HKALB Sept 2012 by Yvette Chiu

Going against the grain: Strong growth predicted in the Middle East

september2012

NORTH ASIA EDITION

ALB 2012

Corporate rankings Wealth management

Indonesia spotlight

Asiaâ&#x20AC;&#x2122;s growing rich creates lucrative legal market

Consolidation and upgrade

PAGE 14

PAGE 20

Mongolia mining

INSIDE

New law may hamper investment

n Deals SPOTLIGHT

PAGE 32

n THE BIG STORY

n LEAGUE TABLES

n SUNDRIES

CHINA INTERNATIONAL ECONOMIC AND TRADE ARBITRATION COMMISSION

CHINA’S EXPERIENCE IN

INTERNATIONAL ARBITRATION INTERNATIONAL IMAGE OF

CHINESE ARBITRATION CHINA INTERNATIONAL ECONOMIC AND TRADE ARBITRATION COMMISSION Announcement The China International Economic and Trade Arbitration Commission (CIETAC) is a permanent international arbitration institution independently resolving economic and trade disputes that was set up in 1954 with the approval of the Government Administration Council of the Central People’s Government and under the organization of the China Council for the Promotion of International Trade/CCPIT (China Chamber of International Commerce/CCOIC). The CIETAC has sub-commissions. The CIETAC and its sub-commissions form an integrated arbitration commission that uses a uniform set of Arbitration Rules and Panel of Arbitrators. In order to better meet the needs of development, further standardize its business management and promote its efficiency so as to provide parties with high-quality arbitration service, the CIETAC revised its Arbitration Rules in January 2012 in accordance with China’s Arbitration Law and the principles laid down in the relevant State Council’s Reply of 1988. Approved by CCPIT/CCOIC in February 2012, the new Arbitration Rules will come into force on May 1, 2012. As from May 1, 2012, the CIETAC Arbitration Rules (2012) shall uniformly apply to the CIETAC and its sub-commissions. The new CIETAC Arbitration Rules (2012) have been released on the CIETAC’s official website www.cietac.org for reference. China International Economic and Trade Arbitration Commission

Address: 6/F, CCOIC Building, 2 Huapichang Hutong, Xicheng District, Beijing 100035, P.R.China Telephone: (86-10) 8221 7788 Fax: (86-10) 8221 7766 64643500

CONTENTS

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“Over the last few years, there has been a flight of funds from Europe and Latin America to Asia, in reaction to things happening in those regions. Asia is seen by many as a more user friendly region to hold funds, and Singapore and Hong Kong have benefited from this perception because they are the two main fund management and trust centres in Asia.” Michael Olesnicky, Baker & McKenzie

16 COVER STORY ALB 2012 Corporate M&A Rankings

Though it has been a tumultuous past 12 months for M&A activity, the rest of the year will see M&A lawyers in the region continue to remain busy with a diverse range of work. ALB presents its Asia-Pacifc corporate M&A rankings after months of in-depth research utilising submission reviews, and hundreds of interviews with private practice partners and their clients.

DEALS

BRIEFS

LEAGUE TABLES

few years has made Indonesia a darling of foreign investors. The challenge is now to sustain it by ironing out some of the kinks, finds Ranajit Dam

APPOINTMENTS

Women in law

Part two: Mining: The method behind the rules Indonesia’s imposition of export taxes and foreign ownership limits in the mining sector earlier this year send a clear signal that the government is determined to upgrade its economy, even if it means enduring short-term pain, finds Ranajit Dam

INDEX

FEATURES A wealth of opportunity

For the first time ever, Asia has clinched the top spot as the region with the highest net worth individuals, say the latest wealth reports. As the number of Asia’s wealthy skyrockets, so is demand for tax efficiency and trust structures, and – undoubtedly – competition among legal advisers. Kanishk Verghese reports on the latest HNWI trends in Asia, the drivers for growth, and the challenges and opportunities that lie ahead.

Boom or bust: A new law for Mongolia

The world’s hottest destination for mining investment, Mongolia, has seen its economy grow at a blistering rate, easily doubling that of its neighbour China in the last year. However, a new foreign investment law, underpinned by a surge of nationalist sentiment, as well as continuing political uncertainty could potentially derail foreign investment in the industry. Seher Hussain investigates the nuances of the law, its effect on the marketplace, and the challenges facing investors in the future.

Indonesia spotlight

Part one: A period of consolidation Breakneck economic growth in the past

SPONSORED Regional Updates — China Paul, Weiss — Singapore Loo & Partners — Malaysia Wong & Partners — Philippines Sycip Salazar Hernandez & Gatmaitan

Part three: Banking: The wheat and the chaff With ASEAN banking integration less than a decade away, Indonesia’s new banking ownership rules aim to separate poorly governed banks from the rest, writes Ranajit Dam

Middle East country report

NEWS

As the West suffers through an unprecedented period of economic instability and mounting financial scandals, it is increasingly evident that the opportunity for growth lies further east, reports Shaheen Pasha

IN CASE YOU MISSED IT

THIS MONTH’S TOP HEADLINES FROM WWW.LEGALBUSINESSONLINE.COM

REUTERS/Yuriko Nakao

Marubeni’s $5.6 bLN Gavilon deal hits delay

The completion of Japanese trader Marubeni Corp’s purchase of U.S. grain merchant Gavilon is being delayed by at least two months as talks on ownership of an important West Coast export terminal and regulatory reviews hold up the $5.6 billion deal.

REUTERS/Lee Jae Won

In Apple v Samsung, alchemy of damages takes the stage Between the hotshot designers and brainy engineers Apple Inc questioned for three weeks in the company’s bitterly fought patent battle against Samsung Electronics Co Ltd, a marketing expert from MIT took Apple’s lawyers all of three minutes.

REUTERS/Mark Baker

Four firms make DreamWorks’ China venture come true U.S. animation company DreamWorks and China Media Capital have launched a series of billion dollar joint venture projects in Shanghai, with assistance from law firms Cravath, Swaine & Moore, Morrison & Foerster, Paul, Weiss, Rifkind, Wharton & Garrison and Paul Hastings.

REUTERS/Damir Sagolj

Cleary, DPW, Lee & Ko on Korean bank offering

Cleary Gottlieb Steen & Hamilton, Davis Polk & Wardwell and Lee & Ko have acted on the Korea Development Bank’s debt offering of $500 million 3.5 percent notes due 2017. The consolidated notes form a single class with the $750 million aggregate principal of 3.5 percent notes due 2017 issued in February this year.

REUTERS/Jason Lee

Obstacles hurting CanadaChina energy investment

Unclear investment rules are hampering trade between Canada and China, a study by officials from both countries said on Wednesday, just three weeks after CNOOC Ltd offered $15.1 billion for Canada’s Nexen Inc.

Ashurst HK fortifies finance team

The Hong Kong office of Ashurst has hired finance specialist Dominic Gregory as its newest partner from Skadden, Arps, Slate, Meagher & Flom, where he was a counsel. He works with clients on a variety of banking and finance matters, such as acquisition finance, asset finance, restructuring and project finance.

APPOINTMENTS

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LATERAL HIRES NAME

Leaving

GOING TO

PRACTICE

LOCATION

Todd Beutler

Withers

DLA Piper

Tax, Private client

Hong Kong

Simon KaiTse Cheong

Zhong Lun Law Firm

Sheppard, Mullin, Richter & Hampton

Corporate

Beijing

David Cho

Orrick, Herrington & Sutcliffe

Dechert

Corporate

Hong Kong

James Fong

Hogan Lovells

Mayer Brown JSM

Corporate

Hong Kong

Winston Li

Horizon Law Firm

Jade & Fountain

Corporate

Shanghai

Jones Day

Banking and finance

Hong Kong

Maria Tan Pedersen

K&L Gates

Henry Sherman

CMS Cameron McKenna

Minter Ellison

Construction

Hong Kong

Brad Shu

Highking & Partners

Jade & Fountain

M&A, Private equity

Beijing

Gang Yuan

Dewey & LeBeouf (now defunct)

Freshfields Bruckhaus Deringer

Energy

Beijing

PROMOTIONS NAME

FIRM

PROMOTION

PRACTICE

LOCATION

Eiichi Kanda

Clifford Chance

Managing Partner (Tokyo office)

Securities, Capital markets

Tokyo

Rita Ku Ming Wai

Withers

Partner

Family Law

Hong Kong

NAME

FIRM

PRACTICE

FROM

Peter Kilner

Clifford Chance

Finance

Tokyo

Hong Kong

RELOCATION

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ASIAN LEGAL BUSINESS september 2012

REUTERS

Analysis: How Apple overwhelmed Samsung’s patent case tactics By Dan Levine and Poornima Gupta

(Reuters) - In August 2010, just a few months after Samsung Electronics launched its Galaxy smartphone, a team of Apple Inc lawyers flew to South Korea. Apple’s late co-founder, Steve Jobs, had already told Samsung executives at a meeting earlier that summer that he considered the Galaxy S, based on Google’s Android operating system, an illegal copy of the iPhone. But given the extensive business ties between the two companies - Samsung is one of Apple’s key component suppliers - a negotiated solution seemed most likely. The Apple attorneys were blunt: “Android is designed to lead companies to imitate the iPhone product design and strategy,” read the second slide in their presentation. But the meeting did not go well, according to a person familiar with the case. Samsung attorneys bristled at being accused of copying, and produced a set of their own patents that they said Apple was using without permission. The meeting brought to the fore a fundamental disagreement between the two companies, and set the stage for a bitter, multi-country patent dispute that led to Friday’s U.S. jury verdict that Samsung had violated Apple’s patents. The jury awarded Apple $1.05 billion in damages, which could be tripled as the jury found Samsung acted willfully. Samsung could now face a costly ban on sales of key smartphone and tablet products. Shares in Samsung - the world’s biggest technology firm by revenue - tumbled more than 7 percent on Monday, set for its biggest daily percentage drop in nearly four years, wiping $12 billion off its market value. Samsung says it will seek to overturn the decision, and the worldwide patent battles among tech giants are hardly over. But for now at least the decision in what was widely seen as a critical case promises to re-set the competitive balance in the industry. The vast majority of patent disputes settle before trial, particularly between competitors. In this case, though, the stakes were just too high - and the two companies ultimately had very different views of the often murky legal issues. Samsung believed its wireless communications patents were strong and valuable,

and would serve as a counter-weight to any Apple showing of infringement, people close to the case say. The South Korean company also didn’t believe Apple could or should be allowed to claim patent protection on design elements like the form of a rectangle, or the front flat surface embodied on the iPhone. Apple, for its part, considered its feature and design patents to be very high up on the intellectual property food chain - and demonstrating their validity was critical to a much wider war against Android. The two companies never came close to settling their differences, according to courtroom testimony, trial evidence and interviews with several sources close to the case. And when it came to the trial, Samsung’s lawyers miscalculated in arguing that a verdict for Apple would harm competition in the marketplace. The jurors, led by a foreman who holds his own patent, were more persuaded by Apple’s pleas to protect innovation. For them, it ultimately wasn’t even a close call. A spokesman for Samsung in Seoul had no immediate comment. CORDIAL BUT ADAMANT Apple launched the iPhone in 2007, revolutionizing the mobile phone market. But later that year Google, then still an ally of Apple’s, unveiled the Open Handset Alliance, with the aim of distributing its Android smartphone software to all-comers. Google’s open approach quickly caught on among manufacturers looking to compete with Apple. The strategy infuriated Jobs, and by 2009 relations between the two companies had soured and Google’s thenCEO, Eric Schmidt, left Apple’s board. Jobs’ biographer famously quotes him as accusing Google of “grand theft” and vowing to “go to thermonuclear war” over the issue. In January 2010, Taiwanese phone manufacturer HTC Corp launched a touch screen, Android-based smartphone that sported features very similar to the iPhone. Apple sued in March of that year, and the Android smartphone patent wars were on. HTC, though, was a minor player compared with Samsung. After the cordial but failed August 2010

meeting, attorneys from Apple and Samsung talked in a series of meetings both in South Korea, California and elsewhere in the United States. Apple’s attorneys set to work putting a price tag on a royalty demand. By October 2010, they had concluded that Samsung should pay $24 per smartphone, and $32 per tablet. Based on Samsung’s own estimation of its profits, Apple’s royalty payments would effectively wipe out more than half of Samsung’s margins on any phone priced less than $450. And, Apple’s offer wouldn’t have covered the “unique user experience” patents Apple holds dear. “We made that clear,” said Apple licensing chief Boris Teksler. By the end of 2010, the meetings stopped as the two sides were too far apart. VIEWED AS RIP-OFF Apple hoped its relationship with Samsung would make filing an actual lawsuit unnecessary. Yet instead of wilting under Apple’s pressure, Samsung instead pressed its own patent claims, including a critical one relating to how mobile products send and receive information over wireless networks. Samsung eventually would request a 2.4 percent royalty on those patents, or $14.40 per device. But Samsung had committed to license its wireless patents on fair terms to competitors over the years, in exchange for the technology becoming part of the industry standard. Courts have generally been reluctant to bar companies from using such “standards essential” patents, and thus they are often less valuable than other types of intellectual property. Then, in early 2011, Samsung released the Galaxy Tab 10.1. To Apple, it was a clear ripoff of the iPad, and showed Samsung had no intention of modifying its products.

The rest of this report can be found on reuters.com

SP ONS O R E D ARTI C L E

MAXWELL CHAMBERS IN JANUARY 2010 SINGAPORE SET UP AN ALTERNATIVE DISPUTE RESOLUTION COMPLEX - MAXWELL CHAMBERS - TO BOOST THE ISLAND NATION’S IMAGE AS THE PREFERRED ARBITRATION DESTINATION. HIGHLIGHTING ITS CONTINUING SIGNIFICANCE AND FUTURE PROSPECTS, MAXWELL CHAMBERS’ CHIEF EXECUTIVE BAN JIUN EAN SPEAKS TO RAGHAVENDRA VERMA. a level of convenience and service which surpasses what they would be able to find elsewhere from an arbitration point of view. Clients are also happy that the institutions are co-located with our hearing facilities, as this means that their case officers are easy to reach, and that their specific requests in terms of the hearing rooms can be personally attended to by the institutions. Do business executives also attend the arbitration proceedings or are there only the lawyers? We occasionally see parties sending company representatives to attend proceedings, but mostly it is the lawyers who come, with the occasional in-house counsel. Arbitration hearings are very technical, and most non-lawyers will not find the proceedings interesting. How is Maxwell Chambers different from any other venue in Singapore that could also host arbitration proceedings? Traditionally function rooms in hotels have been used for holding arbitration hearings, but these are rarely properly equipped for the task. Arbitration is such a small part of a hotel’s business that it does not make sense to invest in the necessary infrastructure. That is what Maxwell Chambers is about – a dedicated dispute resolution facility that invests in what is needed for arbitration. Our team understands the unique and varied logistical requirements that arise in an arbitration hearing, particularly large ones, and our rooms have been set up to provide all the hardware necessary for such cases. Probably the most important difference between Maxwell Chambers and a typical function room is our commitment to privacy and security. Our rooms are individually locked, and separated by acoustically-treated walls to prevent sound leakage. Our chairs are very comfortable for long hearings, and tables are deep with provision for power sockets and internet ports. We also provide shelf space for even large amount of documents. Some of our other specialised services which often cannot be found at conference venues include video conferencing facilities, confidential document shredding, long-term document storage, and a private lounge space for arbitrators.

Are your clients mostly from Singapore or do they also come from other countries? Singapore’s domestic market for dispute resolution is small compared to the rest of Asia, so more than half of the hearings held at Maxwell Chambers involves foreign parties. Southeast Asia provides the bulk of this, notably Indonesia and Vietnam, but we also see a lot of work coming from the Indian subcontinent and North Asia, notably Korean companies. European and American parties also come here, but mostly because the other party is from Asia. Maxwell Chambers’ building also houses 15 different institutions related to alternate dispute resolution. How important are they for your business? They are extremely important, which is why we consider them as partners, rather than mere tenants. The institutions, for example, are involved in arbitration cases very early on, and provide services to clients which Maxwell Chambers does not, such as appointment of arbitrators. When the case reaches the hearing stage, however, Maxwell Chambers provides hosting of the hearing and meeting all related logistical needs. We play complementary roles, and are happy to work with each other. The other tenants are practitioners who themselves are users of our hearing rooms; we provide

Who exactly chooses the venue for arbitration? There isn’t a fixed formula, and it varies from case to case. Some arbitral institutions choose the venue, some leave it to the parties to decide. In many cases the parties agree on a venue together, while in others the arbitrators make the suggestions, especially if the parties cannot come to an agreement. Has your business been already well established and what is the occupancy rate of the 26 rooms that you have to offer? We are about half full at the moment, but this is to be expected since Maxwell Chambers was set up to help grow the arbitration industry in Singapore, rather than to just absorb the existing caseload. We have capacity for growth, and expect to see our occupancy reach a very healthy level in the next five to six years. Do you foresee any substantial change in the international arbitration business scenario, which might affect the nature and the volume of cases that you get? More Asian companies are pushing for Asian seats of arbitration in contracts with other parties. We are excited to see big international investment arbitrations start to come to Singapore. For us, the next step would be to look to host an arbitration between two countries on an international law dispute.

HNWI

ASIAN LEGAL BUSINESS september 2012

For the first time ever, Asia has clinched the top spot as the region with the most high net worth individuals, say the latest wealth reports. As the number of Asia’s wealthy skyrockets, so is demand for tax efficiency and trust structures, and – undoubtedly – competition among legal advisors. Kanishk Verghese reports on the latest HNWI trends in Asia, the drivers for growth, and the challenges and opportunities that lie ahead.

HNWI

WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business

REUTERS/Tim Chong

emerging as top destinations for private wealth management. They flaunt competitive tax regimes and healthy regulatory frameworks, cultivated by Asian demand, as well as an inflow of funds from the West. “Over the last few years, there has been a flight of funds from Europe and Latin America to Asia, in reaction to things happening in those regions. Asia is seen by many as a more user friendly region to hold funds, and Singapore and Hong Kong have benefited from this perception because they are the two main fund management and trust centres in Asia,” says Michael Olesnicky, Greater China tax head and chair of the Asia-Pacific tax group at Baker & McKenzie. “The Hong Kong market is uniquely positioned for Greater China and North Asia, while Singapore has certainly staked itself out as the key player for Southeast Asia,” says Todd Beutler, wealth management and private client services partner at DLA Piper. “Singapore continues to build itself up, and has created an attractive private wealth industry there, not to mention funds and other financial service industries,” he adds. In fact, according to another wealth report released by the Boston Consulting Group (BCG) in May this year, Singapore has nearly one in five people that are millionaires – up 14 percent in 2011 from 2010 – while Hong Kong has the highest concentration of billionaire households proportionate to its size.

he excitement has come to a close at the London Olympics, in which the U.S. asserted its dominance in the sporting arena. In the race for wealth, however, North America has lost gold to Asia for having the largest number of high net worth individuals (HNWIs), says an annual wealth report released in June this year by Capgemini and the Royal Bank of Canada (RBC). The number of Asia-Pacific HNWIs soared to 3.37 million in 2011, compared to 3.35 million in North America, and Europe’s 3.17 million. With a burgeoning wealthy community, Asia’s rich are turning towards the region’s two tax-friendly growing fund management centres – Hong Kong and Singapore – for investment opportunities. Demand for trusts is also surging. Hong Kong’s proposed reform to its trust law is set to make the territory more competitive, but to what extent? A tale of two cities “Asia, in particular, is recognised by many as the only region in the world that is still growing significantly,” says Steven Yeo, senior vice president and Asia chief legal and compliance officer at Manulife. “I understand that over the next decade or so, the global middle class will grow by about a billion people, and 85 percent of those will be in Asia. If the first statistic does not surprise you, the second one certainly makes my jaw drop.” Capgemini and RBC’s report reveals that the number of HNWIs in Asia has grown at a rate of 1.6 percent in Asia – twice as fast as the global average. Within Asia, Hong Kong and Singapore are quickly

“I understand that over the next decade or so, the global middle class will grow by about a billion people, and 85 percent of those will be in Asia. If the first statistic does not surprise you, the second one certainly makes my jaw drop.” Steven Yeo, Manulife Driving growth So, what is driving this growth? In Asia, and certainly in Hong Kong, the outpouring of China’s wealth across the region is noticeable, as the nation’s booming economy bears fruit. The number of millionaires in China is growing exponentially – BCG reports a 16 percent rise over the past year – and is right on the heels of the U.S. Money is also swiftly flowing into the hands of the newer generation and young entrepreneurs. Capgemini and RBC’s report finds that the percentage of inherited wealth in the Asia-Pacific region has more than doubled in a year to 23 percent from 11 percent. “We are definitely seeing clients that have just acquired wealth and are fairly young. A lot of our work for that segment of clients is coming from China in the pre-IPO space,” comments Long, Lee Syin, Asia head of trusts at Walkers in Singapore. “That is an area the professional trustee companies also see as an interesting market.” Asia’s family-owned businesses and the pre-IPO space are key drivers of growth, agrees Beutler. Compared to the U.S. and Europe, many of the largest businesses in Asia are still privately held. “Even when a business goes public, the founding family tends to retain significant if not controlling stake in the business. Asia will continue

HNWI

ASIAN LEGAL BUSINESS september 2012

to see dynamic growth compared to anaemic growth in Europe and the U.S. – and this will continue to generate significant wealth for the high net worth community throughout Asia,” asserts Beutler. The taxman cometh A major selling point of Asia’s flourishing cities lies in their attractive and simpler tax provisions for both companies and residents. The lower taxation rates, fewer regulatory hurdles, and wealth accumulation opportunities in metropolises like Hong Kong and Singapore are enticing the wealthy community abroad to migrate eastwards for an alternate lifestyle. Jim Rogers, the co-founder of the Quantum Fund, and Facebook co-founder Eduardo Saverin are but two examples of many who have recently taken up Singapore as their new home. But despite the lure of tax efficiency in Asia, experts comment that the issue of compliance – with a big emphasis on tax enforcement – is now coming under the global microscope. The U.S. is leading the charge with its newest Foreign Account Tax Compliance Act (FATCA) rules, which targets compliance involving foreign financial assets

some of the fights in the families, families facing tax, or other regulatory issues over the death of a founder. Couple that with the increased tax enforcement and tax transparency being driven by the U.S. and Europe in particular, and it’s causing families that have multinational interests to take care of these issues now,” he adds.

