping & Admiralty We have acted on several occasions for Charterers, Shippers and maritime Insurers, providing advice on many aspects of shipping law including ship arrests, cargo loss and damage, sale and purchase of vessels, disputes arising out of Bills of Lading, Charter Parties, Collisions, Insurance and other marine related matters. Telecommunications We render specialised legal services to telecommunications companies and are currently retained as external Solicitors to such state-owned national telecommunications companies as NITEL, MTN communications Limited and several other service providers in this sector. Securities, Banking & Finance We are actively involved and render advice to various clients on matters related to Securities and Stock markets -such as preparation and issuing of IPOs, drafting of Trust Deeds Unit Trusts etc. We conduct due diligence checks for financial institutions as well as advising on trade and project financing and other matters. We represent the interest of financial institutions locally and abroad -preparing vetting and producing the various agreements required for their businesses.
Real Estate We are highly skilled and experienced in the area of real estate transactions. We render advise on property acquisition, sale and development (locally and internationally). We have been in major development projects involving a multiplicity of issues. Litigation & ADR We have an experienced and skilled team of trial lawyers who have handled complex litigation in virtually all areas of commercial law. We also have the requisite competence for pursuing alternative dispute resolution (ADR) avenues where appropriate. We have specially been successful in enforcing the rights of various businesses in emerging economies against multinational conglomerates in the United Kingdom, Netherlands, France and Thailand thus recovering substantial amounts in damages through litigation and Arbitration. Pro Bono TRLPLAW encourages its attorneys globally to provide legal services to the financially disadvantaged and to underrepresented individuals and groups whose legal needs warrant volunteer assistance. Attorneys involved in this type of pro bono work assist clients with problems relating to education, victims of crimes, employment, domestic violence, credit/debtor relations and landlord/tenant problems. n
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For effective global reach, TRLPLAW has full-service, administrative head offices (comprising the finest available legal minds globally), currently located in Nigeria (Lagos, Abuja, Akure, Port-Harcourt), the United Kingdom and the United States.
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Acquisition International September 2014 57
SECTOR SPOTLIGHT www.acquisition-intl.com
Introducing Asia Pacific’s Prime Locations for International Investment
Introducing Asia Pacific’s Prime Locations for International Investment As the Asia Pacific region constinues to establish itself as a source of global dynamism, we spoke to a number of the region’s major players to find out what Asia Pacifici needs to do to reach its full growth potential.
58 Acquisition International September 2014
SECTOR SPOTLIGHT www.acquisition-intl.com
Introducing Asia Pacific’s Prime Locations for International Investment
Acquisition International spoke to Mohamed Idwan (“Kiki”) Ganie, Managing Partner of Lubis Ganie Surowidjojo law firm in Jakarta, Indonesia, about why his country is an enticing prospect for investors. Mohamed Idwan (“Kiki”) Ganie is the Managing Partner of Lubis Ganie Surowidjojo (LGS). He 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.
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 Tel: +62 21 831 5005 +62 21 831 5025
Dr. Ganie has more than 30 years of legal experience, and specializes in commercial transactions and commercial litigation, including alternative dispute resolution and has acted as an expert in a number court and arbitration proceedings. His expertise covers general corporate/ company law, banking law, finance, bankruptcy and restructuring, mining, investment, acquisitions, infrastructure projects/project finance, antitrust, and shipping/aviation, with a particular focus on corporate governance and compliance. LGS was founded in 1985 by Timbul Thomas Lubis, Dr. Ganie and Arief Tarunakarya Surowidjojo. Since then, LGS has grown into the largest corporate transactions and corporate litigation firm in Indonesia. LGS has also obtained Lloyd’s Register Quality Assurance certifications of ISO 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. One of the firm’s unique selling points is the combination of its long-standing commercial law practice and its premier litigation department that has extensive experience in dealing with commercial disputes in the context of arbitration
Southeast Asia’s business environment is buoyant and confidence is running high, says Claudia Poon, Executive Director at Abraham LLC, a Singaporebased boutique law firm focusing on corporate, M&A, commercial and taxation matters. Compared to North America, South America, Europe and Africa, the business environment in the South East Asian region is buoyant, and confidence in the business environment remains high, says Claudia Poon, Executive Director, Abraham LLC in Singapore.
Company: Abraham LLC Name: Claudia Poon Email: claudia@ abrahamlawoffice.com Web: www.abraham.sg Address: 09-05 Jit Poh Building, 19 Keppel Road, Singapore 089058
“Myanmar had made some radical changes to encourage foreign investment, and more positive changes are expected in the near future. As a result, Myanmar is experiencing a high volume of FDI,” she says. “While Thailand was beset with political problems which compelled the military to take control, it was a move that had the blessings of the establishment; and now that calm has been restored and structural reforms are being undertaken to boost the lagging economy, there is no doubt that the economy will bounce back in a relatively short period of time. “Malaysia continues to welcome foreign investment and huge investments have been made particularly in the property sector by Middle Eastern and Chinese companies. Singapore’s economy continues to mature and with its pro-business rules and regulations, foreign corporations and hedge funds see it as a natural platform from which regional business is to be undertaken. Vietnam’s economy grew by 5+% (as it did in the previous year) and export growth was given a boost by the devaluation of the currency. The large and relatively cheap pool of productive human resource in Vietnam continues to draw foreign investment into the country. “In the last few years, the Philippines has outperformed the other Asian economies (except China) and though the brutal
and alternative dispute resolution as well as litigation in the Indonesian courts. This allows the firm’s corporate transaction departments to benefit from such litigation experience, and from their own compliance work, to ensure that any transactions handled by the firm are carried out with a view to the potential for future disputes and any existing risks. Indonesia’s substantial population, whose prosperity is steadily increasing, and ample natural resources have proven to be an attractive business environment for investment, says Dr. Ganie. “Indonesia presents an appealing proposition – 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 government policies. “Combined with substantial market opportunities presented by a wide range of sectors that have yet to be developed, including even basics such as agriculture, the ample room for continued business growth in the years and decades to come will continue to attract substantial inward as well as domestic interest.” But ongoing regulatory changes in the natural resources sector present challenges for investors, says Dr. Ganie. “The natural resources sector, and in particular the mining industry, have seen a number of policy changes that appear spurred on by populist sentiment, a trend that is expected to continue in the near future. A specific challenge this creates is that there appears to be something of a wait-and-see approach in certain parts of the industry as a result. “Ultimately, the issue is uncertain policy measures rather than bad policy, which at least could be planned around, and such a climate is likely to persist until at least late 2014, after the new administration takes office.” n
run of natural disasters late last year and early this year have dented its growth, it is still expected to do well. Traditionally, the Philippines has endeavoured to model its rules and regulations for business along the lines found in the USA. A large number of US corporations have accordingly established a presence there because of its large pool of relatively cheap labour, and English is widely spoken. “Indonesia remains an enigma in that while FDI is actively encouraged, labour laws remain archaic and burdensome, the rule of law is seen to be inoperative at times and productivity is low; but some quarters are hopeful that the recent Presidential election of a person who has the support of the proletariat and the middle class would bring about changes which would facilitate much needed improvements in the business environment.” But Southeast Asia’s economy faces a challenge in the sluggish recovery of its major export markets, namely the US and the EU, says Ms Poon. “If their recovery continues to be slow, then Southeast Asia will need to pay more attention to the Indian and North Asian markets to sustain its growth,” she says. For its part, Singapore has played and continues to play a pivotal role in the development of the region’s economies, says Ms Poon. “Its ‘First World’ infrastructure has drawn major corporations of the world to site their regional headquarters in the country,” she says. “Its sophisticated banking industry and the location of major hedge funds in the country makes it an important source of funding for the development of the private sector segments of the regional economies. In the last few years its efficient legal system and the quality of its legal fraternity (who have had much experience in cross-border transactions) have received much attention, and Singapore is slowly growing to be a credible arbitration centre for the region.” n
Acquisition International September 2014 59
SECTOR SPOTLIGHT www.acquisition-intl.com
Introducing Asia Pacific’s Prime Locations for International Investment
Bangladesh, with a growing tech sector as well as a number of well-established industries, offers much to foreign investors. Junayed Chowdhury, Managing Partner at Vertex Chambers, a mid-size law firm in Dhaka specialising in corporate, financial, and taxation laws, tells us how to make the most of the country’s exciting business environment.
VERTEX CHAMBERS
™
Company: Vertex Chambers Name: Junayed Chowdhury Email: jchowdhury@ vertexchambers.com Web: www.vertexchambers.com Address: Millennium Castle, Rd 27, Plot 47, Flat B8, Block A, Banani, Dhaka 1213, Bangladesh Tel: +880 2 989 1037
The present political environment in Bangladesh is stable, says Junayed Chowdhury, Managing Partner at Vertex Chambers in the capital Dhaka. “If this goes on, then the future business environment looks promising. However, the existing governmental institution should be more receptive towards modern business methods.” A sector attracting particular attention from investors, says Chowdhury, is mobile financial services. “We have been involved in transactions in this sector. Also, investments in the ready-made garments industry should bring handsome returns for investors. There are also opportunities in hospitality and tourism, the health sector (specifically in Chittagong and Sylhet region), IT outsourcing, jute product manufacturing and export, leather products and so on.” Bangladesh still faces a number of challenges, says Chowdhury, with political instability and institutional corruption among two of the country’s biggest problems. “There must be some political willingness on the part of the two main political parties to accept each other as healthy competitor,” he says.
But Bangladesh is a country on the rise, with a geographic location that is one of the most favourable for business in Asia. “I call Bangladesh ‘the Gateway of South Asia’,” says Chowdhury. “Bangladesh sits in the middle of the connection-point of South and South-East Asia. What Bangladesh needs most now is to abandon confrontational political culture. This will definitely boost investor confidence.” n
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Bangladesh sits in the middle of the connection-point of South and SouthEast Asia. What Bangladesh needs most now is to abandon confrontational political culture. This will definitely boost investor confidence.
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Osprey Capital Osprey Capital is a privately held UK investment company. Osprey Capital has a single focus on small rapidly growing companies. We invest capital, both cashand expertise, into businesses that have a distinct competitive advantage in the market. Contact details: Osprey Capital Limited, 6th Floor, Marble Arch Tower, 55 Bryanston Street, London, W1H 7AA +44 07941 140 629 info@osprey-capital.co.uk
www.osprey-capital.co.uk 60 Acquisition International September 2014
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Introducing Asia Pacific’s Prime Locations for International Investment
Company: Azmi & Associates Name: Dato’ Azmi Mohd Ali Email: azmi@azmilaw.com Web: www.azmilaw.com Address: 14th Floor Menara Keck Seng, 203, Jalan Bukit Bintang, 55100 Kuala Lumpur, Malaysia Tel: +603 2118 5000
Azmi & Associates is a full-service Malaysian corporate law firm. Dato’Azmi Mohd Ali, Senior Partner at Azmi Associates, tells us why the Asia Pacific region, and particularly Malaysia, is such an enticing prospect for investors. Malaysia has well established infrastructure in terms of logistics, IT, various talent for regional roles, and availability of related service providers. By 2020, the ETP aims to increase Gross National Income (GNI) to just over RM1.7tn (US$482bn) which is 2.5 times 2009’s GNI of RM660bn (US$187 billion). As of 2013, Malaysia has a population of 29.90 million, RM312.4 billion with real GDP growth of 4.7%. Survey showed that the dynamism of the economy, business friendly environment, cost competitiveness and open and positive attitudes are the most attractive factors in Malaysia economy. The sectors which have seen the most activity this year, says Dato’Azmi Mohd Ali, Senior Partner, Azmi Associates, have been the oil & gas industry, financial services (including Islamic finance), the manufacturing and service industry and investment in infrastructure to facilitate trading by upgrading the infrastructure services within and outside the country. “Whenever there is an opportunity of merger/ acquisition or expansion of huge conglomerates/ MNCs, it will definitely benefit investors, ranging from local and international. In recent years, it has shifted towards service industry especially on the area of IT where it requires IT talents across Asia Pacific to support a start-up company,” he says. Key challenges for the region’s economy, says Dato Azmi, include the external environment, the region’s diversity in terms of market dynamics, distribution channels, culture and customer preferences, weak commodity prices, anaemic global demand for electrical and electronic products and the waning strength of emerging economies such as China and India. As for how to overcome these challenges, he says there’s a need to Increase capacity and efficiency of the capital market in financing
investment requirements for economic growth and to Build capacity and strengthen the information infrastructure. The Asia Pacific region is steadily strengthening its reputation as a compelling investment opportunity. Dato Azmi attributes this to the long-term trade relationship with China, which allows China to be flooded with capital funds from all over the world for their manufacturing, start-ups and mining industry; the rising need for IT services in other countries such as Japan, Singapore, India and Malaysia, which has attracted investors to look further other than China hence they are able to get funding from worldwide; and high demand for growth in Asia Pacific due to its strong domestic market and intraregional trade ties. The region owes its relative resistance to global risks to its fiscal policies; tighter control over its banking sector; the high rate of saving among the population; and high domestic demand in countries such as China and Indonesia. Key risks facing the region, both from within itself and globally include the fact that its economy is dependent on external demand; its fiscal revenues, which are highly reliant on the oil and gas sector; the relatively high stock of bank credit; and erosion of the economy’s price competitiveness linked to high labour cost; and persistent regional disparities. Asked what the region must do in order to secure its position as a global growth leader, Dato Azmi says, “The region must continue to improve and upgrade its infrastructure system to enhance the level of competitiveness. The tax structure must be reformed in order to create more conformity with progressive regime that encourages growth. Tax structure must be business friendly and conducive to external investment. And on labour, there should be freer movement of labour and talent. Foreign corporations
should be accorded greater flexibilities to bring in talents to meet their operational needs. Professional service sectors should open up to competition in order to create market dynamics and enhance the quality of standards amongst local service providers.” n
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Whenever there is an opportunity of merger/ acquisition or expansion of huge conglomerates/ MNCs, it will definitely benefit investors, ranging from local and international. In recent years, it has shifted towards service industry especially on the area of IT where it requires IT talents across Asia Pacific to support a start-up company
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Acquisition International September 2014 61
SECTOR SPOTLIGHT www.acquisition-intl.com
Introducing Asia Pacific’s Prime Locations for International Investment
Mona Bhide, Managing Partner of Dave & Girish & Co, a law firm focusing on International Finance, Corporate laws and litigations in India, tells us why India is an enticing prospect for investors. “The current business environment in India is exciting, with a number of recent legislative changes aimed at promoting growth,” says Mona Bhide, Managing Partner of Dave & Girish & Co law firm in Mumbai.
Company: Dave & Girish & Co., Advocates Name: Ms Mona Bhide, Managing Partner and Mr Rahul Kukreja, Intern Email: mona@davegirish.com Web: www.davegirish.com Address: 1st Floor, Sethna Building, 55, Maharshi Karve Road, Marine Lines, Mumbai 400002, India Tel: +91-22-22062132 / 22062192 / 22086371
“India has recently undergone elections and we now have elected a new political party. The new government is expected to turnaround the Indian economy by major changes in sector of investment, in particularly with respect to policy relating to the foreign direct investment. The new government has already taken a move to increase the FDI limit in insurance from 26% to 49%. Foreign investment is now also permitted in the defence sector. It is expected that the economy will show further growth and stabilisation. Also, the new government has urged the corporate community to come forward to invest in schemes and projects which are meant for public purpose in the form of Public Private Partnership (PPP). “As per the UNCTAD (United Nations Conference on Trade and Development) annual report, India’s growth is approximately 5.6% in the current year compared to 2% in North Africa and Latin America. As per the report, India has reported a two and a half year high growth rate of 5.7% in first quarter of the first quarter of the fiscal year 2014. We also see a positive growth in the value of INR as compared to US dollars. The exchange value of Rupee in the Foreign Exchange market has improved from 66 (Rupees per Dollar) to 60-61 (Rupees per US dollar). This is a positive indication of the economic growth.” Some sectors which have shown outstanding growth are information technology, infrastructure and healthcare, says Bhide. “As per the India Brand Equity Foundation, the IT sector is expected to touch a worth of US$225bn by the year 2020. “Being a developing economy, infrastructure has witnessed huge investments by the government as well as the private sector in the last decade. A big change that was brought about by the new government in the foreign direct investment policy was opening of the defence sector to foreign investments which until last year was totally restricted. Furthermore, India has the 2nd fastest growing services sector globally, with a growth rate of 9%, with China leading at a rate of 10.9%.” The key challenges faced by those investing and conducting business in India relate to the clearances required from the government in certain sectors, says Bhide. “India, being a country with many laws, is highly regulated. Compliances do pose challenges. However, we see this as a positive factor, as this would only help in property government. An example can be taken in respect of labour laws in India which require companies to comply with numerous requirements in order to make sure the safety of the employees. Even in intellectual property, courts in India have been in favour of public good involved in providing of patented drugs at a cheaper rate as against the commercial interest of the owner of the patent.” The Asia Pacific region is steadily strengthening its
62 Acquisition International September 2014
reputation as a compelling investment opportunity. This can be attributed to a number of factors, says Bhide. “In relation to India we do find low levels of debt and abundance of foreign exchange reserve. We also see the population of 1.2 billion as a positive factor attracting the consumer durable manufacturers to set up shops here. “Compared to other economies of the world, Asia has a healthy government debt level. India has a 68% net debt to GDP rate as compared to eurozone and US with a rate of 85 and nearly 100 respectively. Moreover, the Asia Pacific economy has a sufficient reserve of foreign exchange which creates a balanced fiscal position and is in a position to employ sustainable fiscal packages. “The infrastructure market in Asia has generated number of opportunities due to large population and a need for better infrastructure facilities like roads, railways, etc. The Asia Pacific regions include other stronger markets also like Singapore, Hong Kong, North Korea which do influence the strength of the Asia Pacific region.” The key risks involved in the region can be attributed to communal violence and corruption, says Bhide. “The low standard infrastructure in India causes delays. Another risk involved in the region is that of environmental degradation due to high growth rate in establishments of manufacturing industries. Certain countries in the region are ready to take up business at the cost of environment due to the necessity. The neighbouring countries like Pakistan and Afghanistan do pose terrorism risks which curtail growth. In India we also have a higher taxation rate.” n
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Being a developing economy, infrastructure has witnessed huge investments by the government as well as the private sector in the last decade. A big change that was brought about by the new government in the foreign direct investment policy was opening of the defence sector to foreign investments which until last year was totally restricted.
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SECTOR SPOTLIGHT www.acquisition-intl.com
Zinc SLM
Corporate Debt Strategy
Working with Clients to positively impact Company: The Zinc Group on Working Capital and Profit Name: Dougie McManus Email: DMcManus@
thezincgroup.com Zinc Group is a multi-award winning company in the Credit Control, Recoveries Management, and BPO (Business Process Outsourcing) Functions. Web: www.thezincgroup.com All our solutions haveAddress: been designed dovetail Court, into our clients current processes. 52 toCygnet Zinc adopts an ethos Timothy’s built around seeking understand your needs; then delivering BridgetoRoad, innovative solutions to galvanise your success.
Stratford-upon-Avon CV37 9NW Your most valuable asset your cash flow - are you Tel: 01789 273is149
protecting it at all costs? Zinc SLM (Sales Ledger Management)
maximises the cash in your bank. By using one of the most predictive data engines in the Industry “Zinc Alert” we can calculate the probability of a company becoming insolvent in the next twelve months.
Zinc SLM: • Evaluates, Monitors, Manages Potential Customers and Suppliers
Corporate Debt Strategy
Its “A” rating system shows the strength of a particular company. Its main point of differential is that Zinc SLM offers a bespoke solution to remedy and resolve each individual company position, either as an action for yourself or as an outsource to a member of the Zinc SLM team.
• Allows you to decide who to trade with and on what terms.
• Can reduce your debtor days, therefore potentially removing overdraft costs. In many cases the SLM service is Self Funding
Zinc Group Ltd. is a multi-award winning company in credit control, recoveries management and BPO (Business Processing Outsourcing) functions. Dougie McManus, Group CEO, Zinc Group, tells Acquisition International that remembering to follow the basics is the first step in effectively managing corporate debt. • Asks for your money in a Professional, Prompt, TCF (Treating Customers Fairly) way.
• Is a Risk Reward Service, you only pay a percentage of the total monies collected. Reduces your debtor days, cancels your overdraft and you only pay for success.
www.thezincgroup.com Businesses managing corporate debt today are still bound by the same principle they always have, says Dougie McManus, Group CEO, Zinc Group Ltd. It’s a principle, he says, that is best summed up by the old banking mantra, “A loan well closed is a loan half collected.”
