Legal Business

Dealwatch: Magic Circle trio and Travers Smith advise as Carlyle sells RAC stake to new investors

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Corporate Clifford ChanceFreshfields Bruckhaus DeringerLinklatersTravers Smith
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Clifford Chance (CC), Linklaters and Freshfields Bruckhaus Deringer have all landed advisory roles alongside Travers Smith on a deal which will see CVC Capital Partners form a partnership with Singapore sovereign wealth fund GIC to invest in the roadside assistance provider RAC through the purchase of Carlyle’s stake in the latter.

The RAC is the second-largest roadside assistance provider across the UK and has approximately 8.6m members as of 30 September, 2015. During Carlyle’s ownership, revenues grew from £417m in 2010 to £498m in 2014.

CC advised longstanding client CVC with a team led by corporate partner David Pearson. The firm also recently advised CVC, which holds $60bn in funds under management, on its $150m acquisition of a 50% stake in Arteria Networks Corporation, a Japan-based telecoms carrier focused on enterprise customers.

Linklaters advised Carlyle on the exit with relationship partner Alex Woodward leading, while Freshfields advised GIC with global financial investors group co-head David Higgins leading a team.

Travers Smith advised RAC management on the transaction with senior partner Chris Hale leading a team alongside corporate partner Adam Orr.

Last year Freshfields, Linklaters and Travers combined for the same clients as Carlyle sold half its majority stake in RAC to GIC.

The transaction is subject to approvals and is expected to close in early 2016.

sarah.downey@legalease.co.uk

For more on deal activity subscribers can read: ‘Private equity ABC – the brutally simple world of a private equity lawyer’

Legal Business

‘Greater efficiency’: Freshfields to consolidate Cologne and Düsseldorf offices to create 240-strong team

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In a rare move, Freshfields Bruckhaus Deringer will combine its Cologne and Düsseldorf offices to create what it says will be the ‘perfect platform’ for a stronger presence in the Rhineland.

The decision to combine the offices, which are around 45km apart, comes as the firm looks to reconfigure its German operation to create more efficiency.

A spokesperson for the firm said the merger is ‘not driven by cost or a requirement to downsize’, but to create ‘greater efficiency’ and have ‘more lawyers in a single location to offer a stronger and more specialist platform.’ 

Freshfields is currently deciding whether staff will based in Düsseldorf or Cologne, and how much new office space is required. Either way, more space will be needed to accommodate the merger of the two similarly sized offices.

Each office currently has around 20 partners and 120 fee-earners. When combined, the new office will house a 240-strong team with around 40 partners.

Freshfields’ Germany and Austria managing partner Klaus-Stefan Hohenstatt said: ‘We are currently working on medium-term plans to merge our offices in Cologne and Düsseldorf into one office. This will provide us with the perfect platform to create even larger and stronger teams for our clients. The essential aim is to have a stronger presence in the Rhineland.’

The combination is expected to take place next year and will leave the firm with five offices in Germany including Berlin, Frankfurt, Hamburg and Munich, and 600 lawyers in total.

The move comes as White & Case prepares to shut its Munich office after almost ten years since opening, offering its 11-lawyer team the opportunity to relocate to its larger Frankfurt base.

The office closure will affect partners Markus Langen and Tobias Freiherr von Tucher, five local partners and four associates.

jaishree.kalia@legalease.co.uk

Legal Business

Querying the bill: Treasury ‘concerned’ over Freshfields fees on Eurostar sale

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Freshfields Bruckhaus Deringer has been put under the spotlight for charging £2.8m in legal fees when advising HM Treasury during the £585.1m sale of the government’s 40% stake in Eurostar International Limited (Eurostar) in March this year.

A report by the National Audit Office said HM Treasury was ‘concerned about the cost of the legal work and considered re-procuring the legal adviser during the sale process but it decided that a change of legal team midway through the process would have been inefficient and problematic due to the time-critical nature of the work.’

The report on the sale also noted that while Freshfields’ fees were discounted, some of the fees were high relative to the cost of the civil service staff who were working on the sale project team.

Freshfields fees were charged on a billed-time basis rather than a fixed fee, and the legal cost for an internal transfer of shares from the Department for Transport (DfT) to the Treasury was £500,000.

