Into Africa

Events in the Democratic Republic of Congo – a volatile, mineral-rich country, which is the size of Europe and sits at the heart of the African continent – convey in part the enigma and challenge of doing business in Africa. As Legal Business went to press, news was emerging of the country’s latest humanitarian disaster following government and United Nations troops’ fierce fighting with rebels in Kivu, the eastern region bordering Rwanda.

But as recently as November last year, leading London lawyers were putting together a merger between two of the country’s biggest mining companies, Nikanor and Katanga Mining. The deal created a unified company worth in the region of $3.3bn, following Nikanor’s record AIM listing the previous year.

When Nikanor listed on AIM in July 2006, it raised $400m and, with an initial market capitalisation of over $1.5bn, was the largest company ever to float on London’s junior market. Such major deals emanating from Africa suggest that the attractions for London’s leading law firms are obvious. The presence of several leading firms on recent Africa listings, such as Herbert Smith, Hammonds and Nabarro, seems to confirm this (see box ‘Africa on AIM’, page 80). Indeed, it was one of the world’s most profitable law firms, Linklaters, that advised Nikanor on its AIM IPO.

Linklaters is not a firm to waste time and effort in what some might consider risky or unprofitable emerging markets, as evidenced by its ruthless, recently implemented decision to pull out of eastern European jurisdictions, and to hand offices to local management. Linklaters brought in just shy of £1.3bn last year and, on average, equity partners bagged £1.3m each. Sources tell LB that Charlie Jacobs, co-head of Linklaters’ mining sector group and the firm’s lead partner on African matters generally (and Nikanor specifically), bills between £5m and £6m a year: no mean feat. Anchor clients such as mining giant Anglo American, the world’s largest mining and natural resources group, are a significant contributory factor that any partners looking to replicate such a remarkably remunerative African-focused practice must bear in mind.

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