Telephone: 03301 000 852 E-mail: sales@thezincgroup.com
Zinc Directory Ad 9376.indd 1
02/09/2014 10:03
Most corporate debt occurs because the basics have been ignored or forgotten, says McManus. “Those basics include knowing your customers, suppliers and competitors. Establishing your internal appetite for risk is also an essential component of managing corporate debt. “On many occasions we see the need for refinancing or short term financing as a direct result of ignoring the basics. We all know cash flow kills a company. But how many times do we see the business accept 60-90 day payment terms in pursuance of turnover at the expense of profit?” The management of debtor days is a key challenge to the businesses of today, McManus says. “Some revert to factoring and invoice discounting. Alternative lenders also play a part. However, at Zinc we have helped numerous clients evaluate, monitor and manage their ledgers with a combination of using one of the most predictive data engines in the Industry combined with a credit control team that asks for your money in a professional, prompt, TCF (Treating the Customer Fairly) manner. Overdrafts have been reduced by ensuring that customers pay to terms. Zinc also recommends a strict portfolio management of the ledger. “You take 90-day terms then balance the ledger with terms of 7-14 days .Start at a net off position and work backwards. Seek alternative lenders to fund the 60-90 day terms . Make sure your sales teams factor this in to their sales proposals. If you are take extended terms, can you obtain a bigger share of the sale?
“Can you target the clients who themselves are struggling with cash flow offer them extended terms so you can increase turnover but factor it in to the price of the deal? “Set a strict limit on extended terms as percentage of the overall ledger. Do not put all your eggs in the AAA client basket. It has been said that when a store like Woolworths or Comet leaves the high street, up to 100 smaller businesses can go as well as a consequence.” Vigorous sales campaigns as opposed to sustainable sales activity is common, he says, with the sales director chasing a sale opening up a credit limit on the barest of facts, or no facts at all. Here’s an example: An egg box manufacturer supplies one of the largest egg producers who in turn has one of the largest contracts with a major supermarket. The supermarket pays the producer on 90-day terms. The producer persuades the egg box manufacturer to do the same. The egg box manufacturer continues to take more and more work to fill sales quotas, oblivious to the trading positon of the egg producer. “Zinc’s data engine is showing the egg producer has gone from an AA rating to a ZZ rating in less than three months,” says McManus. “Around one in 14 companies cease trading in this category. Three months later the egg producer is a ZZZ. One in six companies will end up in default or will cease trading. At this point the egg box manufacturer in pursuant of a sales gap has just agreed to take a further 20% increase in sales. Within 30 days of the order the egg manufacturer has gone into administration, taking the egg box manufacturer with them.” It’s a sorry tale that has been repeated many times over the last few years, says McManus. But he says it
is something that can be minimised by three simple credit control steps: Evaluate, Monitor and Manage. “You target the healthy clients in the first place (AAAAA) and knowingly take on the (ZZ-ZZZ) clients on your terms under strict monitoring with credit limits that reflect this. Manage the overall sales ledger with no more than 30% of the book on extended terms. Where possible the extended term clients have this built into the sale price on take-on. “Debtor days are agreed based on your internal appetite for risk, monitored and managed on a daily basis. All new business is subject to the overall agreed debtor days. This action alone can significantly affect your cash flow and in some cases eradicate the need for short term funding.” n
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Set a strict limit on extended terms as percentage of the overall ledger. Do not put all your eggs in the AAA client basket. It has been said that when a store like Woolworths or Comet leaves the high street, up to 100 smaller businesses can go as well as a consequence.
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Acquisition International September 2014 63
SECTOR SPOTLIGHT www.acquisition-intl.com
Captive Insurance: Stepping Out of the Shadows
Name: Joseph L. Petrelli Email: jpetrelli@demotech.com Web: www.demotech.com Tel: +1 614 761 8602 Address: 2715 Tuller Parkway, Dublin, Ohio 43017-2310 USA
Captive Insurance: Stepping Out of the Shadows Demotech, Inc., a financial analysis firm located in Columbus, Ohio, was the first company to review and rate regional insurance companies and then initiated coverage of captive insurance companies. Joseph L. Petrelli, President, Demotech, Inc., tells us why captive insurance providers are today on the rise, and how a new statistical reporting service, Alternative Risk Transfer Statistical Solutions, Inc., can assist captives and their managers. Captive insurance companies, explains Joseph L. Petrelli, President, Demotech, Inc., are insurance companies established with the objective of insuring risks emanating from the parent group or groups. However, captives sometimes insure risks of the parent group’s customers. Captives are a form of risk management that is becoming a means through which individuals and businesses can protect themselves while maintaining control over the cost and coverage of their insurance. “Captive insurance is popular in all lines of insurance, casualty or property. It is particularly effective for high frequency, low severity losses as well as the funding of large deductibles or selfinsured retentions.” The payment of premiums to, and subsequently the payment of losses from, a captive insurance company supplements an effective risk management program by focusing the risk management function and the captive insurer on the mitigation as well as the minimisation of losses to effectively reduce premium payments. “Concurrently, an effective risk management program will reduce or mitigate losses and loss adjustment expenses to a level that is below the premium paid to the captive,” says Petrelli. “As such, tax planning is enhanced through a tax-deductible premium paid to an affiliated entity. Residual profit is retained in the parent company and not by a traditional, unrelated insurer.” Incorporated in 1985, Demotech, Inc. is a financial analysis and actuarial services firm serving the Property and Casualty and Title insurance industries. Demotech was the first company to review and
64 Acquisition International September 2014
rate regional insurance companies. Today, the firm’s clientele includes hundreds of regional and specialty insurers as well as industry leaders such as Nationwide, Allstate and publicly-traded companies.
Key challenges are from renewed regulatory scrutiny, particularly the scrutiny of single parent captives, says Petrelli – adding that this is likely to continue as 831(b) captives continue to be formed.
Demotech is distinguished from the competition in several ways, says Petrelli. “Our personnel are experienced insurance professionals. They knew the business before they joined us to review and rate insurers. We employ actuaries, MBAs, CPAs and CPCUs with decades of experience. Secondly, we developed a Company Classification System to distinguish carriers by their business model and not their size. Thirdly, although we review and rate carriers of any size, we are focused on regional and specialty carriers, such as captive insurers.”
The recent rise in use of captive insurance providers has come about through changes in the traditional insurance industry, says Petrelli. “Captive use increases as coverage in the private sector becomes restrictive and captives must step up to provide the coverage that was previously available from the traditional insurance industry. Similarly, many captives are being formed in anticipation of increases in premium levels by traditional carriers.”
Both in Ohio and across the US, captives are currently under siege by regulators, reinsurers, and to some extent their actuaries and auditors, says Petrelli. “This is due to the dearth of readily available statistical information dedicated to captive insurers and the specialty lines of insurance that they write,” he says. “Although industry averages are not applicable to captives, captives are currently forced to rely upon same.” Insofar as the sectors that have seen the most activity this year, Petrelli says the activity, as well as scrutiny of captives, tends to be in the 831(b), micro captive space that is defined in the Internal Revenue Code. “We have developed a new service, Alternative Risk Transfer Statistical Solutions, Inc. (ARTSSI), to assist all captives to justify and support their premium, loss experience and more fully vet their coverage documents,” he says.
Demotech will stay at the forefront of the captive insurance industry by developing and offering a statistical reporting opportunity to captive insurers through ARTSSI, Petrelli says. “By consolidating the premium and loss information of a large number of smaller captives into appropriate business segments, captive’s owners and managers as well as their regulators and service providers will be better positioned to evaluate the success of captive management strategies. The results will not be tainted by the use of industry averages.” When asked about opportunities for the industry in the next 12 months and beyond, Petrelli says, “We believe that by participating in ARTSSI, consolidating the premium and loss information of a large number of smaller captives into appropriate business segments, captive’s owners and managers, as well as their regulators and service providers, will be better positioned to evaluate the success of captive management strategies. ARTSSI will be a unique opportunity for captives and their managers.” n
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Insurance Linked Securities: An Ever-Evolving Market
Company: KPMG Name: Bianca Brown Email: biancabrown@kpmg.ky Web: www.kpmg.com/KY Address: P.O. Box 493 Century Yard, Cricket Square Grand Cayman KY1-1106 CAYMAN ISLANDS Tel: +1 345 949 4800 Fax: +1 345 949 7164
Insurance Linked Securities: An Ever-Evolving Market The market for insurance-linked securities (ILS) has seen consistent and ongoing growth since about 2001. With the industry evolving to take in emerging markets and new industries, it is now estimated that the global financial footprint of the sector is $15 billion today. A Dynamic, Constantly Changing Market Many feel this is just the start though, with the market continuing to evolve at a rapid and dynamic rate. There is also increasing regulation and significant legislative change which will have a huge impact. Much of the world is also still facing significant economic challenges, adding further layers of complexity and increased focus on investors. KPMG in the Cayman Islands recognises these changes, and, resultantly, has built a strong, focused and experienced team. Comprising experts in the field of structure finance and insurance, we ensure we align our services with our client’s objectives and perspectives.
With returning confidence at every level however, markets are once again seeing the potential. Today this has seen sizable growth in a number of securitized insurance deals. The most commonly exchanged today are: • • • • •
Embedded Value Securitization Extreme Mortality Securitization Life Settlements Securitization Longevity Swaps Reserve Funding Securitization
It is important to have the necessary skills and aptitude to ensure the best investor placement as the evolution continues. Ensuring that the right domicile is selected is also key. Interpreting and qualifying risks is another fundamental.
Catastrophe Bonds
Potential, Growth, Collapse and Evolution
Another huge growth area is in Catastrophe bonds, or Catbonds and for the Cayman Islands, we audit all structures which are licensed, domiciled and administered here. We are also the engaged Claims Reviewer for agreed procedures on 99% of Indemnity based Catbonds that we receive instruction for auditing and prepare Passive Foreign Investment Company (“PFIC”) statements for over 95% of Cayman Islands-domiciled Catbonds.
The ILS market was in great health, starting to fulfil its early potential, mature and grow into an established route to wealth development. That was until 2008 and the collapse of the sub-prime collateralized debt obligations market (CDO).
Auditing Alternative Investment vehicles with an ILS investment focus as well as supplying audit and claims services for innovations within the sector are also popularly within our remit. This has allowed our ILS team to have an extensive knowledge of all products.
The effects were wide ranging, effecting financial markets the world over. Insurance linked securities, notably for life insurance, was very badly hit and essentially drove the collapse of the rest of the market.
ILS in the Future
This tailored approach only works when knowledge is learned, developed and applied however, and, it is understanding the ILS market and direction that drives this.
Greater levels of assets are likely to be apportioned to as reinsurance capacity is built back up again and new stakeholders are attracted. Industry reports and studies are indicating that Catbonds will continue to strengthen. Another key area for increased levels of investment is expected to be life risk too.
Aligning yourself with KPMG in the Cayman Islands can ensure an understanding of the market and how best to exploit it. n
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The market is and will constantly evolve to offer coverage for emerging nations, sectors and innovations.
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The market is and will constantly evolve to offer coverage for emerging nations, sectors and innovations. This is the expectation of most senior commentators, analysts and investors in the segment.
Acquisition International September 2014 65
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The USA’s Leading Specialists in 2014
The USA’s Leading Specialists in 2014 This month, we’re profiling a select number of leading specialists within different sectors in the US.
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The USA’s Leading Specialists in 2014
MidMarket Capital Advisors, LLC serves owners of privately-held businesses on corporate finance, M&A and other financing and ownership-related matters. Patrick Hurley, Managing Director at MidMarket Capital Advisors, tells us how the firm helps its clients achieve their goals and add value to their businesses. MidMarket Capital Advisors is based in the Northeast US, and the business environment there, says Patrick Hurley, MidMarket’s Managing Director, varies by industry and the specific goals of the firm’s clients. “Conditions are generally good and continuing to improve. There remains a relative scarcity of high quality businesses and an abundance of earmarked capital seeking that type of business for investment or acquisition. There is a marked difference between the professional ownership sector and the entrepreneurial owner sector.” Company: MidMarket Capital Advisors, LLC Name: Patrick Hurley Email: phurley@mmadvisors.com Web: www.mmadvisors.com Address: 1629 Locust Street, Philadelphia, PA 19103, USA Tel: +1 215 875 8201
Company: Murray, Devine & Co., Inc. Name: Daniel M. DiDomenico III, CPA/ABV, CFA Email: danield@ murraydevine.com Web: www.murraydevine.com Address: 1650 Arch Street, Suite 2700, Philadelphia, PA 19103 USA Tel: +1 215 977 8092
The clients the firm serves, Hurley says, are experienced players in the business world. “The clients we serve are sophisticated and have valuable businesses with a wide range of options and alternatives for raising capital as well as planning and implementing ownership transitions or acquiring other companies. We clarify how the markets match with our clients, who are then best prepared to select the course to achieve their goals.
MidMarket adds value to its clients’ businesses by providing information and advice accompanied by an appropriate role in negotiations and management of programs and transactions, Hurley says. “Two currently active US$100m-plus projects both involve US-based businesses with significant European and Latin American manufacturing operations. In one case we are serving as lead financial advisor in the sale of the business which features a complex earn-out structure. The other involves serving a management team of a private equity controlled business. In each case we are helping our clients to exercise care and good judgement through our experience and expertise.” But why would a company seeking financial advice use an external service provider, rather than in-housing the service? “The senior executives of the businesses we serve are highly capable and insightful,” says Hurley. “They know what they want and whether they have adequate internal resources. The services we offer are outside of the normal experience of in-house professionals, and there are many occasions where an independent advisor brings a fresh perspective and current market awareness that is not otherwise available.”
“The clients we serve own middle market companies based in North America, Europe, Asia and Latin America. Those businesses range in value from US$25-200m in the following industries: industrial and consumer product manufacturing and distribution; business services; natural resources; and financial services.”
Nearly all MidMarket’s opportunities come via referrals from companies who have been happy with its approach, and have found it an easy firm with which to do business, says Hurley. “We have flexible compensation arrangements and the highest accountability for personalised service, delivered by partners who own the firm and we dedicate ourselves to achieving the goals of our clients.” n
Murray Devine has specialized in valuation, and valuation only for 25 years. The firm’s core valuation services include financial opinions, financial and tax reporting support and entity and asset valuations. Daniel DiDomenico, Senior Vice President at Murray Devine, tells Acquisition International how, amid the challenges of increased regulation, the firm is leading the way in the valuation industry.
Increased scrutiny by investors, bankers, auditors and regulatory agencies of the fair value of illiquid investments has placed a tremendous strain on the financial reporting groups of entities holding such investments, DiDomenico says. “Our independent valuations allow our clients to rest assured that their assets are carried at well-supported values that will withstand the strictest regulatory and investor scrutiny.”
The current valuation services market is strong, says Daniel DiDomenico, Senior Vice President at Murray Devine. “Increasing scrutiny in the M&A arena continues to result in greater board reliance on third party financial opinions.” The firm is currently seeing significant demand for its financial opinions in the context of dividend recap and affiliated entity transactions, he says. “A source of steady and continuing growth for us has been the periodic valuation of illiquid assets held by business development companies, hedge funds and private equity firms. As these types of entities continue to put more money to work, the demand for our services in this sector is also expected to grow.”
To maintain a competitive edge over other valuation service providers, Murray Devine leverages its wealth of skill and experience, says DiDomenico. “Our senior professionals have an average of 15 years with Murray Devine, hold top level professional accreditations and have broad-based backgrounds in accounting, auditing, bankruptcy and reorganisation, law, corporate finance and commercial lending.” n
Murray Devine naturally believes the excellence of its work product is of great benefit to its clients, says DiDomenico. “In addition, however, we pride ourselves on the efficiency of our due diligence process, our ability to meet demanding timelines and our overall responsiveness to our clients’ needs – we are viewed as an asset to our clients’ important transactions and reporting processes.”
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Increasing scrutiny in the M&A arena continues to result in greater board reliance on third party financial opinions.
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Acquisition International September 2014 67
SECTOR SPOTLIGHT www.acquisition-intl.com
The USA’s Leading Specialists in 2014
Company: Plexus Capital, LLC Name: Robert Gefaell Email: robert@plexuscap.com Web: www.plexuscap.com Address: 200 Providence Rd, Suite 210, Charlotte, NC 28207, USA Tel: +1 704 927 6247
Plexus Capital, based in North Carolina, invests mezzanine debt and equity in lower middle market companies. Plexus manages over US$550m across three funds and supports a wide variety of transaction structures including acquisitions, buyouts, recapitalisations and growth capital. Robert Gefaell, Co-Founder and Partner at Plexus, tells us more.
The current US business environment, says Robert Gefaell, Co-Founder and Partner at Plexus Capital in Charlotte, NC, can be summed up in one word: Competitive. “There is a lot of money chasing deals currently, and as a result, capital structures are getting pushed at close, and pricing is getting squeezed,” he says. “Plexus works hard to ensure we make investments that are in the best interest of our LP’s, and we therefore cannot afford to get caught in the rat race. We make every effort to venture down the road less travelled in terms of deal generation, and our efforts are proving fruitful. We are able to maintain conservative leverage profiles at close while maintaining attractive pricing.” Plexus’s core services, Gefaell says the firm looks for an investment size ofUS$4m -15m, and will co-invest for larger amounts. The firm’s investment types include subordinated debt, one-stop financings and equity (minority or majority). Proceeds from investments, he says, are used for acquisitions, growth, leveraged buyouts, management buyouts, majority recapitalisations and minority recapitalisations. The industries Plexus deals with include business services, retail and consumer, healthcare, manufacturing, value-add distribution and other basic industries. The firm does not limit itself to a small number of sectors, Gefaell says. “We are very much industry agnostic.” In terms of company characteristics, Plexus sees revenues of up to US$100m, EBITDA up to US$20m, and has experienced and committed management teams, strong market dynamics, sustainable positive cash flow and a proven business strategy, he says, adding that the firm operates throughout the US.
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Asked how Plexus adds value to the businesses of is clients, Gefaell says, “We freely admit that providing capital is considered a commodity offering in today’s capital markets. That said, Plexus is more than simply a provider capital to lower middle market companies. In all of our transactions, we make every effort connect our portfolio companies with the deep network of resources Plexus possesses – we have 48 different banks as LPs in our funds, which helps to ensure a strong senior banking relationship for our companies and smooth intercreditor negotiations in the closing process. “Plexus has over 112 HNWIs as LPs in our funds – most of whom are successful business owners/ operators with significant business acumen eager to assist Plexus in helping grow our portfolio by offering advice, counsel, and board positions.” For Plexus, maintaining relationships is key to staying competitive, Gefaell says. “Plexus has a nationwide mandate, but our roots are deepest in the Southeast. Through our extensive relationships with the business community, from senior lenders and law firms to private equity shops and independent sponsors, we are able to stay abreast of the competition in terms of deal flow and access to capital. We believe we operate quickly, transparently, and in a direct manner so as not to waste anyone’s time. Being nimble in today’s environment plays a key role in winning deals and getting them over the goal line.” n
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Plexus works hard to ensure we make investments that are in the best interest of our LP’s, and we therefore cannot afford to get caught in the rat race. We make every effort to venture down the road less travelled in terms of deal generation, and our efforts are proving fruitful.
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SECTOR SPOTLIGHT www.acquisition-intl.com
Due Diligence - An Essential Strategy for Corporate Growth
Due Diligence: An Essential Strategy for Corporate Growth
The importance of carrying out a thorough due diligence process cannot be overstated. But it’s an ever-changing landscape; the digital revolution has made carrying out due diligence checks a multi-layered, complex affair. That’s why it’s vital to stay on top of the latest developments in the industry. And so, this month, we’re speaking to some of the firms leading the way in due diligence.