The Magic Circle firm was appointed following a procurement process and a team led by corporate partner Stephen Hewes worked on the deal.

The firm refused to comment.

The adviser fees in total and other costs related to the transaction totalled £8.2m, which amounted to 1% of the proceeds of the 40% stake in Eurostar and the preference share. Financial adviser UBS was paid around £3.6m.

The government agreed to sell its share in Eurostar to winning bidder Patina Rail – a consortium made up of a Canadian investment fund, and UK based Hermes Infrastructure.

It’s been a bad week for Freshfields as the report comes after news broke yesterday (5 November) that the UK Takeover Panel had publicly criticised the firm for its role in the Bumi transaction.

Read the full report here.

jaishree.kalia@legalease.co.uk

Legal Business

Freshfields and HFW criticised by Takeover Panel for breaching rules in Bumi transaction

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Corporate Freshfields Bruckhaus DeringerHolman Fenwick Willan
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In a rare step, Freshfields Bruckhaus Deringer and Holman Fenwick Willan (HFW) have been publicly criticised by the UK Takeover Panel for breaching its code of conduct when advising on the formation of a multibillion-dollar Indonesian coal group.

London’s takeover regulator launched the investigation in December 2012, and concluded that Freshfields and HFW breached rules when instructing on the formation of the coal group Bumi.

Freshfields had advised takeover company Vallar, while HFW had advised the two Indonesian coal mining companies involved.

The takeover panel found HFW had failed to properly disclose that Bumi’s founding shareholders, the Bakrie Group, and Indonesian shareholder Rosan Roeslani, were acting as concert parties in acquiring stakes totaling more than 30% in Bumi’s predecessor company, given they had close ties to each other when the deal was announced in 2011.

The panel also concluded that Freshfields’ failed to notify the panel prior to the announcement of the Indonesian transactions and said the firm ‘could have done more regarding the concert party issue but makes no finding of breach in relation to section 6(b) of the introduction’.

The panel’s statement said: ‘Freshfields and HFW did not take all reasonable care to ensure that the commercial background to the forward-sale arrangements, and their purpose, was fairly presented to the panel.

‘Freshfields and HFW did not ensure that the direct and causative connection between the collateral requirements under the jumbo loan and the forward-sale arrangements, of which they were each aware, was properly explained to the panel.’

A Freshfields spokesperson said the firm co-operated with the enquiry and has accepted the panel’s conclusions.

‘The panel concludes that Freshfields (and other advisers) failed to provide the Takeover Panel with some information that was relevant in considering the submission, but accepted that there was no intention on the part of any of the advisers to mislead the panel.’

HFW said in a statement: ‘The public statement was issued with the consent of all parties involved and, as such, it is not appropriate for us to make further comment.’ 

The panel has also publicly criticised financial adviser Credit Suisse. It did not impose any fines or other penalties.

jaishree.kalia@legalease.co.uk

Legal Business

Freshfields mourns death of veteran US litigator Tim Coleman

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Tim Coleman, a Washington DC-based disputes partner at Freshfields Bruckhaus Deringer, died suddenly yesterday (3 November), after almost six years at the firm.

It is understood that an internal email to partners at the law firm said Coleman fell from a building in the US capital, although Freshfields declined to comment on the circumstances.

Coleman joined the Magic Circle law firm in March 2010 when Freshfields was expanding its US litigation team. He joined after spending four years at the now-defunct Dewey & LeBoeuf where he co-chaired the firm’s white-collar defence and investigations practice group.

Before this, he was a senior counsel to the deputy attorney general at the US Department of Justice for a year, and assistant US attorney at the US attorney’s office in the Southern District of New York from 1997 until 2005. He was also a litigation associate at Wall Street leader Cravath, Swaine & Moore for seven years.

His practice at Freshfields included advising on government investigations, where he regularly represented financial institutions and corporates in investigations of securities and commodities fraud, tax violations, corruption and other violations.

He was particularly experienced in managing complex multijurisdictional matters, having handled cases across Europe, Africa, Asia and the Middle East, and having studied at the European University Institute in Florence and the French National School for the Judiciary in Paris.