It’s all about trust Beneficial tax arrangements and high economic growth are certainly swelling the pockets of a number of cash-rich individuals and families in Asia. With all this liquidity, what are Asia’s wealthy doing with it? Legal professionals observe a notable growth in trust-related advisory and contentious work. Trusts are flexible products, and are set up for numerous reasons, including the management of heirs, long-term ownership and security, and to minimise social and political risks. While the concept of trusts is established and has been used for generations in Europe, Latin America and North America, it is still unchartered territory for many Asian clients. “There is a growing market among Asian families on how they can use trusts for their needs. The whole concept is fairly new to them, and there is an education process as well that goes in when we deal with such clients,” says Long of Walkers. As appetite for trusts grows in Asia, lawyers are noticing a marked increase in the demand for customised trust structures, in line with cultural nuances that may not be present in the West. “In this part of the world, it gets interesting because families here have unique concerns and motivations for wanting to set up a trust. Unlike their counterparts in other parts of the world, the starting point for setting up a trust is not necessarily centred on tax mitigation,” says Long. Instead, what matters is the need for families to consolidate their global “Over the last few years, there has assets into a long-term structure that allows the flexibility to manage their been a flight of funds from Europe holistically from a single point and Latin America to Asia, in reaction to assets of reference, adds Long. “We recogthings happening in those regions. Asia nise that the patriarchs we work with is seen by many as a more user friendly have built thriving family enterprises anchored on simple Asian values of region to hold funds, and Singapore hard work, sacrifice and discipline; and Hong Kong have benefited from and coming from emerging economies this perception because they are the two main they are naturally concerned with the need to secure their assets against the fund management and trust centres in Asia.” threats of political and social unrest Michael Olesnicky, Baker & McKenzie and to provide for their dependents. Culture and language notwithstanding, it is extremely important to understand what these families really and offshore accounts. Asia is responding, need, because a large proportion of Asia’s wealth is still being held with jurisdictions like Indonesia and the by the first generation wealth creators, and these Asian patriarchs Philippines increasing efforts to clamp down are extremely pragmatic and value practical advice,” observes Long. on tax avoiders. In China, the focus has gener“One of the changes in the last few years is that Singapore has ally been on corporations, but some lawyers skyrocketed as a trusts and fund management centre. The jury is still believe that the government will soon set its out on whether it will overtake Hong Kong in this regard, but it is a sights on individuals as well. close call,” says Olesnicky. The two Asian financial hubs continue These changes, in addition to several intrato jostle with each other for Asian wealth management dominance, family issues, are spurring Asia’s wealthy to whilst striving to remain competitive against the more lucrative offimplement full private client structures to shore financial centres. address their needs, notes Beutler. “They “Both [Singapore and Hong Kong] need to continue their trust law are not waiting till the last minute now, and reforms to remain competitive with the more-established offshore that’s probably a function of what you see in trust jurisdictions. They need to be able to move fast and adapt to the Hong Kong and Singapore papers about

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HNWI

ASIAN LEGAL BUSINESS september 2012

More More world world millionaires, millionaires, but but less less wealth wealth

KEY KEY World World North NorthAmerica America Europe Europe

The Theranks ranksof ofpeople peopleworldwide worldwidewith with$1 $1million millionor ormore moreto toinvest investgrew grewby by 0.8 0.8percent percentlast lastyear, year,while whiletheir theircombined combinedwealth wealthfell fell1.7 1.7percent percent

Asia Asia-Pacific Pacific Latin LatinAmerica America Middle MiddleEast East Africa Africa

Number Numberof ofmillionaires millionaires Millions Millions 12 12

2011 2011vs. vs.2010 2010––percent percentchange change

10 10 88 66 More world millionaires, but less wealth

KEY World

changes in the market,” suggests Beutler. The most recent move was made by the Hong Kong government, which launched in March this year a two-month public consultation on its draft trust law reform legislation. Buoyed by the positive reception it received from a consultation held in 2009, the reform aims to strengthen the competitiveness of the territory’s trust services industry and bolster its status as an international asset management centre. The consultation includes amendments to the Trustee Ordinance and the Perpetuities and Accumulations Ordinance. The main proposals include a statutory duty of care on trustees, the power for trustees to appoint agents, nominees and custodians, and to insure trust property against risks of loss, and improve the protection of beneficiaries’ interests. Finally, the reform proposes that a reservation of the settlor’s investment or asset management powers will not invalidate a trust, and the outdated rules that set time limits on the duration of trusts and the accumulation of income be removed. The proposed changes will make Hong Kong trusts more attractive, states Olesnicky, who points out that Hong Kong is already a very established trusts centre. “The difference is that trustees in Hong Kong have been successfully managing trusts governed under foreign laws. That hasn’t stopped Hong Kong from developing a very dynamic trusts industry. But hopefully, with these changes, we will see more trusts being established under Hong Kong law,” he says. Indeed, trust law reform is a first and necessary step towards making Hong Kong trusts more effective. But, in terms of building up the infrastructure, a trust can be set up anywhere in the world, and it is where it is managed and controlled that influences where the trust industry is based. This is where several industry experts say Hong Kong has been very successful.

North America Europe

The22ranks of people worldwide with $1 million or more to invest grew by 0.8 percent last year, while their combined wealth fell 1.7 percent 00

2007 2007

2008 2008

2009 2009

2010 2010

2011 2011

-3-3

-2-2

-1-1

Asia Pacific 22

Latin 44 America 55 66 Middle East Africa

Number of millionaires Wealth Wealthheld held by bymillionaires millionaires $Trillions Trillions $Millions 12 50 50

2011vs. vs.2010 2010––percent percentchange change 2011

10 40 40 8 30 30 6 20 20 4 10 10 2 00

2007 2007

2008 2008

2009 2009

2010 2010

2011 2011

-3 -3

-2 -2

-1 -1

Wealth held millionaires Source: Source:Capgemini, Capgemini, RBC RBCby Wealth Wealth Management ManagementWorld WorldWealth WealthReport Report Reuters Reuters$ graphic/Stephen graphic/Stephen Culp Culp Trillions

14/06/12 14/06/12

2011 vs. 2010 – percent change

40 30 20 10 0

“Both [Singapore and Hong -3 -2 -1 0 1 2 3 4 5 2010 2011 Kong] need to continue their trust law reforms to remain competitive with the more-established offshore trust jurisdictions. They need to be able to move fast and adapt to changes in the market.”

2007

2008

2009

Source: Capgemini, RBC Wealth Management World Wealth Report Reuters graphic/Stephen Culp

14/06/12

Todd Beutler, DLA Piper

HNWI

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“We are definitely seeing clients that have just acquired wealth and are fairly young. A lot of our work from that segment of clients is coming from China in the pre-IPO space. That is an area the professional trustee companies also see as an interesting market.” Long, lee syin, Walkers

“I think the Hong Kong proposals are much more balanced than what we have seen in some of the more adventurous offshore financial centres. Hong Kong is attempting to modernise the worst restrictive rules, but without going completely overboard,” states Olesnicky. Furthermore, Olesnicky points out that when setting up a trust, one usually needs a company under the trust. “The problem we continue to face is that it is still not attractive to use Hong Kong companies. So, even if we have a plethora of Hong Kong trusts being set up under this new regime, I don’t think people are going to be rushing to set up Hong Kong companies. Hong Kong’s company law is too restrictive and inflexible at the moment, so I think people will continue to use BVI or Cayman companies until Hong Kong simplifies her companies law,” he says. Hong Kong’s trust law reform was tabled for the second half of this year, but the recent territory’s leadership change and other legislative priorities suggest with an increasing likelihood that the proposals will be shelved until next year. Not too bad for business While Hong Kong and Singapore battle it out for wealth management supremacy, lawyers note the mounting competition among law firms offering private client services in the region. “Whilst the competition in Hong Kong has always been there, and the wealth management industry has grown, especially in Singapore. We are expecting more firms to come to Singapore, and it will be interesting to see how they tap into the market. There is immense potential,” says Long. Although Walkers established a Singapore office in 2009, surging demand for trust advisory services in Asia prompted the firm to open an Asia trust practice last July, headed by Long. It is the same demand that prompted Guernsey and Jersey-headquartered firm Collas Crill to open an office in Singapore last August, recently hiring trust and funds specialists Marcus Hinkley and Leon Santos to grow the practice. Meanwhile, existing law firms are beefing up their own private client outfits – Beutler’s arrival to DLA Piper in August this year bolstered the firm’s tax and trust expertise. Aside from private client firms, the compliance push in Asia is drawing in several international and local firms, offering compliance and regulatory support to clients, who are looking to invest and want to ensure their interests are well protected. “It is interesting and good for Asia in general, because we are seeing the level of professionalism going up. There is recognition of that, and hence that is why there is so much interest in Asia. I think not just economically, but on the regulatory front too, people are also acknowledging that Asia is not a bad place to do business,” says Long.

Full speed ahead Looking ahead, private client lawyers and professionals predict a further uptick in wealth management and trust advisory activity in Asia. Long believes that an increase in alternative dispute resolution in the HNWI space may be on the horizon. “We have been seeing interest on that front, particularly in the context of family and trust disputes since there are benefits from a reputational perspective, and it is ideal for clients that generally want to keep their family affairs private.” To manage conflict between beneficiaries, Long highlights the STAR trust – a Cayman non-charitable purpose trust – as a useful structure for clients to utilise, particularly in cases where the settlor may have widereaching philanthropic objectives that may not necessarily qualify as being “charitable” in nature. Such non-charitable purpose trusts typically have no limit on perpetuity, and the settlor has the flexibility of appointing neutral third parties to enforce the trust, while specifying the amount of information that each beneficiary receives in relation to their entitlements under the trust. Nonetheless, Asia will continue to be the growth engine of the world in a lot of ways, says Yeo of Manulife. “A lot of companies will be growing here, but that also means the competition for expertise and resources will be great,” adds Yeo. Asian clients are becoming multijurisdictional, with family, networks and assets that span across many borders. This stresses the need for legal service providers to have a capable understanding of crossborder awareness and expertise. To meet the evolving and emergent private wealth demands of Asia’s wealthy, law firms will need to carefully examine their business models to tackle the shifting industry landscape, and make sure that they are appropriately staffed for growth in this booming industry.

INDONESIA COUNTRY REPORT

INDONESIA:

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ASIAN LEGAL BUSINESS SEPTEMBER 2012

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BREAKNECK ECONOMIC GROWTH IN THE PAST FEW YEARS HAS MADE INDONESIA A DARLING OF FOREIGN INVESTORS. THE CHALLENGE IS NOW TO SUSTAIN IT BY IRONING OUT SOME OF THE KINKS, FINDS RANAJIT DAM

espite the fact that Indonesia had posted GDP growth of 6.3 percent in the first quarter of 2012, a number of economists are forecasting that the country’s growth would slow. The global slowdown was expected to take its toll, of course, but the Indonesian rupiah was on a downward curve, certain policy moves on the part of the government were expected to have a negative impact, and exports had begun shrinking. But in a manner fitting of the celebrated growth story it has become, Indonesia defied the naysayers to record GDP growth of 6.4 percent in the second quarter of the year. Buoyant domestic demand, especially in transport, hotels and government consumption, had kept growth on an even keel, in spite of the fact that Indonesia has had consecutive trade deficits between April and June this year. Similarly, despite reports that Indonesia’s investment climate was growing more difficult, the country still managed to post foreign direct investment of 56.1 trillion rupiah ($5.9 billion) during the second quarter of the year,

a quarterly record, and one that kept it on track the break the annual FDI record of $19.3 billion record set in 2011. Additionally, domestic Indonesian companies invested 20.8 trillion rupiah ($2.1 billion) in the second quarter, a 10 percent increase over last year. “Performing particularly well to date this year have been mining, and the chemical and pharmaceutical industries, which together attracted some $1 billion in FDI, while $600 million was invested in utilities, $500 million in food processing, and $500 million for metal, machinery and electronics,” says Ahmad Assegaf, managing partner of Assegaf Hamzah & Partners. Assegaf says that while traditionally the mining and natural resources sectors have been the big attractions in Indonesia, in the plantation sector palm oil has also seen exponential growth over recent years. “However, this industry continues to face pressure on environmental issues from overseas, but I have no doubt that with the adoption of Roundtable on Sustainable Palm Oil (RSPO) best practices, palm oil will be able to continue expanding,” he says. However, the prospects for mining are looking bleak in the near-term as “the commodities cycle is clearly on a downward trajectory, and in the absence of significant stimulus in China, this is set to continue for the foreseeable future, and has the potential to significantly impact on Indonesia,” he adds. Indra Safitri, senior of counsel with Melli Darsa & Co says that Indonesia’s growth story has much to do with the burgeoning middle class in Indonesia, which currently numbers about 43 million people, and the high potential of its buying power. “Moreover, there is a

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Workers unload oil palm fruits in a state-owned crude palm oil processing unit in North Sumatra. REUTERS/Tarmizy Harva

growth momentum in some big cities in Java, other than Jakarta, which will cause the real estate, telecommunication, transportation, trading, and creative industry sectors to grow rapidly,” he says. Despite the healthy figures, Indonesia does have a number of impediments in its path. As noted above, investments in mining, one of the cornerstones of the Indonesian economy, have taken a hit following a series of muchtalked-about policies in that sector. Popular but economically unviable fuel subsidies have been hurting the economy. The slowdown in Europe and China has hit exports, thus putting pressure on the rupiah. And other factors like legal and regulatory uncertainty and rampant corruption have the potential to derail the Indonesian growth train. Strong economic fundamentals helped it avoid the brunt of the Global Financial Crisis of 2008, but this time it might need to dig deeper. THE PERILS OF UNCERTAINTY One of the biggest problems facing Indonesia today is corruption, which is widely seen as holding back the economy. In August, Indonesian president Susilo Bambang Yudhoyono noted that corruption was on the rise, even in parliament, and that it was threatening economic growth in Southeast Asia's largest economy. There are few estimates of how much corruption costs Indonesia, but watchdog groups say it is prevalent in the civil

“WHILE IT IS TRUE THAT CORRUPTION CONTINUES TO PLAY A SIGNIFICANT ROLE, IT NEEDS TO BE REMEMBERED THAT THE PROBLEM OF LEGAL CERTAINTY ALSO FREQUENTLY INVOLVES LACK OF CAPACITY AT THE LOCAL LEVEL.” AHMAD ASSEGAF, Assegaf Hamzah & Partners

service, police and judicial system, and that it adds to business costs in part by weakening confidence in the rule of law. According to Assegaf, the “crucial factor” impacting investor attitudes towards Indonesia continues to be certain at the policy, regulatory, and judicial levels. “While there has been progress in recent years, there are problems we face in the mining sector, where, among other things, overlapping licences are a major issue,” he says. “This is often laid solely at the door of corruption. While it is true that corruption continues to play a significant role, it needs to be remembered that the problem of legal certainty also frequently involves lack of capacity at the local level. Even though a major chunk of governmental power was devolved to the regions back at the end of the 1990s, the regions to this day frequently lack the trained professionals required to fulfill the governmental responsibilities assigned to them.” Safitri agrees that legal certainty is one of the biggest problems for investors in the mining sector. “In accordance with the characteristic of the mining sector which relates to licensing, land-ownership and environmental, thus the prevailing laws and regulations which regulates each of those matters are still conflicting and inharmonious, yet cause high cost and corruption,” he says. In the judicial sphere, however, things have improved enormously

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in recent years. “In particular we view as a sensible step forward the Supreme Court’s plan to establish a chamber system so that the judges, who hear commercial cases, for example, will actually be experts in this area of the law,” says Assegaf. “Furthermore, the Supreme Court now publishes an enormous number of judicial decisions online, as well as a very informative annual report. Nevertheless, as our litigation department can attest, we still have a long way to go before we arrive at the stage where we can say we truly have a clean and reliable judiciary.” Assegaf adds that transparency is also an issue, and information remains notoriously hard to come by in many sectors. “Even when information from one government department is obtained, it may conflict with information from another,” he says. “Take, for example, the maps used in the forestry sector – each institution appears to be producing its own, all the way from the local up to the central level.” Finally, there is the issue of infrastructure, which, as ALB noted in its August issue, causes Indonesia to lag behind some of its regional peers in efficiency and productivity, mostly due to the poor state of its roads, airports, and other economic lifelines. The Land Acquisition Law was passed Indonesia’s central bank’s policy bias could in December 2011, and the Yudhoyono shift towards tightening when global demand government on Aug. 7 issued a reguconditions improve. It has already moved to try lation to speed up the procurement of to avoid bubbles in the property and auto sectors land for public infrastructure projects. by tightening requirements for downpayments in “However, it has received a less than June. Strong loan growth meant banking sector profits are up 19 per cent this year. warm welcome from the construction Transport and communications were the sector, which does not bode well for fastest growing sectors in the first half of the the rapid resolution of our chronic year, up 10.1 percent in the second quarter from infrastructure deficit,” says Assegaf.

DOMESTIC ECONOMY FLYING

a year ago. Luxury car sales are booming as growing wealth leads drivers to upgrade from Toyotas to BMWs, while young consumers are snapping up smartphones. The trade, hotel and restaurant sector grew faster in the second quarter, with the world’s fourth-largest population increasingly flying on new airline routes to stay at branded budget hotels. In Jakarta, trendy new eateries regularly open, while convenience stores are spreading across the country. Inflation picked up last month because of higher food prices ahead of the Muslim Ramadan period, although it looks set to stay within the central bank’s target range this year. Government consumption also picked up in the second quarter, while foreign direct investment grew 30 percent to tap the country’s mineral resources and consumer demand. “As per today’s data, Indonesia remains one of the fastest growing, and perhaps more importantly, one of the most stable economies in Asia,” says Taimur Baig at Deutsche Bank in Singapore. But he adds: “We are concerned that rates are too low and could cause over-consumption and investment in the medium term, but for the time being we remain comfortable with the view that Indonesia is poised for 6 percent plus growth this year and next,” he said.

UP THE VALUE CHAIN One of the state d goal s of the Indonesian government is to upgrade the country from being a low-cost manufacturing and ore exporting economy to being a country that offers high-value goods and services. “There is no doubt in my mind that Indonesia is set to move up the value chain in the years ahead, following in the steps of such countries as Malaysia and Thailand, not to mention Korea and Taiwan,” says Assegaf. He points out that there has been something of a boom in the healthcare industry, which shows enormous potential for further expansion. “Also, retailing has been a boom sector in recent years, and will continue to be so,” he says. “In addition, the central government appears very serious about encouraging in-country processing of mineral ores, and quite a number of smelter projects are now in the pipeline as a result.” Safitri says that the growth of the middle class in Indonesia has encouraged the development of investment

opportunity in telecommunication and healthcare sectors, as well as the creative industry. “Basically, such development stimulates the arrival of the investors, who relate to the middle-class needs, from upstream to downstream,” he says. He adds that as with many other policies, Indonesia still has a long way to go. “Despite the government’s 10,000 MW generating capacity development programme, many of our outer islands continue to suffer severe power deficits,” says Assegaf. “Ironically, it is on our outlying islands that most of the country’s mineral resources are located. By contrast, the vast majority of our population lives on resource-poor Java. So, we have a built-in imbalance here that obviously poses difficulties. For example, how are mining firms going to establish smelters when there isn’t enough power to run them?” Another initiative of the government is to introduce an economic development acceleration programme (MP3EI) that focuses on the integrated development of six economic corridors around the country. “While this plan would seem to have great potential, industry and business remain sceptical to some extent given our history of inadequate policy coordination,” Assegaf says. 2014 AND BEYOND Indonesia’s next presidential election is slated for 2014, when Yudhoyono steps down following the completion of his second five-year term, and unsurprisingly there is much discussion about how his departure will impact the country, with excessive protectionism being one of the possible trends. “There is a general nervousness in the air that the current perceived move towards greater protectionism, particularly in the resources sector could gain further traction in the approach to the 2014 presidential election,” says Assegaf. “Recent moves that have produced some jitters include the introduction of a tax on resource exports and a cap on foreign ownership in the banking sector.” On the positive side, Assegaf notes that there has been a broad continuity in this country’s industrial and development policy, despite frequent shifts at the micro level. “We expect this broad continuity to persist, no matter who wins the 2014 presidential election,” he says. “Despite the issues alluded to above, Indonesia remains a relatively welcoming destination for FDI. Given the current grossly inadequate level of capital formation, we believe that this will continue into the foreseeable future.”

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Worker uses the tapping process to separate nickel ore from other elements at the nickel processing plant owned by PT Vale Indonesia,Tbk in Sorowako of Indonesia’s South Sulawesi Province. REUTERS/Yusuf Ahmad

INDONESIA’S IMPOSITION OF EXPORT TAXES AND FOREIGN OWNERSHIP LIMITS IN THE MINING SECTOR EARLIER THIS YEAR SENDS A CLEAR SIGNAL THAT THE GOVERNMENT IS DETERMINED TO UPGRADE ITS ECONOMY, EVEN IF IT MEANS ENDURING SHORT-TERM PAIN, FINDS RANAJIT DAM

y any stretch of the imagination, 2012 has been an eventful year for Indonesia’s mining industry. In March this year, the mining ministry announced new rules requiring foreign companies to sell down stakes in mines, and increase domestic ownership to at least 51 per cent by the 10th year of production, at a time when the government was renegotiating existing royalty contracts with major foreign investors such as Freeport-McMoRan Copper & Gold Inc and Newmont Mining Corp. Then in May, the country announced that it would ban exports of 14 raw metals from 2014, and would ask all miners to submit plans to build smelters to add value

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to the country’s mineral sector. “Our aim is so that we can add value, open new jobs and if (the products) become semi-finished, then they can be exported,” mining minister Jero Wacik said at the time. Unsurprisingly, the industry did not react particularly well. In June, mine exports to key customers Japan and China slumped as firms halted operations, and laid off hundreds of thousands of workers, Reuters reported. However, Indonesia, the world’s top exporter of coal for power stations and of nickel and tin, as well as a major supplier of bauxite, iron ore, gold and silver, announced in no uncertain terms that it was prepared to suffer a drop in mining exports as it sought to force firms to invest in processing ores into refined metals as part of the government’s long-term strategy to upgrade Southeast Asia’s largest economy. In an interview with Reuters, Indonesian trade minister Gita Wirjawan said that the country wanted to refine the ore domestically, and then either ship finished metals overseas for much higher prices or profit further by manufacturing them at home into steel or iPads - just as its Asian peers do. “These policies are part of Indonesia’s goal to transform itself into a more industrialised country set at least a decade ago, but not many people are aware of this,” says Arfidea Saraswati, partner at AKSET Law. FIRM INTENTIONS According to Saraswati, the reason for the export duty on unprocessed or semi-processed minerals is to ensure that a portion of the financial benefits of mining exploitation go to the Indonesian people while at the same time, preserving the sustainability of natural resources by

INDONESIA COUNTRY REPORT requiring mining companies to either process the mined ores domestically or sell them to others for domestic processing. She adds that a similar set of regulations and policies had been in place even before the issuance of the New Mining Law in January 2009, and the regulations earlier this year. “Many of us were uneasy with the new policy when it was first issued in the New Mining Law, and then as implemented at first stage since May 2012,” says Saraswati. But following extensive research and analysis, “many now believe that the goal to build more smelting and refinery and processing plants in the near future would be more feasibly implemented in stages. These discussions and negotiations between the businessmen and regulators are ongoing, with a view to finding the most suitable framework to both support the mining and the processing industry while still benefitting the people of Indonesia,” she adds. With regard to the requirement to limit the percentage of foreign ownership in companies holding mining business licences, or IUP companies through divestment over 10 years, Saraswati notes that this divestment scheme is not totally new for the mining industry. “The

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“THESE POLICIES ARE PART OF INDONESIA’S GOAL TO TRANSFORM ITSELF INTO A MORE INDUSTRIALISED COUNTRY SET AT LEAST A DECADE AGO, BUT NOT MANY PEOPLE ARE AWARE OF THIS.” ARFIDEA SARASWATI, AKSET Law

divestment requirement is new for holders of mining concessions, or KPs, which later become IUPs, but is not new for companies with contracts of work signed with the government of Indonesia,” she says. “From the perspective of the Indonesian government, this ‘new’ policy balances the opportunity that is given to foreign investors to own 100 percent shares in IUP companies,” which, she says, hold mining business licences, but not contracts of work. SHORT-TERM PAIN Following the announcement of the policies, Indonesia’s mining industry has been bleeding an estimated $164 million a month in lost sales of nickel and bauxite. In August, the country announced that it had awarded an increasing number of mineral export permits; however, to obtain export permits under the new rules, miners would now have to be certified “clear and clean”, and provide plans to process ores they dig up. Muhammad Karnova, partner at Hadiputranto, Hadinoto & Partners, says that while the ban on ore exports have been loosened by the introduction of a series of regulations which permit ore exports with certain requirements, the net result would be to make investors reassess their business model for Indonesian minerals. “As with any transitional matter, those who are adversely affected will raise their voices, such as mineral exporters and their related stakeholders,” he says. “The current position from the central government is clear, namely, to promote onshore mineral processing so that mineral mining activities in Indonesia can give better multiplier effect for the longer term benefit of the people and the country as a whole, and they may do what is necessary to discourage ore exports.” Saraswati says that the short-term pain will be the drop in state revenues from royalties on mineral exports and corporate income tax as the majority of exporters take a step back, and hold their position pending the fulfillment of set of requirements under the various regulations. “Also, given the 20 percent export duty, the mining companies may consider selling their products domestically,” she says. “The production of ores and raw materials would significantly be reduced when existing plants in Indonesia (if any) cannot absorb such raw materials, and at the same time the ores producer or the mining ministry is incapable of finding a solution for cooperation with another processing company.” She adds that from the buyer’s perspective,

offshore buyers that rely heavily on Indonesia’s supply would have to absorb the additional charges in order to maintain supply, at least until December 2013 or January 2014, when the export of unprocessed minerals must discontinue permanently. Karnova says that there are an increasing number of proposals to construct onshore mineral processing and refining activities. “Whether these proposals are genuinely put forward to be implemented or as some interim arrangements – for example, to allow certain exports of ore be able to continue until a full ban is implemented – this remains to be seen,” he says. “To a certain extent, the government will also need to see the readiness of all infrastructure and supporting facilities for an onshore mineral processing facility… so that the economics of an onshore mineral processing facility can be met and reasonable to be implemented.” In respect of certain other minerals, he says that the government should also take into account the demand of international market of certain unprocessed products, and not solely rely on technical matters when determining what can be exported as a raw material and what cannot. “Some minerals will have a huge market if those minerals are sold or otherwise exported as raw materials or half-processed materials, as opposed to full-scale processed materials or minerals with a very small-scale market,” he says. “There has to be

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INDONESIA COUNTRY REPORT some balance between implementing a good policy and commercial reality.”

