Legal Business

The end of the pipeline: Herbert Smith Freehills and Simmons advise AO on float to attain $1bn market cap

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Corporate Herbert Smith FreehillsSimmons & Simmons
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A healthy pipeline of London Stock Exchange listings has seen Herbert Smith Freehills (HSF) advise online appliances website AO on its proposed initial public offering (IPO), with the small-beginnings Bolton white goods company reportedly expected to attain a market capitalisation of around £1bn upon listing.

The HSF team is being led by equity capital markets (ECM) partner Chris Haynes and includes US-qualified global head of capital markets Steve Thierbach and corporate partner Mike Flockhart. AO, which sells items from fridges to coffee machines through its website, said in a statement last Friday that it plans to raise £60m from the IPO.

Simmons & Simmons is advising the underwriting banks on the deal including Jefferies International, J.P. Morgan, Cazenove and Numis Securities. The team is being led by corporate and ECM partner Colin Bole, alongside US securities partner Julian Perlmutter.

Reports from the financial press including the FT and Bloomberg have placed AO’s capitalisation figure at around the £1bn mark, with the FT placing it between £800m and £1.4bn.

While there were no entries in January to the main list, companies waiting to float in order to provide their private equity investors with an exit include Warburg Pincus-owned Poundland and KKR-owned Pets at Home.

Last year saw IPOs raise $18.7bn, a substantial increase on 2012, which raised just $4.7bn according to Dealogic.

In late January, Dentons and Lawrence Graham advised Hurricane Energy, which focuses on oil reserves in reservoirs beneath the North Sea and has already signed investment and drilling deals with BP and Transocean, as it prepares to float on the AIM market of the LSE with a value of £272m.

Hurricane, which is expected to start drilling in the second half of 2014, was led by Dentons corporate partner Jeremy Cohen, alongside energy partner Danielle Beggs and environment partner Sam Boileu.

Cenkos Securities acted as Hurricane’s nomad and broker, with Lawrence Graham’s head of corporate Geoff Gouriet advising alongside senior associates Rebecca Gordon and Jenna Beever.

david.stevenson@legalease.co.uk

Legal Business

Growth in Germany for HSF as it launches disputes practice in Frankfurt

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Herbert Smith Freehills (HSF) today (3 February) took a further step towards building up its German capability following the collapse of its alliance with Gleiss Lutz and Benelux firm Stibbe with the hire of former Baker & McKenzie partner Mathias Wittinghofer to launch its disputes practice in Frankfurt.

A specialist in banking and finance disputes, as well as post-merger and acquisition disputes, Wittinghofer will become part of HSF’s global banking litigation and investigations practice. The dual German and English-qualified attorney’s client base includes banks, private equity firms and major corporations.

Wittinghofer is the fourth partner to join the firm’s Frankfurt office since it opened for business in April 2013 – following corporate lawyers Ralf Thaeter, Nico Abel, and real estate specialist Hans Thomas Kessler who joined from Gleiss Lutz, Norton Rose Fulbright, and legacy SJ Berwin respectively.

The firm’s current global head of HSF’s disputes practice and incoming joint chief executive, Sonya Leydecker, said: ‘Establishing an on the ground disputes capability in Germany, Europe’s largest and strongest economy, is a crucial part of our expanding European strategy. It will greatly enhance the delivery of our disputes service to clients across our global platform. In Mathias we have found an excellent partner, whose strong skills and proven experience in resolving banking and finance disputes neatly fit our strategic focus and requirements in Frankfurt.’

HSF corporate partner and Germany-based Ralf Thaeter added that Wittinghofer’s ‘expertise across the full spectrum of banking and finance disputes brings an important dimension to our existing capability and takes us a step closer to the full-service capability in Frankfurt, which is our ultimate goal.’

Other recent international hires for the 2,300-lawyer firm include former DAC Beachcroft real estate partner Javier Ortega de la Peña to its Madrid office in the last week of January, and former Linklaters partner and financial services regulatory expert William Hallatt to its global FSR practice in Hong Kong in mid-January.

 

sarah.downey@legalease.co.uk

Legal Business

LLP latest – Herbert Smith Freehills sees its overdraft rise by 140% as borrowing totals £111m

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Financial results 2012/13 Berwin Leighton PaisnerHerbert Smith Freehills
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Significantly increased debt has been a recurring theme for many of the latest limited liability partnership (LLP) accounts filed at Companies House and Herbert Smith Freehills is no exception, with its overdraft up over 140% from £26m to £62.7m and total bank borrowing up by 28% to £110.7m.