Freshfields said in a statement: ‘It is with deep sadness we report that our colleague and friend Tim Coleman passed away in Washington, DC. Tim’s enthusiasm for his family and friends touched everyone around him. His death is a profound loss to all of us personally and to Freshfields. We will do all we can to support his wife and family, who are very much in our thoughts and prayers.’

jaishree.kalia@legalease.co.uk

Legal Business

Moving on: homebuilder McCarthy & Stone turns to A&O for its November listing

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Corporate Allen & OveryFreshfields Bruckhaus Deringer
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Regular counsel Freshfields advises lead arrangers on £1bn IPO

Retirement home builder McCarthy & Stone has selected Allen & Overy (A&O) to advise on its £1bn initial public offering (IPO) as it prepares this month to return to public ownership almost a decade after the developer was taken private.

McCarthy & Stone’s appointment of A&O is a move away from Freshfields Bruckhaus Deringer, which was listed as the developer’s solicitor in its most recent annual report in 2014. However, Freshfields already has a lead role on the float, acting for underwriters Deutsche Bank, Goldman Sachs and Jefferies International, with partner Mark Austin leading the team.

Legal Business

Brodies hires Freshfields partner Fountain amid double corporate hire

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Strategic recruitment BrodiesFreshfields Bruckhaus Deringer
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Scottish firm Brodies is taking its private equity offering up a gear by hiring Freshfields Bruckhaus Deringer partner Karen Fountain as part of a double lateral hire into its corporate group.

Brodies has hired fund specialist Fountain and CMS Cameron McKenna private equity partner Douglas Crawford to increase the number of partners at the firm to 94.

Fountain, who recently finished advising Barclays on the spin-off of its natural resources private equity fund, retired from Freshfields in April after 15 years at the firm, having joined from Slaughter and May in 1999. She was a partner for 12 of those years, becoming a key part of the firm’s City funds group.

Intent on returning to Scotland upon her retirement, Fountain joins Brodies’ Edinburgh office, bringing with her expertise in fund formation, joint ventures, investor and management arrangements and regulatory issues.

Crawford, already a senior name in the Scottish legal market, leave CMS just 18 months after the firm’s rescue deal for Dundas & Wilson.

Crawford, who spent five of his 17 years at Dundas & Wilson heading the former Scottish elite firm’s corporate department, joins Brodies as head of private equity.

The energy specialist, who is particularly active in the oil and gas space, will join the firm’s Aberdeen office. Graphite Capital and Bank of Scotland are among his clients. 

The appointments will boost the firm at a time – according to managing partner Bill Drummond – when private equity work is buoyant in Scotland, filling holes left by the relocation of banking work to the City post-Lehman.

Drummond said: ‘At a time when the role of private equity and funds in stimulating a return to economic growth in Scotland and the wider UK is ever-more important, we are very pleased to be looking forward to welcoming Doug and Helen to Brodies. Their expertise will be of value to many clients looking to make investments and establish new vehicles to take advantage of that growth and help stimulate more economic activity.’

tom.moore@legalease.co.uk

Legal Business

Omani sovereign wealth fund calls in Freshfields to sue Bulgaria

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Disputes Arnold & Porter Kaye ScholerFreshfields Bruckhaus Deringer
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Oman’s largest sovereign wealth fund has hired Freshfields Bruckhaus Deringer to take Bulgaria to arbitration over its role in the collapse in Balkan bank KTB, while the Bulgarian government has instructed Arnold & Porter to defend the claim ahead of preferred law firm White & Case.

Freshfields partners Boris Kasolowsky in Frankfurt and Willibald Plesser in Vienna have been handed the task of recouping losses suffered by the State General Reserve Fund of Oman after KTB closed in June 2014. The arbitration claim, understood to be valued at more than $100m including interest, has been filed at the World Bank’s arbitration court, the International Centre for Settlement of Investor Disputes (ICSID).

The fund held a 30% stake in KTB, which was placed under the supervision of Bulgaria’s central bank last year amid the country’s worst banking crisis in two decades. A bank run began, with customers rushing to withdraw their deposits following allegations that the bank’s main shareholder, Tsvetan Vassilev was embezzling its funds. Vassilev has denied the charges in a case yet to go to trial.

The claim is the sixth time that Bulgaria has been sued at the ICSID, with the Balkan country instructing Arnold & Porter for the first time.