Acquisition International September 2014 69
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Due Diligence - An Essential Strategy for Corporate Growth
Azure Partners Name: Mike Robson Company: Azure Partners Email: mike.robson@ azurepartners.co.uk Web: www.azurepartners.co.uk Address: Azure Partners, 60 Cannon Street, London EC4N 6NP Tel: 0207 100 1233
Identifying the Right Merger or Acquisition for You Azure Partners offers practical help for business owners and directors, identifying and exploiting new opportunities and creating and implementing strategies to meet the challenges businesses face. Mike Robson, Partner at Azure Partners, tells us how you can ensure an M&A deal works out how you hoped. Corporate financiers and business brokers report a significant upturn in M&A activity now that the economy has returned to growth. You may be in the middle of a merger right now, or considering approaching another company to join forces, but the reasons behind the move are crucial to its success for your company, its employees, your stakeholders and you personally. I cut my teeth in business in unravelling a complex merger that had failed to deliver the expected financial and operational benefits and there are numerous studies indicating that a high proportion of mergers and acquisitions fail to add value and in many cases destroy value. Attributes of successful mergers So what are the attributes of a mergers or acquisitions that are likely to create value long term? Ask yourself which of the following you will gain: • Additional products or services you cannot easily develop alone • Technology you will own and can use, perhaps as a response to a change in your market or industry • An improvement in, or expansion of, your management or technical capability – bringing people with a wider range of skills, knowledge or experience into your organisation brings benefits provided they can work effectively together • Better or quicker access to new sectors or geography • Genuine and quantifiable costs savings you know how to implement – many synergies turn out to be illusory • Better or quicker access to a customer base or revenue stream you can exploit CEOs often cite other reasons to merge or acquire, from tax advantages to increased market share to the undervaluation of the target company. Our contention is that if you cannot be very positive that you can implement at least one of the above list you should question whether the time, expense and disruption all mergers and acquisitions create are worthwhile. Assessing the target and due diligence If you have the right set of reasons for the merger 70 Acquisition International September 2014
or acquisition and you believe you can strike an acceptable deal you need to consider the due diligence stage. We believe that financial and legal due diligence is usually done well but that the more important non-financial due diligence is often done badly or ignored completely leading to the high failure rate described above. Sometimes acquirers use the “Art Critic” approach: “It looks and feels right, so we should do it,” rather than the airline pilot approach of, “Let’s identify the things that can go wrong and check them in a structured way, before we take off.” When we are assessing a merger or acquisition we look closely at seven key operational areas in addition to the legal and financial aspects of the deal: • Vision and strategy: How do the two organisations define success, how do their business strategies fit together, what should the group look like in two years’ time and how do we define and measure the success or failure of the deal? • Marketing: How do the targets value proposition, products and services map to ours and can we credibly combine them? Are the routes to market complementary and can we make 1+1=3 by combining them? • Sales: Is their sales methodology well defined and implemented and does it fit with our corporate values? Can we keep their successful sales people and are the pay and incentive programmes compatible? Why will their sales force be successful in selling our products and services and vice versa? • Innovation of products and services: How do their innovation processes fit with ours and can we bring things to market we could not do individually? • Operations: Do we gain valuable facilities, can we rationalise suppliers or negotiate better terms, will our distribution and IT systems work well together? Crucially how will potential gains be realised and who is going to make it happen? What expertise do we gain and how can we keep it? • Culture: Do the core values, work ethic, remuneration policies and the decision making processes of each company match? If they do not and you do not have a plan to overcome the
problem the expected benefits of the deal can easily be lost • Management: Making an acquisition and ending up with poor or incompatible management reduces your opportunity for growth and can destroy value in your company. Investors often say that the quality of the management team is of greatest importance when assessing and investment but many (perhaps most) are very poor at assessing their management and how well they will work together. Post-acquisition leadership and management are key to success. Take time to get it right, and get external help. Azure Partners work alongside the boards of progressive companies from their earliest stages though growth and maturity to preparing them for sale or flotation. We have the skills, the commercial experience and the necessary knowledge to significantly enhance the value of your business. n
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Sometimes acquirers use the ‘Art Critic’ approach: “It looks and feels right, so we should do it,” rather than the airline pilot approach of, “Let’s identify the things that can go wrong and check them in a structured way, before we take off.
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SECTOR SPOTLIGHT www.acquisition-intl.com
Due Diligence - An Essential Strategy for Corporate Growth
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At Verity, we are responsive and adaptive to the evolving regulatory framework as well as today’s business changing requirements. Our unique investigative service offers our clients a holistic view providing valuable insights and local knowledge, prepare them to mitigate associated risks and maximise opportunities.” Company: Verity Consulting Limited Name: Kelvin Ko, Managing Director Email: info@verity.com.hk Web: www.verity.com.hk Address: 4109 Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong Tel: +852 2581 9696
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Today’s stricter regulations mean that the demand for effective due diligence is greater than ever, says Kelvin Ko, Managing Director of Hong Kong-based corporate investigation consultancy, Verity Consulting Limited. Verity Consulting Limited, headed by Managing Director Kelvin Ko, is a corporate investigation consultancy with a focus in Hong Kong and Greater China, dedicated to helping corporations prevent and mitigate risks. Whether due diligence, litigation support, asset and background search, fraud and other commercial investigation, the highly experienced team is committed to support clients’ evolving needs.
To help business leaders successfully mitigate risks, Verity takes a holistic approach to due diligence. Its in-depth research provides visibility to a company’s background and structure, details into its management and shareholders, business interests, company and individual litigation involvement and reputation. Additionally, field investigation is combined to reveal intelligence and hidden facts about a company’s environment and conditions, business operation and scale, and credibility from various perspectives. “In cases such as supplier due diligence, it is common that everything looks promising on paper, but a simple site visit will reveal otherwise,” says Ko. “For example, long overdue staff salaries and payments to vendors may suggest the supplier has financial difficulties. Field investigation is an added advantage in the process, but in many cases, especially when establishing relationships with foreign partners, it’s a must.”
Aggressive enforcement of international laws and recent developments in regional regulations have put increasing pressure on multinational and local companies to comply with the rules. “The Hong Kong Securities and Futures Commission has implemented a regulation requiring sponsors to perform due diligence on applicants in the effort to improve initial public offerings standards,” says Ko. “Along with the tightening of Chinese anti-corruption laws, the demand for due diligence has increased significantly. “At Verity, we are responsive and adaptive to the evolving regulatory framework as well as today’s business changing requirements. Our unique investigative service offers our clients a holistic view providing valuable insights and local knowledge, prepare them to mitigate associated risks and maximise opportunities.” n
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Planning on Succession
Company: Nedbank Private Wealth Name: Debbie Lumsden Email: debbie.lumsden@ nedbankprivatewealth.com Web: www. nedbankprivatewealth.com Address: Nedgroup Trust (Jersey) Limited, 31 The Esplanade, St Helier, Jersey JE1 1FT Tel: 01534 823202
Planning on Succession British expats often forget that their worldwide assets are likely to remain subject to UK inheritance tax. An offshore private investment company, says Debbie Lumsden, Director at Nedgroup Trust (Jersey) Limited, may be an effective tax-efficient vehicle to help expats pass on and protect their wealth. It is not uncommon for UK domiciled but non-UK resident individuals, i.e. British expats, to forget that their worldwide assets are likely to remain subject to UK inheritance tax (IHT) which is currently charged at 40%. This is because liability to IHT is determined by an individual’s domicile and not residence.
rate). Inevitably this made trusts less attractive and a search for a viable alternative began.
Everyone acquires a domicile of origin at birth. This is usually the country that your father considered to be his real or permanent home at the date of your birth. If your parents were not married when you were born, your domicile of origin comes from your mother. Although it is possible to displace a domicile of origin by acquiring a new domicile of choice in another jurisdiction, your domicile of origin is very difficult to shake. Furthermore, even though a UK domiciliary may live outside the UK for a number of years, if they ultimately intend to return, their UK domicile will continue, meaning their worldwide estate will be subject to IHT on death.
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An offshore company may provide opportunities in terms of wealth planning for British expat families who may eventually return to the UK.
Trusts have traditionally been used by individuals to allow wealth to pass down to future generations tax efficiently, but also to control the distribution of wealth so beneficiaries do not inherit vast sums at a young age and/or spend the money inappropriately.
An offshore company can provide a significant degree of flexibility while allowing the donor to retain control and is a tax efficient vehicle for expats to consider for assisting them with passing on and protecting their wealth.
However, the advent of the Finance Act 2006 saw significant changes in the UK tax regime whereby new trusts enter the “relevant property regime”, which result in an immediate charge to IHT at 20% for transfers made in excess of a settlor’s available nil rate band (currently £325K) and consequent tenyearly anniversary IHT charges (at up to six per cent) and exit charges (at a proportion of the six per cent
The Structure An offshore private investment company is incorporated with family members as shareholders. The share capital of the company is structured in such a way that the donor may retain a degree of control (via for example, voting rights) with the
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future value accruing to other family members via different share classes; the effect of which reduces the donor’s estate for IHT purposes. Exactly how the shares are structured and what rights attach will be determined by the memorandum and articles, perhaps supplemented by a shareholders agreement which can be drafted on a bespoke basis to meet the family’s individual requirements. An offshore company is an extremely flexible vehicle and can hold a variety of investments from family business interests to land and property. The Benefits • The individual is able to plan for succession and pass wealth to future generations with flexibility in mind, while also retaining a degree of investment control via a single consolidated entity. • Having assets in a corporate vehicle, as opposed to owning them personally, also provides asset protection for business and family assets. • A corporate vehicle can afford shareholders with limited liability. • There are no immediate IHT charges on the transfer of property into the company and no tenyearly IHT charges. • A non-resident donor can transfer cash and property into the company without giving rise to a UK capital gains tax (CGT) charge, although the UK tax treatment of the latter asset class is currently under consultation in the UK. • The company can be capitalised by way of a loan to maintain tax efficiency on extraction of funds and should the donor decide to return to the UK he can receive loan repayments in the UK free of UK tax.
SECTOR SPOTLIGHT www.acquisition-intl.com
Planning on Succession
• The donor’s exposure to UK IHT on death will be limited to the value of his shareholding. Shares in the company, up to the value of the donor’s nil rate band, can be gifted into trust without triggering an immediate IHT charge. This is valuable where family members are minors or potentially spendthrift and the trust can provide another layer of protection to control the passing of wealth. • Similarly, “growth shares” could be created which only benefit from future growth in the company, which could be settled into trust tax free while they have no value. • Shares in the company can be gifted to other family members free of IHT providing the donor survives seven years (although UK residents would need to be mindful of their CGT position).
Moving back to the UK Should the individual decide to return to the UK in the future, then the company structure would continue to provide the same benefits to the family.
Taxation An offshore company with no UK business assets would be completely outside the UK CGT regime. As a non-resident company, it would not pay UK corporation tax and would only pay UK income tax on UK source income such as rental income. Furthermore, UK rental income would be subject to UK income tax on the company at a rate of 20%, which should be compared to that for non-UK resident individuals holding UK residential property who would be subject to the usual UK income tax rates of up to 45%.
Summary An offshore company can provide a significant degree of flexibility while allowing the donor to retain control and is a tax efficient vehicle for expats to consider for assisting them with passing on and protecting their wealth.
Furthermore, the income and gains of the offshore company would not be attributed to the non-resident donor or shareholders, and UK resident shareholders would only be subject to UK tax in respect of any distributions or benefits they receive.
From a broader UK tax perspective, the income and gains of the offshore company associated with the individual’s initial transfer to the company would be attributed to him and taxed on him in the UK in a personal capacity. However, the offshore company could become UK tax resident whereupon it would become subject to UK corporation tax (at a rate of 20% from April 2015), as opposed to the individual being subject to less favourable UK income taxes (currently up to 45%) which would apply if the company remained offshore or if they held assets in their personal name.
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Should the individual decide to return to the UK in the future, then the company structure would continue to provide the same benefits to the family.
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Kindly note that the officers and directors of Nedbank Private Wealth are not qualified to provide tax advice and therefore the above does not constitute tax advice. Nedbank Private Wealth will work alongside its clients’ professional legal and tax advisors in order to implement a bespoke solution for each of its expat clients and families.
If UK residential property is being held in the structure, consideration would need to be given to the annual tax on enveloped dwellings (ATED) and a close eye kept on the UK’s consultation on UK CGT for non-UK residents owning UK residential property.
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Project Finance
Project Finance The global financial crisis has had a huge effect on project finance for infrastructure around the world. Private capital is now less available, and economic policies adopted by many countries have concentrated on austerity. In this mid-year review of project finance across all sectors, we speak to the leading players to tell us about their recent accomplishments in this challenging sector, their most prominent deals and their plans for the future.
Company: Santamarina y Steta, S.C. Name: Juan Carlos Machorro Guerrero Email: jmachorro @s-s.mx Web: www.s-s.mx Address: Campos Elíseos 345, Col Chapultepec Polanco, Miguel Hidalgo, México D.F. ZIP 11560 Tel: +55 5279 5400
Santamarina y Steta, S.C. is recognised as one of the largest and most prominent law firms in Mexico. The firm has offices in four of the country’s leading industrial and financial centres: Mexico City, Monterrey, Tijuana and Querétaro. The firm’s goal is to provide its clients with the highest quality legal services available in the Mexican market, aiming, at the same time, to furnish these services as efficiently and cost-effectively as possible. Juan Carlos Machorro, Partner in charge of the Energy practice at Santamarina y Steta, tells us why Mexico, which is undergoing massive reform of its energy sector, is an increasingly attractive business environment. The business scene in Mexico, says Juan Carlos Machorro, Partner in charge of the Energy practice at Santamarina y Steta, S.C. law firm, is very encouraging. “Firstly, Mexico continues to develop intense trading activities, as part of the largest economic bloc in the world: the North American Free Trade Agreement (NAFTA).” Mexico is the third major trading partner of the United States, he points out, and an important link in the worldwide trade chain. “In addition, Mexico has a network of international free trade agreements which grants preferential access to 45 countries.” Mexico is a leading exporter of high-tech advanced manufacturing, as well as an important attraction pole for investment, Machorro says, citing the World Investment Report 2013 of the United Nations Conference on Trade and Development (UNCTAD), which names Mexico as one of the seven most attractive countries in the world to invest in. “Mexico is also a competitive destination, it holds vast amounts of productive knowledge and manufactures and exports a large number of sophisticated goods.” The oil and gas sector, as well as the electricity sector have been growing and developing industries for a long time, says Machorro. “The energy reforms [a package of measures, recently approved by the Mexican Congress, which will open Mexico’s oil and energy sector to domestic and foreign private capital, ending the monopoly of the state-owned Petróleos Mexicanos, known as Pemex] will certainly create new opportunities for investors. 74 Acquisition International September 2014
“Once the reforms are fully implemented, investors will be able to develop large, complex projects in Mexico, similarly to the way in which projects are developed in other countries with more mature energy industries.” Mexico’s geographical location has always been a double-edged sword, says Machorro. “On the one hand, we have been able to benefit from our proximity to the United States in terms of our commercial relationship with this country, strengthened through the NAFTA, allowing the free trade of goods across North America,” he says. “On the other hand, this business relationship has created a significant economic dependence on the United States in various industries, having a direct impact on the overall performance of the Mexican economy. In this sense, when there is an economic slowdown in the United States, such as the global financial crisis, it is almost certain that a general slowdown will follow in the Mexican economy.” “An important challenge for this country is to generate a strong domestic economy, capable of withstanding any turning points generated in other markets, especially in the United States, without leaving aside the aforementioned business relationship with said country. This is a major challenge, as it involves the strengthening of the Mexican industry, creating a competitive chain of supply, and higher labour productivity, among other things to improve, in order for Mexico to eventually minimise its high dependence on the United States.
“All this must be led by a reliable and effective legal framework which provides investors the opportunity to properly develop their businesses and activities. This challenge also implies the creation of an adequate environment for business and commercial transactions, fostering transparency and fighting corrupt practices.” n
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An important challenge for this country is to generate a strong domestic economy, capable of withstanding any turning points generated in other markets
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Project Finance
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 Tel: +62 21 831 5005 +62 21 831 5025
Dr Mohamed Idwan Ganie, Managing Partner of Lubis Ganie Surowidjojo law firm in Jakarta, tells us about his firm’s work with energy and infrastructure projects in Indonesia is the country’s economy continues its organic growth. Indonesia’s substantial population, whose prosperity is steadily increasing, and ample natural resources have proven to be an attractive business environment for investment, says Dr Mohamed Idwan Ganie, Managing Partner of Lubis Ganie Surowidjojo law firm in Jakarta. “Indonesia presents an appealing proposition – 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 government policies.” LGS is acting for the Government of Indonesia (Ministry of Finance, the national electricity company (PLN), the Indonesia Infrastructure Guarantee Fund (IIGF), and Regional Governments hosting infrastructure projects) in formulating and executing the legislative and contractual framework underlying Indonesia’s current and future infrastructure development. “IIGF is an Indonesian government institution that insures risks of Public Private Partnership (PPP) projects stemming from a variety of sources, including unfavourable policy changes and other political risks,” says Dr Ganie. “This replaces the previous practice of government guarantee notes that were issued on a per-project basis and creates a robust framework within which all future PPP projects in Indonesia will operate. The infrastructure projects necessarily involve a large number of parties, both commercial and government, ranging from local regional governments to the ministerial level, and often involving projects of national significance, with the associated political aspects of their development.” 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. “One of our unique selling points is the combination of our long-standing commercial law practice and our premier litigation department that has extensive experience in dealing with commercial disputes in the context of arbitration and alternative dispute resolution as well as litigation in the Indonesian courts,” says Dr Ganie. “This allows our corporate transaction departments to benefit from such litigation experience, and from their own compliance work, to ensure that any transactions handled by the firm are carried out with a view to the potential for future disputes and any existing risks.” Dr Ganie himself has more than 30 years of legal experience, and specialises in commercial transactions and commercial litigation, including alternative dispute resolution and has acted as an expert in a number court and arbitration proceedings. His expertise covers general corporate/company law, banking law, finance, bankruptcy and restructuring, mining, investment, acquisitions, infrastructure projects/project finance, antitrust, and shipping/ aviation, with a particular focus on corporate governance and compliance.
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One of our unique selling points is the combination of our longstanding commercial law practice and our premier litigation department that has extensive experience in dealing with commercial disputes in the context of arbitration and alternative dispute resolution as well as litigation in the Indonesian courts
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He 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. n Acquisition International September 2014 75
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Project Finance
Belfius Corporate Finance: A New Kid in Town in the Belgian Project Finance Advisory Market Belfius Corporate Finance, a division of the Belgian bank Belfius, was created to provide equity capital markets, M&A and financial advisory services to the bank’s clients.
Company: Belfius Corporate Finance Name: Mick Elegeert Peter Vermeiren Email: mick.elegeert@belfius.be peter.vermeiren@belfius.be Web: www.belfius.be
On 25 July, the joint venture Strabag- T-Systems reached financial close on the road tolling PPP in Belgium. Viapass, representing the Flemish, Walloon and Brussels Region, has signed a 12-year concession contract with the joint-venture and foresees, in a first phase, in a 18-months construction period for a new, intelligent Belgian road tolling system for heavy trucks. Started in January 2011, when the three Regions in Belgium signed a political agreement envisaging the joint reform of their road taxes, the new system, according to current planning, should be operational in 2016. The joint-venture was co-advised by Belfius Corporate Finance, a new player in the Belgian project finance advisory scene in Belgium. Mick Elegeert, Head of the Corporate Finance department of Belfius explains, “Almost two years ago, we started the project finance advisory activities to broaden the department’s scope of services towards its Belgian clients. Apart from our equity capital markets and M&A competences, we wanted to offer additional services to a number of clients of the bank, especially to those corporate clients fitting into the ‘Business to Government’ approach of the bank. Important in our approach is that these activities are developed within a stringent framework of confidentiality and conflict of interest procedures, in other words our advice is independent from the financing activities of the bank.” Since the start of these activities, Belfius Corporate Finance gained experience in a few smaller transactions, though in the meantime the pipeline is filling up. “We are working amongst others on the PPP for the construction of a number of schools in the Brussels and Walloon area, and are mandated by a project developer who’s
76 Acquisition International September 2014
intentions are to build a 200 MW biomass project in the harbour of Ghent, while a number of other projects are under negotiation”. Mick Elegeert is satisfied with the progress until now. “It is hard work, but we believe we have a combination of skills that can make the difference. We can offer the whole package, from modelling over debt structuring to equity advisory, or we can offer more tailor made services.” In 2007, Belfius also created DG Infra, a jointventure with GIMV NV to develop, invest and manage infrastructure assets. Peter Vermeiren, Managing Director Corporate Finance and Private Equity, explains“The joint-venture invested on its own behalf and on behalf of third parties, ¤220m in over 20 infrastructure assets, which represents a total investment cost of more than ¤2bn, and is a well-established equity and mezzanine player in the infrastructure market”. The market of infrastructure assets remains attractive, but also competitive as well on the advisory side as on the investor side. In an open economy as the Belgian economy, infrastructure assets are enhancing economic growth. Development and modernization of roads, bridges, tramways and other transportation infrastructure, but also demographic changes and the increasing awareness of the importance of a sustainable energy and utility market are important drivers in the market. These drivers, in combination with the increasing pressure on government budgets should enhance the partnerships between governments and experienced private market players. “We are convinced,” conclude Vermeiren and Elegeert, “that we can further develop our activities and offer professional added value to our clients in Belgium or to Belgian projects in general.” n
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It is hard work, but we believe we have a combination of skills that can make the difference. We can offer the whole package, from modelling over debt structuring to equity advisory, or we can offer more tailor made services.
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Asset Finance: The Lending Revolution
Company: SKM Asset Finance Ltd Name: Steve Moody Email: steve@ skmassetfinance.co.uk Web: www.skmassetfinance.co.uk Address: Finance House, 45 Grange Road, St Leonards, Ringwood BH24 2QE Tel: +44 01202 855080
Asset Finance: The Lending Revolution SKM Asset Finance was formed in 1997 and specialises in the provision of asset finance to the SME sector, predominantly to the construction industry. Steve Moody, Director of SKM Asset Finance Ltd, tells us why asset finance plays an important role in the running of SMEs. The current business environment within the construction sector in the UK is definitely on an upward spiral. According to a buoyant PMI survey, activity in the construction industry rose strongly from 62.4 in July to 64.0 in August, signalling the largest monthly rise in building activity since January and one of the largest ever seen in the survey’s 17-year history. This upturn was led by yet another nearrecord increase in house building, but commercial activity and civil engineering also rose at historically strong rates, reflecting a broad-based recovery fuelled by a mixture of rising residential property demand as well as increased business spending on office space, industrial capacity and retail outlets. So, why the title to this article? The answer is that despite these positive trends, a bank-funded study has revealed that success rates on applications for bank loans were at a three-year low. In corroboration the latest Business Monitor quarterly report confirmed that small businesses are more likely to be turned down for bank funding than they were in the aftermath of the financial crisis. In contrast, the National Association of Commercial Finance Brokers (NACFB), of which SKM Asset Finance Ltd is a long standing member, has published the results of its annual broker survey, which shows this year’s asset finance lending total stood at £12.7bn, which is almost double the amount that NACFB lenders facilitated during the depth of the financial crisis in 2009. It represents a continuation of the 16% year-on-year growth they reported twelve months ago and marks a 20% increase in lending to UK small businesses over the last year via its independent broker members – the largest increase in business completed by NACFB brokers in one year since pre-recession times.