A miner breaks stones containing gold in Poboya at the Indonesia’s Central Sulawesi province April 12, 2012. REUTERS/Yusuf Ahmad

LEARNING TO ADAPT According to Saraswati, because the domestic processing and export restriction was not expected until January 2014, foreign-owned companies and local companies that have not prepared for domestic processing are still waiting to see what options that may be available for them. “Those with small reserves cannot continue operating unless there is certainty that they can sell their ores,” she says. “One widely discussed scenario is that the government may establish a state-owned smelting company which would buy raw materials from small mining companies in the proximity of its smelter. It is under discussion where the plant would be constructed, depending on the availability of the raw materials, and other factors. It will be interesting to see what the government decides to do.” She adds that companies with abundant reserves and the potential to develop a processing plant are initiating discussions with industrial companies and researchers, and closely monitoring the progress of discussions and negotiations between the regulators and other business players. “But only if the processing business is considered commercially and technically feasible, and supported with the guarantee of sufficient supply of raw materials and the necessary infrastructure, will companies seek alliances for financing and technical and marketing support,” she says. Karnova says that there are two kinds of foreign investors: Those who have been

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operating in Indonesia through a hybrid investment structure (such as a cooperation agreement, a tiered private company structure, mining services, and the like) and those who do not. For those who have been operating through hybrid investment structures, the new regime allows them to convert these structures such that they can directly hold shares in a mining company which was otherwise prohibited. “Winding up or restructuring these structures will certainly allow them to get better ’title and ownership’ compared to those hybrid structures. But there are tax costs associated to this restructuring, and a host of government approvals which need to be secure prior to making it happen, including converting the relevant KP into an IUP,” he says. “Those who have been investing directly, mostly in contractbased concessions, may see that there is no immediate concerns as contract-based concessions are still upheld until their expiry dates.” The issues, he says, are starting to come we discuss about divestment requirement, having to relinquish some existing concession areas, amendment to the contract-based concessions, bigger statutory payments to government, and the like. “While these may be factored into as some changes to the business and to a certain extent financial model of said investors, finding some durable solutions to each of the problems faced by each of investor is key,” he adds.

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“THE CURRENT POSITION FROM THE CENTRAL GOVERNMENT IS CLEAR, NAMELY, TO PROMOTE ONSHORE MINERAL PROCESSING SO THAT MINERAL MINING ACTIVITIES IN INDONESIA CAN GIVE BETTER MULTIPLIER EFFECT FOR THE LONGER TERM BENEFIT OF THE PEOPLE AND THE COUNTRY AS A WHOLE, AND THEY MAY DO WHAT IS NECESSARY TO DISCOURAGE ORE EXPORTS.” MUHAMMAD KARNOVA, Hadiputranto, Hadinoto & Partners

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Gold pieces, each weighing 100 grams, are seen arranged at the state-owned mining company PT Antam Tbk metal refinery in Jakarta. REUTERS/Beawiharta Beawiharta

ADVICE FOR CLIENTS Saraswati says that for clients considering acquiring a mining company, her firm suggests either maintaining the minimum local shareholder ownership or immediately find a strategic local shareholder. “This is for two reasons,” she says. “First, in anticipation of the divestment realisation, the local partner may be able take up more shares under first right of refusal and preemptive right exercise (if mutually agreed), or other means that can be structured between the shareholders. Second, having a local shareholder who knows how to keep the business and licences in good standing with the local community and regional governments would be very useful.” Karnova says that clients first need to determine what business model they may want to have in Indonesia. “Is there any idea to do listing overseas in established mining exchanges such as Canada or Australia?” he asks. Then clients need to determine how the initial operation is going to be undertaken, whether by partnering with more established local players, or going solo first and then partnering with others. “Different types of investors have different risk appetite and drivers, and cannot be generalised,” he adds. “As regards divestment, we ask them to pay attention to the upcoming implementing divestment regulation, and allow investment structure to be as reasonable as possible when dealing with the need for a local listing for various reasons.”

WHAT THE FUTURE HOLDS Saraswati says that after learning from the other companies who have been in recent disputes or failed in their investments for different reasons, investors in mining sector would be more cautious and prudent. “Both in the short term and long term, we expect that there will be more direct ownership in structuring of mining and/or processing investments to ascertain control over the investments,” she says. She adds that in order to ensure that the processing business will be owned 100 percent, or more than 49 percent by foreigners the business must be set up separately from the mining unit. “Under current policy, the divestment obligation only applies to mining companies holding production operation IUPs (for exploitation) and not companies holding industrial processing licences or IUPs especially for processing and refinery,” Saraswati says.

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A trader stands near a screen showing the Indonesia Stock Exchange Composite Index in Jakarta. REUTERS/Supri Supri

BANKING EMPOWERING THE INDUSTRY WITH ASEAN BANKING INTEGRATION LESS THAN A DECADE AWAY, INDONESIA’S NEW BANKING OWNERSHIP RULES AIM TO SEPARATE POORLY GOVERNED BANKS FROM THE REST, WRITES RANAJIT DAM

n the end, it was a takeover bid that probably pushed Indonesia’s banking authorities into action. After vacillating for what seemed to be ages on issuing new banking ownership rules, it was Singapore’s DBS’ much-talked-about $7.3 billion bid for a stake upwards of 67 percent in Indonesia’s Bank Danamon in early April that forced Bank Indonesia into making an announce-

ment. In late May, rumours abounded that Indonesia’s central bank would limit the maximum stake a single shareholder can take in the country’s banks to below 50 percent. But those fears, as it turned out, were unfounded. In July, Bank Indonesia announced that while it would cap single ownership of domestic banks at 40 percent, it would allow exemptions that could pave the way for the Danamon bid to proceed. Without specifying exactly how much, Bank Indonesia said that listed banks that are financially strong and have tier 1 capital ratio of more than 6 percent will be allowed to own stakes of more than 40 percent in Indonesian banks. Reuters reported that while the announcement was on expected lines, it came as a relief not just DBS, which was aiming for the biggest-ever takeover of an Indonesian company, and for foreign banks such as Standard Chartered that own substantial stakes in the nation’s lenders. According to industry watchers, the central bank rule is aimed at ensuring the financial health of majority owners in local banks in Indonesia, after a slew of bankruptcies in the 1998 financial crisis. “The rule is aimed at consolidation of the bank-

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“THE RULE IS AIMED AT CONSOLIDATION OF THE BANKING INDUSTRY. IT HOPES TO MAKE THE LOCAL BANKING INDUSTRY MORE COMPETITIVE BY ENSURING GOOD CORPORATE GOVERNANCE.” THEODOOR BAKKER, Ali Budiardjo Nugroho Reksodiputro (ABNR)

ing industry,” says Theodoor Bakker, foreign counsel at Ali Budiardjo Nugroho Reksodiputro (ABNR). “It hopes to make the local banking industry more competitive by ensuring good corporate governance.” Bakker adds that with full ASEAN financial integration expected in 2020, Indonesia wants to do what it can to bring its banks up to speed. In the 14 years since the financial crisis, Indonesian banks have generally become relatively well capitalised, with the sector a magnet for foreign investment. As foreign entities are currently allowed to hold up to 99 percent of local banks, eight of Indonesia’s top 11 banks by market value are either controlled by foreign banks, business families, private equity firms or wealth funds in one of the region’s most open banking sectors. Some analysts have speculated that the new banking rules thus target foreign investors, but Iwan Setiawan, senior partner at Makes & Partners does not agree. “The rule does not discriminate between foreign and local,” he says. “The goal is to reduce the influence of majority shareholders in banks, in order to lessen the amount of risks they are exposed to.” Under the new rule, financial institutions can hold up to 40 percent of local banks, while non-financial institutions can hold up to 30 percent, and individuals only 20 percent. Existing majority owners failing to meet Bank Indonesia’s top standards for financial health will have to reduce their stakes to comply with the limit by January 2019. What a lot of experts agree on, however, is that implementation of the rule might not be entirely straightforward. Shortly after it was announced, Bank Indonesia stated that more than 10 Indonesian banks do not meet new standards on financial health and corporate governance, although these lenders are likely to be small. Setiawan says that he is still waiting for some “clear guidance” on when and how the rule will be implemented, and how it could shape the local banking industry. Bakker admits that there is certainly some uncertainty in the sector now, but adds that the restrictions imposed by Indonesia compare favourably with restrictions on banking sectors in other countries. “The news of the 10 banks failing to meet the criteria was probably good news,” he says. “When you think of how many

banks there are in the country – and there are a lot – just 10 affected banks means that the Indonesia’s banking system is in very good shape.” However, a strong regulatory infrastructure, and the ensuing legal certainty is vital for foreign investors, he says, who will “vote with their feet” if they do not feel comfortable. “If you look back to the Asian Financial Crisis of 1998, you will remember how the entire system was laid bare,” he says. “Indonesia has certainly come a long way from there, but there’s still much it can do to dispel serious doubts.”

A view of Indonesia’s Central Bank building in Jakarta. REUTERS/Supri Supri

Makes & Partners Law Firm Menara Batavia 7th Floor, Jl. KH Mas Mansyur, Kav. 126, Jakarta 10220, INDONESIA Tel: +62-21-574-7181 Fax: +62-21-574-7180 E-mail: makes@makeslaw.com www.makeslaw.com Capital Markets: Iwan Setiawan

M&A/Corporate: Irfan Ghazali

Banking & Finance: Fransisca

General Inquiries: Richard L. Weiss

energy & resources

ASIAN LEGAL BUSINESS september 2012

BOOM new law for Mongolia

The world’s hottest destination for mining investment, Mongolia has seen its economy grow at a blistering rate, easily doubling that of its neighbour China in the last year. However, a new foreign investment law, underpinned by a surge of nationalist sentiment, as well as continuing political uncertainty could potentially derail foreign investment in the industry. Seher Hussain investigates the nuances of the law, its effect on the marketplace, and the challenges facing investors in the future.

oreign investors have been keeping a nervous eye on Mongolia recently, as rapid-fire developments continue to increase investment uncertainty. First up, the recently held July elections have left more than a quarter of the government in the hands of politicians who advocate local control over the nation’s mines. Then, a tumultuous August that saw ex-Mongolian president Nambaryn Enkhbayar, jailed for four years for corruption. Given his position as the chairman of a political party that forms the current fragile ruling coalition, his sentence could easily result in developmental delays for several massive mining projects. With this most recent episode, concern continues to grow amongst investors that they may not see the returns they expect if the current trend of resource nationalism is to continue. State of play Reports indicate that Mongolia has over 6,000 deposits of 80 differ-

ent minerals as well as possessing one of the biggest copper mines on the planet, the Oyu Tolgoi project, which is predicted to produce over 81 billion pounds of copper and 46 million ounces of gold. These resources have unsurprisingly fuelled a gold rush of investors to the landlocked country over the last year, resulting in the fastest growing economy in the world. As expected, over the last year lawyers have seen an unrelenting stream of M&A work as well as project development matters in the mining space. Alongside, however, there are several other trends such as increased interest in coal and gas, alternative energy projects, and the growth of supporting industries. “We are seeing a lot more interest from mining services companies coming into Mongolia to support the development of the resources business there,” says David Wenger, partner at Allens. “We are also starting to see encouraging signs of infrastructure development, off the back of the intended royalties of various mining projects, so there is increased interest in airports,

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energy & resources

BUST REUTERS/David Gray

roads, social housing, energy, power supply etc.” Hand in hand with mining development is the need for railways, as the current lack of infrastructure hampers the development of exports. “Effectively, most of the exports are going to China,” says Chris Melville, partner at Hogan Lovells, “and the government has an ambitious plan to connect with the Russian rail network to Vladivostok, in order to diversify its customer base for mineral exports.” There are also ongoing projects to raise overseas finance. “We are currently working on the IPO of Tavan Tolgoi which is one of the largest coal mine deposits but not yet fully in production,” continues Melville. “We’re also seeing a lot of interest in the potential GDR market.”The $3 billion IPO has gone through several delays, but is now scheduled for the first quarter of 2013. John Viverito, Singapore-based partner at Gibson, Dunn & Crutcher further details, “There’s been a tremendous amount of interest from China over the resources in Mongolia, because of the proximity in terms

“The law is vaguely drafted, but one of the effects is to specifically target state-owned enterprises that aim to gain control of key strategic sectors. At the moment the government is considering underlying regulations to deal with the implementation, so the devil will be in the detail when those regulations come out”. Chris Melville, Hogan Lovells

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Planned Mongolian railway corridors of location and logistics. We’ve also seen European, Australian and North American interest as well as a lot of interest by Indian entities in various natural resources. In that sense, it’s been a global phenomenon.” One practice area that is heating up considerably and unexpectedly is disputes. Sparked by a conflict over the South Gobi mine (see “A catalyst called Chalco”), lawyers are now handling international arbitration matters, a new and potentially unwelcome addition to their previously transaction-heavy workload. A new foreign investment law The most momentous development by far, however, has been the recently implemented foreign investment law that came into effect in May this year. Hastily pushed through the Parliament, specific guidelines have yet to be issued, yet the general tenor of the law specifically targets foreign investor’s control over the mining industry. Key features of the law include capping foreign investment into strategic sectors of the economy, such as minerals, communications, and banking and finance. Potential investors are required to notify the government beforehand for any transactions under which they would acquire between 5 percent and 1/3 of the shares in a strategic company. Further, if the foreign investor intends to hold more than 49 percent of the shares, and the amount invested exceeds $75 million, then approval from the Parliament must be given based on a submission from the Cabinet. Worryingly, at the moment, the law does not specify the processes for how the request for approval should be submitted, what information should be contained in that submission and in what way, and how quickly the Parliament will respond. “This law has created a chilling effect on new investment because people aren’t exactly sure how it is going to be implemented,” reveals Viverito. “A year ago, we were watching significant amounts of money actually flow into the country for small-to medium-sized mining projects, be they silver or gold, iron ore or coal, pretty much across the spectrum. But new investment has dried up for the time being.”Another facet of the law deals with investment by foreign state-owned entities. The law specifies that foreign state-owned businesses are required to obtain consent from the Cabinet, prior to making any investment into Mongolia. However, again the definition

RUSSIA

Erdenet Choybalsan

ULAN BATOR

Zamyn-Uud

MONGOLIA

Stations Ports Existing railways Planned railways Planned roads

TAVAN TOLGOI Gashuun suhait

Note: Domestic rail networks in China are not shown. Source: Railway Authority of Mongolia

Sainshand

Oyu Tolgoi Hohhot

CHINA

Vostochnaya

Jinin

Datong BEIJING

Haicheng Qinghuangdao

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Tianjin

Reuters graphic/Christine Chan

07/07/11

“There’s been a tremendous amount of interest from China over the resources in Mongolia, because of the proximity in terms of location and logistics. We’ve also seen European, Australian and North American interest as well as a lot of interest by Indian entities in various natural resources.” John Viverito, Gibson, Dunn & Crutcher

of “state ownership” is unclear, resulting in ambiguity for investors. “The law is vaguely drafted, but one of the effects is to specifically target state-owned enterprises that aim to gain control of key strategic sectors,” says Melville. “At the moment the government is considering underlying regulations to deal with the implementation, so the devil will be in the detail when those regulations come out.” A wait-and-see approach Given the swift passage of the law, investors are understandably jittery about what this may mean for their current and future projects. What advice should they follow? “There isn’t a clear path for people making investments right now as we don’t know what the application procedure will be, what information will be required by the government or what people will need to do in order to submit their applications; none of those rules or regulations have yet been announced,” says Wenger, advocating that if an investor wanted to move forward immediately they would have to negotiate with the government directly. Viverito urges a waitand-see approach for new investments, noting that the government has announced that there may be a modification of the law to make it clearer and more favorable to foreign investors. “Some may be scared off by the law, but Mongolia is a democracy

energy & resources

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and the government is, therefore, naturally balancing the interests of the people against the interests of the foreign investor,” says Stephen Tricks, London-based consultant at Clyde & Co. “It shouldn’t scare off those that are genuinely interested in dealing with Mongolia on a long term basis. You have to understand how the country works and what its attitude to foreign investment is, and within that framework you can expect that a lot of progress will be made over the next year.” Corruption and other roadblocks Besides the new investment law, practitioners highlight a few other obstacles when it comes to doing business in Mongolia. Firstly, corruption: “The new investment law is relatively draconian in a number of ways, and there are concerns that it may lead to additional corruption which is a serious problem in terms of people trying to get projects through the system there,” reveals Viverito, further noting that one of the concerns the firm has seen from investors regards the transparency of the approval process. On Transparency International’s Corruption Perceptions Index in 2011, Mongolia was ranked 120 out of 183 countries. Not all practitioners see corruption as an insurmountable problem, however, with Melville commenting that, “Mongolia is a functioning democracy and is significantly more open and investor friendly than its neighbouring jurisdictions. Also President Elbegdorj is very keen to stamp out corruption and has made this a priority of his administration.”

Overall, lawyers highlight that the process on the ground in terms of doing business is relatively complex, but par for the course for what you would find in other developing countries. They also stress the importance of tapping into local knowledge to access local networks. The Ease of Doing Business Report 2012, in fact, showed Mongolia climbing three spots from last year, now ranked at 86 out of 183, showing a distinct improvement. The primary impediment clearly remains the new foreign investment law, which sources in the market have labeled a potential paradigm shift for investors keen to do business in Mongolia.

Law firm frenzy A knock-on effect of the flood of foreign investments has been the development of the legal services market in Mongolia. Several international firms have announced the launch of local offices, among them Hogan Lovells, Allens, Clyde & Co, and Minter Ellison. “Historically, given it was a Soviet satellite state, the private practice market has been small, but it is now growing and the extent of cooperation between Mongolian lawyers and foreign lawyers is also developing,” says Tricks, adding that “it’s not an easy ride; one has to be prepared to build up the relationship, and to live in Mongolia or to travel there on a frequent basis. The Mongolians are much more willing to do business with people who are prepared to meet face-to-face”. Igor Bogdanich, partner at Allens, further remarks on the distinct yet complementary roles to be played between international firms and domestic lawyers: “International firms that come in should work closely with the local firms. It’s excellent for clients to have access to a global network, but you also need a local hand. There needs of the holding companies is a Singaporean to be more local firms that are exposed to entity. SouthGobi Resources is also listed the investors’ way of doing business, and the on both the Toronto and the Hong Kong more that the two work together, the deeper stock exchanges. the pool will become in country, and that’s Viverito, part of the team advising a good thing for Mongolia in terms of doing South Gobi Resources, firmly says, business.” “Unless this dispute is resolved by the government, I don’t see how foreign inFuture outlook vestors will feel comfortable investing any Given former president Enkhbayar’s recent further money into projects in Mongolia. imprisonment, the South Gobi and Chalco If this multi billion dollar problem is not dispute and the new investment law, the resolved, we are going to see a continbusiness situation in Mongolia remains unued devaluation of other companies certain. However, sources foresee stability with Mongolian assets, which are listed in the future; Bogdanich says frankly, “Most on stock exchanges around the world. countries have a foreign investment law of We will see those values continue to fall some description, and it’s a legitimate sovbecause people are not convinced that ereign matter. Once the regulations have the owners of these assets are going to come down in detail, I’m confident that most be getting a fair shake in the country and clients, as they do in other jurisdictions, will that is really a critical issue for the new work through it and keep investing.” government and for Mongolia.” Tricks echoes those thoughts, saying conIt remains to be seen how this dispute fidently that “The advice is that don’t expect will play out; but many are watching anything to move quickly. It’s not a country closely as it may well be a bellwether to where one can expect to get rich quick. gauge how the government will react to You have to take a long view and work with future foreign investment. Mongolians on a long term basis. But there

A catalyst called Chalco

he market generally concurs that triggering event that led to the hasty establishment of the foreign investment law is the dispute centred on the Aluminum Corporation of China’s (Chalco) $926 million bid in April this year for coal mining group SouthGobi Resources, in which Ivanhoe Mines has a majority share. If successful, the bid would give Chalco, a Chinese state-owned entity, up to 60 percent of SouthGobi’s shares. The Mongolian government has challenged the bid under the new foreign investment law, undoubtedly due to growing political sensitivity about foreigners profiting off the country’s natural resources. That the sale would cede control of one of the nation’s most profitable coal mines to China, Mongolia’s exceedingly powerful neighbour, has also raised concerns. At the moment, the bid has stalled and the dispute has entered into international arbitration. SouthGobi Resources can avail itself of the international arbitration process under the Singapore and Mongolia bilateral treaty, given that one

is tremendous potential here”.