In the first accounts filed since Herbert Smith’s June 2012 merger with Australia’s Freehills, the global LLP accounts reveal that revenue is slightly down on last summer’s unaudited figure of £471.2m, standing at £469m. The accounts, which do not include the Australian side of the business, further show a LLP cash position of £29m.

Meanwhile, the highest paid member this year received £2m, compared to £1.6m the previous year.

The accounts, signed off by senior partner Jonathan Scott and outgoing chief executive officers (CEO) David Willis and Gavin Bell state: ‘Transactional activities in the UK and Europe remained muted between October 2012 and April 2013, while we also faced challenging conditions in Asia and Australia.’

They make reference to the cash call that legacy Herbert Smith equity partners had to make in May last year to bring its finances in line with Freehills, worth around £20m.

Other firms to have filed their 2012/13 LLP accounts at Companies House include Berwin Leighton Paisner, which saw a 221% increase in bank borrowing in the 2012/13 financial year.

The 790-lawyer firm’s borrowing has risen to £45m from £14m the previous year.

david.stevenson@legalease.co.uk

Legal Business

All grown up – HSF’s Belfast volume disputes centre pilots post-merger Australian litigation

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When legacy Herbert Smith set up its volume disputes support centre in Belfast in 2011 it was, despite or perhaps because of the fact that it was at the vanguard of this kind of move, a conservatively promoted step, with initial plans to train only around 20 fee earners, including a mix of solicitors and legal assistants.

Post its merger with Freehills, the growth of this successful centre is evident as its latest pilot to roll out the use of the Belfast centre to its Australian merger partner for Australian litigation gets underway, and the fact that it has, three years later, blown its initial growth targets out of the water with 120 permanent employees, almost evenly split between qualified lawyers and legal assistants.

According to one spokesperson for the firm the Belfast office is already used to support work coming from jurisdictions such as Europe and Hong Kong. The purpose of this latest pilot, which has been on the table since 2012, is to see if the time differences can be overcome and the Belfast office is currently working on a large dispute that is set to finish in April, when the pilot scheme draws to a close.

Libby Jackson, director of the Belfast office told Legal Business: ‘The pilot is focused on ensuring that our teams, our processes and our technology solutions work together seamlessly to deliver to the Australian disputes practice the responsiveness across time zones, cost-efficiency and high quality legal work that the Belfast office has delivered to date to our global clients.’

Jackson commented that she has had some positive feedback from the pilot already and once the pilot concludes in April there will be a review from both the Belfast and Australian perspectives.

She adds: ‘In our experience, clients are increasingly placing value on a more systemised approach to the document intensive aspects of cases but are looking for solutions which further enhance (rather than sacrifice) quality while allowing costs to be controlled more closely.

‘The rapid expansion of the office and the legal services that we offer is due to high levels of client demand and interest.’

david.stevenson@legalease.co.uk

Legal Business

Dealwatch: HSF, Clifford Chance and Slaughters take the spotlight in Cineworld expansion

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Corporate Clifford ChanceHerbert Smith FreehillsSlaughter and May
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Herbert Smith Freehills (HSF) has landed a role advising Barclays, JP Morgan and Investec on Cineworld Group‘s £107m rights issue and £504m acquisition of Warsaw-listed Cinema City International, a deal announced yesterday (09 January) that would create a cinema chain with almost 2,000 screens across Europe and Israel. Corporate partners Mike Flockhart and Chris Haynes are leading the team, with US securities advice from Steve Thierbach.

Slaughter and May is advising Cineworld, with corporate partners Mark Zerdin and David Johnson taking the lead.The firm is part of a team of other international firms including Paul, Weiss, Rifkind, Wharton & Garrison (US law), Sołtysiński Kawecki & Szlęzak (Polish law), Djingov, Gouginski, Kyutchukov & Velichkov (Bulgarian law), Nagy és Trócsányi (Hungarian law), Havel, Holásek & Partners (Czech and Slovakian law), Nestor Nestor Diculescu Kingston Petersen (Romanian law) and Herzog Fox & Neeman (Israeli law).

Clifford Chance is acting for Cinema City, with a team led by corporate partners Jonny Myers and Spencer Baylin. Linklaters also has a role on the deal advising other financial advisers.