There are now a wide range of SME lenders operating in the UK, and the market is diversifying at an incredible rate. Availability of funds is no longer the issue, but there are still significant barriers facing SMEs who are looking for finance. Small businesses don’t have to rely on their high street bank for credit, but few are aware of the full range of alternatives out there – or that an independent broker will be able to match them with the best lender for their needs. In the latest Close Brothers Business Barometer, a poll of UK SME owners and senior management on a range of economic and financial issues, revealed that 41% of businesses admit that their knowledge of alternative sources of finance could be better, while 18% say that they are unaware of any alternatives to bank lending. They also found that 44% of respondents had never heard of asset finance, much less understand the benefits it could bring to their business. For those of you who want a brief explanation of what asset finance is, it is the provision of hire purchase or leasing facilities which enable an SME to acquire vehicles, machinery and other assets whereby security is taken on the asset concerned. The SME will pay over an agreed period, not being longer than the useful life of the asset. It is advisable for any business to hold cash reserves against potential dips in activity or income but this doesn’t have to delay or prevent investment in vital assets. Asset finance enables a business to purchase the equipment they require while protecting their working capital, spreading the cost of investment and helping reduce their tax bill. Asset finance also opens up additional credit lines that are independent from a bank and is less likely
to require additional security compared with a bank loan. A bank may call in an overdraft at any time, but with asset finance an SME is protected by the security of a fixed term contract. So how do SMEs become more aware of asset finance? One potential game changer is the recently announced Small Business, Enterprise and Employment Bill which builds on a Treasury consultation launched earlier this year. It proposes taking legislative action to help match SMEs rejected for funding from their bank with alternative finance providers. Overall, the creation of a mandatory process to help match SMEs seeking finance with a wider range of lenders will be hugely beneficial for small businesses and the UK economy. However, alternative lenders shouldn’t just be viewed as a last resort for SMEs who have already been rejected by the banks. The fact the government recognises a need for change in small business lending is a positive step forward. Banks have enjoyed a monopoly on small business lending without keeping on top of what today’s SMEs need and want. The reality is that hard working small businesses need fast and flexible finance, and banks are simply not built to provide this sort of funding. As an asset finance broker, SKM Asset Finance Ltd can be both fast and flexible and we currently provide finance decisions within 48 hours, many in less than 12 hours, and have a 98% approval rate on all asset finance proposals we receive. In summary, we hope that finance companies, brokers and organisations such as the NACFB continue to spread the word of the importance and availability of asset finance for SMEs. n Acquisition International September 2014 79
Andra Musatescu Law & Industrial Property Offices is full service and lauded by clients for “the quality of its language skills and the flexibility and personalisation of service. Its main strength is in IP” (Legal 500).
Intellectual Property Littigation and Dispute
Resolution
IT and Telecom Finance Antitrust, Competition and Trade Energy, Oil and Gas Real Estate
Dr. Andra Musatescu is “an IP expert of ‘the absolutely highest standard” (Legal 500) “a fantastic lawyer” (Chambers and Partners), “a true expert at what she does” (WTR1000) and “one of the best external legal counsel to be found anywhere” (WTR1000). awards / rankIngs:
Top tier (GOLD) ranked by WTR1000; n Award for professionalism and international recognition given during the First Intellectual Property Gala organized by Finmedia in 2012; n Winner of the “Dispute Resolution Law Firm of the Year in Romania” Acquisition International Legal Awards (2011 and 2012); n Winner of the Corporate Intl Magazine 2011 Global Award: “Intellectual Property Lawyer of the Year in Romania” (2011); n Ranked every year by Chambers and Partners; n Ranked every year by Legal 500. n
ContaCt
Adress: 13 Septembrie 121, Bl. 127, Ap. 21, sector 5, Bucharest, Romania Phone: +4021 411 05 76
Fax: +4021 781 47 93
E-mail: office@andramusatescu.ro Web www.andramusatescu.ro
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The Shipping Industry
The Shipping Industry We’ve spoken to shipping firms based around the world to find out what is happening in the industry right now, and how they plan to navigate any rough seas that may lie ahead.
Acquisition International September 2014 81
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The Shipping Industry
Name: Rowena Grima Email: rowena.grima@fenlex.com Web: www.fenechlaw.com Address: 198, Old Bakery Street, Valletta VLT1455, Malta Tel: +356 21 241 232
The Malta flag: A Sensible Choice in Ship Registration All ships are bound to fly a maritime flag and it is that flag which dictates how such vessel’s operations are governed. Rowena Grima, Head of Ship Registration Department at Fenech & Fenech Marine Services Ltd in Malta, lists the reasons why the Malta flag is an excellent option for shipowners. International Law requires all ships to hoist a maritime flag. The right to fly the flag of a State is granted on the strength of the registration of a vessel under the chosen jurisdiction. Once registered, a vessel’s operations are automatically governed by the laws and fiscal regime of the chosen flag state and such flag state simultaneously acquires the obligation to exercise effective control over ships flying its flag. In the light of this, it becomes immediately clear to any discerning ship owner that the decision to choose a reputable and tax efficient flag is one that requires careful consideration.
There are a number of key factors ship owners ought to consider before choosing one flag over another – and, as we shall see, the Malta maritime flag more than fulfils these requirements. (see table below) Besides full registration, the Merchant Shipping Act (Cap.234 Laws of Malta) allows for the bareboat charter registration of vessels, a system which operates on the dual registration of a vessel in two compatible jurisdictions. Currently, compatibility exists with various ship registries amongst which are Antigua & Barbuda, Bahamas, Belize, Bulgaria, Canary Islands, Cayman Islands, Cyprus, Denmark,
Estonia, France, Germany, Gibraltar, Isle of Man, Italy, Liberia, Madeira Int. Ship Register, Marshall Islands, Netherlands, Netherlands Antilles, Panama, Poland, Romania, Russian Registry, Singapore, Spain, St. Vincent & the Grenadines, Turkey, Ukraine and Vanuatu. All types of vessels, from cargo ships to cruise liners to marine structures may register under the Malta flag so long as they are over six metres in length and are certified seaworthy by a recognised Classification Society (IACS member). n
Key Motives in choosing a Flag Reputable Flag
What the Malta Flag Offers The Malta maritime flag is the largest European flag and the 7th largest internationally. It is also on the Paris MOU White List.
Flag eligibility requirements
Malta flag vessels may be owned by a Maltese individual or company or by a foreign corporate entity which enjoys separate legal personality in terms of the law under which it is established or constituted.
Reduced Fiscal Bill
The Malta flag offers complete income tax exemption to owners, charterers and financiers of Maltese vessels of 1,000 NRT and over. This exemption is also administratively extended to most vessels of under 1,000 NRT.
Reduced Administrative Costs
Malta offers: - competitive tonnage dues calculated on the net registered tonnage and year of build; - no restrictions on nationality of crew onboard Malta flag vessels; - highly competitive professional fees when compared to European counterparts.
Rules relating to validity and enforceability of Mortgages
Malta provides an efficient and sound jurisdiction affords high priority ranking to financiers. A mortgagee is granted an executive title making it equivalent to a judgement thereby allowing the mortgagee to proceed directly with enforcement measures without having to resort to court action.
Easy entry and exit from Ships Registry
Procedures for the registration and the closure of Registry of a Malta flag vessel are standard and straightforward.
Support facilities
The Malta Registry provides a 24/7 service for urgent transactions; Malta boasts a highly qualified and flexible work force with expertise both in the legal and technical. maritime field.
82 Acquisition International September 2014
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The Shipping Industry
Ana Cristina Pimentel, Partner at law firm Armando Henriques, Ana Cristina Pimentel & Associados, Sociedade de Advogados, RL in Lisbon, has over two decades’ experience in shipping law. Armando Henriques, Ana Cristina Pimentel & Associados, Sociedade de Advogados, RL is a Portuguese Law Firm. Although the firm was incorporated in 1999, its partners have been working in the maritime sector since the early 1980s and 1990s. ARMANDO HENRIQUES, ANA CRISTINA PIMENTEL & ASSOCIADOS
SOCIEDADE DE ADVOGADOS, RL
Company: Armando Henriques, Ana Cristina Pimentel & Associados, Sociedade de Advogados, RL Name: Ana Cristina Pimentel Email: ah.acp@netcabo.pt acp-11305l@adv.oa.pt Address: Av. Miguel Bombarda, 50 – 2º, 1050-166 Lisbon, Portugal Tel: +351 781 99 90 +351 936 401 576
The firm covers all areas of shipping, as well as road and air transport and insurance law, representing national and foreign shipowners, cargo interests, shipping agents, forwarding agents, port authorities, insurance companies and P&I clubs, on the various aspects of cargo claims, marine casualties, purchase, sale, registration and repair of vessels. The firm has been very active on the arrest of vessels, being a member of the Shiparrested.com organisation. Ana Cristina Pimentel obtained her degree in Law in 1991, in Belgium, at the Université Catolique de Louvain-la-Neuve. Since then she has been working actively in shipping, as well as in road and air transport and insurance, representing various national and foreign intervening parties in those areas of activity such as shipowners, cargo interest, shipping agents, forwarding agents, port authorities,
C&B More, which has offices throughout the Netherlands, was founded in 2012 as a tax firm specialised in shipping. Partners Hendrik Boonstra and Connie Roozen tell us how the firm is helping its clients navigate the industry’s choppy financial waters. Much like the conditions on the North Sea at this time of year, the current climate for the shipping industry is rough, says Hendrik Boonstra, Partner at tax advisors C&B More in the Netherlands. “Our clients are currently facing financing challenges,” he says. “Furthermore, politics are changes on international tax planning. Also for shipping, a consultation on the international treatment of shipping income has been published.” As a tax specialist, C&B More, which has offices in Rotterdam, Groningen and Breda, is involved in all areas of tax advice for its clients. These include international tax planning, vat, wages tax, financing structures and filing tax returns. Most of the firm’s clients are in the shipping industry, most of them family-owned businesses.
Company: C&B More Name: Connie Roozen / Hendrik Boonstra Email: connie.roozen@cb-more.com hendrik.boonstra@cb-more.com Web: www.cb-more.com Address: Van Nelleweg 1, 3044 BC Rotterdam Peizerweg 87B, 9727 AH Groningen Tel: +31 651 226 404 +31 647 090 150
While most of the firm’s clients are Dutch, it also has clients spread all over the world, for example in the US, Germany and Greece. C&B More is a member of the Dutch Association for Tax Advisers, the professional association of university-educated tax advisers in the Netherlands. The Association has entry requirements, professional education and independent disciplinary boards. The firm is also a member of the Dutch Shipowners Association and WISTA (Women’s International Shipping and Trading Association). The firm is distinguished from the competition, says Partner Connie Roozen, by being innovative and specialising
insurance companies and P&I clubs, on the various aspects of cargo claims, marine casualties, purchase, sale, registration and repair of vessels. In 2003 she obtained her post-graduation diploma on Maritime Law at the London Metropolitan University, in London, UK. She is a lawyer, a member of the Portuguese Bar Association since 1994. She has also been a teacher at the Escola Superior Náutica Infante D. Henrique, the Portuguese Nautical School, since 2004, giving lectures on different subjects on maritime law and transport law. n
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The firm has been very active on the arrest of vessels, being a member of the Shiparrested.com organisation.
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in shipping. “We are looking at new opportunities in international tax planning and restructuring for the shipping industry. This means learning about new structures and translating tax legislation into opportunities for our clients. Also, in meetings with our clients we learn the real needs of the industry and we aim to find solutions for the current challenges. A current financing possibility is the new Spanish tax lease.” C&B More maintains a competitive edge over other service providers in the region by having a presence both throughout the Netherlands and beyond, says Boonstra. “We are located in Rotterdam, Groningen and Breda. This means we operate in the Netherlands as whole. To be aware of international tax planning opportunities we also act as a tax adviser in other countries, for example in Germany and Greece. We also assist foreign shipping companies in setting up a branch/ legal entity in the Netherlands.” Asked why a company would prefer to use an external service provider rather than in-housing the service, Roozen says that, depending on the size and complexity of the client, an internal tax counsel can sometimes be preferred. “But most of our clients use us as an external service provider,” she says. To add value to its clients’ businesses, C&B More leverages its fiscal expertise, says Boonstra. “Our clients value us as creative, personal, clear, fair, accessible and solutionoriented. The result is key.” As an example he cites a current restructuring project where C&B More has been visiting the client’s office to discuss the consequences of the restructuring with the client’s legal, administrative and project department. “We are fully involved in implementing the structure, being as efficient as possible in achieving the set goals.” n
Acquisition International September 2014 83
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Bulgaria: History of East European success
Company: PwC Bulgaria Email: pwc.bulgaria@bg.pwc.com Web: www.pwc.com/bg Address: 9-11 Maria Louisa Blvd., floor 8, 1000 Sofia, Bulgaria Tel: +359 2 91 003
Bulgaria: History of East European Success PwC has been present in Bulgaria since 1992 and has long been advising companies on how to establish their business in Bulgaria. We have expert knowledge and practical experience in the full range of business and legal issues. With a local team of around 200 full-time staff – transaction services specialists, auditors, consultants, lawyers, tax experts and HR consultants, our reputation lies in building lasting relationships with our clients and delivering value in all we do. PwC Bulgaria is organised into three main lines of service. Each line of service is staffed with highly qualified, experienced professionals whose aim is to help our clients build value, manage risk and improve their performance. Advisory Services At PwC, we work with you to provide advice and assistance in the implementation of your strategy. We recognise the importance of having experienced, dedicated staff who can build strong sustainable relationships, understand your business and work together to develop innovative solutions to your business needs. We use our financial, analytical and business operation skills to develop and tailor solutions, whatever issues you are facing: creating/ acquiring/financing businesses and integrating them into current operations; enhancing performance; improving management and control; dealing with crises; and restructuring and realising value. We do this in an objective manner to help you enhance stakeholder value, build trust and communicate with the market place. Let’s take a look at the services we offer within our Advisory Services department. Deals We are well-known in the marketplace for our knowledge and experience in all types of financial transactions: • Mergers and acquisitions - we focus on the deal continuum from strategy through to post deal integration, including financial and operational due diligence, accessing the capital markets and valuing, negotiating and structuring deals. • Strategic and valuation advice - we provide independent expert valuation advice for your
84 Acquisition International September 2014
business; we evaluate the financial implications for example, of corporate debt, restructuring, investments, mergers and joint-ventures; we advise on better managing assets and large capital investments amidst increased competition, or in times of uncertainty; we evaluate technical, operational, market and financial risks. • Growth or divestments and developing exit strategies - our specialists help you complete and extract the maximum value from your deals. • Business Recovery Services - we undertake a range of restructuring, rescue and turnaround assignments for companies or stakeholders concerned about the ability to meet changing market demands. We also provide the full range of insolvency services. Consulting We help you to attain increased performance by improving the efficiency and effectiveness of your company’s key business operations. Using our deep understanding of finance, risk management/ compliance, IT systems, operations and human resources, we help you identify and implement cost saving initiatives, improve management and control, identify and manage risk and improve quality. We also use our experience and proven expertise to provide practical assistance to improve financial underperformance and cashflow management. We provide advice and support to address key client issues, leveraging technology, data services and change and programme effectiveness skills to provide you with a comprehensive solution: • Financial Effectiveness – we work with you on finance reviews, performance management, consolidation and reporting, treasury and working capital, back office operations, people, systems and tools and risks and controls.
• IT Effectiveness – we help you to align IT to your business, manage IT cost and value and make IT projects perform, as well as advise on sourcing and service management and IT due diligence. • Governance, Risk and Compliance – we advise on governance, enterprise risk/portfolio risk management, specialised risk services, managing business operations for compliance outcomes, compliance monitoring and reporting, compliance cost management and incident identification and remediation. Dispute Analysis & Investigations We provide forensic expertise to organisations (and their lawyers) that are facing issues with financial and legal implications, to help them make intelligent, informed decisions whether in the boardroom or the courtroom. Assurance Services • Our Assurance practice serves many of the world’s best-known companies and a lot of other organisations both large and small. Our audit approach is tailored to suit the size and nature of your organisation. Our deep understanding of local and international regulation and legislation means we can also help with complex reporting issues involving Sarbanes-Oxley and International Financial Reporting Standards (IFRS). • Additionally, we are leaders in the development of non-financial performance reporting, helping our clients respond to the need for greater transparency, improved corporate governance, and business models based on the principles of sustainability. • Our Assurance services include: financial statements audit; regulatory compliance and reporting; Sarbanes-Oxley compliance; IFRS
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reporting; assistance on capital market transactions; corporate reporting improvement; independent controls and systems process assurance; sustainability reporting; and internal audit • Currently, about 80 professionals work within our Assurance practice, among which 8 statutory auditors, members of the Institute of Certified Public Accountants in Bulgaria and 17 members of the Association of Chartered Certified Accountants (ACCA). Tax Services PwC Bulgaria has one of the largest tax practices in the country. With 21 years of local experience and a client portfolio consisting of leading local and multinational businesses we render a comprehensive range of tax services across all fields of business. Our professionals provide assistance with: corporate tax services including tax structuring and compliance, mergers and acquisitions; indirect tax services including VAT, customs and excise duties; international assignment solutions including visas and immigration, income tax and social security consulting and compliance. We deliver more than simply tax advice; we devise complete business solutions by blending our professional skills, working together with
Bulgaria: History of East European success
PwC Assurance and Advisory Lines of Services professionals and attorneys-at-law from Tsvetkova, Bebov and Partners. It is our priority to help you optimise the opportunities for your business while complying with the complex and evolving legislation. We aim to deliver long-term value and success to your business.
Fireworks for the The Unification of Bulgaria holiday celebrations
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We deliver more than simply tax advice; we devise complete business solutions by blending our professional skills, working together with PwC Assurance and Advisory Lines of Services professionals and attorneys-at-law from Tsvetkova, Bebov and Partners.
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Acquisition International September 2014 85
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The Philippines: Immeasurable Strength
Company: Cruz Marcelo & Tenefrancia Name: Simeon V. Marcelo and Manuel L. Manaligod, Jr Email: info@cruzmarcelo.com Web: www.cruzmarcelo.com Address: 6th, 7th, 8th & 10th Floors, CVCLAW Center, 11th Avenue corner 39th Street, Bonifacio Triangle, Bonifacio Global City 1634, Metro Manila, Philippines P.O. Box 3525 Makati Central Tel: +632 810 5858 Fax: +632 810 3838
The Philippines: Immeasurable Strength The Philippines is today a hugely attractive place to do business. Manila law firm Cruz Marcelo & Tenefrancia’s CEO and Founding Partner, Simeon V. Marcelo, and Senior Partner, Manuel L. Manaligod, Jr, tell us why. Among the ASEAN countries, the Philippines is now the most attractive investment option for prospective companies, businesses or new entrants. At the start of 2014, there were some concerns such as the impact of Super Typhoon Yolanda, infrastructure bottlenecks, forecast of El Niño by midyear, and possible hike of interest rates. Yet, despite these concerns, the Philippine Statistics Authority reported that the Philippine economy grew by 6.4% in the second quarter of 2014, improving on its 5.6% growth rate for the first quarter of the year. Similarly, a report from the BSP forecasts favourable business conditions for the last quarter of 2014 where local firms are expected to hire more workers to support their ongoing expansion plans. Also, the ASEAN Business Outlook Survey 2015, conducted by the US Chamber of Commerce and American Chambers of Commerce, showed improved confidence in the Philippine economy. This was confirmed by the results of the World Economic Forum’s Global Competitiveness Report for 2014-2015 where the Philippines climbed seven places, citing the reforms of the past four years as the reason for the country’s continuing improvements of its economic fundamentals. With the accelerating rate to construct and improve needed infrastructures and systems to support foreign investments, it is undeniable that the Philippines has made a tremendous headway in the right direction since the start of the Aquino Administration. It cannot be disputed that major changes in culture and attitudes, particularly towards good governance, transparency and accountability of the National Government and its officials, have positively and hugely impacted investor and business confidence in the country. How We Can Help You Succeed in the Philippines Fifteen partners (out of twenty-three), led by former Chief Presidential Legal Counsel Avelino J. Cruz, Jr. and former Solicitor General Simeon V. Marcelo, formed Cruz Marcelo & Tenefrancia (CMTLaw) to establish a legal professional partnership based on 86 Acquisition International September 2014
the original principles that spurred the phenomenal growth of their former law office during its first decade of existence. The foundation of CMTLAW is anchored on a commitment to build a lasting legal institution that will carry on the values of professionalism, meritocracy and mutual respect in all of its dealings. CMTLaw is a full service firm. It has, through its members, more than three decades of engagement and expertise in various fields of law, specialising in litigation and dispute resolution, corporate and special projects, mining and natural resources, energy, infrastructure transportation and public utilities, intellectual property and taxation. Its Litigation Department’s partners and associates have the widely recognised outstanding ability to wage coordinated and multi-pronged litigation campaigns. Its litigators boast an unmatched record of success in critical, high-stakes, must-win commercial disputes and even in public interest cases. Mr Marcelo, since the establishment of the Bangko Sentral ng Pilipinas (BSP) in 1993 [except for the five years that he was the government’s Solicitor General (during which he served as BSP’s government lawyer) and Ombudsman] is the principal private legal counsel with respect to its major litigation cases. Likewise, the members of its Corporate Department have established their unparalleled proficiency in handling complex corporate and commercial transactions. Exemplified by its legal practice in public-and-private partnership and similar projects, the firm has set itself apart by its flexibility in providing counsel or advice to either the Government through consultancy or advisory arrangements or to prospective investors, lenders and contractors who take part in such nation-building projects. It is worth noting that the firm is the private counsel of the Philippine Stock Exchange.