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PITFALLS AND OPPORTUNITIES:

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As the West suffers an unprecedented period of economic instability and mounting financial scandals, it is increasingly evident that the opportunity for growth lies further east. The Middle East and North Africa, in particular, are expected to outpace the rest of the world, according to a July report by the International Monetary Fund (IMF). In the report, the IMF stated that it expects regional economies to expand this year by 5.5 percent, up from its previous estimate of 4.2 percent. However, by comparison, it expects the crisis-hit euro zone to contract by 0.3 percent and trimmed its estimates for the United States. "In contrast with the broad trends, growth in the Middle East and North Africa will be stronger in 2012 and 2013 relative to last year," the fund said in its quarterly revision of economic forecasts. "Key oil exporters continue to boost oil production and domestic demand, while activity in Libya is rebounding rapidly after the unrest in 2011." But the Middle East and North Africa are not without their own geopolitical challenges, which could serve as a hindrance to business. To help navigate the sometimes treacherous terrain in the region, the following is an overview of some of the opportunities and challenges the business and legal communities face when attempting to do business in the Middle East. REUTERS/Peter Andrews

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The United Arab Emirates, once the Golden Child of the region with the glitz and glamour of Dubai, suffered a thrashing in the wake of the global financial crisis. Humbled by Dubai World’s $25 billion restructuring and tarnished by the ghost towns that emerged as construction and development dried up, the UAE is once again seeking its place on the global stage with significant legislative reforms that it hopes will spur investment. The revised Commercial Companies Law is among the most anticipated pieces of legislation due by the government. The draft of the law, which was approved by the UAE cabinet in December 2011, will allow business ventures, especially small enterprises, to forgo the 150,000 dirham minimum capital requirement under the old Companies Law passed in 1984. It will also address issues of corporate governance by increasing transparency through the disclosure of financial statements, and is expected to provide a set of unified accounting standards based on international best practices.

“The new law will predominantly impact public joint stock companies, and will introduce some good general changes that will assist in attracting more funds into these companies. Changes to the general framework of PJSCs will protect and clarify the rights of stakeholders, improve levels of transparency through the disclosure of financial statements, and improve the integrity of boards,” wrote Mohammed El Ghul, senior associate and Intisar Sadek, senior counsel, at local law firm Habib Al Mulla & Co in an April report. Still, there are areas that lawyers fear fall short of what is needed to truly reform the legislative system. The most anticipated change revolves around the issue of foreign ownership. Under the current legislation, foreign owners are restricted from owning more than 49 percent of a limited liability company. A local partner must hold the rest. The new Companies Law is expected to give the UAE cabinet the authority to raise that ceiling of ownership for foreign owners in certain sectors and industries. Essam al-Tamimi, senior partner at Al Tamimi & Co, told The Brief earlier this year that the decision to only provide exemptions

A development is seen on one of the islands on the World Islands project in Dubai. REUTERS/Jumana El-Heloueh

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“2008 AND 2009 WAS THE WORST TIME EVER FOR DUBAI, AND EVERYONE THOUGHT IT WOULD COLLAPSE. BUT, ACTUALLY, DUBAI IS A REGIONAL HUB WHERE MOST BUSINESSES IN THE REGION ARE RUN OUT OF. PEOPLE WILL CONTINUE TO INVEST HERE.” HUSAM HOURANI, Al Tamimi & Co

to the 51 to 49 percent foreign ownership rules in select cases rather than change the law altogether to accommodate 100 percent ownership by foreigners, may turn off some investors who are eagerly awaiting a firmer stance on the issue. The UAE received foreign direct investment worth $3.9 billion in 2010 and $4.0 billion in 2009 respectively, according to the United Nations Conference on Trade and Development. These figures were sharply low compared to $13.7 billion in 2008 because of the global financial crisis and Dubai's own corporate debt problems. The country is expected to benefit from a flight-to-safety in the wake of the Arab Spring. While legislative changes are certainly on the minds of investors interested in the UAE, the shadow of debt restructurings remains. State-owned Dubai World rocked global markets in 2009 when it announced that its property development unit Nakheel was unable to make payments on its Islamic bond. The trickle down effect of this disclosure was the exposure of a culture of implicit guarantees in debt dealings within the country, which forced Abu Dhabi to come in and help bail out its troubled neighbour. Now almost three years later, Dubai and many of its entities are on the road to recovery following a spate of debt restructurings. Still, there are bumps along the road. The Dubai Group, for instance, remains embroiled in contentious debt negotiations. The Royal Bank of Scotland and two other banks have abandoned talks on restructuring the Dubai Group's $10 billion debt, and threatened to bring unprecedented legal action against the investment vehicle of Dubai's ruler, sources close to the matter told Reuters in July. Sources said the banks were demanding immediate repayment, and would take the issue

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The Burj Khalifa stands in Dubai. REUTERS/Mohammed Salem

to court if necessary. Trying to go through the courts could prove hard given the uncertainties over insolvency law in Dubai. While the UAE has bankruptcy legislation, the statute has never been tested by the kind of multibillion dollar, multijurisdictional case which a Dubai government-related entity would represent. Lawyers and bankers complain the legislation is out-of-date - especially in terms of criminalising anyone who defaults on debt and is open to a judge's interpretation, which means two identical cases could yield vastly different rulings. Also, bankruptcy legislation is spread across several different laws. A new insolvency law is in the works, but will not be passed in time to address the current wave of restructurings facing Dubai, lawyers say. Still, the Gulf Arab state has made some progress on restructuring its debt, and that has improved confidence. Healthy demand in April for the state's first sovereign bond issue in nearly a year suggested that investor confidence in Dubai was on an upward trend. Analysts and legal experts say there is room

now for the UAE, and Dubai in particular, to restart some of the country’s stalled projects. After the debt crisis hit, spending on infrastructure projects fell sharply. Last year, it dropped 20 percent to 7.1 billion UAE dirhams ($1.9 billion), half the level seen in 2008. But conditions are improving. Abu Dhabi has revived plans to build branches of the Guggenheim and Louvre museums as part of a $27 billion cultural project aimed at making Abu Dhabi a cultural capital for the region. Drydocks World, a shipbuilding unit of Dubai World that is in the process of restructuring $2.2 billion in debt, plans to build the world’s first underwater hotel. “2008 and 2009 was the worst time ever for Dubai, and everyone thought it would collapse. But actually, Dubai is a regional hub where most businesses in the region are run out of,” says Husam Hourani, managing partner at Al Tamimi & Co. “People will continue to invest here. There is increasing opportunity from tourism and hospitality, and companies with bases here are going to want to invest in their future business.”

Bordering the UAE to the west is the kingdom of Saudi Arabia, which is fast becoming the market to watch in the Gulf. The kingdom boasted gross domestic product of 6.6 percent last year, fuelled by soaring oil prices and heavy government spending. Robust government spending is slated to continue with the Ministry of Finance projecting in December last year that the kingdom will spend 690 billion riyals ($184 billion) in 2012. Much of that expenditure is expected to take place in the construction and infrastructure sectors, creating vast opportunities for businesses and legal advisers alike to cash in on the bounty. Infrastructure is key when exploring the Saudi market. For instance, Saudi Arabia's construction sector is fuelled predominantly by public spending on economic and social infrastructure. Business intelligence firm Business Monitor International (BMI) said in a recent report that construction industry growth rates will accelerate over 2012 and 2013, thanks to the government's vast

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infrastructure investment scheme aimed at staving off public discontent. The Arab Spring uprisings last year sparked concerns of similar protests in the kingdom, where unemployment is a growing concern among Saudi Arabia’s large youth population. To counter the threat of unrest, especially as violent protest erupted in neighbouring Bahrain, King Abdullah of Saudi Arabia established a $130 billion plan to create jobs and build subsidised housing. Saudi Arabia is estimated to have projects worth $623 billion currently underway, according to the economic weekly MEED, making it by far the largest projects market in the region, worth almost as much as the other five GCC states combined. A report by MEED Insights also estimates that the kingdom has more than $300 billion worth of projects planned and yet to be awarded. Project finance is considered to be a major area of growth within the Saudi market. For instance, Saudi Arabia's General Authority for Civil Aviation (GACA) is funding the building of the 27 billion riyal ($7.2 billion) King Abdulaziz International Airport in Jeddah through a series of Islamic bonds that are fully guaranteed by the Saudi Ministry of Finance. Saudi Arabia’s Al-Jadaan & Partners has joined global law firm Clifford Chance in advising GACA on the deal. Dominic Harvey, Abu Dhabi-based partner at Vinson & Elkins, says the expected flood of business has prompted the firm to expand with a Saudi Arabian office to further target project finance work. Social infrastructure such as power, water and wastewater projects will be key, while transportation infrastructure, alternative energy and more metals and petrochemical facilities will also keep law firms busy in days to come. Baker & McKenzie, for instance, recently advised the Dow Chemical Co and its subsidiaries on Islamic project financing worth $1.4 billion to support the construction and operation of three integrated petrochemical plants in the Jubail Industry City. The emphasis on social infrastructure and thus ensuring that its population does not take to the streets is of particular importance to the kingdom, as unrest could threaten the oil industry and its exports. Saudi Arabia, which has the largest oil reserves in the world, produces over nine million barrels a day. While oil prices have been high amidst the global economic crisis, the kingdom has been actively attempting to diversify the economy away from its heavy reliance on oil. Over the

last 15 years, Saudi Arabia has made strides to open itself up more to both foreign investment and different industries. Real estate has seen a particular boom; a trend that is at odds with troubled real estate markets in the rest of the Gulf, lawyers say. Strength in that market is expected to get an additional boost by the passage of the highly-anticipated, and much-delayed, mortgage law. After over a decade of study, the government approved the country's first law permitting mortgages in July. Saudi Arabia's housing market will need 1.65 million new homes by 2015 to meet demand, according to a report released by Banque Saudi Fransi last year. Private and public developers will need to build about 275,000 units a year for a population that has doubled in size since 1988, and is growing by more than 2 percent annually, it said. The mortgage law, which includes regulations covering mortgage finance institutions, home leasing, and legal mechanisms to settle disputes, could make it much easier to satisfy this demand for housing. According to a Fitch Ratings report, the introduction of a mortgage law in Saudi Arabia will improve the housing supply and social stability, and also provide for diversification of the banking sector. Interest is already emerging from the financial sector. Saudi Arabian investment bank Sidra Capital plans to set up a housing mortgage firm with one billion riyals ($267 million) of capital to tap growth expected after the kingdom passed a law covering mortgages, chief executive Hani Baothman told Reuters. Baothman has said that the law is expected to encourage the formation of several companies to compete with banks in mortgage financing, but this could not happen without an active sukuk market to provide such companies with the liquidity necessary for lending. Sukuk have been a strong area for growth in recent months. A spate of issuances out of the kingdom, in both domestic and dollar denominations, has been met with strong demand. For law firms, Saudi Arabia’s burgeoning sukuk market is proving to be profitable. Recent deals include petrochemical company National Industrialization Co’s (Tasnee) two billion riyals offering in May, while dairy firm Almarai completed a one billion riyal deal in March. Momentum for sukuk issuances in the Gulf is expected to continue through the end of the year at least, with Saudi Arabia serving as the main driver, lawyers say.

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The Kingdom Tower stands in the night in Riyadh. REUTERS/Ali Jarekji

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Vehicles drive past skyscrapers on a road in Doha. REUTERS/Mohammed Dabbous

“THE POLICY OF THE GOVERNMENT IS THAT QATAR WANTS TO MOVE FROM A FRONTIER MARKET TO AN EMERGING MARKET. IT NEEDS A CRITICAL MASS OF COMPANIES LISTED.” AHMAD ANANI, Latham & Watkins

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Qatar, which made its mark among global economies as the largest producer of liquefied natural gas, has gained even more fame in recent months after the small Arab kingdom won the bid to host the 2022 FIFA World Cup. With this achievement, Qatar has been thrust into the international spotlight with an aggressive push by the government to improve the country’s infrastructure and facilities, creating a wealth of opportunities for businesses and lawyers alike. The country has allocated 40 percent of its budget between now and 2016 to infrastructure projects. State-owned property developers Barwa Real Estate and Qatari Diar, for instance, are set to spend 100 billion riyals ($27.5 billion) over the next five years to 2016 on commercial and residential projects, according to a national development strategy unveiled last March. The government is backing this budget allocation with promised public investment worth $95 billion during the period, over $65 billion of which is expected to be on infrastructure. There are plans to spend $11 billion on a new international airport, $5.5 billion on a deep-water seaport, and $1 billion on a transport corridor in Doha. An additional $20 billion will be spent on roads. Among its more ambitious projects, Qatar plans to implement a $41 billion rail project. In October last year, Qatar Railways had stated that it had received bids from around 60 consortiums with at least two contractors each for the same. The project will include four rail lines, and will link stadiums that will be used to host the various matches of the soccer World Cup. The rail project is also expected to have an underground component at the centre of the capital city of Doha. Education and healthcare will also be major industries of growth, experts say. Government spending will be a key driver for growth in 2012 and into next year, according to a recent report by Emirates NBD research. According to the government’s recently released budget, development and infrastructure spending is projected to rise by 7.1 percent to 62.1 billion riyals this year. To help fund some of its proposed projects, Qatar recently made history by issuing the largest dollar-denominated Islamic bond to date valued at $4 billion. The two-tranche sukuk, which was the government’s first Islamic debt issue in nine years, attracted a massive order book of over $24 billion. International law firms Latham & Watkins and White & Case advised on the deal.

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“The government is going to be injecting money and liquidity into the market, so there will be certain areas where we will see legal work and growth,” says Ahmad Anani, corporate partner at Latham & Watkins, who is based in Doha and Abu Dhabi. “This is a planning phase. We will then see a lot of construction work for lawyers. Real estate will be required, which will create another important area for business. I see this market on a steady growth over the next seven years.” Anani added that capital markets work will be a hot area for the legal community in Doha. Islamic lender, Barwa Bank, a unit of Barwa Real Estate, plans to issue a sukuk by 2013 and is eyeing a share listing over the longer term, its chief executive told Reuters in June. The bank sees an issuance as helping smooth out maturities in the Gulf state, which plans to invest about $130 billion in its nonhydrocarbon sector between now and 2018. A yen-denominated deal by Qatar's quasi-sovereign oil and gas company, Qatar Petroleum, is also said to be in the works, according to IFR Markets, a unit of Thomson Reuters. In another potential deal in the works, Qatar Telecom has asked banks for proposals about a $1 billion commercial paper programme, three sources told Reuters

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in May. It would be a rare example of a Middle Eastern entity using such an instrument. Commercial paper, which is a short-term unsecured debt instrument used to manage near-term obligations and to finance everyday expenses more easily, has so far only been issued by a couple of regional banks and Abu Dhabi state-owned investment fund Mubadala. Initial public offerings are also expected to be a hot market for lawyers in the coming months. Latham & Watkins is currently working on six IPOs that are expected to launch in the second half, and into the first quarter of 2013, Anani says. The firm is also in discussions regarding three more IPOs out of Qatar. “The policy of the government is that Qatar wants to move from a frontier market to an emerging market,” he says. “It needs a critical mass of companies listed.” Despite its diversification into other industries, there are still plenty of opportunities within Qatar’s energy sector. A moratorium has been placed on the export of LNG until 2015, but the country is seeking alternatives. Qatar plans to spend $25 billion on expanding its domestic petrochemical industry over the next decade, thereby more than doubling its annual petrochemical production capac-

ity from the current 9.2 million tonnes to 23 million tonnes by 2020. Qatar will be the consummate growth story for the next decade, lawyers say, with law firms looking to increase their presence in coming years.

The island kingdom of Bahrain was long hailed as the hub for business and finance in the Gulf. Without the glitz and glamour of Dubai, Bahrain sought a more serious financial standing with one of the highest numbers of both Islamic banks and international financial institutions in the region. International players, including big law firms, sought to make a presence in the country, which has had a historically strong relationship with Saudi Arabia. Saudi Arabia shares one of its oilfields with Bahrain, providing around 70 percent of the budget revenue in a country of over 1.2 million people, including 660,000 foreigners. Last year, Riyadh and other Gulf countries promised Bahrain and Oman $10 billion each over 10 years for socio-economic spending to bolster their governments in the face of unrest.

A view of the skyline of Manama at night. REUTERS/Hamad I Mohammed

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ASIAN LEGAL BUSINESS september 2012

City view of Bahrain’s capital Manama is seen from Abraj Al Lulu. REUTERS/Hamad I Mohammed

But the onset of the financial crisis and the instability that ensued in the wake of the Arab Spring has cast Bahrain into a negative light. As media reports highlighted mounting violent protests and unrest in Bahrain’s financial centre, banks and corporations began to reconsider the viability of Bahrain’s business environment. In August 2011, Credit Agricole shifted the majority of its Bahrain-based staff to Dubai, while BNP Paribas moved back office operations from the island kingdom. In February this year, Societe Generale's private banking arm also confirmed plans to exit Bahrain to cut costs. Sources told Reuters in May that the Bank of Tokyo-Mitsubishi too plans to scale back its operations in Bahrain. Law firms too have not been immune to these mounting concerns. Offshore law firm Appleby pulled out of Bahrain last year, citing the instability of the region as the reason. The firm continues “to monitor the region for the future,” says Peter Bubenzer, group chairman of the firm. It has been a costly year for the country. Bahrain’s 2011 gross domestic product growth fell to 2.2 percent from 4.5 percent in 2010. A study conducted by Bahrain’s Shura

Council, its parliament, and the Bahrain Chamber of Commerce and Industry earlier this year also indicated that businesses in Bahrain lost up to $800 million over the last year due to the unrest. According to a Reuters poll conducted in July, Bahrain is forecast to be the only Gulf country in the red in 2012, with a budget deficit of 2.0 percent of GDP. However, lawyers still say the opportunity for conducting business in Bahrain remains strong, although the nature of their practices have changed over the last three years. Before the financial crisis, Bahrain – like much of the region – was focused on building up its infrastructure. Real estate was king, and construction projects dominated much of the legal work in the country. But with the bursting of the global real estate bubble and the subsequent financial downturn, construction sites turned to ghost towns as funding dried up. For lawyers, vibrant real estate and construction practices suddenly gave way to an increased need for dispute resolution. Trowers & Hamlins’ Bahrain partner Paula Boast told The Brief that dispute work used to make up only 10 percent of her practice in 2009, with 90 percent still focused on

project development. By 2011, dispute work made up 60 percent of her practice, with 40 percent dedicated to actual construction deals. Lawyers say the current legal environment has shifted notably towards litigation. To that end, local law firms have a distinct advantage in handling court matters. Under Bahraini law, while international law firms can operate in Bahrain without a local partner, they can only represent claimants when accompanied by a Bahraini lawyer licensed before the Cassation Court. The financial crisis has also created work for lawyers in the realm of restructuring and refinancing. Islamic investment bank Gulf Financial House was repeatedly forced into restructuring obligations in 2010, as the firm struggled with its debt burden in the aftermath of the global downturn. The company recently restructured $45 million in debt, the second time it has restructured that same facility. In May this year, a unit of Bahrain investment house Arcapita filed for bankruptcy protection in the United States, becoming the first Gulf entity to file for Chapter 11 after it was threatened with legal action following its

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failure to repay a hedge fund in full. Arcapita’s legal advisers are Gibson Dunn & Crutcher and Linklaters. Clifford Chance is working with the creditor committee. “There has been a significant amount of work out of the ashes of the financial crisis,” says one Bahrain-based lawyer. “Financial institutions have struggled, and have needed advisory work and structuring expertise to help them meet obligations. Things are not as dire as they were on that front, but there are still payments that need to be made. This is an area that will keep corporate departments (of law firms) busy for a while.” Despite Bahrain’s challenges, legal experts say it is not without its strengths. Infrastructure, for instance, has become the buzzword going forward as the government seeks to appease the masses with more social housing. Bahrain’s government has signed a $550 million public-private partnership (PPP) to build housing in the kingdom. The country has also committed $4.8 billion towards expansion of its international airport, $4.7 billion towards improving its roads and bridges, and $8 billion towards expanding its public transport networks, according to a report by Deloitte. Such initiatives will require financing through loans and debt instruments. Bahrain issued a $1.5 billion, ten-year dollar bond in June. International law firms Allen & Overy and Baker & McKenzie, as well as local Bahraini firms Hassan Radhi and Associates and Qays H. Zu’bi Attorneys & Legal Consultants have advised on the deal. Legal experts expect more corporate financing deals to come to market over the next few months.

REUTERS/Stephanie McGehee

The Gulf state of Kuwait has come under the spotlight in recent months as it struggles through its own political upheaval, which threatens its economic development in the region. Kuwait has seen eight governments come and go in just six years due to bickering between the parliament and the cabinet. The last government resigned in June after Kuwait's constitutional court dissolved a parliament elected in February this year. In a continuation of its political tug-of-war, Kuwait's ruler approved a new cabinet in July, which ushered back many of the old faces following the mass resignation in June. Analysts expect Kuwait's ruler to dissolve the parliament in order to allow a new election, widely expected to be held after the Muslim holy

month of Ramadan. The new cabinet should be sworn in before the reinstated parliament. But such a move could prove difficult as the majority of the 50 elected-member assembly have said they are boycotting the reinstated parliament, which was tarnished by corruption allegations. Such political manoeuverings are resulting in a lack of faith in the Kuwaiti market, which could hinder its economic growth, experts say. "Domestically, a negative outlook is inevitable where government spending remains dormant, tendering of new projects significantly lags, and asset values continue contracting as the local stock market considerably underperforms," National Bank of Kuwait (NBK) chief executive, Ibrahim

Dabdoub, said in July, according to a report in Reuters. Kuwaiti lawyer Mohammed Al Noor at AlTwaijri & Partners (TLF) adds that the lack of political stability has already had an impact on the country’s development. “Decisionmaking needs political will, otherwise Kuwait cannot move forward,” he adds. “There isn’t much foreign investment because the law needs to be changed. The Foreign Direct Investment Law is in draft form, but it needs to be reviewed and passed by the parliament, and this is a long process.” Major oil producer Kuwait is one of the most financially stable economies in the world, thanks to a high demand for its natural resources. But its weak regulatory

MIDDLE EAST PROFILE

ASIAN LEGAL BUSINESS september 2012

“THERE HAVE ALWAYS BEEN A SMALL NUMBER OF INTERNATIONAL FIRMS BECAUSE OF THE WAY THE KUWAITI MARKET IS. THE LEGAL MARKET HERE DEPENDS A LOT ON WASTAS (PATRONAGE) AND WHO YOU KNOW AND THE OPPORTUNITIES YOU CAN GET.” ABDUL AZIZ AL-YAQOUT, DLA Piper

environment and outdated insolvency laws make it difficult for distressed companies to restructure, weakening the country’s business capabilities, according to the World Bank. Speaking at a forum in May, World Bank senior counsel Riz Mokal said Kuwait needs legislation that gives distressed but economically viable companies an opportunity to restructure. The Financial Stability Law brought in as a response to the financial crisis did not provide for this, according to a report by Reuters. Kuwaiti firm Investment Dar, which partly owns British luxury car maker Aston Martin, secured a one billion dinar ($3.6 billion) debt deal with creditors in February 2011 as part of a contentious restructuring under Kuwait's Financial Stability Law. The Global Investment House is undergoing its second voluntary debt restructuring in three years. Other laws are also in need of a revamp in order to make the Kuwaiti market more conducive for business, lawyers say. Kuwait is in the process of drafting a new commercial companies law in addition to laws for small and medium enterprises. Kuwait is also drafting an investment promotion authority law to reduce financial and logistical barriers for inbound and internal investment in the country. But legal experts say such legislation is taking a backseat to the country’s current political situation. Tenders for large-scale projects, such as the Al Zour waste water project, have already been submitted, but are currently on hold as politics play out. Financing for many projects has also stalled with banks currently reluctant to lend, given a lacklustre legal environment and past credit defaults. In such an uncertain market, it is a struggle for international law firms to conduct business. “There have always been a small number of international firms because of the way the Kuwaiti market is,” says Abdul Aziz Al-Yaqout, regional managing partner at DLA Piper. “The legal market here depends a lot on wastas (patronage) and who you know and the opportunities you can get.” DLA Piper, SNR Denton and Curtis, MalletPrevost Colt & Mosle are the three main in-

ternational players with a presence in Kuwait. Al Noor of TLF says that many international law firms have sought to downsize in Kuwait because it is a slow growth process. “They want results fast and move quickly if they don’t come. This is not the way this region works,” he says. There is room for local lawyers to make a mark in Kuwait, but concerns remain in some cases that the standards in practice differ too greatly between local Kuwaiti firms and international players. Still, lawyers on the ground say there are prospects for growth within the capital market in the wake of the Capital Markets Law passed in 2010. Mergers and acquisitions and investment restructurings should provide more legal work in the months to come, says Al-Yaqout.