The deal, should it complete, would combine Cineworld’s 101 UK cinemas with Cinema City’s 99 cinemas that are spread over Israel, Poland and the Czech Republic. The move comes as Cineworld’s rivals have expanded overseas, with Odeon operating in seven countries while Vue Entertainment has a presence in five.

Cineworld’s market value was £590m yesterday while Cinema City was valued at 1.5bn Polish Zloty (£305m). The major attraction of Cinema City could well be the growth that it has enjoyed between 2009 and 2012. During that period, the company saw revenues increase by 14.2% and is reported to have a strong pipeline of screen openings in place to ensure further growth.

The cinema industry has been particularly active deal-wise over the past year: in June 2013 Allen & Overy, Ashurst, Debevoise & Plimpton and Skadden, Arps, Slate, Meagher & Flom all took roles on the £935m sale of Vue Entertainment by private equity firm Doughty Hanson to Canadian investors OMERS Private Equity and Alberta Investment Management Corporation.

david.stevenson@legalease.co.uk

Legal Business

Herbert Smith Freehills announces hire of Maitland Chambers Tom Leech QC as Murray Rosen QC retires

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Herbert Smith Freehills has today (9 January) announced the hire of Tom Leech QC, who has left Maitland Chambers to join the top 10 LB100 firm as a partner in its advocacy group in London.

Having joined the Bar in 1988 and taken silk in 2010, Leech has spent his entire career at Maitland Chambers. He is experienced in commercial litigation, professional negligence, company and property litigation, as well as offshore jurisdictions, while his portfolio includes high profile cases in the High Court, Court of Appeal and the House of Lords.

HSF established its advocacy unit in 2005, launched by former 11 Stone Buildings barrister Murray Rosen QC and Littleton Chambers’ Ian Gatt QC, as the firm set itself at the vanguard of firms training its solicitors to be advocates, offering clients greater flexibility in its approach to court work in London and across other offices.

Now comprising three partners and four associates, the addition of Leech will ‘enable the unit to maintain the high quality of advocates’ as Murray Rosen QC prepares to retire in April this year.

Of Leech’s departure, Maitland Chambers’ head Christopher Pymont QC, said: ‘Tom is a highly capable advocate at the very peak of his skills. He has enjoyed a long and distinguished career in these chambers and at the independent Bar. He will be a credit to the HSF Advocacy Unit. We are sorry to see him go but would like to wish him every success in his new role.’

HSF’s London-based head of advocacy Ian Gatt QC added: ‘Hiring a QC of Tom Leech’s calibre is a real coup for the advocacy unit and marks an exciting new phase in our development. Personally and professionally Tom is an excellent fit for our practice and I am delighted to welcome him to the team.’

sarah.downey@legalease.co.uk

Legal Business

Revolving doors: HSF loses Perth mining head to Australian rival

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Having completed a crucial overhaul of its management and remuneration structures towards the end of 2013, Herbert Smith Freehills (HSF) would have hoped to get 2014 off to a positive start but has instead suffered another setback, with news that the head of the firm’s mining practice in Perth, Justin Little, will join independent Australian outfit Gilbert + Tobin.

Little will join the Perth office of Gilbert + Tobin in its energy and resources practice. He is a member of the Australian Mining and Petroleum Law Association and has extensive experience advising Australian publically listed mining and resources companies, including BHP Billiton and Rio Tinto, on M&A transactions and equity fundraisings.

Gilbert + Tobin’s Perth managing partner, Michael Blakiston said the appointment reflects the ongoing development of the firm’s energy and resources practice, particularly in the oil and gas industry.

‘I am delighted that a lawyer of Justin’s calibre and ambition is joining our firm,’ he said. ‘Justin will strengthen our presence in Perth and make a valuable contribution to the national growth of our energy and resources practice.’

As the merger between legacy Herbert Smith and Australia’s Freehills in 2012 was partly motivated by the desire to build a strong energy practice, the loss of a high-profile industry expert will come as a blow to the firm and follows the departure energy finance specialist Jason Fox to Bracewell & Guiliani in London in March 2013. This exit added to other big-name losses throughout the year in another core practice area – disputes – with Ted Greeno joining Quinn Emanuel Urquhart & Sullivan and Simon Bushell leaving for Latham & Watkins.