Similarly, its Mining and Natural Resources/Energy Department partners are the recognised first-movers in the field and the department is acknowledged for its expertise in providing counsel to leading mining and exploration companies on a broad range of matters, including compliance with nationality and capitalisation requirements, obtaining government approvals, review of applications for mineral agreements, and negotiating and drafting contracts pertinent to the resources industry. Further, the firm’s Intellectual Property Department lawyers are leaders in their craft, and are long well-known for their skills to provide excellent and effective legal services covering the full spectrum of intellectual property practice, namely: trademarks; Philippine patent prosecution; prosecution of PCT application; copyright; media, entertainment and broadcasting; intellectual property commercialisation; licensing and franchising; administrative IP Litigation; and IP enforcement action. With the firm’s expertise in the foregoing practice areas of law, companies considering doing business in the Philippines, based on the experience of its numerous foreign and multinational clients, will find CMTLaw quite a valuable partner in their business pursuits here. The Association of Southeast Asian Nations (ASEAN) region remains robust even as its expected growth for 2014 was adjusted from 5.2% to 4.7%. The ASEAN region aims to achieve regional economic integration by 2015 through its ASEAN Economic Community (AEC). With the AEC in place, the growth for the region is expected to be at a faster rate, with more foreign-direct-investments expected to flow into ASEAN member countries. n
SECTOR SPOTLIGHT www.acquisition-intl.com
Nigeria’s Oil and Gas Sector Trends: The Rise of Local Champions
Company: ADVISORY Legal Consultants Name: Pacer Guobadia Email: guobadia@advisoryng.com Web: www.advisoryng.com Address: 33B Adebayo Doherty Street (Off Admiralty Way), Lekki Phase 1, Lagos, Nigeria Tel: + 234 7000 2384 7679
Nigeria’s Oil and Gas Sector Trends: The Rise of Local Champions Pacer Guobadia, Consultant at ADVISORY Legal Consultants in Lagos, tells us how Nigeria’s oil sector is shaping up in 2014 and how the firm is helping companies do business in an ever-changing industry. The significant delay in the passage of the Petroleum Industry Bill (PIB) by the Nigerian Legislature and the resultant regulatory uncertainty is viewed by many as the reason for the recent divestment by International Oil Companies (IOCs) of a substantial percentage of onshore investments in Nigeria’s upstream sector of the oil and gas industry. The Nigerian government seeks to reform the regulatory landscape and the fiscal regime of the industry via the PIB. Although the process has dragged on for over six years and has deterred new investments by some IOCs in the sector, it has created the most active stint of M&A transactions in the history of the industry. Some analysts see the spate of divestments in the sector as a natural transition by Nigerian indigenous oil companies who have hitherto operated in the fringes of the sector as small scale service providers and downstream product marketers, to now gradually become key players in the upstream sector. The rationale for this view is that, traditionally, IOCs have always been able to adapt and operate in any country no matter the level of political uncertainty and the situation in Nigeria is not likely to be different;consider also that the fiscal changes expected under the PIB will have a greaterimpact on the profitability ofoffshore assets, but IOCs are not selling off their offshore assets, only portions of their onshore portfolio;moreso, indigenous companies have paid exorbitant pricesfor the onshore assets acquired. These points support the view that the uncertainties around the PIB is not the
root cause of the current spate of divestments, rather the trend is simply an asset rationalisation by IOCs in a mature province, which is spurred on by asset-hungry indigenous players on the rise. IOCs like Shell, Chevron, ExxonMobil, Eni and Total have raked in billions of dollars in M&A transactions offloading some of their onshore assets to indigenous firms like Neconde, Elcrest, Seplat, Afren, etc. One of the transactions consummated in 2013-2014 that typifies the rise of local champions is Conoco Phillips’ divestment of its Nigerian business to Oando Plc for a staggering sum of US$1.5bn. Our firm, ADVISORY Legal Consultants had the privilege of advising Conoco on this landmark transaction and tackling the various commercial and regulatory challenges that arose on the journey to transaction close. As sector specialists, ADVISORY has had the opportunity of advising on several M&A transactions and project developments promoted by indigenous companies that are taking a more advanced role in exploiting Nigeria’s oil and gas resources. Our expertise, developed through decades of deep industry experience, covers legal, regulatory and policy issues in the energy, natural resources and infrastructure sectors and commercial and transactional matters that arise in project development and financing. We are distinguished by our in-depth industry knowledge, our unmatched experience gained through our consistent handling of energy and infrastructure projects and our
unique involvement in the design of the new legal, regulatory, policy and commercial landscape for our focal sectors. As specialists, we have demonstrable ability to fashion robust, innovative and practical solutions for our clients as we did in the Conoco divestment to Oando.. n
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As sector specialists, ADVISORY has had the opportunity of advising on several M&A transactions and project developments promoted by indigenous companies that are taking a more advanced role in exploiting Nigeria’s oil and gas resources.
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SECTOR SPOTLIGHT www.acquisition-intl.com
Mauritius: A Gateway to Africa and Asia
Company: Kross Border Web: www.krossborder.com Address: St Louis Business Centre, Cnr Desroches & St Louis Streets, Port-Louis, Mauritius Tel: +230 203 1100
Mauritius: A Gateway to Africa and Asia Based in Mauritius, Kross Border is a leading provider of international financial services. The group specialises in corporate administration, domiciliation, accounting, fund administration and captive management services. Kross Border is a leading provider of international financial services. Our management company is based in Mauritius and has been serving the offshore international business community since the 1990s, with particular focus on the community of investors in Africa. The group specialises in corporate administration, domiciliation, accounting, fund administration and captive management services. Our value is to provide services of the highest quality to our portfolio of Global Business Companies. Our clients include large international banks, private equity firms, fund promoters and other financial institutions as well as large non-financial institutions. At Kross Border, we offer corporate administration and domiciliation services and we assume all the statutory responsibilities of a company secretary companies, trusts and funds we administer.
Boat on the lagoon in Mont-Choisy beach, Mauritius island, indian ocean.
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We provide bespoke solutions to make sure your international financial operations are managed efficiently and your financial reporting is transparent, up-to-date and accurate. Our services in this department include local statutory bookkeeping, liaising with auditors, international management reporting whether in IFRS/IAS, US, UK or any other major GAAP, and full consolidated account preparation, reporting and filing with the Financial Services Commission. As your fund administrator, we provide reliable and efficient services, allowing you to maximise efficiency whilst you concentrate on raising new funds and identify the best investment opportunities. In tax, Kross Border uses its in-house expertise and access to specialist tax advisers to offer the following services: international tax planning and advice where Mauritius is used as an investment platform; preparation of tax computation and filing of tax
returns; liaison with local tax authorities and overseas agents on an ad-hoc basis; strategic monitoring of control and substance with respect to use of Tax Treaties; application for new and renewal of tax residence certificate; and monitoring of any other tax compliance. Kross Border provides support for the listing of companies and funds on the Stock Exchange of Mauritius Ltd. Our services include: advice on listing procedures & requirements; assistance in the preparation and submissions of required documents for listing purposes; acting as authorised representatives with the stock exchange; and ensuring compliance with post-listing obligations. Our payroll service can help you deal with the complexities of paying your staff and complying with Mauritius Revenue Authority. Kross Border also offers a range of captive formation and management services in Mauritius. n
SECTOR SPOTLIGHT www.acquisition-intl.com
Harit Sheth Advocates Company: Harit Sheth Advocates (Kenya) Name: Richard Mundia Kariuki Position: Managing Partner Email: mundia@ haritsheth-advocates.com Web: www.haritshethadvocates.com Address: Sharif House, 4th floor Kimathi Street Tel: +254-202330593
Kenya: Africa’s Go-To Investment Location Despite the World Bank lowering Kenya’s economic growth forecast for the next two years due to delays to the seasonal rains affecting agriculture production, East Africa’s largest economy is still set to grow by 4.7% in 2014 and 2015. We catch up with Harit Sheth Advocates’ managing partner, Richard Mundia Kariuki, to find out why Kenya is still Africa’s number one country for investment. With its foundations in Property, Conveyancing,Real Estate,Commercial and Corporate Law, Harit Sheth Advocates provides professional legal services in Kenya to both local and foreign investors. Headquartered in the Kenyan capital of Nairobi, we are able to respond to time sensitive demands. With a clear aim to deliver the best results to our clients, we maintain a clear focus on the appetite for investment in Kenya. Able to advise on opportunities, provide relevant guidance as well as provide legal expertise and expertly handle contract negotiations, we see investment trends in Kenya continuing in the foreseeable future. The key sectors in the country which are still extremely ripe for investment are in real estate development, infrastructure development, hospitality and tourism - with the number of quality hotels and resorts increasing at a high rate. China is presently engaged in
King & Co. Company: King & Co. (Lagos) Name: Tokunbo King Email: kingco@hyperia.com Address: Alex Creppy House, 4th Floor, 30 King George V Road, Lagos Tel: +234 1270-2576
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Offering experienced, enthusiastic and professional counsel at every level, we are delighted to play a big role in the growing trend for investing in our great country.
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investment in these sectors with investors from other territories being eagerly sought. Investment from China in other areas is another notable area of focus, with the number of Chinese firms investing here in excess of 20 in just the past few years. Active in food manufacturing, engineering, construction, telecoms and aviation among others, many Chinese firms are now progressing their plans for local production facilities. This is a clear switch from the policy of previous years where Kenya’s domestic market was satisfied with goods exported from China. With the rains affecting agriculture here, Kenya’s rapidly diversifying tourism industry and real estate development are now more important than ever. With growth likely to continue in these sectors in the next decade, Harit Sheth Advocates are ready to partner you towards growth of your company, Kenya and the African continent. n
Nigeria: A Future Investment Hub? In its recent 2014 Africa attractiveness survey 2014, EY underlined the widely held view that Nigeria is among the leading sub-Saharan investment destinations. We catch up with Tokunbo King from King & Co. law firm in Lagos, about why such reports are just the start of what is shaping up to be a bright future for investors in Africa’s biggest economy. Just five months ago, in April 2014, Nigeria was confirmed as the biggest economy in Africa, pushing it ahead of South Africa. In reality of course, it is likely that the country ascended to this position some time ago. However, it was the inclusion of previously uncounted sectors such as like telecoms, media and technology, and the film and music industries which really made the difference. It seems that the news has whetted the investment appetite of many however. At King & Co. we are seeing growing enquiries and requests for our market leading services in all sectors we serve. A clear sign that Nigeria is ready for a future of investment now, our team continues to monitor every opportunity within the country from our location in the capital.
role in the growing trend for investing in our great country. With experience working with Admiralty & Maritime Law, Aviation, Banking & Finance, Contracts and Litigation for companies domiciled here, we understand the country and what it demands perfectly. More than this though, we are also committed to helping inward investment from overseas clients. Experienced in Company & Commercial Law, Company Formation & Acquisitions and multi-million Foreign Investments and with a clear focus on the oil and gas sector, we are eager to become your Nigerian Business Partner. n
Offering experienced, enthusiastic and professional counsel at every level, we are delighted to play a big
Acquisition International September 2014 89
SECTOR SPOTLIGHT www.acquisition-intl.com
The Gambia: Land of Opportunities Company: Trust Bank Ltd (Gambia) Name: Dodou Nyang Position: Ass. Head of Department – Marketing and Business Development Email: info@tblgambia.com Web: www.tblgambia.com Address: 3-4 Ecowas Avenue, Banjul, The Gambia Tel: +220 4225777/8/9
The Gambia has seen a surge in its banking industry in recent years. Dodou Nyang of Trust Bank, which has branches across The Gambia, tells us how Trust Bank is excelling in an increasingly competitive environment. Trust Bank Limited started operations in The Gambia in October 1st 1997, employing over 300 people. The shareholding is in the hands of institutional investors, both local and foreign, individuals and employees of the bank. With our Head Office located at 3-4 Ecowas Avenue, Banjul, Trust Bank operates 17 branches across the length and breadth of the country making us the only bank in The Gambia with a presence in all the regions. Our overriding objective is to return excellent results to our shareholders by maintaining a very clear focus on providing value to our customers, by leveraging on our staff and continuously improving on our service, products and delivery. The banking industry in The Gambia continues to witness and be affected by the high competition which continues to grow. This competition has given customers a choice to go with any bank of their choice and this has really changed banking in The Gambia in recent years. The major challenge faced by Trust Bank Ltd in the past years is to retain and grow its customer base by offering customised, hassle free and flawless service delivery.
Despite the tough competition and challenges however, our bank’s performance year in year out is one to reckon with. Profitability, reserves and the balance sheet have all grown significantly due to the disciplined approaches taken by the management. As the bank is registering tremendous success in the financial business in The Gambia, we plan to maintain this momentum in the coming years with the same strategy of creating access to low cost funds by leveraging on the branch network and sales structure and also to simultaneously improve efficiency through leveraging the robust technology platform. Trust Bank Ltd refuses to be a bank that changes just to keep up with the competition but instead, will continue to perceive the needs of its customers in order to drive change ahead of competition. There is still plenty of opportunity to provide a wider range of banking services to a significant number of unbanked and inadequately banked people in The Gambia. We have a team and the spirit to ensure Trust Bank remains the bank of choice in this country. n
Paraguay: Looking Towards the Future With the country’s credit rating raised by Moody’s to Ba2 (positive) earlier in the year and Standard & Poor and Fitch lifting their ratings to BB within the last few months, Paraguay is now readying itself for a vibrant investment future. We touch base with Mersan Abogados’ expert in corporate, banking and administrative law, Carlos Galli, for his take on developments in the country. Company: Mersan Abogados Name: Carlos Galli Email: carlosmersan@ mersanlaw.com Web: www.mersanlaw.com Address: Fulgencio R. Moreno 509, ‘De la Colina’ Building, P.O. BOX 693, Asunción, Paraguay Tel: +595 21447 739
Established in 1943, our firm enjoys its reputation as one of the leading law firms in Paraguay. With a reputation which extends nationally and internationally, we offer expert and professional legal advice, guidance, consultancy and IP protection to major clients at home and abroad. Working with an existing client list operating in every sector and at every level, our tailored service is increasingly demanded by new clients too. With multi-faceted growing ambition for investment in the country the experience and knowledge we bring is proving to be the decisive factor in forming responsible business decisions and safeguarding essential assets such as Intellectual Property. Our team is full of talent - made up of highly qualified and experienced attorneys. This results in our advice helping companies and organisations position
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themselves optimally as the country enjoys stable growth. For 2014 and 2015, forecasts show that growth here will attain between 4.2 and 5.3% for example. That is coming on the back of a growth rate of 13.6% last year, with the buoyant mood largely a result of Paraguay’s improving fiscal performance. A strengthening in its institutional framework propelled by new legislations the government brought in last year and President Horacio Cartes’ plan to bolster investment in the country’s infrastructure and agriculture is also having a dramatic and positive effect. With our settled political environment offering a stable, dependable and reliable platform for investment, our firm offers you unrivalled access to Paraguay knowhow. Our extensive range of services are able right now to deliver your exacting needs, no matter where your investment has its Paraguay home. n
Simple, Smart & Effective Premier is a fast growing Management Company / Trust Company. Licensed and regulated by the Mauritius Financial Services Commission, Premier offers its services to high net worth individuals, private companies, multinationals and listed entities across the globe. Our group and affiliate companies are based in Seychelles and Singapore We take pride in our reputation of providing punctual and cost effective services with highest ethical standards. Client confidentiality, discretion and protection of your assets are our priority. We provide you with tailor-made and flexible solutions to suit your requirements, including tax minimization, reduction of global operating cost, and assets protection. We form and administer both onshore and offshore entities to allow our clients to achieve their personal and business objectives at a very reasonable cost couple with a high level of professionalism and personalized service. Premier’s teams is made up of experienced and dynamic members, most of which are qualified in the field of Economics, Accountancy, Law and International Taxation and are members of Professional Bodies such as the Society of Trust and Estate Practitioners (STEP) and the Association of Chartered Certified Accountants (ACCA). We are also an Expert Alliance Member of the INAA Group, a worldwide network of independent professional firms consisting mainly of audit and accounting firms. Premier is able to draw resources from experts in this network for the benefits of its clients. We do what we know best. There is no need for you to ask for it, you will get the best services!
Premier Business Centre, 10th Floor, Sterling Tower 14, Poudriere Street, Port Louis, Mauritius Telephone: (230) 245-6703 Fax: (230) 245-6704 Skype: premiermauritius E-mail: contact@premier.mu
www.premier.mu
SECTOR SPOTLIGHT www.acquisition-intl.com
Hot-Spots for Oil & Gas Investment
Company: Santamarina y Steta, S. C. Name: Juan Carlos Machorro Guerrero Email: jmachorro@s-s.mx Web: www.s-s.mx Address: Campos Eliseos 345, Col Chapultepec Morales, Miguel Hidalgo, México D.F. ZIP 11510 Tel: +55 5279 5400
Hot-Spots for Oil & Gas Investment Juan Carlos Machorro, Partner in charge of the Energy practice area at law firm Santamarina y Steta, S.C., tells us how major reforms to Mexico’s energy sector are set to radically change the country’s oil and gas business landscape. How would you describe the oil & gas sector in your jurisdiction in 2013? In 2013 the detonation of projects was not higher than in previous years, and there was no increase in the tenders called by the government; although the oil and gas sector in Mexico followed a steady pace throughout 2013, as the energy reform was about to be published, the whole sector was somewhat expectant. It is important to notice that the oil and gas sector in Mexico was subject to two different regimes: while there has been an open market for gas midstream activities since 1995, oil exploration and exploitation remained state-reserved activities and the private sector could only participate through service contracts which resulted unattractive due to the rigid payment schemes offered to contractors. What are the key drivers for growth in the sector? The main driver for growth in the sector has come to be the new energy reform, which entails a great number of opportunities in the energy sector, specifically in the oil and gas sector. The referred reform will draw the attention of private investors to the sector, as it is an investment area in which, for many decades, private participation was outlawed due to constitutional restrictions in the industry; thus the creation of a competitive market, where equal participation among all parties, including Petróleos Mexicanos (Pemex), will be encouraged. What distinguishes the oil & gas sector in your jurisdiction from those in major player states such as North America and Africa? 92 Acquisition International September 2014
Prior to the energy reform, the oil and gas industry in Mexico was conducted by Pemex, as a state-owned company. By means of this legal monopoly, most of the activities related to the exploration and exploitation of hydrocarbons were developed by Pemex, and the private sector could only participate through service contracts that were not attractive enough.
Do you have any predictions for the oil & gas sector in your jurisdiction for 2013/14? The secondary legislation deriving from the energy reform was approved in the third quarter of 2014, however, we are aware that this will not generate immediate results in terms of the development of the oil and gas market.
In this sense, the industry was significantly different from the industries of other leading countries of the sector, despite being in the same geographical location and therefore having several common elements, such as resource abundance and large coasts, as is the case of the United States and Canada; large producers of oil and gas in Africa and Asia were also part of industries that were very different from the Mexican industry.
It is important to recall the major paradigm shift that marks this reform, as it radically transforms the energy sector from a monopoly, primarily led by the state, to a sector widely open to investment and competition between private participants. In this sense, the changes caused by such a profound transformation will be evident at different stages throughout the implementation of the reform.
How can your expert knowledge of the industry support those doing business in the region? At Santamarina y Steta S.C. we have a deep understanding of how markets in Mexico operate and develop and a vast experience in energy markets. For many years, Santamarina y Steta, S.C. has devoted a considerable part of our human capital to develop our energy practice area, as we are aware of Mexico’s great potential in this particular field. For this purpose, we have several converging areas which are directly involved in energy projects, including, among other areas, our environmental, real estate, corporate, finance, M&A, and tax practice areas, in order to best assist our clients, providing a truly comprehensive counseling, so as to comprise all possible features that any project of the energy industry may include.
For the remainder of 2014, we expect that companies interested in participating in the Mexican energy market (including major international oil companies and several suppliers of goods and services related to this industry) will start setting offices up in Mexico, and will begin to analyse the market thoroughly, in order to start operations. n
SECTOR SPOTLIGHT www.acquisition-intl.com
Company Law Changes Increase Flexibility for Jersey M&A Activity Nigel Weston, Partner at Walkers, tells us why changes to the Companies Law in Jersey are set to further strengthen Jersey’s reputation as a prime M&A location.