Four Arnold & Porter partners are working on the case, with Washington DC duo Jean Kalicki and Paolo Di Rosa handling the claim stateside, with support from David Reed and Dmitri Evseev in London.

White & Case has acted on four of Bulgaria’s six investor-state cases at the ICSID and is currently counsel on a €600m claim from Austrian energy group EVN over regulatory decisions that reduced its profits in the region.

Kasolowsky and Plesser are representing EVN in that case, which makes the KTB claim Freshfields’ second active case against Bulgaria.

tom.moore@legalease.co.uk

Legal Business

Freshfields and Latham act on creation of new PE house as Barclays spins-off another venture

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Dealwatch Freshfields Bruckhaus DeringerLatham & Watkins
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Private equity heavyweights Freshfields Bruckhaus Deringer and Latham & Watkins have acted on the spin-off of Barclays’ natural resources private equity arm through a management buyout.

Barclays Natural Resources Investment has been bought by its managers, led by chief executive Mark Brown, after being placed into Barclays’ non-core asset pile following a restructuring of its investment bank last year.

The profitable unit, which has 14 staff operating out of London, New York and Doha, has an existing $1.7bn under management, including investments by the Qatar Investment Authority and by Barclays itself.

The renamed Global Natural Resource Investments (GNRI) instructed Latham & Watkins’ global co-head of private equity David Walker to lead on the spin-out and is already planning to raise a standalone fund of over $1bn.

Walker picked up the deal following his work back in 2011 on an earlier Barclays spin-off, Barclays Private Equity, which became buyout firm Equistone, while he was at Clifford Chance. For the GNRI transaction, Walker led a team comprising funds partners Nick Benson and Tom Alabaster, tax partner Sean Finn and employment partner Catherine Drinnan. 

Freshfields partner Karen Fountain, who has since retired, led the legal advice to Barclays. She was supported by corporate partner Philip Richards.

The management buyout ends another legacy of Barclays’ former chief executive Bob Diamond who encouraged the launch of the unit in 2006, shortly after becoming chief executive, to aggressively expand Barclays’ investment banking arm.

Brown said: ‘As an independent manager, we believe there is a demand for a private equity business that is focused on global natural resources, excluding upstream oil and gas in the US. In addition, we believe that the requirement for private equity capital in the global natural resources sector is stronger than ever and the current volatility in commodity prices is creating a positive back-drop for patient private equity.’

tom.moore@legalease.co.uk

Legal Business

Freshfields to double office space in Manchester as low-cost services site in Salford confirmed

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Having taken its first step toward offering alternative legal services to clients earlier this year, Freshfields Bruckhaus Deringer has selected a long-term base for its low-cost services hub in Manchester, double the size of its current office.

The Magic Circle firm will move from its temporary base in Manchester’s city centre to permanently occupy One New Bailey, located by Spinningfields in Salford. Staff are expected to move into the new premises from early 2017.

The firm has leased 80,000 sq ft with the flexibility of adapting ‘the amount of space that [Freshfields] would occupy to reflect the evolving needs of [its] clients and business’.

The legal and business services centre, called the Global Centre, opened its doors in the northwest in July this year after it announced it was to move the majority of its support services team out of its London office for a cheaper and more efficient alternative.

The office will accommodate legal services staff, as well as human resources, IT, marketing and business development, office management, document specialists and change management. It is currently based in Arndale House where the firm has a 40,000 sq ft lease.

The transfer from London remains ongoing and is expected to create a number of redundancies within the support services team, although many are expected to relocate in phases starting next year, with back office staff being the first to relocate. Alongside business services, repetitive legal work is also being shifted to the new centre.

In May, Freshfields appointed Anup Kollanethu as centre director for the combined services after it signed a lease for space in Arndale House. ‘One New Bailey gives us both the high quality and attractive location we want for our staff,’ said Kollanethu.

Salford mayor Ian Stewart added: ‘It’s exciting news that Freshfields has selected Salford as the long term location for its global services centre. We welcome the creation of new jobs in Salford and the city council is ready to work with the firm to make their staff welcome and to assist with recruitment support.’

Knight Frank Manchester advised Freshfields throughout the selection process for its long term Manchester premises.

jaishree.kalia@legalease.co.uk