The Gulf Arab sultanate of Oman was cast into the spotlight last year as the Arab Spring turmoil ushered in a series of uprisings within the country, with citizens protesting a lack of employment opportunities to meet the needs of its fast-growing population. The IMF said in December that a 2010 census had put the unemployment rate among Omanis at 24.4 percent, although the high number may include many who are not truly looking for work. Omanis accounted for only 14 percent of nearly 1.3 million private sector employees in 2011. The social unrest last year prompted Sultan Qaboos bin Said, a U.S. ally who has ruled Oman for 42 years, to pledge an extra $2.6 billion of spending in April 2011. Oman obtained pledges in March 2011 for $10 billion in aid over 10 years from its wealthier Gulf neighbours. The government forecasts a budget deficit of 1.2 billion rials for 2012, or 4.3 percent of 2011’s gross domestic product (GDP), which grew a real 5.5 percent last year. Against this backdrop, the sultanate is attempting to draw more foreign investment within its borders to bolster its economy. Its initiatives are expected to create abundant opportunities for businesses and lawyers.

Oman joined the World Trade Organisation in 2000, and has since relaxed laws for foreign capital investment into the country from 51 percent to 30 percent. In addition, Oman is considered to be one of the more businessfriendly environments in the Gulf, including a free trade agreement with the U.S. and a modern business law framework. Driving some of the activity is the sultanate’s focus on its industrial development. Oman has one of the fastest growing power and water sectors in the Middle East region, with electricity and desalinated water demand expected to increase until 2017 at an average growth rate of about 9 percent per year, according to the Oman Power and Water Procurement Company. Solar power and renewable energy are areas of particular

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View of the Al Alam Royal Palace in Muscat. REUTERS/Benoit Tessier

focus for Oman. “The greatest growth area in Oman is in infrastructure projects, in particular water and power,” says Bruce Palmer, partner at Curtis, Mallet-Prevost Colt & Mosle. “We are talking about large scale projects of over $1 billion.” Such projects will require a significant amount of financing, creating opportunities for banks and the legal community. In addition to infrastructure projects, Islamic banking is also seen as a key growth area for the country, legal experts say. The Islamic finance market has grown to nearly $1 trillion globally, analysts estimate. But unlike neighbouring states such as the UAE and Iran, which have embraced the industry, Oman until last year remained stubbornly secular in its approach to finance. Its central

bank head said in 2007 that "banks should be universal”. Oman reversed its stance after seeing a steady trickle of investment money flow to nearby countries with well established Islamic banking sectors. The decision was also seen as one way of appeasing its population following the protests. Following the edict allowing Islamic finance, the sultanate launched its first Islamic bank, Bank Nizwa, which attracted $681 million rials ($1.77 billion) in bids during its initial public offering. Bank Nizwa’s was the first IPO this year in Oman, with Trowers & Hamlins having advised on the deal. The country's market regulator has said it expects three to four new listings in 2012. Sharia-compliant lender Al Izz International Bank, Oman's second lender to be licensed for Islamic

operations, was expected to issue an IPO of 40 percent of its 100 million rials capital by June this year. However, the anticipated IPO has still not come to the market. Legislation covering Islamic insurance, or takaful, along with sukuk is expected to be finalised by the end of the third quarter of the year, Capital Market Authority officials told Reuters in June. But the introduction of the regulatory framework may not produce a rapid surge of activity. Many institutions are still grappling with the need to obtain product expertise, arrange oversight by boards of Islamic scholars, train staff, and build computer systems. “The introduction of Islamic banking is great, but it will undoubtedly be slow to begin with to see how it goes,” Palmer says.

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A conference presented by the IBA Corporate and M&A Committee, supported by the IBA Asia Pacific Forum Topics include: • A review of general M&A outlook and recent trends • Insight from the regulators • Current public M&A issues • Private equity and private M&A today • Acquisitions finance • Top M&A issues for the General Counsel • Asia outbound: case studies • Financial due diligence and anti-bribery laws • Joint venture transactions in Asia Who should attend? Lawyers in private practice, in-house counsel, investment bankers, accountants and other professionals involved in mergers and acquisitions.

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WOMEN IN LAW

ASIAN LEGAL BUSINESS AUGUST 2012

WOMEN AS BUSINESS LEADERS AHEAD OF ALB’S NEXT WOMEN IN LAW PANEL ON OCT. 31, RANAJIT DAM AND SEHER HUSSAIN SPEAK TO THE FOUR PANELISTS ABOUT THE SECRETS TO THEIR SUCCESS

Sok Cheng

Stefanie Yuen Thio

Legal counsel, SE Asia Morgan Stanley

Joint Managing Director TSMP Law Corporation

Named Singapore’s In-House Lawyer of the Year at the Marina Bay Financial Centre ALB SE Asia Law Awards 2012, Morgan Stanley’s Sok Cheng is no stranger to the spotlight. In this year alone, Cheng has worked on a number of high-profile deals, several South East Asian deals this year including the Felda Global Ventures Malaysian IPO – the world’s second-largest listing till date – Thai Beverage’s acquisition of shares in F&N, and Morgan Stanley’s acquisition of an exchange membership on the Indonesia Stock Exchange (IDX). The icing on the cake is that Cheng has been able to pursue a high-flying career in addition to having a fulfilling family life: She has three children aged between one and 12 years old. Cheng, who prior to joining Morgan Stanley in London, was with Freshfields Bruckhaus Deringer in the firm’s London office, says that one of the biggest challenges that her female peers face is that lawyers in the corporate finance practice area typically maintain long working hours to meet the demands of the job. “Many of my peers gave up along the way when they started a family,” she says. “I have been fortunate with having understanding managers who valued the skills I have, and agreed to flexible working arrangements at periods of time when my children were young.” As for her secret to maintaining a work-life balance, she says that it comes down to “being organised and efficient at work and at home, and knowing my limits”. Cheng, who currently heads the legal function at Morgan Stanley in Singapore, says that the early years were not always the easiest. “When I started out as a junior lawyer in London in 1995, it was certainly not an advantage being female – and Asian,” says Cheng. “The culture in the City of London was very masculine, and there were few female role models.” However, she says that situation is much better today. “Nowadays, especially in Asia, there is increasingly a level playing field for good lawyers, and there are numerous female role models in the legal profession,” the Cambridge-educated Cheng says. To young female lawyers starting out in the profession now, she has the following advice: “Equip yourself with useful skills, such as brushing up your second or third language. Gather useful work experience, such as spending some time working in a different jurisdiction where possible.”

Stefanie Yuen Thio wears many hats: Aside from heading the corporate practice division at TSMP Law Corporation, she is a director on the boards of several Singapore investment companies owned by international conglomerates, and is also active in charitable and voluntary organisations, including Dover Park Hospice where she sits on its governing council. These are achievements, however, that she underplays by referring to her life as “one continuously boring blip”. Thio asserts that mindset has played an important role in her success. “As a woman, I have never felt that there was a glass ceiling, or that my gender disadvantaged me in any way,” she says. “It is the knowledge that you can try for anything you want that has been an important equipping point in my career.” The most intractable problem that women professionals face, notes Thio, is the tug-of-war between motherhood and career. “Women who accept that they should be defined by their ability to have babies, and bring them up personally, probably place the greatest shackles on their careers,” she says, adding that she never had the luxury of making a decision about work-life balance. “I had a job, and I wanted to do it well,” she says. “People's livelihoods depended on me. So I made do. Women can have it all, so long as they believe that.” Thio also gives credit to her immensely supportive husband. “He never took the view that I was the primary parent, and even on something as intensely feminine as breastfeeding, he supported me in a very hands-on way, starting by attending breastfeeding class alone!” she says. “So, my advice to women, pick a good life partner. The rest is just details and organisation.” The positive-thinking Thio feels that in many corporate scenarios, being a woman can be of great advantage. “In boardroom battles, I have found that as a woman, it is easier to adopt a more consensusbuilding approach leading to a win-win solution,” she says. “Often in gladiatorial corporate standoffs, where two male egos are engaged, there's a need to achieve a winner-takes-all result. I think that a successful corporate negotiation is one where everyone leaves feeling like they got something.” Finally, she has this piece of advice for young women currently starting out in their careers: “Love what you do. Then do it with a passion. Anything else is to give yourself less than your due.”

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WOMEN IN LAW

Sushma Jobanputra

Fang Fang

Partner-in-charge Jones Day

Vice President of Tax SingTel

Having practised banking law for over 25 years in Paris, London and New York, Jones Day’s Sushma Jobanputra has keen insight into the life of an influential and successful female lawyer. A self professed “deal junkie”, she was encouraged to be independent from an early age. “My mother grew up in a different generation, and didn’t have the opportunity to go into higher education,” she says, “and she very much regretted that, and so drummed it into us from an early age that we had to be financially independent regardless of gender.” Did she face obstacles as a female lawyer coming up through the ranks? She says, frankly, that “In my case I had so many weird things; I was a woman, and I spoke with an accent, so I didn’t dwell on it. At that time, lawyers were so busy, there wasn’t time to think about discrimination, my only goal was to do the best that I could.” Having graduated from law school in Canada, she credits the nation for its politically correct atmosphere, scores of female lawyers, and diverse ethnic population that helped her practise law in a supportive environment. Like many other high powered professionals, Jobanputra places a priority on work-life balance. “Having a family often makes you more focused, and even more efficient,” she says, “as there are so many aspects of your life that need to be managed concurrently.” She emphasises that female professionals in Asia have a definite advantage over their counterparts in the West, highlighting Singapore’s flexible working culture, short commute times, and reliable household help. “That’s made my life a lot easier. When I’m at home, I’m just spending time with my family, not grocery shopping. I’m spending quality time with them as opposed to organisational or logistic time at home,” she reveals. Another difference she highlights is that Asia boasts several prominent female heads of law firms, especially in Indonesia and India, yet relatively few senior women in banking, on the transactional side. “When I joined Barclays Capital [in 2003], I was the fourth female managing director globally and I was the first female front office managing director. That statistic was shocking. There are lots of directors and middle office and back office bankers, but in senior positions, there aren’t that many women,” she says. Her advice for the next generation? “In every country I’ve lived, I’ve been different,” she says. “I was born in Africa, I was educated in Canada, lived in London and Paris; so I never fit the mould. At times though, being a woman has been an advantage, because people underestimate women, and so you have that element of surprise on your side. That gives you that advantage. In the end though you just have to be willing to work hard, learn from your errors, and like what you do.”

Fang Fang is acclaimed in the local business community for her dedication and far-ranging experience. Even from a young age, she was always confident in her path, revealing that “In my generation, it was expected of you to go to school, then junior college, and then progress in that way. Generation Y may tell you a different story, but I grew up with these goals.” As for her choice of profession? “Curiosity drew me to tax, it’s always had this mysterious air about it,” she says. “And in Singapore, compared to the U.S. or Australia, there are actually quite a few females in the tax profession.” How does she separate her working life from her personal life? Fang advocates that it is impossible to have an equally balanced life, all of the time. “If you look at it throughout your career, there are certain phases when you spend more time at work, and other phases where you focus time on your family. It’s not consistently balanced,” she says. Nowadays, she spends more time at work, given that her children are adults. However, when they were younger, she recalls being on a slower lane, watching her colleagues’ progress faster than her, because she would leave work by a certain time to spend time with her family. Like other high powered women in the region, she agrees that the family-oriented culture in Asia is a community that is invaluable. “You can’t just rely on domestic help,” says Fang. “Here you also have your family and your in-laws as a support network.” Fang highlights cultural expectations as one of the biggest obstacles she has faced throughout her professional career. “Being female, you tend to feel obliged to spend time with the family, which is also the societal expectation. Males, generally, if they spend time working late, they are less guilty about it. Over time, it may have gotten better, but we haven’t come to a place where everyone feels the same,” she says. Advice for up-and-coming female professionals? “You have to look at your career as a whole, and not try to balance family and work all at the same time. It can never be equal. You need to focus more on one and less on the other at certain times. You can always come and readjust the balance. Don’t let that deter you, believe that you can still pursue your passion, but you don’t need to progress at the same pace as everyone else.”

31 OCTOBER 11AM - 1:45PM ONE RAFFLES QUAY, #28-01 NORTH TOWER, SINGAPORE TO REGISTER CONTACT LUCINDA (65) 6870 3305

commercial litigation

ver the past year, the number of lawsuits involving nonmainland companies has risen by about 10 percent in China, according to the China Daily, and one of the main reasons is that foreign companies are realising it is possible to come out ahead in Chinese litigation. “There is a growing understanding of the working of Chinese courts, which has led to reduced reluctance among foreign companies to take the litigation route,” says May Tai, partner, dispute resolution, at Herbert Smith in Beijing. With the economic downturn putting most expansion plans on hold, businessmen have more time to concentrate on recovering bad debts and enforcing their IP rights, says Tai. Additionally the economic downturn has led many companies to realise that it is cheaper to pay damages than carry out their commitments in a contract, says Eugene Chen, Shanghai-based partner in Hogan Lovells’ international dispute resolution team, Furthermore, Chen says that companies in China are also realising that litigation can be used as a strategic tool to gain leverage while negotiating a settlement. “They may [eventually] lose a case, but will manage to put extra pressure on the other side,” he says. According to him, this has led to a very distinct trend in China towards increased litigation.

ASIAN LEGAL BUSINESS september 2012

There are other additional factors contributing to this trend. For example, the emergence of China as a nation of consumers in addition to a production hub has given rise to a totally separate source of litigation – foreign companies selling consumer goods. “Five to 10 years ago, foreign companies would be mostly protecting their manufacturing in China, instead of being bothered about their China sales, which at the time were not substantial,” says Peter Wang, head of the litigation practice at Jones Day in Shanghai. However many multinationals earn substantial chunks of revenue from China today, and hope to grow even further, says Wang. To protect this market share, these western brands are moving forward to sue even international competitors in Chinese courts. They have been encouraged by by the swiftness of the Chinese judicial process, which provides the plaintiff with a distinct advantage. “The Chinese system is very front-loaded,” says Wang, “meaning that plaintiff can spend a lot of time to gather evidence on its own, while the defendant doesn’t have that much time.” Indeed, there are more ways for the plaintiff to make life difficult for other foreign companies, and they fully exploit the Chinese legal provisions to achieve that. Instead of suing each other directly, these multinationals use their Chinese subsidiaries to file suits against the

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commercial litigation

Litigation rising China’s commercial litigation business is booming as companies are feeling confident of getting fairer judgements and are happy with its faster judicial process. The recent economic slowdown and the growing importance of the Chinese consumer market have provided the immediate spur to the trend. However, serious pitfalls in the Chinese judicial system still advise caution. Raghavendra Verma reports

REUTERS/Carlos Barria

opponents’ local companies. Explaining the reason behind the practice, Wang says that for a Chinese company suing another Chinese company, the response period for the defendant is even shorter than the one given to a foreign company. “They may get just 30 days to respond,” he says. There is no doubt that this provision puts a huge amount of pressure on the companies that get sued in China. “As soon as they receive notice of a lawsuit, they need to put a response plan in place,” says Wang. Wang, who is a U.S.-qualified lawyer, says that the situation becomes more critical as multinational companies are less familiar with the Chinese judicial system. Buying more time is critical, and several factors need to be considered before making any response. Jurisdiction is one of them, he says. Often, companies successfully manage to object to the jurisdiction of a court on the basis that they do not have any substantial business in that area. While adopting this approach, not only do the defendants manage to gain time, but also avoid fighting a case in a place where they perceive a local bias, says Wang. The legal teams of the multinationals also need to get to grips with the Chinese civil law system, which, according to Herbert Smith’s Tai, does not seek disclosure, discovery of documents or witnesses’

testimonies. “Unlike in a common law system, where one has to get to the bottom of each case with lots of evidence and an argument for every point, the Chinese system heavily relies upon documentation,” she says. The emphasis in Chinese courts is to get the dispute resolved as quickly as possible. “It’s not so important that they leave no stone unturned,” says Tai. “[They want to] get justice and move on.” There is a distinct advantage to this approach for China, where the courts do not have the kind of resources at their disposal that most Western countries do. “This allows a limited number of Chinese judges to deal with phenomenal number of cases,” says Tai. “I have heard that each of them handles up to 200 cases a year.” However, it could be very risky for companies to have their sensitive cases adjudicated in a hurry and therefore, lawyers often prescribe preventive measures. “For a high-value contract, we always recommend the inclusion of an arbitration clause,” says Tai. To the advantage of the foreign companies, the Chinese arbitration system functions according to international norms, she says. Also, Chinese courts in various parts of country vary greatly when it comes to efficiency. While admitting that there is a question mark on the capabilities of Chinese courts to deal with specialised cases, Wang says that “it is also clear that in some places, there are very capable judges and in others, there may be those which are less experienced in complex commercial litigation”. According to Wang, most of the larger provinces and the major cities like Beijing and Shanghai are much more accomplished than others, and are, therefore, preferred by foreign companies. “They even

commercial litigation

ASIAN LEGAL BUSINESS september 2012

REUTERS/Jason Lee

not been able to recover damages,” she says. “That was quite annoying for the client, although it was still a good result as the counterfeiting operations ceased.” It might not be very difficult to win a case against a counterfeiter, but taking influential parties to court in China is still a big challenge. Tai has a warning for foreign companies initiating litigation against big state-owned enterprises. “That might change the whole dynamics of the case,” she says. According to Chen, who has been based in Shanghai for the last five years, in cases involving influential parties, there is a risk of corruption or external interference to the judicial process. He says that the system is still not independent and prone to manipulation, “There is a growing and deeper even though there has been a gradual imunderstanding of the working of provement. Chinese courts, which has led to a One of the reasons, he says, is that the lesser reluctance among foreign Chinese courts are relatively young, being created only in the 1960s. He adds that within companies to go into litigation.” these few decades, the developments have May Tai, Herbert Smith been quite substantial. However, local regulations still do not allow foreign law firms to appear in court, and they have to employ local pany in China. “It had premises, a website law firms for that purpose. This can lead to problems from time to time. and a big sales network for goods that were According to Chen, “there is a little bit of tension when it comes to counterfeits of our client’s,” says Tai. dealing with local law firms over making sure that international clients Even though the litigation took place in a receive the levels of service that they expect from us”. second-tier city, Tai says that it was handled Explaining the situation, he says that the local law firms often do very efficiently. “The hearing was completed, not realise the influence China has over global business. “They are and the judgement came out in less than nine mainly focused on Chinese litigation, while they also need to think months of filing the case, which compares about the client’s entire global strategy,” he adds. quite well with others jurisdictions,” she says. However Chen says that there are a lot of opportunities for both Although Tai’s client won the case, it failed sides to collaborate further, and there are certainly gains to be made to enforce damages. Typical of the stories one from the expanding legal industry in China. “The amount of litigation hears about China, the respondent in this case will keep rising as China’s judicial system becomes more and more managed to deregister his company and just reliable,” he says. disappeared. “The Chinese courts have still have separate courts to handle intellectual property matters,” he says. Even for those companies that are extremely reluctant to initiate any sort of litigation in Chinese courts, there is no other option left when it comes to enforcing intellectual property rights. In one of the cases involving a famous Western brand, Herbert Smith filed an IP lawsuit against a large counterfeiting com-

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SPONSORED PROFILE

King & Wood Mallesons

Chinese Disputes – Fighting on All Fronts

C Meg Utterback Partner King & Wood Mallesons’ Dispute Resolution Group, Shanghai Office.

ross border litigation may involve a web of litigation that was never contemplated at the signing of the original agreement. Companies inbound to China and Chinese companies outbound rarely find that large disputes are solely resolved in one forum. A. The Possible Venues Foreign companies inbound to China and Chinese companies outbound have the same options for dispute resolution: foreign courts, domestic courts (including civil, criminal and administrative actions), and domestic or offshore arbitration. Investment treaty disputes may also be an option. Large cases require utilizing multiple venues to achieve the best outcome for the client. B. Cross Border Disputes As Sword Good lawyers want to achieve the client’s ends early. Few companies want an extended dispute resolution process that ties up their potential cash flow and requires expenditures on lawyer fees for a year or more. Clients also fear the inherent risk of waiting for a judgment or award that might be found unenforceable, could be appealed indefinitely, or where depletion or transfer of the assets has occurred before judgment. C. Strategies We consider only a few examples of cases where multiple cross border disputes are not only a means to obtain relief but serve other important purposes. The Danone v. Wahaha case was one of the first high profile China cases where the filing of multiple simultaneous actions was a tool to increase leverage and gain advantage. In the Danone v Wahaha case, over sixty proceedings were brought: eight Stockholm arbitrations, fifty cases in PRC domestic courts, asset preservation and other suits brought in multiple tax shelter jurisdictions, court litigation in California, actions in France for seizure of assets, and proceedings in Hong Kong. The aims varied: 1) increase pressure for settlement; 2) increase the counter party’s legal fees; 3) obtain evidence; 4) obtain court verdicts for use as evidence in other proceedings; and 5) obtain inconsistent judgments to undermine enforceability of any one judgment.