Company: Walkers Name: Nigel Weston Email: nigel.weston@ walkersglobal.com Web: www.walkersglobal.com Address: PO Box 72, Walker House, 28-34 Hill Street, St. Helier Jersey, JE4 8PN Channel Islands Tel: +44 (0)1534 700 700 Fax: +44 (0)1534 700 800
A raft of significant changes to the Companies Law in Jersey have recently been introduced. Notably, the developments will introduce greater flexibility to the corporate framework, as well as streamlining the merger process, all of which will enhance Jersey’s already strong reputation as a convenient domicile for corporate and M&A activity.
in a jurisdiction where an offer made to them would contravene the laws of that jurisdiction. The new law will follow English company law with specific provision for takeover offers to lawfully exclude a shareholder where the company risks breaching the laws of their jurisdiction by making an offer to them.
The changes to the Companies (Jersey) Law 1991 came into effect on 1 August 2014 and in line with the global upswing in M&A activity, Jersey remains an attractive jurisdiction for structuring purposes, whether for incorporation as part of a group, from topco to asset holding SPV, or as a stand-alone option. The flexibility of the companies law regime is only one of the benefits Jersey has to offer. As a result we see Jersey transactions that are a small part of high profile global deals across numerous jurisdictions, as well as Jersey-only transactions.
Certain time periods in respect of notice of continuance in another jurisdiction are reduced to 21 days. These include the notice period to be given to creditors before an application is made for authorisation to seek continuance, and the period in which an objection may then be made by creditors. The amendments also allow creditors to waive the requirement for notice.
Alongside various amendments to streamline the merger process in Jersey, there is a new provision inserted in the law conferring a power to make regulations for demergers, which will enable an existing company to “split” into two or more companies. With regard to “takeover offers”, the generally accepted practice has been to exclude from an offer any shareholder
Additionally, the time period has been reduced for certain parties to apply to court in relation to mergers and the time period after which application can be made to the registrar of companies following the taking of the steps required in the law. With various other changes being introduced, all designed to increase flexibility of the Jersey company, including issues related to distributions, share capital and corporate governance, the updated law will be of great interest to all who use Jersey companies within their structures. n
The Underwriting Evolution: Remaining Competitive in Times of Change With traditional underwriting processes seeing wide scale changes, Steven Sangha of Green Park Interim & Executive Search takes us through how his firm, Green Park is addressing the shortage of skills and talents the actuarial and underwriting professions have long been associated with. Company: Green Park Interim & Executive Search Name: Steven Sangha Email: steven.sangha@ googlemail.com Web: www.green-park.co.uk Address: 15 Portland Place, London, W1B 1PT Tel: 020 7399 4300
As the UK’s largest independent supplier of senior interim management to both the private and public sectors Green Park Interim & Executive Search is well aware of the challenges facing underwriting recruitment. With the landscape in the profession changing at a rapid rate too, keeping up with what our clients demand and expect is where we excel. We do this by innovating in the segment, ensuring we provide a dynamic service to our clients, in keeping with our three clear business focuses. With a commitment to sourcing and placing only the best and most relevant talent, our processes controlling our Executive or Interim Management searches are robust. Add to this our provision of tier one level guidance and empowering better decision making through our Independent Board Advisory services, we strive to ensure we offer a more than
competitive service as the sectors most competitive environment continues. This approach allows us to dovetail our professional service with that of our clients, becoming much more of a partner in successful business growth than merely a service provider. With our skill of acquiring pertinent business knowledge, and ability to disseminate this to our clients in an easy to understand and easy to action way, we augment the focus of our clients. With market-leading expertise, specialist knowledge and a driver to deliver and exceed expected results, we focus on clear areas where we can provide scalable results. Able to comprehensively advise on how to attract and develop the best relationships, we are your partner for your Executive Search needs across Board Practice, Financial & Professional Services, Retail, Commerce & Industry, Public Sector, Charities & Social and Enterprise Healthcare. n
Acquisition International September 2014 93
WE KNOW YOU CAN DO IT. But you do not have to do it all by yourself. With a client base spanning 12 time zones and covering nearly every sector of economic activity, NERO Boutique Law Firm brings, with its “boutique” approach, a new dimension to the practice of business law in Morocco. Led by Me Nesrine Roudane, who is widely recognized as one of the country’s leading attorneys in Employment Law, NERO Boutique Law Firm provides its local and international clients with high value-added services, delivered by a team of attorneys experienced in successfully dealing with complex issues and cases in each of the firm’s four core areas of practice: Employment & Labour Consumer Protection & Advertising Foreign Exchange & Investment Energy & Environment
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NERO BOUTIQUE LAW FIRM 154 Boul. Bir Anzarane, 3ème étage, n° 9 20100 Racine Casablanca Maroc +212 (0) 522 827 722 nerolaw@nerolaw.net
SECTOR SPOTLIGHT www.acquisition-intl.com
Industrial Free Zones: Foreign Direct Investment
Company: Galadari, Advocates & Legal Consultants Name: Manish Narayan Email: manish@galadarilaw.com Web: www.galadarilaw.com Address: P.O.Box: 7992 Dubai - UAE Tel: +971 4 3937700 Fax: +971 4 3937755
Industrial Free Zones: Foreign Direct Investment Industrial development and local manufacturing forms a crucial component of the economic development strategy of Dubai Government. Carrying forward from the successes of sector specific free zones, such as, Jebel Ali Free Zone (“JAFZ”), Dubai Internet City (“DIC”), Dubai Media City (“DMC), Dubai Multi Commodities Centre (“DMCC”), the Dubai Government has established two free zones exclusively for industrial and manufacturing operations. They are, the Dubai Industrial Park (“DIP”) and Dubai Industrial City (“DIC”), both of them being free zones which allow for 100% share ownership of corporate entities. The ownership structure along with several other benefits is aimed at promoting foreign direct investment within the sector. Dubai Industrial City (DI) Dubai Industrial City is a non-free zone business park
dedicated to the manufacturing and logistics industry. DI is an industrial zone clustering manufacturing facilities in high value added sectors concentrates on six sectors: machinery and mechanical equipment, transport equipment, base metals, chemicals, food & beverage, and mineral products. Spread across 55 square kilometers, DI is the second largest non-real estate project in Dubai and is now home to over 500 companies with a total workforce of more than 10,000 people which includes leading multinational companies. Dubai Investments Park (DIP) Dubai Investments Park (DIP) setup in 1997 is a unique, self-contained mixed-use industrial, commercial and residential complex operated by Dubai Investments Park Development Company LLC. DIP offers world-class infrastructure facilities and services. The park is equipped with facilities and services for
manufacturing, housing, academic, research and development, distribution and logistics purposes. The industrial complex in DIP has quickly emerged as a powerhouse in manufacturing ideal for any kind of industry - from light to medium and heavy. Road networks enable connectivity to regional and international transport linkages resulting in speedy access to key markets and prompt delivery of raw materials. Adequate supply of water and electricity, ultra-modern cooling plants, excellent waste management system and recycling facilities, a sophisticated telecommunications network and up-todate staff amenities make it the preferred choice for all types of ventures. The new Al Makhtoum International Airport has further increased the demand within the DIC and DIP. n
Acquisition International September 2014 95
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Global Experts Directory LLF Legal & Tax has a broad range of specialties by serving mainly businesses and individuals. Our experience allow us to offer to our customers complete Legal and Tax services in Albania, in Greece and in the Balkan area. Our services include: All type of Legal Documentation, Civil and criminal Litigation, Company law, Tax law, Employment law, Administrative, Real Estate, Investments & Energy Intellectual property and E-commerce, International trade, Immigration issues, Commercial litigation and arbitration, Joint Venture and Collaboration, Mergers, Acquisitions, Takeover, Family laws, dispute resolution & child custody cases with regards conflict of laws. n
Acquisition International September 2014 97
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Deal Diary Welcome to Deal Diary, Acquisition International’s monthly round-up of recent M&A activity across the globe. As always, we feature a range of transactions across a number of different sectors. In support services, Silverfleet Capital, the European private equity firm, has agreed to acquire AGR Holdings AS, the petroleum services division of Oslo-listed AGR Group ASA, in a NOK 1,640 million (c. €195m) transaction. Investment banking advisory firm Evermore assisted in the deal. In TMT, Cable & Wireless Communications, Plc, through its subsidiary Cable & Wireless Panamá, S. A. has agreed, with the support of Panamanian law firm Alemán, Cordero, Galindo & Lee, to acquire Panama-based Grupo Sonitel for US$36m, plus contingent consideration of up to an additional US$5m. It’s a deal that will see Cable & Wireless enter the El Salvador, Peru and Nicaragua B2B markets. In financial services, Umati Capital, a company that finances businesspeople and farmers supplying larger agribusinesses, has secured a US$10m credit line from Singapore-based ApexPeak to fund its expansion. The money will enable Umati to structure products that enable the traders and processors to pay farmers’ invoices early and at better rates. Ashitiva & Co. Advocates acted as legal adviser to the management team. In healthcare, the US-based real estate investment trust Health Care REIT, Inc. has completed the acquisition of 11 premium-quality seniors housing communities concentrated in southern England for £153m from Gracewell Healthcare, with the assistance of Merrill Datasite. The energy and resources sector has seen Armstrong Asset Management agree to commit up to US$22.5m to develop and operate a portfolio of 50MW minihydro plants in Indonesia, with Deloitte and NKNLegal assisting in the deal. And in the consumer sector, Odin Equity Partners has signed a binding agreement to divest SFK Food, the leading innovative blend developer and supplier of spices, herbs, marinades and functional ingredients in Denmark for the meat, fish and poultry industries, to European food supplier Solina Group. Merrill Datasite assisted in the transaction. Have you done a deal lately? If so, then we want to hear from you! Head over to our website, www.acquisition-intl.com, and submit the details. n
Consumer SFK Food
100
BFP Holdings
100
Energy & Resources Inti Duta Energi hydro-electric portfolio
102
Topco Ltd
102
Total Coal South Africa Proprietary Limited
103
Financial Services ApexPeak
105
Diamond Trust Bank
105
Health Care Patron Capital Partners
106
Bestway Group
106
Support Services Hunters Group
109
AGR Holdings
109
Crawford Scientific
110
OEG Offshore Group
110
TaxAssist MBO
111
TMT
98 Acquisition International September 2014
Dark Fibre Africa
112
Grupo Sonitel
112
SpotXchange
113
SmartNews
113
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Healthcare H1 2014 was relatively similar to the second half of 2013 in terms of the volume and value of M&A transactions targeting the healthcare sector, according to data from Zephyr, the M&A database published by Bureau van Dijk. In total there were 652 deals worth an aggregate USD 26,196 million from January to the end of June. Although results for 2014 to date have been anything but spectacular, some comfort can be taken from the fact that things appear to be heading in the right direction. Although values took a slight tumble in the first half of the year, it was only by a relatively small amount, from USD 27,141 million in H2 2013 to USD 26,196 million. The figure also represents a significant improvement on other results between H2 2011 and H1 2013, which ranged from a low of USD 11,760 million to a high of USD 16,186 million. Volume has been even more positive, reaching 652 in the first half of 2014, representing the best result in the entire period under review, dating back to the beginning of 2006. So far H2 2014 has started fairly slowly, notching up 174 transactions worth USD 4,140 million to date. North America has received the most funding from investors in the year to date, securing a total of USD 15,222 million thus far and placing it well ahead of its nearest rival, Western Europe, which has been targeted in deals worth USD 7,520 million. In spite of the large gulf in valuations, the two traded places in terms of volume, with Western Europe leading the field with 262 deals and North America coming a close second with 257. Third place in both cases was taken by the Far East and Central Asia, which received USD 4,622 million across 120 transactions. Therefore, a considerable increase in deal activity is likely going to be necessary if the healthcare sector is to generate similar levels of investment to H2 2013 and H1 2014. However, the modest results in H2 to date may be due to the traditionally slow summer period and could lead to increased activity if investors come back suitably refreshed from their recent holidays. n
NUMBER AND AGGREGATE VALUE (MIL USD) OF HEALTHCARE DEALS GLOBALLY: 2006- 2014 to date (as at 01 September 2014) Deal half yearly value (Announced date) H1 2006
Number of deals 470
Aggregate deal value (mil USD) 20,491
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 H1 2014 H2 2014 TD
495 505 533 453 426 381 429 461 457 494 536 574 580 591 635 652 174
61,935 31,823 27,631 13,520 7,312 5,736 10,131 14,698 17,625 25,172 11,760 13,402 15,281 16,186 27,141 26,196 4,140
Corporate Finance
“Without continual growth and progress, such words as improvement, achievement and success have no meaning.� ~ Benjamin Franklin
M&A l Due Diligence l Specialist Tax Services l Valuations Contact details: 020 7549 8008 steve.govey@beavismorgan.com paul.smith@beavismorgan.com
www.beavismorgan.com Accountants and Business Advisers
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Consumer Deals
Odin sale of SFK Food to Solina Odin Equity Partners (“Odin”) has signed a binding agreement to divest SFK Food to Solina Group (“Solina”). Kjeld Kronborg Danielsen and Casper Juul Sørensen will stay on as shareholders and directors of SFK Food.
sale of
Jacob Bergenholtz, Managing Partner, Odin, said: “SFK Food is an attractive business with exciting prospects. Since 2011, Odin and the management of SFK Food have been actively engaged in optimising the business platform and building strategic value through strengthened customer relationships and new food concepts. We’re very proud of the business as it stands today, well-positioned for profitable growth. We’re confident that it will continue its positive developments under Solina ownership”. to
Kjeld Kronborg Danielsen, CEO, SFK Food, said: “We’re looking forward to being part of the Solina Group. Together with Solina, we’ll continue to develop our service and product offering which will be beneficial for both customers and suppliers”. Eric Terré, CEO, Solina Group, said: “SFK Food is highly recognized for its service level and product quality and we’re looking forward to working with the management team and the organisation. SFK Food will benefit from the existing Solina Meat platform as well as the Solina Group structure for international development. “Solina is currently expanding in Western Europe within its three core areas: Service to Meat Industry, Service to the Culinary and Snack Industries and Service to professionals. SFK Food represents a perfect strategic match for the Group in this expansion process. Customers of both Solina and SFK Food will benefit from an extended service platform and more R&D and innovation investments. The group will offer the widest range of products in savoury businesses in Europe”, added Eric Terré.
Adam Pang
Virtual Data Room Provider
Tax Adviser
Merrill DataSite, led by Adam Pang, director, represented the sell side for the provision of their VDR. Mr. Pang commented: “Merrill DataSite worked with the sell side on this project to prepare and present their confidential data for the due diligence phase, which was executed efficiently to a successful close.” Adam.Pang@merrillcorp.com | + 44 20 7422 6268 | www.datasite.com n
Zimt Holdings acquisition of BFP Holdings from Lesaffre
Zimt Holdings acquisition of
Lesaffre has sold 100% of UK food distributor BFP Wholesale Limited (BFP) to private equity consortium Zimt Holding. Transaction details were not disclosed. Headquartered in Sevenoaks, BFP is a nationwide, one-stop wholesale supplier of ambient, chilled and frozen food products. The company’s products are distributed from strategically well-located depots via a fleet of multi-temperature vehicles to more than 4,000 customers throughout the UK, including Krispy Kreme and Greggs. BFP has grown consistently over the years and in 2013 sold 50,000 tonnes of food products, generating a turnover of over £75m.
from
Marc Casier, Lesaffre’s General Manager Baking Western Europe, conducted the disposal. He said: “The sale reflects a strategic choice to focus on our core activity of yeast production & sale and we are very pleased to have found an ambitious buyer for BFP.” The consortium was led by David Burresi and Sebastian Sipp. According to Sipp: “BFP presents an exciting opportunity for accelerated growth in the years ahead. By deploying our significant operational and management expertise we will be working closely with the management team to develop BFP’s purchasing and distribution processes and will invest in its personnel and information systems to enable the firm to take advantage of a fast-changing environment.”
Virtual Data Room Provider
Legal Adviser to the Purchaser Legal Adviser to the Equity Provider Tax Adviser
Lesaffre was advised by consumer advisory firm Leopold Capital Partners and Linklaters. Zimt Holding was advised by Addleshaw Goddard, with GE Capital providing financing. n Legal Advisers to the Debt Providers
The sale reflects a strategic choice to focus on our core activity of yeast production & sale and we are very pleased to have found an ambitious buyer for BFP.”
100 Acquisition International September 2014
Legal Adviser to the Vendor
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Consumer Deals
Ontex IPO Ontex Group NV (“Ontex” or the “Company”) has announced the final price and results of its initial public offering that was launched on 11 June 2014 and ended, as said in the prospectus, on 24 June 2014 (“IPO”). Charles Bouaziz, Chief Executive Officer of Ontex, said: “This is a landmark day for Ontex, its employees, customers, consumers and shareholders as the business returns to the Euronext stock exchange. As a public company, with the support of the financial markets, we will become a stronger partner and employer delivering profitable sustainable growth.” Roland Berger Strategy Consultants represented Ontex management team. Leading the team at Roland Berger were Laurent Dusollier (left), Senior Partner, Benjamin Entraygues, Partner and Dominique Trancart, Principal. They commented: “We have had a long-lasting working relationship with CEO and top management at Ontex as we have previously worked with them on various strategy projects. During the IPO process, we advised them on the preparation of the Equity Story and Analyst Presentation, working closely with other counsels.” They continued: “The main challenge was to make sure that all stakeholders (management, shareholders, and various counsels) were fully aligned on key messages to be provided to potential investors. Roland Berger Strategy Consultants role was central in this regard, as our analyses, market expertise and know-how were largely used in different documentations.” “Going forward, this IPO should allow our client to execute its strategy aimed at strengthening its market positions in both mature and emerging countries and enhancing its value proposition in several market segments.”
IPO
Legal Adviser to the Purchaser
Equity Story Adviser
Legal Adviser to the Equity Provider
Financial Adviser
Tax Adviser
laurent.dusollier@rolandberger.com benjamin.entraygues@rolandberger.com dominique.trancart@rolandberger.com n
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Energy & Resources Deals
Armstrong Asset Management investment in Inti Duta Energi hydro-electric Armstrong’s South East Asia Clean Energy Fund has agreed to fund the construction of a portfolio of mini-hydro power generation projects in Indonesia being developed by PT Inti Duta Energi (IDE), the mini-hydro development subsidiary of Jakarta-listed construction company PT Nusa Konstruksi Enjiniring Tbk (NKE).
Edy Wirawan
Gavin Yusuf
Suditomo Kartohadiprodjo
Edy Wirawan, Partner assisted by Gavin Yusuf, Associate Director and Roy David Kiantiong, Tax Partner led the team at PT Deloitte Konsultan Indonesia who were engaged to perform M&A transaction services on behalf of Armstrong Asset Management. Mr Wirawan commented: “It was our first engagement with Armstrong and we did not face any significant issue or problem to complete this deal. We understand that Armstrong are keenly looking for investment opportunities in Indonesia and we believe that this deal should be an important milestone for their geographical presence in Indonesia.” ewirawan@deloitte.com Sudiotomo Kartohadiprodjo, Partner of Nurhadian Kartohadiprodjo Noorcahyo law firm assisted by Jay Rasjidgandha, Pamela A. Libing and Deajeng P. Wardani represented PT Inti Duta Energi a company which engage in renewable energy owned by PT Nusa Konstruksi Enjiniring Tbk, a public and listed construction company. Mr. Kartohadiprodjo commented: “We have been assisting this group since 2006. The main challenge we faced was the process of alignment of the business interest of both parties since the method of investment made by Armstrong was not a merely through direct share participation, nevertheless it was combined with debt structures which were set in a way to have similar economic benefit with ordinary share participation.
investment in
Inti Duta Energi hydro-electric Financial Due Diligence Provider & Tax Adviser
Legal Adviser to the Vendor
Legal Adviser to the Equity Provider
“By entering to this cooperation, our client is expecting to gain benefit from the strategic alliance and networks. If the projects undertaking with Armstrong run smoothly, then hopefully European investors may also observe and take into account the parent of PT Inti Duta Energy as a listed company.” dudi@nknlegal.co.id | www@nknlegal.com n
SSE PLC acquisition of Topco Ltd from Bridgepoint Development Capital SSE plc has completed the acquisition of The Energy Solutions Group Topco Limited (ESG), a Manchester-based designer and provider of energy management solutions, from Bridgepoint Development Capital, for an enterprise value and total cash consideration of £66m with the potential for a further £6m if agreed targets are achieved. The acquisition of ESG complements and enhances SSE’s services in competitive markets for industrial and commercial customers. As stated in SSE’s financial results statement in May, these services – including electrical and mechanical contracting, lighting services, private energy networks and telecoms - are being brought together in an ‘Enterprise’ division to meet the energy and related needs of such customers in an enhanced and co-ordinated way.
acquisition of
Topco Limited from
The existing management team at ESG will lead this business, which will continue to trade as The Energy Solutions Group. SSE believes that it will benefit from the commitment of the ESG management team and other employees to delivering effective energy management solutions for the benefit of customers and the environment. It is expected to earn annual operating profit of over £10m within five years, in addition to the commercial synergies that it will bring to SSE’s Enterprise division. Jim McPhillimy, SSE’s Managing Director, Enterprise, said: “Managing energy costs and environmental impact are big priorities for businesses and other organisations. As a responsible company focused on the long term, we believe it is in SSE’s interests to make the consumption of energy more sustainable. ESG is a leading provider of energy management solutions and these will be offered to SSE’s existing and potential new customers as part of a significantly increased presence in the growing business-to-business market for energy services. “This market will be increasingly important in the next few years, and SSE’s programme to dispose of assets and businesses that are not core to its future plans is designed to enable the company to make a success of those opportunities which are, such as energy services. The disposal programme is well under way and we expect to report substantive progress in the autumn.” n
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Energy & Resources Deals
Exxaro acquisition of Total Coal South Africa Proprietary Limited Exxaro has entered into a binding sale and purchase agreement (the “SPA”) with Total S.A. (“Total”) for the acquisition of 100% of the issued share capital of Total Coal South Africa Proprietary Limited (“TCSA”) and its related export marketing rights under primary Richards Bay Coal Terminal (“RBCT”) allocation (“the Acquisition”). In terms of the Acquisition, Exxaro will acquire 100% of the issued share capital of TCSA from Total as well as settle all outstanding loan claims of Total Finance S.A.S (“Total Finance”) against TCSA.
acquisition of
Exxaro confirms that after the completion of the Acquisition, TCSA will be a wholly-owned subsidiary of Exxaro and the Memoranda of Incorporation of TCSA and its subsidiaries will not frustrate Exxaro from compliance with its obligations in terms of the Listings Requirements. Exxaro anticipates financing the Purchase Consideration using its existing corporate debt facilities, which have been reserved for the Acquisition. Exxaro is required to provide a US$-based guarantee for the Purchase Consideration. “Exxaro is delighted with its success regarding the Acquisition and for the growth opportunities it will provide for Exxaro as well as the contribution to the South African economy in terms of continuing employment and foreign earnings. The consolidation of ownership of coal assets within South Africa is a welcome opportunity,” said Sipho Nkosi, Exxaro’s chief executive officer.
Jerome Pottier
Merrill DataSite was representing Total in this project with whom they have a long-standing relationship. They were led by Jerome Pottier, sales director, Merrill DataSite, France. Mr. Pottier commented: “We provided the virtual data room for online due diligence against thousands of pages of confidential information. We were able to provide a quick and efficient service to help support closure of this deal.” Jerome.Pottier@merrillcorp.com n
Virtual Data Room Provider
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Peyman Erginel - Law Firm
Northern Cyprus
HAVE YOU THOUGHT OF INVESTING IN THE TRNC? Business opportunities in the Turkish Republic of Northern Cyprus are expanding, opening up a developing market to international acquisitions and investments. At Peyman Erginel Law Firm, we can advise on acquisitions and investments of all sizes, in all sectors, and our dedicated team, led by Peyman Erginel herself, will be on hand to guide you through the process from start to finish. We set the standard for provision of legal services in the TRNC with our “complete assistance” strategy, which ensures a consistency and continuity of approach that is unique within the country. Our firm has experience in the following areas: - Property matters (Purchase, Tenancy and Conveyancy) Immovable Property Commission Disputes - Wills, Probates and Trusts - Adminstration of Estates - Civil Litigation - Family Law - Shipping - Intellectual Property - Trademarks and Patents - Corporate Law - Banking Law - Commercial Law - Arbitration - Mediation Our firm is expert in the fields of Intellectual Property, Trademarks and Patents and has an excellent record of success in the Courts of North Cyprus. We have handled a number of high-achieving court cases against infringement and passing-off with regard to the Levi Strauss and Nike trade marks. These widely publicised successes set precedents and closed the factories producing imitation goods bearing such trade marks. Our firm also represents many other international companies, including Quiksilver and Caterpillar. Peyman Erginel
PO Box 122, Mustafa Çağatay Avenue No 16, Kyrenia, Via Mersin 10, Turkey Office: +90 392 815 2655/815 5550/815 9694 Mobile: +90 533 861 4646 Fax: +90 392 815 4900 Website: www.peymanerginel-lawfirm.com Email: peymanerginel@erginellaw.com
DEAL DIARY www.acquisition-intl.com
Financial Deals
Umati Capital Kenya acquisition of credit line from ApexPeak Umati Capital, a company that finances businesspeople and farmers supplying larger agribusinesses, has secured a $10 million (Sh880 million) credit line from Singapore-based ApexPeak to fund its expansion. Umati said the credit line from ApexPeak will target SMEs processing milk and fresh produce like maize, wheat, barley and rice. “We look forward to aggressively expanding our unique blend of technology and financial services to companies in the agribusiness sector,” said Umati co-founder Ivan Mbowa in a statement.
Auma Okelo
acquisition of credit line from
Legal Adviser to the management team
Ashitiva & Company Advocates represented Umati Capital (Kenya) Limited. The team was led by Miss Auma Okelo, Lead Associate in the Commercial Law Department, assisted by Mr. Kennedy Ashimosi, Partner – Real Estate and Commercial and supported by Miss Anne Masese, Lawyer, Commercial Law Department. Miss Okelo commented: “We have worked with Umati Capital (Kenya) Limited since January 2014. Our role in the transaction was reviewing the contract forwarded to Umati by ApexPeak, advising our clients on the transaction, making major recommendations and subsequently re-drafting of the contract.”
“As this was a cross-border commercial contract which comes with many challenges, we had to ensure that we were thorough in our assessment and review of the agreement and that it adequately protected our client as well as ensuring that the agreement was in line with Kenyan laws.” “This credit line allows Umati to expand their operations by affording them the financial muscle to increase their market share with micro-finance financing. The demand in Kenya for loans is high and this pool ensures that they adequately penetrate the market.”
Risk & Insurance Due Diligence Provider
“From a legal stand-point one must always be conscious that there is a possibility that the contract may end up in a court of law and there are a number of issues that one must navigate through to ensure the contract adequately protects your client.” aokelo@ashitivaadvocates.com | www.ashitivaadvocates.com n
Kenya’s Diamond Trust Bank share offering Diamond Trust Bank Kenya intends to offer 22 million shares in a rights issue, subject to approval from the market regulators. This follows approval obtained from the bank’s shareholders, at an extraordinary general meeting held on 4 March 2014. Mr. Abdul Samji, the bank’s Chairman, said that the additional capital raised will play a key role to fund future asset growth, investment in the branch network and alternative channels in Kenya, as well as strengthen the Group’s presence in East Africa, through additional investments in DTB’s subsidiaries in Tanzania, Uganda and Burundi. It will also enable the bank to explore future investment opportunities in other new markets in the region. In the proposed rights issue, shareholders will be given the opportunity to take up their rights at the ratio of one new ordinary share for every ten ordinary shares held. Mr. Samji advised that the date of the launch of the proposed rights issue, as well as the subscription price for the issue and the amount of additional capital to be raised will be announced by the bank once approval for the issue has been obtained from the Capital Markets Authority and the Nairobi Securities Exchange. “The proposed rights issue accords the shareholders with the opportunity to increase their investment in DTB and benefit from its growth,” said Mr. Samji.
share offering
Data Processing Adviser
Reporting Accountant
Legal Adviser
Between 2006 and 2012, DTB Kenya undertook three sets of rights issues, raising additional capital of KShs 4.1 billion in the aggregate from the market. “We are excited at the growth prospects and the support and confidence in DTB that our shareholders have demonstrated in the past and we are hopeful that this issue, which will be DTB’s fourth since 2006, will go even further to affirm this relationship,” said Mr. Samji. Announcing the group’s annual results, DTB’s Managing Director and Group CEO, Mrs. Nasim Devji said: “2013 has been an exceptional year for DTB, with notable growth achieved across all key balance sheet parameters, as well as earnings, on the back of continuing growth in market share of assets and profitability across the East African markets we are present in.” n
Co- Sponsoring Stockbroker
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Healthcare Deals
Patron Capital Partners sale of Gracewell Healthcare to Health Care REIT and Sunrise Senior Living Health Care REIT, Inc. (NYSE:HCN) has announced that it has completed the acquisition of 11 premium-quality seniors housing communities (the “Portfolio”) for £153 million (approximately USD$257 million in cash based upon an exchange rate of GBP to USD of 1:1.68) from Gracewell Healthcare (“Gracewell”). Sunrise Senior Living, LLC (“Sunrise”), the management company in which HCN owns a 24% interest, will separately purchase Gracewell’s management company and manage the Portfolio going forward.
Merlin Piscitelli
Merlin Piscitelli, director at Merrill DataSite, led on provision of the virtual data room for the sell side team. Mr Piscitelli commented: “Merrill DataSite worked with the sell side team to prepare a large amount of data for the VDR on this project. This helped ensure an efficient and smooth delivery of secure, online documentation for the due diligence phase of this deal.” Merlin.Piscitelli@merrillcorp.com www.datasite.com
sale of
to
and
“HCN has built a strategic position in the UK as the leading partner to the premium, private pay seniors housing industry,” said Tom DeRosa, HCN’s CEO. “This latest acquisition brings together the operating expertise of Sunrise, the development expertise of Gracewell and the strategic capital of HCN. We are pleased to expand our relationship with our largest operating partner by building on our leading position in the highly attractive Greater London and Southern England markets. We’re highly confident in the Sunrise management team and their ability to deliver a premium product to their residents in the US, Canada and the UK.” “Through our best-in-class platform and capital partnership with HCN, Sunrise is strongly positioned to grow,” said Chris Winkle, CEO of Sunrise. “We’ve been operating premium seniors housing communities in the UK for more than a decade and have a tremendous local operating platform through our exceptional portfolio of 27 communities, which are concentrated in Greater London and Southern England, that we manage for HCN.” n
Virtual Data Room Provider
Co-operative Group sale of its Pharmacy business to Bestway Group The Co-operative Group (“The Co-operative”) has announced that it has entered into an agreement to sell its Pharmacy business to Bestway Group (“Bestway”), for a purchase price of £620 million*. The transaction is due to complete in October 2014, following the fulfilment of a number of required steps to separate the Pharmacy business from The Co-operative.
sale of its Pharmacy business to
With this acquisition, Bestway will have an annual turnover of approximately £3.4 billion and a global workforce of more than 32,600 people, with over 11,900 people in the UK. Richard Pennycook, Interim Group Chief Executive of The Co-operative Group, said: “The successful sale of our Pharmacy business is an important move for The Co-operative Group. The proceeds will enable The Co-operative to reduce debt and invest in our business and is part of the focused delivery of our clear strategic plans and priorities. “I am pleased that the agreement we have reached with Bestway reflects the quality of the business and the high level of interest from a number of bidders. Bestway is acquiring an excellent pharmacy business characterised by the quality and professionalism of colleagues and high levels of customer service. Bestway in return is an ideal owner, being a strong family-run group with a proven track-record of putting the needs of customers first. “I expect the Pharmacy business to go from strength to strength under the committed long-term ownership of Bestway and we look forward to working with them through the transition period.” Zameer M. Choudrey, Bestway Group Chief Executive, said: “We are delighted to be bringing The Co-operative Pharmacy business into the Bestway family, adding to our growing and diverse business portfolio. In line with our own ethos, there is a strong focus on supporting and servicing the needs of the local communities within this business. “On behalf of Bestway Group, I look forward to working in partnership with the management and staff at The Co-operative Pharmacy.” n
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a firm decision for your companies corporate and legal needs Our breadth of experience enables us to offer a wide range of skills to suit the individual needs and demands of each one of our clients. We conduct our work with a high degree of professionalism and dedication, and provide an expert, sensitive service for all of our clients. The firm has a uniquely flexible and entrepreneurial culture that fosters partnerships with our clients. Knowing the law is not enough. We understand our clients’ business objectives and address their legal needs in a manner that is consistent with the “big picture.” We have earned a reputation for being trusted business advisers, and we demonstrate our value every day in the successful results we achieve. Reflecting the firm’s entrepreneurial spirit, with more than 3 offices around the world, including associated offices, we are ready to help you wherever your business takes you. Tornaritis Law Firm aim is to provide quality legal services to clients around the world operating under the highest ethical standards with the principles of time and cost-efficiency in mind.
Nicosia 16 Stasikratous, 1065 Tel: +357 22456056 Fax: +357 22664056
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Silverfleet acquisition of AGR Holdings Silverfleet Capital, the European private equity firm, has agreed to acquire AGR Holdings AS (“AGR”), the petroleum services division of Oslo-listed AGR Group ASA, in a NOK 1,640 million (c. €195m) transaction. The transaction completed on 1st September.
Martin Copeland
Dave Navarro
Martin Copeland, Managing Director at Evercore, led the team that advised Silverfleet Capital on its AGR Petroleum Services acquisition. “The transaction offers Silverfleet an international expansion opportunity in the highly attractive Oilfield Services segment with a world leader in well management services. The transaction involved extensive negotiation to match buyer and seller value and deal timing expectations as well as, in particular, resolving the refinancing of a pre-existing senior secured public bond at AGR with satisfying the requirements of Silverfleet’ s new funding banks.” Clive Smith, Director at Calash Limited led the team as the Project Director representing Silverfleet Capital Partners LLP, supported by Jason McGhie, Project Manager and Eleanor Macdonald, Analyst. Mr Smith commented: “This was a fast track project. However, as a former owner of a well project management business, I was very familiar with the service offering and the technical challenges facing this business both domestically and internationally. Calash was also heavily involved in a similar business transaction conducted earlier this year. “This is an important entry for Silverfleet into project management services in the oil and gas industry. “Calash aims to support Silverfleet in further oil and gas transactions in the future as well as strategic development of these businesses.” http://www.calash.com n
acquisition of
Corporate Finance Adviser
Commercial Due Diligence
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Financial and Tax Due Diligence & Tax Structuring
Clive Smith
Hunters Property Group merger with Hunters Group HUNTERS Property Group, the 105-branch national estate and lettings agency, has announced a merger with Hunters Group Limited, the West Midlands company with offices in Tamworth, Lichfield and Sutton Coldfield. merger with
The two businesses will combine to become one of the top brands across the UK, conducting around 10,000 sales and lettings transactions annually. Both businesses were established over 20 years ago, during the recession of the early 1990s, but have thrived and become leaders in their respective markets. Kevin Hollinrake, managing director and co-founder of Hunters Property Group, and John Ozwell, founder and chairman of Hunters Group Limited, released a joint statement to announce the merger: “We are delighted to be able to unify the Hunters name under a single business.” Tariq Javaid, Corporate Finance Director, and Richard Feltham led the team at Garbutt & Elliott LLP who were advisors to Hunters Property Group Ltd. Tariq Javaid
Adviser
Mr Javaid commented: “The timeframe was very tight, four weeks and the sellers were away abroad, but by working closely with the sellers accountant and a number of conferences calls with all advisors we were able to complete on a timely basis. The merger will allow to complement the existing network of Estate Agents, provide a bigger Geographic reach to boost Hunters coverage and success in the residential market across the Midlands and nationwide.” n
Richard Feltham
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Support Services Deals
KKR acquisition of majority stake in OEG Offshore Group OEG Offshore Group (“OEG”), a fast-growing global provider of specialist equipment to the offshore oil and gas industry, announced the acquisition of a majority interest in the company by KKR, with the executive management retaining a significant holding in the company. OEG is headquartered in Aberdeen, UK with regional hubs in the main offshore oil and gas regions including Singapore, Australia, and USA and 20 further diversified stocking locations worldwide.
acquisition of majority stake in
John Heiton, CEO of OEG, said: “We have achieved significant growth in OEG to date but our teams have the appetite to accelerate our further development through both organic and acquisitive means. We believe that KKR will be an excellent partner to achieve those aims, given their global network and experience as a leading investor in the energy services sector. We are delighted to co-invest with KKR to develop OEG into a leading global provider of field support equipment to the offshore energy industry.” Dominic Murphy, Member and Head of KKR operations in the United Kingdom, andJosselin de Roquemaurel, Director and Head of Energy for KKR Europe, said: “OEG has built an impressive track record of growth and has an exciting development path ahead, expanding its fleet, geographic coverage, and suite of products and services. We are enthusiastic about partnering with John Heiton and his team who combine deep industry expertise with strong commercial acumen and relationships in the offshore oil and gas industry and logistics sector.”
David Waring
James Robinson
Corporate Finance Adviser
David Waring, Senior Managing Director, and James Robinson, Director, at Evercore, led the team that advised the shareholders of OEG Offshore on its sale to KKR. “The transaction provides OEG Offshore, one of the leading global players in DNV certified offshore containers, with capital to continue international expansion. The Evercore team ran a fast track process; careful design, preparation and transaction management created a highly competitive process culminating in signing within 5 weeks of ‘going to market’. This transaction demonstrates the long term advisory relationship, with the same Evercore team advising on the previous sale of the business in 2012.” n
Maven investment in Crawford Scientific Maven has completed a £3.9m investment in Crawford Scientific (Crawford), investing alongside founder Sam Crawford and the senior management team, as part of a strategic plan to grow the business in the UK and internationally. merger with
Established in 1985 and with a turnover now in excess of £10m, Crawford provides chromatography consumables, instrument parts and technical services to a wide range of industries including the pharmaceutical and oil & gas sectors. Located in Strathaven, 15 miles south of Glasgow, the business supplies laboratories across the UK, mainland Europe and the USA. Crawford’s customer base includes a number of blue-chip clients such as GlaxoSmithKline, AstraZeneca and BP. The new investment will afford Crawford the opportunity to pursue its organic growth strategy with a particular emphasis on its service offering, develop new markets and actively look at strategic acquisition opportunities.
Financial Adviser to the Equity Provider
As part of the transaction Sean Kerr will join the board as Chairman. Sean brings a wealth of experience from his prior role as MD of Exova Europe and will help support the business as it enters its next phase of growth. David Milroy, Investment Director at Maven, said: “Sam has done a fantastic job in building the business and has surrounded himself with a great team. We have been impressed by the technical capability of the individuals that enables the company to present to the market a true end-to-end Chromatography offering. The business is well positioned to take advantage of future opportunities open to it and this is underpinned by a favourable outlook for its target markets. We look forward to working with Sam and the wider team to deliver our shared growth ambitions.” Sam Crawford, Managing Director at Crawford Scientific added: “We are delighted to be partnering with Maven and look forward to working with them to help build further on the company’s achievements to date. We have a very capable and driven team at Crawford who have the success of the company at the heart of everything they do, ensuring that we deliver a valued service to our customers. Our people are key to the future growth of the business and this transaction will enable them to share in that success. Crawford is in a fantastic position to deliver further growth in the coming years and we are delighted that we will be able to draw upon the experience of both Maven and Sean Kerr as we move forward.” n
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Support Services Deals
TaxAssist MBO IN A GROUND-BREAKING DEAL, the franchisees of TaxAssist Accountants have worked alongside its executive management to buy out the business. TaxAssist, 25th in the Accountancy Age Top 50 Survey of firms with £27m in revenues, is now co-owned by a tranche of its franchisees, senior management and long-standing business partners. The new ownership structure will see the business 32% owned by franchisees, 53% by the senior management team and 15% by long-standing external business partners. “We believe this is a first in the UK and internationally,” said chief executive Karl Sandall. “Franchise operations have been bought by their management teams, but as far as we are aware never in partnership with their franchisees. More than half of our network, including franchisees and their staff, have invested in the business and many more have expressed an interest in buying shares in the future as they are placed on our internal market. We’re delighted at the response to this offer and the even closer working partnership it creates for our business.” John Westgarth, who founded the business in 1995, retires as chairman and director.
MBO
Adviser
Stephen Reed, corporate finance partner at Price Bailey, Martin Simons, Senior Commercial Manager at HSBC and Mark Whittaker, Corporate and Commercial Partner, Ashton KCJ Solicitors advised on the deal. n Pictured Left: back row (left to right): Colin Deny, Deputy Area Commercial Director, HSBC - Mark Whittaker, Associate, AshtonKCJ - Stephen Reed, Corporate Finance Partner, Price Bailey. Front row: Sarah Robertson, Business Development Director - Karl Sandall, CEO - Phil Sullivan, Network Operation & Finance Director.
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TMT Deals
Dark Fibre Africa refinancing Dark Fibre Africa (RF) Pty Ltd (“DFA”) has recently announced that it has entered into a refinance agreement with a syndicate of lenders to provide R3.5 billion of corporate debt facilities. A.I. spoke to 2 of the lenders on this deal. Mlungisi Phungula (Legal, Risk and Compliance Officer) Manoj Nathoo (Project Investment Officer) and Rudo Nyazika (Credit Analyst) represented the KZN Growth Fund. They commented: “The biggest challenge was the time required for approval. The client needed approval in about 5 weeks, which was less than the normal time taken in practise in this industry. The minimum time taken by most project financiers is about 3 months. However, all parties pulled together and worked within a tight deadline so as to ensure that the approval was granted in the required time. “Our funding was primarily given in order to expand the fibre optic network in KZN. Hence, our funding led to better web and voice (cell phones) connectivity in KZN. This included benefits to tertiary institutions that can now communicate with its peers internationally via fibre optic cables at a much faster but cheaper method.”