A: 17th Floor, Shanghai International Commerce Centre, 999 Middle Huai Hai Road, Shanghai, 200031, P. R. China T: +86 21 2412 6086 F: +86 21 2412 6150 E: meg.utterback@cn.kwm. com W: www.kwm.com

Today in China contractual cases tried in arbitration, either on-shore or off-shore, may be accompanied by a companion domestic court case alleging a tort. The benefits are 1) the likelihood of a favorable ruling in the local court, 2) an early opportunity to seize evidence and preserve assets; 3) the possibility of getting an order restricting the ability of the legal representative or company executive to leave China; 4) pressure for

settlement; and 5) relief in advance of the arbitral award which may have the effect of a) providing evidence for the arbitration, b) undermining the enforceability of the later arbitral award, or c) insuring the availability of assets to satisfy a successful award. The issue of whether tort claims are within the purview of the arbitration clause and the extent to which such cases can be brought is currently the subject of review in numerous domestic PRC courts. Practictioners remain hopeful that guidance on this practice will issue in China in the future. In a civil law system it is often difficult to obtain evidence adverse to the other party. Companies often bring collateral cases in common law jurisdictions to obtain more evidence for use not only in that proceeding but in proceedings in other jurisdictions. As practitioners, we grapple with questions about whether deposition testimony in a court case in Massachusetts can be used as evidence in Henan. If it is used, how does one authenticate such testimony and use it for advantage. Chinese courts take a dim view of the collection of evidence in China for use in off-shore proceedings. Parties need to consider thoroughly the risks of using collateral litigation as a discovery tool. Lawyers often must consider the availability of interim relief from a favorable jurisdiction. For example, it is likely that asset preservation from a Chinese court, if supported by a bond or security from the applicant, is more readily available than relief from a US federal court, which may impose a higher threshold of proof. Recently intellectual property cases have provided the greatest fodder for multiple litigations in cross border litigation. Larger IP cases may involve actions in China for civil remedies such as a declaration of ownership of the IP, criminal cases for trade secret theft, administrative actions before the Trademark Office, actions with Administration of Industry and Commerce to restrict the flow of allegedly infringing product, off-shore arbitration in Hong Kong pursuant to a license agreement or suit in the Virginia federal court over unfair trade practices. Conclusion To succeed in cross border litigation, the client needs a cohesive and well considered strategy to avoid the risk of haphazard outcomes. Lack of communication and lack of coordination will undermine the effort and result in wasted fees with no tangible return. Fight on all fronts with a well-defined battle strategy. Meg Utterback is a partner in King & Wood Mallesons’ Dispute Resolution Group, Shanghai Office.

Corporate M&A rankings

ASIAN LEGAL BUSINESS september 2012

ALB 2012

Corporate rankings By KANISHK VERGHESE and SEHER HUSSAIN Additional reporting by PAUL PIMENTEL

“T

he situation in Europe is threatening a slowdown in Asia,” says one practitioner, whose view is echoed unanimously by over 150 lawyers interviewed by ALB for the 2012 Corporate M&A Rankings. The past year has been a trying time for M&A lawyers, as the global economic downturn has undoubtedly resulted in a deceleration in activity, and ignited fierce competition for work. Asia-Pacific deal volumes fell 29.5 percent to $223 billion in the first half of 2012 compared to last year, while M&A targeting Asia-Pacific firms dropped 30 percent to $177 billion, reported Reuters. Companies are adopting a cautious approach towards expansion, and are monitoring euro zone activity,

China’s political changes, and the U.S. elections closely. The graphic depicts China as the most active M&A market in Asia, grabbing 38 percent of the total. It is no secret that China has been at the forefront of outbound M&A in Asia, with practitioners noting a marked increase in activity at the public level. Many international law firms are working on a rising number of take-private transactions, after accusations of fraud and a tough economy have led many Chinese companies to de-list from stock exchanges in the U.S. Several of these companies are expected to eventually go public in China or on the Hong Kong Stock Exchange. Also on the agenda for China is a leadership change which will

Corporate M&A rankings

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* Most targeted nations - Top 10 Value $ billionY

nYear to date percent change China Australia

S, Korea India Indonesia Hong Kong Malaysia Singapore Taiwan Philippines 01

-60- 50 -40- 30 -20- 10 01

02 03 04 0

source: reuters reuters graphic/Catherine trevethan 21/06/12

take place during the country’s 18th National Congress later this year. As with any leadership change, this has created some uncertainty in the market, but the mood remains confident that outbound deals will pick up once the handover is completed. Much like China, both Japan and South Korea have witnessed an uptick in outbound transactions, spearheaded by cash-rich North Asian conglomerates seeking global ambitions. “Outbound deals are more numerous within Asia, but smaller in size compared to deals out of Asia,” adds a Japan-based M&A partner. However, the appreciation of the yen, coupled with the effects of last year’s tsunami, have slowed Japanese inbound work to a trickle. In Taiwan, business remains steady. Lawyers observe that interaction between U.S. and Taiwanese companies has dipped, while transactions with Europe are on the rise. The second half of the year started strong, with Taiwanese chip designer Mediatek’s offer to buy 40 to 48 percent of rival MStar Semiconductor’s outstanding shares, in a deal worth about 115 billion New Taiwan dollars ($3.83 billion). Southeast Asia was a bright spot in the region, partly offsetting sluggish deal flow elsewhere in Asia. Deals in Indonesia and Malaysia saw a huge pickup, with volumes rising 62 percent and 33 percent, respectively. “There’s definitively a high level of interest in Indonesia, perhaps greater now than there ever has been before,” confirms a Jakarta-based lawyer. “The market seems very healthy for deals, including all types of corporate transactions.” Buoyed by vigorous growth and strong balance sheets, Southeast Asian companies are aggressively chasing financial, energy, and retail firms globally. Some of the region’s landmark deals include Singapore’s DBS Group Holdings’ $7.3 billion bid for Indonesia’s PT Bank Danamon, as well

as Malaysia’s Petroliam Nasional Bhd’s $5.3 billion acquisition of Canada’s Progress Energy Resources. Hopping across to India, the outlook remains choppy, with one Delhi-based practitioner reporting that “in the last six to eight months, there has been some misgovernance in India which has affected M&A; deals are not getting closed in a tight timeline, and the urgency to complete has come down dramatically”. Evidenced by the striking fall in percent change of India-related deals in the graphic, there are still some bright spots, including the Tata Global Beverages Limited and the Starbucks Group $900 million joint venture to open up cafes in India. On the whole, lawyers report that they are still busy handling inbound work. Taking a look at Vietnam also throws up some interesting trends; despite economic uncertainty, one Hanoi-based lawyer reports that “the Japanese community is keener than ever to expand and consolidate their investments into Vietnam, especially within the financial services, banking, and insurance sectors”. Predictably, energy projects have also remained popular with several coal-fired power plants in various stages of financing and development. This year also saw the largest private equity transaction to date in Vietnam occur, with Kohlberg Kravis Roberts’ (KKR) $159 million investment in Masan Consumer Corporation, a current market leader in fish, soya and chilli sauce. In all, it has been an undeniably tumultuous 12 months, and it is safe to say that the rest of the year will see M&A lawyers in the region continue to remain busy with a diverse range of work. Stay tuned for more M&A coverage in upcoming issues.

Corporate M&A rankings

Asia

tier

· · · · ·

Clifford Chance Freshfields Bruckhaus Deringer Linklaters Simpson Thacher & Bartlett Skadden, Arps, Slate, Meagher & Flom

tier

· · · · · · ·

Allen & Overy Baker & McKenzie Davis Polk & Wardwell Herbert Smith Hogan Lovells Latham & Watkins Paul Hastings

tier

· · · · · · · ·

Cleary Gottlieb Steen & Hamilton Morrison & Foerster Paul, Weiss, Rifkind, Wharton & Garrison Shearman & Sterling Sidley Austin Sullivan & Cromwell Weil, Gotshal & Manges White & Case

ASIAN LEGAL BUSINESS september 2012

tier

· · · · · · · · · · · · · ·

Allen & Gledhill Amarchand & Mangaldas & Suresh A Shroff & Co Fangda Partners Kim & Chang King & Wood Mallesons Lee & Ko Mayer Brown JSM Milbank, Tweed, Hadley & McCloy Nagashima Ohno & Tsunematsu Norton Rose O’Melveny & Myers Slaughter and May Vinson & Elkins WongPartnership

tier

· · · · · · · · · · · · ·

AZB & Partners Jun He Law Offices Kadir Andri & Partners Lee and Li Mori Hamada & Matsumoto Nishimura & Asahi Rajah & Tann Reed Smith Ropes & Gray Shin & Kim Shook Lin & Bok Stephenson Harwood Yulchon

REUTERS/Toru Hanai

Corporate M&A rankings

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China Domestic

· · · · ·

tier

· · · · ·

Fangda Partners Haiwen & Partners Jun He Law Offices King & Wood Mallesons Zhong Lun Law Firm

tier

· ·

Commerce & Finance Law Offices Global Law Office Guantao Law Firm Jia Yuan Law Offices Jingtian & Gongcheng

Grandall Law Firm Llinks Law Offices

China Foreign

Clifford Chance Freshfields Bruckhaus Deringer Linklaters Skadden, Arps, Slate, Meagher & Flom Weil, Gotshal & Manges

tier

· · ·

· · · · · · · · · · ·

tier

Allen & Overy Baker & McKenzie Cleary Gottlieb Steen & Hamilton Davis Polk & Wardwell Herbert Smith Hogan Lovells King & Wood Mallesons Latham & Watkins Paul Hastings Paul, Weiss, Rifkind, Wharton & Garrison Simpson Thacher & Bartlett

Ropes & Gray Salans Stephenson Harwood

· · · · · · · · · ·

Kirkland & Ellis Mayer Brown JSM Milbank, Tweed, Hadley & McCloy Norton Rose O’Melveny & Myers Reed Smith Shearman & Sterling Sidley Austin Sullivan & Cromwell Vinson & Elkins

China M&A Legal rankings Based on Value - Any Involvement Advisor Ranking Legal Advisor Full to Each Advisor

REUTERS/Guang Niu

· · · · ·

tier

Ranking Value inc. Net Debt of Target ($ Mil)

Rank

Mkt. Share

Number of Deals

Skadden

17,492.4

7.7

Linklaters

16,489.2

7.2

Baker & McKenzie

13,695.6

6.0

Weil, Gotshal & Manges

13,471.6

5.9

Fangda Partners

12,844.7

5.6

King & Wood Mallesons

12,661.7

5.6

Freshfields Bruckhaus Deringer

10,563.6

4.6

Vinson & Elkins

10,059.7

4.4

White & Case

8,833.3

3.9

Clifford Chance

8,719.1

3.8

Subtotal with Legal Advisor

120,727.7

53.0

591

Subtotal without Legal Advisor

107,026.3

47.0

3,894

Industry Total

227,753.9

100.0

4,485

(*):tie Deals recorded from May 1, 2011 to July 1, 2012 League tables are based on the nation of either the target, acquirer, target ultimate parent, or acquirer ultimate parent at the time of the transaction. Announced M&A transactions excludes withdrawn deals. Deals with undisclosed dollar values are rank eligible but with no corresponding Rank Value. Non-US dollar denominated transactions are converted to the US dollar equivalent at the time of announcement of terms.

Corporate M&A rankings

ASIAN LEGAL BUSINESS september 2012

Hong Kong

· · · ·

Clifford Chance Freshfields Bruckhaus Deringer Linklaters Skadden, Arps, Slate, Meagher & Flom

tier

· · ·

tier

· · · · · · · · · · · ·

Ropes & Gray Stephenson Harwood Vivien Chan & Co

tier

Allen & Overy Baker & McKenzie Cleary Gottlieb Steen & Hamilton Davis Polk & Wardwell Herbert Smith Hogan Lovells Latham & Watkins Paul Hastings Paul, Weiss, Rifkind, Wharton & Garrison Simpson Thacher & Bartlett Slaughter and May Weil,Gotshal & Manges

· · · · · · · · · ·

King & Wood Mallesons Mayer Brown JSM Milbank, Tweed, Hadley & McCloy Norton Rose O’Melveny & Myers Reed Smith Richards Butler Shearman & Sterling Sidley Austin Sullivan & Cromwell Vinson & Elkins

hong kong M&A Legal rankings Based on Value - Any Involvement Advisor Ranking Legal Advisor Full to Each Advisor Freshfields Bruckhaus Deringer

Ranking Value inc. Net Debt of Target ($ Mil)

Rank

Mkt. Share

Number of Deals

14,403.8

16.5

Linklaters

11,982.1

13.8

Ashurst

8,744.0

10.0

Baker & McKenzie

7,828.5

9.0

Allen & Overy

7,340.0

8.4

Sullivan & Cromwell

6,947.8

8.0

Clifford Chance

5,228.0

6.0

Mayer Brown JSM

5,211.7

6.0

Freehills

4,218.5

4.8

Kirkland & Ellis

3,993.9

4.6

Subtotal with Legal Advisor

48,148.9

55.6

249

Subtotal without Legal Advisor

38,413.0

44.4

1,159

Industry Total

86,561.9

100.0

1,408

REUTERS/Siu Chiu

Corporate M&A rankings

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India

tier

· · · ·

Amarchand & Mangaldas & Suresh A Shroff & Co AZB & Partners J. Sagar Associates Luthra & Luthra

tier

· · · ·

Khaitan & Co Talwar, Thakore & Associates Trilegal Wadia Ghandy & Co

india M&A Legal rankings Based on Value - Any Involvement Advisor Ranking Legal Advisor Full to Each Advisor

Ranking Value inc. Net Debt of Target ($ Mil)

Rank

Mkt. Share

Number of Deals

Amarchand Mangaldas

8,730.1

24.8

AZB & Partners

4,575.7

13.0

Skadden

3,951.1

11.2

Khaitan & Co

2,238.4

6.4

Corrs Chambers Westgarth

1,988.1

5.7

Ashurst

1,970.5

5.6

Allens

1,950.8

5.6

J Sagar Associates

1,536.7

4.4

Linklaters

1,420.4

4.0

Clifford Chance

tier

· · · · · · · ·

Alliance Legal Bharucha & Partners DSK HSA Advocates Majmudar & Partners Phoenix Legal Rajani Associates S&R Associates

1,351.0

3.8

Subtotal with Legal Advisor

23,948.9

68.1

288

Subtotal without Legal Advisor

11,210.0

31.9

917

Industry Total

35,158.9

100.0

1,205

REUTERS/Mukesh Gupta

REUTERS/B Mathur

Corporate M&A rankings

ASIAN LEGAL BUSINESS september 2012

Indonesia

tier

· Assegaf Hamza & Partners · Hadipuntranto, Hadinoto & Partners · Soemadipradja & Taher · Soewito Suhardiman Eddymurthy Kardono

tier

· · ·

Ali Budiardjo, Nugruho Reksodiputro Hiswara Bunjamin & Tandjung Melli Darsa & Co

tier

· · · · ·

Budidjaja & Associates Ginting & Reksodiputro (in association with Allen & Overy) Makarim & Taira S Makes & Partners Oentoeng Suria & Partners

indonesia M&A Legal rankings Based on Value - Any Involvement Advisor Ranking Legal Advisor Full to Each Advisor

Ranking Value inc. Net Debt of Target ($ Mil)

Rank

Mkt. Share

Number of Deals

8,315.9

36.9

Wong Partnership

7,501.8

33.3

Shook Lin & Bok

7,433.9

33.0

Allen & Gledhill

5,509.9

24.5

Latham & Watkins

1,838.0

8.2

Slaughter and May

1,224.0

5.4

Berwin Leighton Paisner

1,000.0

4.4

KhattarWong

1,000.0

4.4

Baker & McKenzie

Stamford Law Corp

985.8

4.4

Baker Botts

725.0

10*

3.2

Shearman & Sterling

725.0

10*

3.2

White & Case

725.0

10*

3.2

Subtotal with Legal Advisor

14,545.6

64.6

Subtotal without Legal Advisor

7,982.9

35.4

410

22,528.5

100

473

Industry Total (*):tie

Deals recorded from May 1, 2011 to July 1, 2012 League tables are based on the nation of either the target, acquirer, target ultimate parent, or acquirer ultimate parent at the time of the transaction. Announced M&A transactions excludes withdrawn deals. Deals with undisclosed dollar values are rank eligible but with no corresponding Rank Value. Non-US dollar denominated transactions are converted to the US dollar equivalent at the time of announcement of terms.

REUTERS/Beawiharta Beawiharta

Corporate M&A rankings

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Japan Domestic

tier

· · Mori Hamada & Matsumoto · Nagashima Ohno & Tsunematsu · · Nishimura & Asahi

tier

Anderson Mori & Tomotsune · · Atsumi & Sakai

Oh-Ebashi LPC & Partners TMI Associates

Japan Foreign

· · ·

tier

Davis Polk & Wardwell Herbert Smith Morrison & Foerster

· · · · · ·

tier

· · · · · · ·

Baker & McKenzie GJBJ Freshfields Bruckhaus Deringer Shearman & Sterling Simpson Thacher & Bartlett Skadden, Arps, Slate, Meagher & Flom Sullivan & Cromwell

Allen & Overy Clifford Chance Hogan Lovells Linklaters Norton Rose Paul Hastings Paul, Weiss, Rifkind, Wharton & Garrison White & Case

japan M&A Legal rankings Based on Value - Any Involvement Advisor Ranking Legal Advisor Full to Each Advisor

Ranking Value inc. Net Debt of Target ($ Mil)

Rank

Mkt. Share

Number of Deals

Nagashima Ohno & Tsunematsu

75,908.4

35.0

Nishimura & Asahi

64,043.5

29.6

122

Mori Hamada & Matsumoto

57,832.8

26.7

163

Shearman & Sterling

45,409.2

21.0

Sullivan & Cromwell

33,775.1

15.6

Simpson Thacher & Bartlett

29,095.1

13.4

Anderson Mori & Tomotsune

27,378.9

12.6

Clayton Utz

23,653.7

10.9

Blake Cassels & Graydon

20,006.9

9.2

Allen & Overy

19,988.6

9.2

Subtotal with Legal Advisor

184,810.2

85.3

750

Subtotal without Legal Advisor

32,795.5

14.7

2,485

Industry Total

216,605.6

100

3,235

REUTERS/KYODO Kyodo

Corporate M&A rankings

Macau Spotlight Firms BN Lawyers DSL Lawyers MdME Lawyers Rato Ling Vong Lei & Cortés

Philippines Spotlight Firms

Malaysia

tier

· · ·

· ·

Kadir Andri & Partners Skrine Wong & Partners/Baker & McKenzie

tier

· · · · ·

ACCRA LAW Quisumbing Torres/Baker & McKenzie Romulo Mabanta Buenaventura Sayoc & De Los Angeles Sycip Salazar Hernandez & Gatmaitan

Shearn Delamore & Co Shook Lin & Bok Zaid Ibrahim & Co Zain & Co Zul Rafique & Partners

tier

· · · ·

Lee Hishammuddin Allen & Gledhill Rahmat Lim & Partners Raja, Darryl & Loh Tay & Partners

tier

Albar & Partners Christopher Lee & Co

REUTERS/Nicky Loh

· ·

REUTERS/Victor Fraile

· · · ·

ASIAN LEGAL BUSINESS september 2012

REUTERS/Zainal Abd Halim

Corporate M&A rankings

WWW.LEGALBUSINESSONLINE.COM : @ALB_Magazine : Connect with Asian Legal Business

Singapore Domestic

· ·

tier

Allen & Gledhill WongPartnership

· · · · ·

tier

Baker & McKenzie.Wong · · & Leow Drew & Napier Rajah & Tann Shook Lin & Bok Stamford Law Corporation

Duane Morris & Selvam Rodyk & Davidson

Singapore Foreign

· · · ·

tier

Allen & Overy Clifford Chance Latham & Watkins Linklaters

· · · · · ·

tier

· Ashurst Baker & McKenzie.Wong · · & Leow Herbert Smith Milbank, Tweed, Hadley & McCloy Norton Rose Skadden, Arps, Slate, Meagher & Flom

Berwin Leighton Paisner Hogan Lovells Lee & Lee Sidley Austin

singapore M&A Legal rankings Based on Value - Any Involvement Advisor Ranking Legal Advisor Full to Each Advisor

Ranking Value inc. Net Debt of Target ($ Mil)

Rank

Mkt. Share

Number of Deals

Allen & Gledhill

13,306.2

26.8

WongPartnership

12,156.6

24.4

Shook Lin & Bok

11,541.3

23.2

Baker & McKenzie

8,311.8

16.7

Rajah & Tann

3,897.5

7.8

Freshfields Bruckhaus Deringer

3,010.5

6.1

Arthur Cox

2,868.9

5.8

Paul Hastings

2,742.3

5.5

Mayer Brown

2,455.3

4.9

Latham & Watkins

2,153.4

4.3

Subtotal with Legal Advisor

36,908.2

74.2

283

Subtotal without Legal Advisor

12,823.3

25.8

726

Industry Total

49,731.4

100

1,009

REUTERS/Vivek Prakash

Corporate M&A rankings

South Korea

tier

· ·

Kim & Chang Lee & Ko

tier

· · ·

Bae, Kim & Lee Shin & Kim Yulchon

tier

· · ·

Jipyong Jisung Yoon & Yang Hwang Mok Park

ASIAN LEGAL BUSINESS september 2012

south korea M&A Legal rankings Based on Value - Any Involvement Advisor Ranking Legal Advisor Full to Each Advisor

Ranking Value inc. Net Debt of Target ($ Mil)

Rank

Mkt. Share

Number of Deals

Lee & Ko

16,624.9

28.0

119

Kim & Chang

12,585.1

21.2

115

Shin & Kim

9,984.5

16.8

Bae Kim & Lee

9,956.4

16.8

Latham & Watkins

6,312.6

10.6

Jipyong Jisung

3,863.0

6.5

Yulchon

3,785.6

6.4

Freehills

3,309.1

5.6

Yoon & Yang

1,242.4

2.1

McDermott Will & Emery

1,225.0

10*

2.1

Chadbourne & Parke

1,225.0

10*

2.1

Subtotal with Legal Advisor

41,398.5

69.7

401

Subtotal without Legal Advisor

18,028.8

30.3

1,032

Industry Total

59,427.2

100

1,433

REUTERS/Handout .