Refinancing
Debt Providers Covered in this Article
Avishal Khusial
Liberty Group Limited was represented by Liberty Financial Solutions. The Liberty Team was led by Avishal Khusial: Debt Originator, Molesh Singh: Senior Credit Analyst and Zwide Mhlongo: Senior Legal Counsel. They commented: “The main challenges arose in executing the deal from a legal perspective and in capturing the commercial essence of the transaction in the legal documentation. We assisted in overcoming these challenges by engaging the client on the basis of the legal and commercial advice provided by the parties involved in the transaction and taking a pragmatic approach to facilitating the implementation of the deal.”
Molesh Singh
They continued: “Firstly, I think it raises the client’s business profile in the telecommunication markets. The deal is structured such that it gives the client adequate flexibility to expand its current network, engage in M&A activity to the extent that it is economically viable and engage in opportunistic transactions as they arise.”
Zwide Mhlongo
KGF’s R193m contribution was part of the initial consortium of funder’s contribution, which in total was R3.2bn of the R3.5bn total commitment. The other funders (amongst others) to the consortium were South African based financial institutions such as Absa, RMB and DBSA. KGF played a pivotal role in the early stages of the project by providing senior and mezzanine finance to DFA when the other funders had reached their prudent ceiling limits and could not provide further funding. buhle@kzngrowthfund.co.za | www.kzngrowthfund.co.za
They concluded: “This was a momentous deal for Liberty Financial Solutions in the telecommunications infrastructure space and we think it demonstrates our capability to participate in bespoke transactions that reference distinctive asset classes. Through participation in this deal we are confident that Liberty Financial Solutions can generate more commercial business with DFA and the Remgro Group as a whole.” http://www.liberty.co.za/Pages/liberty-landing-page.htm n
Cable & Wireless acquisition of Grupo Sonitel Cable & Wireless Communications, Plc (CWC), through its subsidiary Cable & Wireless Panamá, S. A. (CWP), has agreed to acquire Panama-based Grupo Sonitel for US$36 million plus contingent consideration of up to an additional US$5 million. Grupo Sonitel operates SSA Sistemas, a provider of end-to-end managed IT solutions and telecoms services to business and government customers in Panama, as well as in El Salvador, Nicaragua and Peru; and Sonset, a provider of IT solutions and services to Small and Medium Enterprise (SME) customers in Panama. Logistica, an IT hardware reseller and a small number of other non-core Grupo Sonitel companies, are not included as part of the transaction. Bringing together CWP’s networks, connectivity expertise, and customer scale, with Grupo Sonitel’s end-to-end managed services and solutions will create a market-leading proposition for customers in Panama. There are also opportunities to grow the business in El Salvador, where the two companies already partner on the government’s 911 project, as well as in Peru, Nicaragua and the Caribbean markets where CWC is the leading provider of telecoms services to businesses. Combining the most extensive MPLS and international connectivity network in the region, with Grupo Sonitel’s capabilities, will provide further growth opportunities. Partners Raúl Borrell, Alejandro Ferrer and associate Rita de la Guardia led the team at Alemán, Codero, Galindo & Lee who were representing CWP. Mr. Borrell commented: “we have been working with Cable & Wireless for over 15 years. We advised them in all matters related to the transaction, conducted the due diligence of all the acquired companies and drafted and negotiated the Stock Purchase Agreement. We believe that our active and proactive involvement in the transaction was an important element of the transaction’s success. This acquisition will allow CWP to expand its geographical presence in Latin America, and to broaden the range of services that the company provides to its clients.” rborrell@alcogal.com www.alcogal.com n Raúl Borrell
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TMT Deals
RTL Group acquisition of SpotXchange RTL Group, the leading European entertainment network, today announced that it has signed a binding agreement with the current shareholders of SpotXchange, Inc. to acquire a 65 percent majority stake in the Denver-based video advertising monetization company. In addition to RTL Group’s initial investment US-$144 million (€107 million), the parties agreed on an earn-out component that might increase the initial consideration subject to the future performance of SpotXchange. Under the terms of the deal, RTL Group also has the opportunity to acquire the remaining shareholding in the future.
acquisition of
The deal is subject to US competition authority approval and is expected to close by the end of August 2014. The investment is the next step of RTL Group’s strategy to become a leading player in all segments of online video and online video advertising. RTL Group becomes the first major broadcaster to invest in the rapidly growing market of programmatic online video advertising. Under the terms of the transaction, RTL Group will appoint three of five members of the Board of SpotXchange. Michael Shehan and Steve Swoboda will continue to manage the day-to-day operations of the company, reporting to its Board.
VENDOR Tax Advisor
RTL Group and the management team of SpotXchange have developed a joint growth plan to keep SpotXchange on its current growth path in the US and Asian-Pacific region, while simultaneously focusing on an accelerated roll-out in Europe. Eide Bailly LLP acted as Tax advisor to SpotXchange led by Laura Srsich, Tax Partner in Eide Bailly’s Golden office, she commented: “I have worked with SpotXchange since its inception, and have enjoyed my long-term working relationship with key management. I am proud to have worked with SpotXchange as it has grown into a successful international business. As an independent member of HLB International, Eide Bailly looks forward to continuing to serve our clients as their needs expand internationally.” www.eidebailly.com n
Atomico and GREE investment in series B funding for SmartNews SmartNews, the free, award-winning news-discovery app for iOS and Android, has raised $36 million in Series B funding, with significant investments from international investment firm Atomico and global mobile-social company GREE.
and
Since SmartNews launched in Japan in December 2012, more than four million people have downloaded its apps, with impressive user-engagement metrics. SmartNews’s sophisticated, proprietary algorithms identify trending news stories, ranking and displaying them in a colorful, extremely easy-to-use app that is tailored specifically for smartphone screens. The Japanese Android version was named a Google Play App of the Year in 2013, and the iOS version was an App Store Best of 2013. The company’s approach is as friendly to content-providers as it is to users, driving significant mobile traffic and publisher revenues. In Japan, SmartNews has already forged partnerships with major media companies, including Yomiuri and Nikkei. The company plans to release a U.S. version this fall, and recently named Rich Jaroslovsky, who was the first Managing Editor of the Wall Street Journal’s web operations and founded the Online News Association, as vice president for content to establish relationships with U.S. content-providers.
investment in series B funding for
“We’re thrilled to co-lead a new funding round to help SmartNews continue its impressive growth in Japan and globally scale its technology and world class team,” said Niklas Zennström, Chief Executive Officer of Atomico. “We believe that SmartNews has developed a unique and addictive news service combined with a publisher solution that creates a winning experience for everyone. We’ve been active in Japan for a long time, and it’s great to now see a new generation of companies that, as well as building strong businesses domestically, have the aspiration and capability to become international leaders too.” Both Atomico and GREE have expertise in international expansion, and as investors in SmartNews will provide direct support to the company. Atomico has a dedicated team that helps companies scale, including experts in international expansion, hiring and communications, many of whom worked with Mr. Zennström as part of the global team that grew Skype. GREE will provide international support through its San Francisco-based GREE International unit. n
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Acquisition International’s monthly lifestyle section
playHARD
The Very Best Way to Make a Gin & Tonic
No matter what exciting mix of spirits takes your fancy, it’s well worth exploring the delights of the classic drinks – those tempting tasters that we all have fond memories of. And they don’t come any better than this all-time classic...
My heart belongs to Hartwell
Whilst staying at this beautifully restored 18th-century stately home, I left something behind, my heart…
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My heart belongs toHartwell Whilst staying at this beautifully restored 18th-century stately home, I left something behind, my heart… Built in the early seventeenth century for the Hampden family, the Hartwell house has both Jacobean and Georgian features with outstanding decorative plasterwork and panelling. Its fine elegant reception and dining rooms create the ambience of a great country house. This stately home, located just a short drive from London, was once lived in by exiled King of France Louis XVIII and his court for five years, has still kept its royal edge, offering luxurious accommodation, fine dining and wine, fit for any current king and queen.
“
The hotels’ 46 magnificent rooms are furnished with antiques and hung with paintings. Its elegant drawing and dining rooms provide the ideal setting in which to enjoy the delicious food and fine wines. This hotel is perfect for any special occasion and really leaves you longing for more.
With perfect views, history, and elegance and of course the modern touches that we can’t live without (internet and the much loved hot tub) – this hotel is for sure as special as it comes with an added bonus of an award winning restaurant.
”
Mixing business with pleasure… Across the courtyard from the main house, a technology hub called Hartwell Court can be found. Formerly a coach house Hartwell Court has been restored and extended to provide excellent conference and meeting facilities in the Hartwell Rooms. The Hotel has not only kept its original charm but addressed the need for business and conferencing facilities, whether it’s a team building exercise, a strategy day or an important meeting with clients - Hartwell Court really does allow you to mix business with pleasure. Keeping the Magic alive… Hartwell Spa is situated close to the Hartwell Rooms and Hartwell Court, about 100 yards from the main house. An essential part of a visit to Hartwell House is the opportunity to relax and enjoy the pleasures of the Spa. Swim in the warm clear water of the inviting pool lined with blue mosaic tiles, relax in the steam room, sauna and the bubbling waters of the whirlpool bath. Let’s not forget the all-weather hydrotherapy Hot Tub
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located on the spa sun terrace, it’s a perfect place to kick back, relax and unwind after a hectic week. Award winning fine dinning With perfect views, history, and elegance and of course the modern touches that we can’t live without (internet and the much loved hot tub) – this hotel is for sure as special as it comes with an added bonus of an award winning restaurant. The gastronomic experience at Hartwell House really does put the cheery on the cake or indeed the jewel in the Hartwell crown. Awarded 2 AA Rosettes, Hartwell House offers a range of unique dishes to suit every taste, combining the very best of local produces and seasonal offerings. Every course is prepared to perfection under the watchful eye of our Head Chef Daniel Richardson. Daniel Richardson bio. Born in Northamptonshire in 1971, Daniel has been living in Aylesbury and joined the team at Hartwell House as Chef Tournant in 1994. He was quickly promoted and on 1st January 2000 was appointed as Head Chef. While ensuring the smooth running of four kitchens at Hartwell, Daniel’s has consistently raised the standards of food served in the restaurant, private parties and the Spa Café & Bar to levels of excellence recognised through many accolades, including 2 AA Rosettes for Hartwell’s restaurant. His ambition is to continue to lead his team to exceed expectations and enhance Hartwell House’s already excellent reputation. Daniel places great importance on the belief that locally sourced and home grown food is the best and only food to serve. Working closely with a network of local farmers he sources the finest fresh, reliably grown and reared ingredients with low carbon footprint to be used in his menus wherever possible. Prior to joining Hartwell House, Daniel worked as Chef de Partie at Le Meridian Hotel, Piccadilly London, including the Michelin starred Oak Room restaurant, and also at the 3 Michelin starred restaurant ‘Le Gavroche’ in London. Contact Hartwell House, Hotel, Restaurant and Spa Oxford Road, Near Aylesbury Buckinghamshire, HP17 8NR Tel: +44 (1296) 747444 Fax: +44 (1296) 747450 info@hartwell-house.com www.hartwell-house.com
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Hartwell Summer Dinner Menu Smoked goats cheese fondant with roasted hazelnuts, apple and raspberry Pan fried mackerel with sultana and almond dressing, caramelised cauliflower puree Pea and asparagus risotto with crispy Aylesbury duck and chorizo, peashoots xxx Pan fried monkfish fillets with ratatouille vegetables, polenta flavoured with basil and pine nuts, red wine and balsamic fish sauce Ballotine of chicken with rosti potato, pancetta lardo ns, sweetcorn, runner beans and chicken jus Tartlet of caramelised onions, tomato and mozzarella cheese, smoked aubergine puree and balsamic reduction xxx Passionfruit and mango chiboust with compressed exotic fruits and coconut ice cream Iced strawberry parfait with mint marshmallow, strawberry salad and Pimms sorbet Hartwell honey pannacotta with poached raspberries and tonka bean ice cream
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Mixing the Perfect Gin & Tonic...
Alcohol, enjoyed responsibly, with good company and good food, is a wonderful thing. And, there are a great many thousands of spirits, beers, wines and infusions to enjoy. Whether it is a lazy Sunday afternoon relaxing at home, a balmy summer evening in the tropics or a freezing winter night ensconced in front of the crackling fire, there will be a drink that is ideal. No matter what the exciting mix of spirits or flavour combinations of the finest Belgian fruit beers takes your fancy however, it is well worth exploring the delights of the classic drinks – those tempting tasters which we all have fond memories of. For me, there is no better drink than a Gin & Tonic. Kept simple with a twist of lime and iced as heavily as your hands will take the glass, it is sublime and ridiculous in equal measure – no matter how generous you are with your measures. However, there is such a thing as a bad Gin & Tonic. Worse than this in fact, a badly made G&T is truly catastrophic – and can generally be tasted in public houses and bars without a dedicated Mixologist. You know the type – the ones where your shoes stick to the floor and there is a constant cloud of literal bar flies swooping to taste your chosen nectar. No? Lucky you. Well, to combat any eventuality of a bad experience, I present you with the very best Gin & Tonic – The Md Gt. Ingredients: • 1 or 2 shots of your favourite dry gin, (Tanqueray London Dry Gin is ideal) • A good quality Tonic Water (Schweppes is advisable) • 1/2 shot of a good quality elderflower cordial (Bottlegreen is nice) • 1 or 2 dashes of Angostura bitters • 1 lime • Lots of ice cubes (an iceberg or freshly chipped glacier would do) Equipment: • Professional cocktail shaker • A tall and slim glass (a highball is good) • A sharp knife • A Chopping Board Method: The first thing you need to do when making the perfect Gin & Tonic is ensure your gin is in the freezer. It won’t freeze, just become very viscous and, all-importantly, ice cold. You then need to place your serving glass in the freezer. Adding a couple of ice cubes to it at this point will also help. The second thing you need to do to is place about four or five ice cubes in the cocktail shaker. For added
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effect, place the shaker back in the freezer while you prepare the lime and ensure you have all the other ingredients to hand. Taking your lime, gently but firmly roll it on a chopping board three or four times. This will break down the inside of the lime and release more of its luscious and zingy juice. Next, slice it in half with the sharp knife and cut a thin roundel from one of the halves. Cut this slice in two and put to the side for now. Having removed the shaker, (and your gin), from the freezer, squeeze the juice from one half of the lime into the cocktail shaker. Then, cut this squeezed half in two and also place it in the cocktail shaker. Once this is done, add the (frozen) gin, cordial and the bitters to the shaker. Place the lid on and vigorously shake it for at least 30 seconds. Ideally you will shake it until your shoulders start to ache but, failing this, a full minute joggling about should be ample. Taking your serving glass, (ideally a highball though a Peroni beer half pint glass or even a larger Cabernet glass can work well), fill it to the very top with fresh ice cubes. It does not matter if they slightly protrude the rim – they will settle once the liquid is added. Ensuring the strainer is firmly fixed to the shaker, decant the liquid into the glass. Add one or both of the halved slices. Take your tonic water and top up the drink. Present the prepared drink to your guests, and await your deserved thanks- which will definitely be received. Showing off? Try these tips for extra flair and frivolity: • Using a vegetable peeler, shave of a thin sliver of the lime peel and then twist it as hard as you can over the drink. This releases the essential oils and adds a burst of fresh flavour to the drink. Place the peel on the top of the ice before serving. • Take two thin and long black straws and add one of them to the drink. Holding the second straw, dip this in to the drink, remove it, and stick to the outside of the glass. • If you are celebrating with someone special, add two or three extra dashes of bitters, to make the drink “pink”. This is ideal for a romantic setting of course. • Cut up a few cubes of cucumber and replace the elderflower cordial with half a shot of Midori. This creates a wonderful watermelon flavour. n
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“
The first thing you need to do when making the perfect gin & tonic is ensure your gin is in the freezer. It won’t freeze, just become very viscous and, allimportantly, ice cold.
”
Acquisition International September 2014 119
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The Pearl of Sri Lanka Shaped like a teardrop falling gently from the Indian sub-continent and renowned for its natural beauty, it’s easy to see the pearlescence for which Sri Lanka earns its familiar nickname. For everyone fortunate and deserving enough to holiday here, and set among this awe inspiring landscape, is the stunning eco-resort of the Ranweli Holiday Village. With its wonderful golden beach sloping to the warming waters of the Indian Ocean on one side, and magnificent mangroves on the other, the Ranweli resort provides a tranquil and serene setting for anyone wishing to escape the stresses and strains of hectic daily life. The Ranweli Holiday Village is just a short car journey from Bandaranaike International Airport in Colombo. Winding through bustling villages and breathtaking countryside, even this initial journey instils a sense of wonder, which continues as you climb aboard the lagoon ferry to complete the final leg of your trip to the hotel. When reaching the other bank you’re warmly greeted by the resort’s staff, eager to help you with your bags. A simple check-in at the comfortable reception takes just a few minutes, before you’re whisked away to your private bungalow nestled amid the intricate network of pathways through the carefully tended palm gardens. Laid out in the style of a traditional Sri Lankan village but with an added and unmistakable sense of luxury and comfort, each bungalow offers a stunning view of the mangroves, nearby river or the Indian Ocean. The resort offers 56 Deluxe Sea View Bungalows, 10 Standard Sea View Bungalows, four River View Bungalows and 17 Standard Rooms. Blending seemlesly with the rich natural flora and fauna of this spectacular island, each Deluxe Sea View Bungalow also offers weary travelers an inviting king-sized bed and secluded personal seating area. With direct access to the beach, a small private terrace means its all too easy for days to drift by unnoticed as you lie back and watch the world. Ideal for a gentle morning stroll to dip your toes in the bath-warm surf, or relaxing with loved ones over a gin and tonic (or something a little more exotic).
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The Standard Sea View Bungalows, River View Bungalows and Standard Rooms are all equally well appointed, with rain showers and solar heating lending an ever-present eco element to the surrounding luxury. Also with private terraces or balconies, it is the perfect way to enjoy the sumptuous sunsets or inspiring sunrises.
The essence of Ranweli is of course its green-credentials and, with sustainable tourism becoming increasingly popular, this multi-award winning and partnered resort does not disappoint. Eager to protect the environment, Ranweli also invites its guests to get closer to their surroundings.
A large wardrobe with personal electronic safe, mini fridge and bar, tea and coffee making facilities, air-con and ceiling fan, private telephone, cabled-internet access are also offered as standard across all accommodation.
Another stunning resort-based excursion is the nature walk. Hosted by Ranweli’s resident expert naturalist, the nature trail introduces you to a heady mix of nearly 100 native plants, trees and shrubs; many of them native to Ranweli. Lasting two hours and taking in the full 22-acre garden, guests on the trail also get a unique view of the mangroves on the elevated boardwalk.
The Ranweli Holiday Village eco-resort also has one suite for guests wanting to really immerse themselves in total luxury. Located at the southern end of the resort and comprising separate bathroom, bedroom, lounge, dining and kitchen areas, the Malkadol Cottage offers complete privacy with a sweeping panorama of the ocean beyond. The restaurant at Ranweli caters for everyone no matter their taste or cultural preferences. Offering both a la carte and buffet menus, relaxing meals with good wine and good conversation are guaranteed.
These are just two of the most popular activities within the resort but anyone wanting more can try the hosted cycling tours, river cruises, regular craft demonstrations and butterfly walks. Further afield, the Ranweli, staff will also organise archaeological and national park tours, as well as trips to elephant orphanages, combating the way the indigenous population has been ravaged over the years.
With a veritable galaxy of world-renowned cuisine, diners can enjoy traditional Sri Lankan food, something a little closer to home, continental, vegetarian or a taste of farther afield. And, with the catering team able to deliver a personalised buffet, you can truly entertain your taste buds.
Finally, a trip to Kandy in the north of the Island is definitely not to be missed. From the awe-inspiringly beautiful drive through Sri Lanka’s verdant and tea plantation-rich landscape, to the fascinating tour of Sri Dalada Maligawa, (the Buddhist Temple of the Sacred Tooth Relic), inspirational experiences and sights are never far away in this green and great Ranweli haven. n
The Pavilion Bar is also open through the day and night, offering snacks and drinks. Built from wonderful locally sourced and sustainable woods, it’s a magnificent area in which to wile away the hours, day or night. The lounge bar is another great place in which to relax, with hot and cold snacks presented a couple of times a day and round the clock international and local drinks.
Ranweli Holiday Village, Waikkal, Sri Lanka Tel: (94) 31 5679334 / (94) 31 5679335 Fax: (94) 31 2277358 ranweli@slt.lk www.ranweli.com
A full room service is also available, of course, with freshly prepared dishes delivered to your bungalow, the beach or the pool. For something a little unique, however, sampling the Ferry Dining Experience at least once during your stay is an absolute must.
play HARD www.acquisition-intl.com
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The Ranweli resort provides a tranquil and serene setting for anyone wishing to escape the stresses and strains of hectic daily life.
Photo credit: ODH via Flickr
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