Corporate M&A rankings

ASIAN LEGAL BUSINESS september 2012

South Korea Spotlight Foreign Firms · · · · · ·

Cleary Gottlieb Steen & Hamilton Clifford Chance Linklaters Paul Hastings Sidley Austin Simpson Thacher & Bartlett

REUTERS/Kim Hong-Ji

Corporate M&A rankings

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Sri Lanka Spotlight Firms · · · ·

DL & F de Saram FJ & G de Saram Julius & Creasy Nithya Partners

REUTERS/Andrew Caballero-Reynolds

Taiwan

taiwan M&A Legal rankings Based on Value - Any Involvement Advisor Ranking Legal Advisor Full to Each Advisor

tier

· · ·

Baker & McKenzie Lee and Li Tsar & Tsai

tier

· · ·

Chen & Lin Attorneys LCS & Partners Jones Day

tier

· ·

Eiger Law Formosan Brothers Attorneys at Law

Ranking Value inc. Net Debt of Target ($ Mil)

Rank

Mkt. Share

Number of Deals

Lee and Li

4,899.0

36.0

Jones Day

1,850.6

13.6

First International Law & Intellectual Property

1,834.8

13.5

Fenwick & West

408.0

3.0

Orrick Herrington & Sutcliffe

395.0

2.9

Nagashima Ohno & Tsunematsu

364.6

2.7

TMI Associates

364.6

2.7

Mori Hamada & Matsumoto

325.6

2.4

Shearman & Sterling

309.0

2.3

Freshfields Bruckhaus Deringer

290.0

2.1

Subtotal with Legal Advisor

7,586.5

55.7

Subtotal without Legal Advisor

6,033.1

44.3

199

Industry Total

13,619.5

100

244

REUTERS/Nicky Loh

Corporate M&A rankings

ASIAN LEGAL BUSINESS september 2012

REUTERS/Adrees Latif

Thailand

tier

Allen & Overy Clifford Chance Linklaters Norton Rose Weerawong, Chinnavat & Peangpanor

tier

· · ·

Legal Advisor Full to Each Advisor

Baker & McKenzie

tier

· · · · ·

thailand M&A Legal rankings Based on Value - Any Involvement Advisor Ranking

DFDL Thanathip & Partners Tilleke & Gibbins

Ranking Value inc. Net Debt of Target ($ Mil)

Rank

Mkt. Share

Number of Deals

Davis Polk & Wardwell

2,173.7

16.6

Linklaters

1,911.3

14.6

Slaughter and May

1,761.3

13.4

Allen & Overy

1,630.8

12.5

Baker & McKenzie

1,075.8

8.2

Bracewell & Giuliani

795.0

6.1

Gianni, Origoni, Grippo & Partners

372.5

2.8

Clifford Chance

372.5

2.8

King & Wood Mallesons

238.2

1.8

Mori Hamada & Matsumoto

186.8

1.4

Subtotal with Legal Advisor

7,814.4

59.7

Subtotal without Legal Advisor

5,285.9

40.4

308

Industry Total

13,100.4

100

347

Corporate M&A rankings

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Vietnam

tier

· · ·

Baker & McKenzie Freshfields Bruckhaus Deringer YKVN Lawyers

tier

· · · · · ·

Allens DFDL Frasers Law Company Mayer Brown JSM Tilleke & Gibbins Vilaf

tier

· · · ·

Duane Morris Hogan Lovells Indochine Counsel Russin & Vecchi

vietnam M&A Legal rankings Based on Value - Any Involvement Advisor Ranking Legal Advisor Full to Each Advisor

Ranking Value inc. Net Debt of Target ($ Mil)

Rank

Mkt. Share

Number of Deals

Nagashima Ohno & Tsunematsu

567.3

12.6

Shearman & Sterling

567.3

12.6

Freshfields Bruckhaus Deringer

567.3

12.6

Allens

212.2

4.7

Mori Hamada & Matsumoto

186.8

4.2

Yulchon

154.7

3.5

Kim & Chang

74.1

1.7

Baker & McKenzie

65.8

1.5

Linklaters

64.0

1.4

Allen & Gledhill

33.8

0.8

Subtotal with Legal Advisor

1,303.5

29.2

Subtotal without Legal Advisor

3,183.4

70.8

418

Industry Total

4,486.9

100

439

REUTERS/Nguyen Huy Kham

Corporate M&A rankings

RANKINGS METHODOLOGY OUR RESEARCH The ALB research team spoke to a wide variety of lawyers and clients. The results were drawn from firm submissions, our own resources, and market suggestions. All interviews were off the record, confidential, and conducted entirely for research purposes. OUR RANKINGS Our rankings are based on the following metric: • Key clients and client feedback • Firm’s visibility and profile in the marketplace • Volume, complexity, and size of work • Presence across Asia

and operator of several coking coal mines in China’s Inner Mongolia region. In addition, the team counselled AEI Asia on the $237 million sale of its China gas distribution business to China Resources Gas Group, a transaction involving 40 target companies involved in gas sales, distribution, and transportation. Peers praise the group, remarking that “Clifford Chance is always the top competitor particularly given the firm’s partnerships across the globe with most of the private equity houses.” The firm has expanded throughout Asia over the last few years, and is expected to open an office in Seoul this year. Hong Kong-based Roger Denny heads the firm’s M&A practice in Asia.

ASIAN LEGAL BUSINESS september 2012

pragmatic recommendations, and work with us to deliver solutions as opposed to just quoting the regulations. The team is also personally on top of all the details which is very refreshing.” Key contacts include Hong Kong-based regional managing partner for Asia, Robert Ashworth, as well as partner Teresa Ko who is recommended for “all Hong Kong Stock Exchange-related matters because of her extensive experience and close working relationships”. Other leading partners include Tony Foster in Vietnam and James Lawden in Japan. Linklaters

Freshfields Bruckhaus Deringer

Information was drawn from the firm’s submissions, lawyer interview, client interviews, and peer commentary from the marketplace.

Asia-wide rankings

tier

Clifford Chance Consistently ranked in the top tier for corporate and M&A work, this firm is sought after for its international presence, depth of experience in cross border transactions and expertise across a variety of sectors. This breadth and depth is reflected in the transactions the firm has been involved with. Earlier this year, Clifford Chance advised European dairy cooperative Arla Foods on the strategic purchase of a 6 percent stake in China Mengniu Dairy Company, the largest dairy product manufacturer in China in terms of sales and volume. The $290 million transaction represented the largest international cooperation in China’s dairy industry at the time. The team also represented a consortium including Credit Suisse, New World, Baosteel, and CCB International on a $151 million investment in ChongHou Energy Resources, a holding for Qipanjing Mining Company, an owner

This excellent group has an established reputation for complex and cutting-edge M&As, and it offers superior counsel on highvalue outbound transactions, public M&As, and takeovers. With an on-the-ground presence in Hong Kong, China, Vietnam, and Japan, the team is well equipped to handle pan-regional matters on a regular basis. Strong expertise in private equity and regulatory work serves to round out the practice. Sources are especially quick to commend its deep and experienced bench of lawyers across Asia. Highlights from the last year include several landmark deals; advising Alibaba Group on its proposed $2.7 billion privatisation of Alibaba.com, by way of a scheme of arrangement; counselling a consortium led by Cheung Kong Infrastructure Holdings on a £4.7 billion ($7.3 billion) acquisition of Northumbrian Water; and representing Caterpillar on its takeover offer for ERA Mining Machinery, a Hong Kong-listed manufacturer of hydraulic coal mining equipment. Clients say: “This team really knows the ins and outs of getting a deal done in a complex environment like China. They have clearly done this for a very long time, make

“They are probably the best choice in this field because of their solid legal skills, valueadded advice, understanding of challenges and attention to detail,” says one client of Linklaters. The firm has a commanding M&A presence in Asia, with a notable prowess in mining and resources, financial institutions groups (FIG) and insurance. Cementing the firm’s Asia-wide top-tier status, senior corporate partner Matthew Middleditch has relocated to the Hong Kong office from London. In addition, partner Tien Chao joined the firm’s China office last year from Morrison & Foerster. Hong Kong partner Chris Kelly is praised by clients for his M&A understanding and capabilities, especially on mining-related deals. In September last year, Kelly advised Minmetals Resources Limited, China Minmetals’ Hong Kong listed international arm, on its $1.3 billion cash acquisition of Australia’s Anvil Mining Limited. Clients across Asia have only praise for the firm’s lawyers. In Singapore, partners Stuart Bedford and Sophie Mathur are described as “technically excellent, very commercial, solution oriented and responsive”. Another client hails Bedford as an incredibly hardworking top-notch M&A lawyer, with a calm personality. In Greater China, Fang Jian “brings years of experience and

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understanding of the market, and is always looking to add value to the relationship”. The excellent is not just found at the top level. “We have worked with a few associates as well, who are all high quality,” praises a client. The opening up of Korea’s borders to foreign law firms means the Linklaters’ Korea practice, led by Hyung Ahn, may consider opening a Seoul office in the near future. In the meantime, the team has benefited from the addition of partner Hyo Young Kang, previously at Allen & Overy and Yulchon, and project finance and energy lawyer James McLaren. Simpson Thacher & Bartlett

Corporate M&A rankings

for the Bank of America Merrill Lynch as the financial adviser for Shanda Interactive Entertainment in a similar matter. One client affirms that “on M&A, I would give it top marks; from the simple to the complex work, they provide comprehensive and deep expertise and Simpson always goes the extra mile.” Key partners include Hong Kong-based Leiming Chen, head of the China practice, and Tokyo-based David Sneider, who is described as “very knowledgeable about Japanese and U.S. law”. In Hong Kong, partner Kathryn King Sudol is “a great adviser to the business team, provides extremely helpful insights and advice, and is well-versed in PE and M&A”. Skadden, Arps, Slate, Meagher & Flom

This pre-eminent team is sought after for its sophisticated work on corporate transactions. Complex acquisitions, dispositions, joint ventures, minority investments, and other combination transactions involving China, Hong Kong, India, Korea, Singapore, Thailand, and Vietnam are all skillfully handled by the group. The team is spread across Beijing, Tokyo and Hong Kong, and is lauded for its bilingual capabilities in these jurisdictions. The firm has also applied to open an office in South Korea. Recent significant work includes: representing a Japanese-Korean consortium in the acquisition of a 15 percent stake in Companhia Brasileira de Metalurgia e Mineração for $1.95 billion; counselling China National Agrochemical Corporation (CNAC) in its $2.4 billion acquisition of Makhteshim Agan Industries, listed on the Israeli Stock Exchange; and acting for KKR in its minority investment in TVS Logistics Services, a leading third party logistics service provider in India. The team also advised on two significant “going-private” transactions, a key trend over the last year: representing both PAG Asia Capital with such a transaction involving Funtalk China Holdings, and acting

This group is lauded as a leading onestop-shop for clients seeking counsel on complex and innovative M&A matters. It offers expertise on inbound and outbound cross border M&A and private equity transactions, including share acquisitions and dispositions, asset acquisitions and divestitures, reorganisations and joint ventures. With a presence in Singapore, Beijing, Shanghai, Tokyo and Hong Kong, the group also offers a strong Hong Kong law practice that is a core practice strength. In the last year, the China M&A group worked on several high-profile, “goingprivate” transactions involving U.S-listed Chinese companies, most recently advising Tianfu Yang, the chairman of Harbin Electric, a manufacturer of electric motors, in the $750 million acquisition of the remaining stake in Harbin Electric not already owned by him. Other notable highlights include representing Yahoo! Inc in its $7.1 billion sale of a 20 percent stake in Alibaba Group Holding Limited and counselling Maybank in the U.S. law aspects of its $1.4 billion acquisition of Kim Eng Securities. Other key clients include the China Three Gorges Corporation, Youku Inc, Bank of America Merrill Lynch and Advantest Corporation. One client highlights the team’s “personal attention and ability to maintain overall perspective on the transaction while mobilising global wide resources to bring value”, while another reveals the lawyers

are “responsive, intelligent, decisive and convincing in negotiations, as well as possessing great PRC people skills”. Leading partners include Michael Gisser in China, Singapore-based Rajeev Duggal, Mitsuhiro Kamiya in Tokyo and Hong Kongbased Jonathan Stone.

tier

Allen & Overy Recognised as a leader when it comes to strategic and complex legal issues, this firm offers expertise across a wide range of M&A and corporate work, including public takeovers, complex joint ventures, disposals, restructurings, and corporate governance issues. The firm’s focus on cross border transactions is demonstrated in the high profile deals it has been involved with, recently advising Hong Kong Exchanges & Clearing on its offer for The London Metal Exchange, a deal valued at £1.4 billion ($2.2 billion). The firm has continued an aggressive expansion into the Asia-Pacific region, recently announcing two new offices in Vietnam, and attracting top Vietnamese lawyer Dao Nguyen, formerly of Mayer Brown JSM, to serve as managing partner for the new operation. Clients have noted that the firm is developing strong local franchises to complement its international presence, which will enable single billing across jurisdictions, an attractive feature for many. Key contacts include Hong Kong-based Gary McLean, head of the firm’s Asia-Pacific corporate department. Baker & McKenzie

Clients are quick to commend the consistency of the talent offered by this impressive corporate practice that spans China, Hong Kong, Japan, Taiwan, Singapore, Vietnam, Malaysia, Indonesia, Thailand, and the

Corporate M&A rankings

Philippines. In the last year, the firm has seen significant amounts of energy and resourcerelated M&As, and handled a steady stream of financial services-related transactions as well. The team has been involved in a number of key transactions across the region: advising a consortium of five Chinese companies on its $1.95 billion acquisition of a 15 percent stake in Companhia Brasileira de Metalurgia e Mineração in Brazil; counselling Nabtesco Corporation, a Japanese manufacturing company on the acquisition of Kaba Gilgen AG, a Switzerland-based company; representing Recapital Group and Bakrie Group in the $3.3 billion acquisition of 75 percent of PT Berau Coal Energy Tbk shares and 25 percent of PT Bumi Resources Tbk; and acting for MetLife Group on the $180 million sale of its Taiwan subsidiary to Chinatrust Financial Holdings. Other major clients include Mitsui Sumitomo Insurance, LVMH Moët Hennessy Louis Vuitton, China Gas Holdings and Disney. One source described the team as: “Highly responsive, available on demand, including over weekends, and always providing excellent personal treatment. They also have a deep understanding of local practices and culture, while also understanding how western companies conduct business and their specific needs.” Leading contacts include Yuk Tong Cheung in Hong Kong, Ai Ai Wong in Singapore, and Shanghai-based Howard Wu.

ASIAN LEGAL BUSINESS september 2012

Indonesia, and India. Major recent matters include counselling NEC Corporation on its $449 million acquisition of Convergys Corporation’s Information Management business, acting for Chinese oil giant CNOOC on its proposed blockbuster $15 billion acquisition of Canadian energy company Nexen, and representing the Tokyo Stock Exchange Group with its planned business combination transaction with the Osaka Securities Exchange. The Tokyo-based team also advised JPMorgan Securities as financial adviser to TradeStation Group with its $411 million acquisition by Monex Group through a cash tender offer followed by a merger. Other notable clients include Citigroup, Deutsche Bank, Goldman Sachs and Hitachi. Clients report that: “We have been very pleased with their performance and the team is responsive with good negotiation skills.” Lead partners include Kirtee Kapoor in Hong Kong who focuses on cross border M&As and restructuring transactions, and Eugene Gregor and Ted Paradise in Tokyo. Sources affirm that Paradise is “an excellent lawyer, but more importantly, he is very considerate and attentive to the client’s needs”.

David Laurence from Dubai. The Japan team, headed by James Robinson, comprises an impressive 21 fee-earners, including four partners. The team recently advised Sanyo Special Steel on its Indian steel joint venture with Mitsui and Mahindra & Mahindra. Commenting on Robinson and Dominic Roughton in Tokyo, one client says: “They are well aware of Japanese business culture, enabling smooth communication between us. Moreover, they are very skillful at drafting provisions acceptable to both parties, while still protecting our interests.” Another client sums up his experience with the firm: “We have succeeded in achieving our purpose through Herbert Smith’s valuable advice and skillful negotiation. We are very happy with their performance.” Hogan Lovells

Herbert Smith

Davis Polk & Wardwell

Graeme Preston, Herbert Smith

This talented corporate group attracts particular praise for its strength in innovative cross border M&A transactions, and highprofile and complex equity and debt deals. Spread across Tokyo, Beijing and Hong Kong, the firm also offers a Hong Kong law practice. The Beijing-based group is consistently sought after for its expertise in the privatisation and listing of Chinese stateowned enterprises, while the practice overall is well-regarded for its work in South Korea,

Herbert Smith has a top M&A outfit, with a particular strength in energy and resources, TMT, and financial services. The firm works closely with numerous market-leading companies including Jaguar Land Rover, BP, CNOOC, Goldman Sachs, Nintendo, Sumitomo Corporation, and Marubeni Corporation. Hong Kong partner Jason Sung advised CNOOC last July on Hong Kong listing rules and compliance aspects relating to its $2.1 billion acquisition of Opti Canada, a Calgary-based oil sands maker. In Tokyo, despite the loss of partner James Watson to Vinson & Elkins, the team has benefited from the promotion of Graeme Preston to partner, and the relocation of

Hogan Lovells has grown its M&A practice significantly in the last year, under the leadership of Asia corporate practice head Jamie Barr. The M&A outfit boasts over 100 fee-earners in Asia, and retains a client list that includes the likes of Goldman Sachs, UBS, and Johnson & Johnson. Partners Andrew McGinty and Steven Robinson co-head the Greater China team, which has advised on a euro 3 billion ($3.7 billion) joint venture between an international company and a Chinese SOE, and a European corporation’s 100 percent acquisition in a Chinese solar energy components supplier. In addition, the China team was bolstered by the addition of partner Michael Chin from Dorsey & Whitney in August last year. The firm has been capitalising on its setup of an on-the-ground presence in Mongolia, headed by Michael Aldrich. To meet the surging demands in the region, partner Chris Melville relocated to the Ulaanbaatar office from London in April this year.

Corporate M&A rankings

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Latham & Watkins

Paul Hastings

Neil Torpey, Paul Hastings

Latham & Watkins’ corporate team is exceptionally strong when it comes to large and sophisticated cross border transactions, with five offices throughout Asia. In the last year, the team has seen significant amounts of work from Greater China, frequently handling investment and cross border M&A transactions, as well as counselling international companies, financial institutions, and investors with their business in the region. Recent significant work includes advising Merrill Lynch and Merrill Lynch Far East in Sinopec Kantons Holdings’ HK$2.22 billion ($288.2 million) acquisition of interests in five joint ventures in the PRC from its controlling shareholder, China Petroleum & Chemical Corporation. Capitalising on the wave of going-private transactions involving U.S.-listed companies based in China, the expert corporate team also represented Funtalk China Holdings, a leading retailer and distributor of wireless communications devices, accessories and content, with the privatisation of the company. Other key clients include J.L.French, City Telecom (HK), and the Bright Food Group. One client reveals that: “We had a fantastic team on this complicated deal. The target company had a complex holding structure in various countries with challenging laws regarding foreign ownership, so it required extensive diligence and workarounds. Additionally, the deal structure was not straightforward, and required a lot of original drafting and careful negotiations with sellers whose interests were not always aligned. Latham did a terrific job at navigating these issues and getting us to a favorable outcome.” Key contacts include Tim Gardner, Michael Liu and Kenneth Chan in Hong Kong and Rowland Cheng in Shanghai.

Daniel Kim, Paul Hastings

Paul Hastings has garnered a strong reputation for its work in Asia, and works closely with leading companies including Samsung Electronics, General Electric China, JP Morgan and Mapletree Investments. The firm’s over 30-strong M&A lawyers in Greater China have played an active role in some significant deals in the region, including advising China Media Capital on its joint venture with U.S. animation company DreamWorks. The joint venture projects include a film and television content production firm named Oriental DreamWorks, and a $3.2 billion cultural centre in Shanghai. In another highlight for the firm, partner Daniel Kim, supported by Matthew Berger, Scott Hataway and Pierre Kirch, advised Samsung Electronics on the sale of its hard disk drive operations to digital consumer electronics company Seagate Technology for about $1.3 billion. The firm has an enviable Korea practice led by partner Jong Han Kim, and has applied to the Ministry of Justice to open an office in Seoul. Kim has received final approval as a foreign legal consultant from the Ministry, and the establishment of an office on the ground is imminent. In addition to Kim, partner Daniel Kim and the rest of the team are expected to relocate to the new office.

tier

Cleary Gottlieb Steen & Hamilton This longstanding team excels in private equity matters, and is also highly regarded for its handling of inbound investments, finance, and joint venture transactions. In the last year, the team has continued to counsel companies in Asia on high-profile outbound investments. Cleary has over 50 lawyers in Beijing and Hong Kong, and

has plans to expand into South Korea later in 2012. The firm also offers a strong Hong Kong law practice, a key attraction for many of the major multinational corporations, private equity investors and hedge funds that form its clientele. Recent notable work includes advising China’s Sichuan Hongda Group in its $3 billion joint venture with Tanzania’s National Development Corporation (NDC) to develop coal and iron ore projects in East Africa. It also represented African Minerals in connection with Shandong Iron & Steel Group’s $1.5 billion acquisition of a 25 percent shareholding in several mine, rail and port and power subsidiaries in Sierra Leone. Significant clients include Koreabased Kookmin Bank, the Korea Investment Corporation, North Star Bank, and TPG. Recent additions to the team include the highly-experienced Ling Huang in Beijing from Shearman & Sterling, while key partners in Hong Kong include Freeman Chan, Michael Preston and Sang Jin Han. Morrison & Foerster Morrison & Foerster is noted for having one of the most active M&A practices among international firms in Tokyo. Over the last two years, the firm has completed more than 40 cross border transactions – mostly involving Japanese companies – valued at over $35 billion. The firm has three offices in the Greater China region, and its recent success has largely been driven by a strategy of supporting Japanese clients in Greater China-based transactions. The firm has been involved in several highprofile transactions, recently representing Hitachi in the $4.8 billion sale of its hard disk drive and data storage business to Western Digital, one of the largest tech deals announced last year. The team also counselled Softbank in the $4 billion restructuring of Alibaba Group’s Alipay, China’s largest online payment system. Notable additions to its Tokyo team over the last year include former O’Melveny & Myers Tokyo managing partner Dale Araki, a leading foreign corporate and M&A specialist with particular expertise in transactions involving intellectual property. Peers note that the firm has “a large presence on the ground in Japan, with experienced M&A lawyers who do a broad range of work”. Key contacts include Ken Siegel in Tokyo and Thomas Chou in Hong Kong. Paul, Weiss, Rifkind, Wharton & Garrison

Paul Weiss has a sizeable presence in Asia, with an M&A team comprising six partners

Corporate M&A rankings

and 34 lawyers. The practice has grown substantially in the last 12 months with the addition of five associates, two China legal consultants, and a counsel. Partner Jeanette Chan led a team in February this year that advised DreamWorks Animation on establishing a joint venture with China Media Capital to establish a China-focused family entertainment company. The venture will engage in business opportunities including live entertainment, theme parks, mobile, online, interactive games and consumer products. It is a key cooperation project endorsed by the Chinese vice president Xi Jinping, and supported by the Chinese government in relation with its initiative to develop the country’s animation and entertainment industries. Jack Lange and Xiaoyu Greg Liu are key partners in the Hong Kong and Beijing offices, respectively, while Jeanette Chan is a primary contact for both locations. Partners Tong Yu and Kaye Naoko Yoshino are the main M&A partners in Japan. Shearman & Sterling This firm is noted for its work on complex, multi-disciplinary and multi jurisdictional transactions. With a footprint in several key financial centres in the region, it works across industries and is often sought out for its experience in structuring deals. Earlier this year, the team represented Sany Deutschland GmbH, a subsidiary of Shanghai-listed Sany Heavy Industry, in its 360 million euro ($445 million) acquisition of German mechanical engineering group Putzmeister. The deal was one of the largest ever by a Chinese investor in Germany. It also represented Premium Lead Company and its subsidiary New Era Investment Holding, in the $2.3 billion privatisation of Nasdaqlisted Shanda Interactive Entertainment, one of China’s largest online gaming and entertainment companies. Peers note the depth of the team, praising the work of Lee Edwards, partner in the firm’s China practice, and describing Kenneth Lebrun, a partner in the firm’s Japan practice, as a “standout practitioner”. Key contacts include Lee Edwards in Beijing, Colin Law and Paul Strecker in Hong Kong, and Masahisa Ikeda, managing partner of the Tokyo office Sidley Austin Sidley Austin has well-established expertise in the structuring, negotiation and financing of domestic and cross border M&A transactions. The team is also sought out for its knowledge of unsolicited takeover

proposals, including shareholder rights plans. With six established offices in the region, the firm provides integrated M&A and strategic investment advice across a range of sectors, frequently representing prominent public and private corporations as well as financial institutions in corporate transactions. Notable work from the last year includes representing U.S.-based Tyson Foods in multiple acquisitions in China, totaling more than $1 billion while the Hong Kong team represented Malaysian conglomerate Berjaya Corporation in the $450 million privatisation of its Hong Kong-listed subsidiary Cosway Corporation. Clients hold the group’s leading lawyers in high regard, describing Hong Kong partner Constance Choy, as “always calm, intelligent, and approaches problems from different perspectives”. Key contacts include Tang Zhengyu in Shanghai, Yang Chen in Beijing, Constance Choy in Hong Kong, and Matthew Sheridan in Singapore. Sullivan & Cromwell This firm has traditionally focused on complex high-end transactions rather than on a large volume of deals. This is reflected in high-profile matters handled over the last year, including representing Tokio Marine Holdings in its $2.66 billion acquisition of Delphi Financial Group, a move designed to help Tokio Marine expand into the U.S. insurance market. The corporate team also counselled China Cinda Asset Management on its sale of a 16.54 percent equity stake to four strategic investors – a deal valued at $1.64 billion – and acted for Goldman Sachs in its $900 million acquisition of a 12 percent equity stake in Chinese insurer Taikang Life Insurance. Clients praise the team for its “top level response” and “good commercial understanding”. The firm has made some significant additions over the last year, most notably adding Kay Ian Ng, former Hong Kong managing partner at Freshfields, to the team, enabling it to launch its Hong Kong law practice. Key contacts include Chun Wei in Beijing and Hong Kong, Michael De Sombre in Hong Kong and Izumi Akai in Japan. Weil, Gotshal & Manges Weil, Gotshal & Manges has had an incredible year, which has not gone unnoticed in the legal industry. Several peers have

ASIAN LEGAL BUSINESS september 2012

acknowledged the firm’s growing presence in the Asia M&A space, highlighted by an impressive client base that includes Nomura, MGM Resorts, PCCW, Shanda, CICC and Thomson Reuters. The firm’s deal portfolio over the last year has been impressive, acting on Yahoo!’s $7.1 billion sale of its 20 percent Alibaba stake back to Alibaba, the $1.88 billion sale of a controlling stake in Weetabix Food Company by Bright Food Group Co, General Electric’s joint venture agreement with Aviation Industry Corp, and Shanda Entertainment’s $2.3 billion takeprivate transaction. In another notable deal this year, partners Douglas Ryder and Anthony Wang advised AMC Entertainment Holdings on Dalian Wanda Group’s $2.6 billion acquisition of the U.S. cinema chain. One client describes Wang as a “rising star”, adding that he is “very knowledgeable and hardworking”. Commenting on experienced partner Akiko Mikumo, another client says: “Akiko is a top lawyer. She is very responsive, responsible and very thorough in her legal analysis.” White & Case With offices in five key financial centres in the region and a large worldwide network of legal resources, a key advantage this global powerhouse offers is the ability to assemble cross-office, multi jurisdictional teams to address complex transactions. Prominent deals over the last year include advising the six banks underwriting the $3 billion privatisation of Chinese e-commerce company Alibaba.com, and representing the Saudi Arabian Oil Company on its $8 to $10 billion joint venture with China Petrochemical Corporation (Sinopec) to build, own and operate an oil refinery in Yanbu, Saudi Arabia. The firm also advised Nestlé S.A. on its $S2.1 billion acquisition of a 60 percent

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stake in Hsu Fu Chi, a leading manufacturer and distributor of confectionery products in China. Notable additions over the last year include Beijing M&A partner Tao Lan, who joined from Dewey & LeBoeuf, and has extensive experience advising Chinese state-owned enterprises and multinational corporations. Peers note the activity of this firm in several markets, particularly in Japan, singling them out as “our biggest competitors”. William Kirschner leads the firm’s regional M&A practice from Singapore. Additional key contacts include Shanghai-based John Leary, Li Xiaoming in Beijing and Tokyobased Jun Usami.

tier

Allen & Gledhill

Corporate M&A rankings

Amarchand & Mangaldas & Suresh A Shroff & Co

This Indian powerhouse consistently ranks in the top tier for corporate transactions in South Asia. Over the last year the firm continued to expand its presence across India, opening a new office in Chennai, its seventh overall, and adding several new partners to the M&A and corporate practice. Notable transactions include advising MS&AD Insurance Group, Japan’s largest property-casualty insurer by revenue, on its $530 million purchase of New York Life Insurance’s 26 percent stake in the latter’s India joint venture. The deal was the second-largest FDI matter in the country’s insurance sector at the time. Clients respect the firm for its “knowledge, experience, and ability to execute with promptness”. Highly experienced New Delhi-based managing partner Shardul Shroff is the key contact. Fangda Partners

A heavy hitter when it comes to public M&As, this Singapore-based team is also an emerging force in private transactions. Recent high-profile work includes advising Temasek Holdings on its $10 billion joint venture with Khazanah Nasional Berhad to develop prime land parcels in Singapore and Malaysia. The expert team also counselled Maybank in acquiring a 44.6 percent controlling stake in Singapore-listed stockbroking firm Kim Eng Holdings for S$798 million ($636.6 million), and offer to take over at a total cost of S$1.79 billion. Clients reveal that the team is “extremely consistent in quality of advice, and commercial and dependable in providing sound judgments”. One source further details that: “You know when you deal with a certain partner you will get the benefit of their experience, and they work on most of the major deals in the country.” In Singapore, Andrew Lim and Mei Lim are co-heads of the corporate practice.

This firm has a strong reputation for strategic M&A work in China, with offices in Shanghai, Beijing, and Shenzhen. Highlights from the last year include: representing Canada’s Scotiabank in its $720 million purchase of a 19.99 percent stake in the Bank of Guangzhou, advising HNA Group in its $2.2 billion acquisition of Ge Seaco SRL, the world’s fifth-largest shipping container leasing business and counselling Digital Sky Technologies, the Russian internet investment group, in relation to its $500 million investment in 360buy.com, the largest Chinese e-commerce company. Key additions over the last year include M&A partners Hu Jun and Bao Chen in Beijing, and Ma Chen in Shanghai. The firm has also announced its plans to expand with the opening of a new office in Hong Kong. Kim & Chang Kim & Chang has been a long-standing leading M&A player in South Korea and Asia, boasting a practice of about 70 partners and 180 lawyers. In February, Jong Koo Park,

Han Woo Park and Eui Seok Kim advised SK Telecom on its acquisition of a 20.1 percent stake in Hynix Semiconductor, the world’s second-largest memory chipmaker, worth 3.375 trillion Korean won ($2.99 billion). In another notable deal, Young Jay Ro, ByungMoon Jung and Han Woo Park advised on the merger between two Korean major liquor makers, Hite Brewery Co and Jinro Co. The team advised on deal structure-related issues, government approvals and filings, and tax and securities regulations. “Young Man Huh is well experienced, very diligent, and knows client’s needs very well,” praises a client, who adds that Huh “provides a well-balanced opinion, pointing out risks from the very early stage of deals, and provides the right solution and consequential analysis afterwards in a very professional manner”. King & Wood Mallesons King & Wood Mallesons’ M&A team is making great strides forward following the merger between Mallesons Stephen Jaques and King & Wood in March this year. The firm has 19 partners and 65 lawyers in its corporate and securities team in Hong Kong alone, and the arrival of partners Candy Chan and Raymond Wong served as a further boost to the burgeoning practice. The team is advising on an increasing number of China outbound investment transactions. Partner Conrad Chan advised China Nuclear Industry 23 Construction Company, a Hong Kong company controlled by a Chinese SOE, on its takeover bid for a listed company in Hong Kong. In another notable ongoing transaction, partner Larry Kwok is advising Malaysian financial group RHB Capital Berhad on the Hong Kong law aspects of its proposed business merger with OSK Investment Bank Berhad. The deal is expected to complete in the fourth quarter of this year. “Their performance and service is outstanding on every level. I engage lawyers all over the world, and find that King & Wood Mallesons consistently outperforms everyone else,” says a delighted client. Lee & Ko Lee & Ko’s M&A group comprises over 100 lawyers, and has a wealth of experience in handling management disputes and hostile takeover transactions. Ford Motor Company, Samsung Electronics, AXA Asia Pacific Holdings and Sony Computer Entertainment are just a handful of several top-notch clients that the firm advises. Kyu Wha Lee, senior partner and head

Corporate M&A rankings

of the corporate and M&A groups, has been praised as “smart and diligent” and “knowledgeable and responsive” by appreciative clients. Lee led the team in advising Shinsegae Co on its horizontal spin-off of its discount store business into E-Mart Co, in a deal worth about $5.3 billion. The firm also advised Samsung Electronics on its sale of its hard disk drive business to Seagate Technology for about $1.3 billion in December last year. The transaction required multi jurisdictional and multi faceted legal and regulatory solutions from the firm’s M&A team. Further strengthening its M&A capabilities, the firm has hired experienced lawyers Young Jae Cho and Chung Hwan Choi. Mayer Brown JSM Focusing on a variety of complex, cross border and strategic transactions, this firm offers clients an integrated global team that is spread across Thailand, Vietnam, Singapore, Hong Kong, and China. The team recently advised Nestlé S.A. on its $11.85 billion acquisition of Pfizer’s infant nutrition business; the transaction, which is still subject to regulatory approval, is one of the largest acquisitions to date this year. The firm has strengthened its corporate and M&A offering in China with the additions of partners Henry Wang, who joined from Dechert, where he was the managing partner of its Beijing office, and Billy Au, who joined the firm from Orrick, Herrington & Sutcliffe in Hong Kong. Milbank, Tweed, Hadley & McCloy Known for its M&A expertise in the energy and resources sector, this firm serves the region through four offices, located in Beijing, Hong Kong, Singapore, and Tokyo. The firm also formally launched its Hong Kong law practice recently, and bolstered its China M&A team with additional hires. Notable transactions from the last year include advising Mongolian Mining Corp on its $950 million acquisition of QGX Coal, Mongolia’s largest mining acquisition at the time. The corporate practice recently saw the addition of Beijing-based counsel Li Chen, who has extensive experience representing large Chinese state-owned enterprises and foreign corporations in cross border M&A transactions. Sources single out Anthony Root, the firm’s Asia corporate practice head, based in Beijing and Hong Kong, as “a very experienced, smart and diligent lawyer”.

Nagashima Ohno & Tsunematsu This prominent Tokyo-based team is often involved in the largest and most complex cross border transactions involving Japanese firms. Notable work from the last year includes advising ExxonMobil on the $3.94 billion sale of its Japanese unit to TonenGeneral Sekiyu, the second-largest refiner in Japan. Nagashima Ohno also acted as counsel to Sumitomo Metal Industries on its merger with Nippon Steel Corporation, which will make the merged company the fourth-largest steel manufacturer in the world. The two companies are expected to merge in October this year. Its client base also includes the Tokyo Stock Exchange Group, Tokyo Electric Power Company and Nomura Holdings. Clients refer to Nagashima Ohno & Tsunematsu as “the headline act in Japan, the best in terms of breadth, and the firm that everyone looks to as the standard”. Partner Ryo Okubo is the key contact in Tokyo. Norton Rose This dynamic team is a popular choice for natural resources, commodities, and shipping transactions. With a 58-strong group spread across Hong Kong and Singapore, it is well positioned to advise on cross border work in established and emerging markets. It recently counselled HSBC in its capacity as financial adviser to the offeror, Asia Satellite Management Stock Ownership Trust, on the $290 million takeover of Asia Satellite Telecommunications Holdings by way of scheme of arrangement. Other highlights include advising CLSA Capital Partners on its investment into PT Sinar Mitra Sepadan Finance, a vehicle financing company in Indonesia. Core clients include Million Star Technology, CapitaLand, Rothschild, Deutsche Bank AG and Credit Suisse. Peers affirm that “they are a strong competitor in the market”. In Hong Kong, David Stannard is the group head while key partners in Singapore include Adam Summerly and Jake Robson. O’Melveny & Myers With outposts in China, Japan, Singapore and Hong Kong, this firm continues to guide companies and financial investors through the complexities of strategic transactions. The team has capitalised on several trends in the region, including privatisation transactions, large-scale M&As among Chinese public companies, the rise of domestic PE funds, and increased focus on

ASIAN LEGAL BUSINESS september 2012

compliance in M&A transactions. Notable deals include representing Western Digital in its $4.3 billion acquisition of Hitachi Global Storage Technologies and advising Nasdaq-listed China Real Estate Information Corporation in its $400 million merger with E-House (China) Holdings. Core clients include Tiens (USA) Investment Holdings Group, Mount Kellet Capital Management, and Primavera Capital Group. Gordon Ng and James Ford are leading partners in Hong Kong, while Walker Wallace handles corporate transactions in Shanghai. Slaughter and May This Magic Circle firm focuses on adding value to a select number of highly complex and innovative transactions. Serving the region largely through its offices in Hong Kong and Beijing, the firm has an extensive network of partner firms and contacts that allow it to provide integrated services on global transactions. Recent highlights include advising Canadian-listed Talisman Energy on its proposed $1.5 billion sale of a 49 percent stake in Talisman Energy to China’s Sinopec. The firm is also advising UK marketing services company Aegis Group on a £3.2 billion ($4 billion) cash offer by Japan’s Dentsu, a deal which will create the world’s fifth-largest advertising agency. Vinson & Elkins Globally renowned for its strength in energy transactions, this expert corporate team frequently handles complex and highprofile M&A work across the region. The 45-strong group is spread across Shanghai, Beijing, Tokyo, and Hong Kong. Of note was its representation of Reliance Industries in its $7.2 billion sale to BP PLC of a 30 percent stake in 23 oil and gas production sharing contracts that Reliance operates in India. Other highlights include counselling Sinopec with its acquisition from Galp Energia of 30 percent of all its upstream interests in Brazil as well as its acquisition of 30 percent of existing intercompany debt – a transaction worth approximately $5.15 billion. Clients affirm that the team “always has good business sense and performs at its best”. Recent arrivals include the highlyexperienced James Watson as a partner in the firm’s Tokyo office from Herbert Smith, while the corporate practice is headed by Jay Cuclis in Hong Kong. WongPartnership This prominent Singapore-based firm house’s lawyers are skilled in the full range of M&A work, handling high-profile public

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Corporate M&A rankings

124 lawyers. In the last 12 months, the firm welcomed the arrival of partners Alex Hao, Miao Qinghui, Dennis Hu, and Luo Meihua, and counsel Fu Jun. In July this year, partners Zhang Ping and Chen Changjie assisted Guangdong Cable Networks in obtaining a two billion yuan investment from strategic investors. Partner Sammuel Zhao is the key contact at the firm. Kadir Andri & Partners

sector takeovers, cross border acquisitions and private equity matters. The firm also has offices in Shanghai, Beijing, Abu Dhabi and Doha, lending it key regional expertise. Significant highlights from the last year include counseling DBS Group Holdings in its proposed S$9.1 billion acquisition of PT Bank Danamon Indonesia Tbk as well as representing Abraaj Capital, a Dubaibased private equity firm, on its divestment of a 50 percent stake in Turkish hospital chain Acibadem Saglik Yatirimlari Holding. Notable clients include Temasek Holdings, KKR, EQT Partners and Navis Capital. Peers praise them as a “strong player with very good technical abilities”. Ng Wai King is the leading partner in Singapore with a focus on private equity buyouts.

tier

AZB & Partners Complex domestic and cross border M&As are core strengths of this impressive team. It is particularly sought after for its knowledge of the energy and infrastructure sectors as well as corporate law advice. Recent notable work includes advising Qualcomm, a 3G and next-generation mobile technologies provider, in the announced agreement for Bharti Airtel to acquire an interest in Qualcomm Asia-Pacific’s Indian entities. The team also represented travel agency Yatra Online in its acquisition of online hotel distribution network travelguru from travelocity. The team is led by Mumbaibased managing partner Zia Mody. Jun He Law Offices Jun He Law Offices commands a sizeable M&A team, comprising 60 partners and

This well-established Malaysian firm is renowned for its cross border capabilities and clients praise the diversity of corporate services on offer. Often advising on highprofile work in the region, highlights from the last year include representing Khazanah Nasional Berhad in a joint investment with Temasek Holdings regarding $10 billion worth of real estate developments. Other key clients are Usaha Tegas, Sime Darby and SapuraKencana Petroleum Berhad. Clients say: “They grasp commercial objectives easily, provide commercially oriented solutions, and are accessible at all times,” while peers single them out as “very wellconnected with strong government links”. Dato’ Sreesanthan leads the team in Kuala Lumpur. Lee and Li In Taiwan, Lee and Li is often involved in landmark M&A transactions involving large corporate entities. Headline deals from the last year include representing Yuanta Financial Holding in its $1.63 billion acquisition of Polaris Securities, a record deal that made Yuanta the largest securities firm in Taiwan, as well as counselling AIG in its $2.16 billion sale of its stake in Nan Shan Life Insurance. In June this year, the firm acted for MStar Semiconductor as the target in a $3.83 billion takeover by rival Taiwanbased chip designer MediaTek. Clients praise the team, saying: “They are consummate professionals, providing the highest quality legal advice with a keen sensitivity to the business needs of their clients.” Key contacts include Taipei-based partner Ken-Ying Tseng. Mori Hamada & Matsumoto Big Four Japanese firm Mori Hamada & Matsumoto is a go-to firm for M&A in Japan, and has a wealth of experience in handling transactions between domestic and Asian companies. With the country’s outbound work increasing, several top Japanese companies are selecting Mori Hamada as their counsel of choice.

Partners Masatake Yone, Takuya Eguchi, and Atsushi Oishi are highly recommended in the market. One commentator adds that Oishi has a “great knowledge of tax matters”, which is often a vital component of M&A transactions. Nishimura & Asahi Takashi Ejiri, Koichi Kusano, and Masakazu Iwakura head Nishimura & Asahi’s M&A practice, which works with leading bluechip clients like Canon, Toshiba Corporation, Goldman Sachs Japan, Morgan Stanley, Osaka Securities Exchange, Marubeni Corporation and Sapporo Holdings. Partners Kozo Kawai and Ryutaro Nakayama advised Nippon Steel Corporation, the largest steel maker in Japan, on its merger with Sumitomo Metal Industries, which will make the merged company the fourth-largest steel manufacturer in the world. The two companies are expected to merge in October this year. Rajah & Tann This Singapore-based firm is dedicated to providing superior corporate counsel when it comes to complex, cross border deals. It is especially well respected for its public M&A expertise in the insurance, healthcare, banking, and real estate sectors. With offices in Shanghai, Vientiane, Ho Chi Minh City and Bangkok, as well as associate firms in Malaysia, Indonesia and Cambodia, the firm has sought-after regional expertise. Highlights from the last year include advising City Spring Infrastructure Trust and CityNet Infrastructure Management on the $1.51 billion purchase of assets from SingTel. Clients praise the team for its “robust, well-constructed advice and excellent responsiveness”. Chia Kim Huat heads the corporate practice in Singapore. Reed Smith With strength in Shanghai, Beijing and Hong Kong, this team is well regarded for its corporate transactional advice. Highlights from the last year include counselling PCCW Limited and HKT Limited on its spin-off and listing of HKT’s telecommunications business by way of a unique business trust structure. It also handled HKR International’s disposal of a 50 percent interest in Discovery Park Shopping Centre to the New World Group, a matter worth HK$1.38 billion ($178 million). Leading partners include Michael Pepper, Ivy Lai and KC Mok in Hong Kong. Clients report that “RS’ performance has been above our expectations and we intend to use them again”.

Corporate M&A rankings

Ropes & Gray This firm has continued a client-led expansion into Asia, adding a Hong Kong law practice and announcing the opening of its Shanghai post and a proposed Seoul office. In the last year, the team has represented several public companies, multinational corporations and investment funds in their dealings in the Greater China market. Highlights include advising Bain Capital in the $365 million sale of two of its Chinese portfolio companies to French chemical company, Arkema. Clients remark that “the team provides a compelling service offering, with a good mix of corporate partners who have a strong background not only in China transactions but in pan-Asia investments”. Key contacts in Hong Kong include partners Marcia Ellis and Brian Schwarzwalder. Shin & Kim Shin & Kim’s impressive M&A team has had a successful year, working with clients including General Electric, SK Group, Samsung Group, Lotte Group, Orix, and Standard Chartered Private Equity. Senior foreign attorney John Kim is singled out for praise by a client, who describes him as an “excellent negotiator and very good at dealing with international clients”. In December last year, Chang-Hyun Song, Yong-Woo Lee and Jooyoung Park advised

Seagate Technology International on its acquisition Samsung Electronics’ hard disk drive business, in a key deal worth about $1.3 billion. Shook Lin & Bok This Singapore-based team focuses on high-value, complex and cross border transactions. Over the last year the team was involved in the hostile takeover of SGXlisted SMB United Limited by Boer Power Holdings, which became a competitive takeover battle with Tokyo-listed Osaki Electric Co. It also advised on the proposed $7.2 billion acquisition of PT Bank Danamon Indonesia Tbk by DBS Group Holdings and the $1.7 billion acquisition of a 60 percent stake in Hsu Fu Chi by Nestlé S.A. Clients highlight partners David Chong and Michelle Phang, saying: “David is a first-class lawyer who is able to provide practical solutions and Michelle is a safe pair of hands.” Stephenson Harwood With offices in Hong Kong, Guangzhou, Shanghai, and Singapore, this team has taken significant steps to strengthen its M&A practice in the region, particularly in Greater China. In the last year, the team has seen growing resource-oriented M&A transactions as well as significant activity in the technology and hospitality sectors. Notable deals include representing the

ASIAN LEGAL BUSINESS september 2012

Chiho-Tiande Group on an investment by SIMS Metal Management involving the sale of existing shares and the issue of convertible bonds with detachable warrants. Key contacts include managing partner Voon Keat Lai and head of corporate Hilda Chiu. Yulchon Yulchon has had a terrific year despite the global economic downturn, with several competitors acknowledging the firm’s high quality work and growing M&A presence. The Korean firm has benefited from the recruitment of professionals from other toptier Korean firms, international firms, as well as internal organic growth. The firm’s client list is impressive, including Hyundai Motor Group, Lotte Group, Goldman Sachs, and Samsung Electronics. Last year, partner Sung Wook Eun led the team that represented Fila Korea and Mirae Asset Private Equity in the $1.225 billion acquisition of Acushnet Company from Fortune Brands. Commenting on the firm’s work, one client says: “The deal turned out to be a lot more complicated than initially anticipated, but Yulchon completely and efficiently handled them very well. This is a firm that understands and fulfills customers’ needs rather than chase money.”

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