Further signs of post-merger discontent at a senior level were also evident on the Australian side in late 2013, with Singapore managing partner John Dick and corporate partner Geoffrey Grice also leaving the firm.

david.stevenson@legalease.co.uk

Legal Business

Leadership: Herbert Smith Freehills unveils new joint CEOs

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After much speculation, Herbert Smith Freehills announced today that it has appointed Sonya Leydecker (pictured) and Mark Rigotti as joint chief executive officers (CEOs).

The appointments come after a recommendation by the firm’s governance body, the council and following ratification by partners. Leydecker and Rigotti will take their positions for a term of three years after current CEOs David Willis and Gavin Bell step down on 1 May 2014.

Both Leydecker and Rigotti currently sit on the executive board and have strong reputations in both of their legacy firms. Leydecker has been Herbert Smith’s global head of disputes for almost nine years, while Rigotti led legacy Freehills banking, finance and corporate groups and is currently managing partner for clients and industries at HSF.

‘Appointing new leaders represents a further important post-merger milestone, and in Sonya and Mark we are fortunate to have two partners who will bring to the role a powerful combination of management skills, leadership ability and practice experience,’ said senior partner Jonathan Scott.These strengths will provide a strong platform on which to carry out their responsibilities and help deliver our strategy. With new leadership and strong work flows, particularly in the UK and Australia, we are excited about the prospects for 2014.’

Deputy senior partner Mark Crean added: ‘This is a terrific note on which to end what has been a strong first full calendar year for us, marked by the many opportunities we have been given to show how our enhanced capability can benefit clients.’

December has been a particularly busy month in what has been a difficult year for HSF. Earlier this month the firm finally agreed on a combined remuneration system which will see it use a global managed lockstep, although concessions were given to the legacy Freehills side to pay additional bonuses to high billers or star laterals. A statement announcing the move described this as a ‘variable, performance-related component to the system that is specific to Australia partners above a certain point in the lockstep’.

The firm has also seen a number of high-profile departures during its first year as a merged entity, particularly in disputes, with the latest being Tony Dymond leaving for the London office of Debevoise & Plimpton this week.

david.stevenson@legalease.co.uk

Legal Business

Revolving doors: Debevoise picks up second experienced HSF litigator

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Strategic recruitment Debevoise & PlimptonHerbert Smith Freehills
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US firm Debevoise & Plimpton has announced that Tony Dymond, former co-head of Herbert Smith Freehills (HSF) Seoul office, will be joining its London office.

Contentious construction expert Dymond (pictured) is the second high-profile HSF litigator to join Debevoise this year, with Kevin Lloyd joining the firm in July after resigning from HSF in December 2012.

Like Lloyd, Dymond is a renowned litigator with 20 years of experience advising international clients on complex, multi-jurisdictional disputes.

A solicitor-advocate, his practice focuses on high-value construction and engineering disputes in the energy and infrastructure sectors.

Debevoise’s London office has seen significant expansion in its litigation practice, led by former Attorney General Lord Goldsmith QC. The team has grown by 12 lawyers in 2013 alone.

‘Tony Dymond’s arrival is great news for the firm. He is a highly respected lawyer with a truly international practice, and a key addition to our litigation team in London. Tony’s arrival also further demonstrates our commitment to provide premier English law advice to our clients,’ said Michael Blair, presiding partner of Debevoise.

A HSF spokesperson confirmed that Doha-based dispute resolution lawyer James Doe has been promoted to partner in Seoul to replace Dymond, who ‘retired from the partnership’. HSF has had a difficult year following the merger between legacy Herbert Smith and Australian outfit Freehills in October 2012 with senior partner exits, particularly in its signature disputes practice, and a remuneration reform which took some time to get voted through.

But the firm remains upbeat. Lewis McDonald, Seoul managing partner and head of corporate South Korea at HSF, said: ‘We have had a great start to our Korean practice so far and I am grateful for the support Tony has provided to me and the firm during this first phase. The next phase of our development will be significantly bolstered by James who has energy, enthusiasm and the perfect skill-set and regional experience for this market.’

David.stevenson@legalease.co.uk

Legal Business

A carve-out before Christmas – HSF agrees compromise to (largely) unite post-merger partner pay

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It was a long time coming but Herbert Smith Freehills (HSF) has finally agreed a compromise to unite equity partner pay just over a year after the union of Herbert Smith and Australian leader Freehills.

The deal will see the two firms combine their partnerships under a ‘global managed lockstep’, a break from previous attempts to usher in more radical performance-based rewards for the combined partnership.

As Legal Business reported three weeks ago, the firm has decided to allow legacy Freehills some latitude when it comes to how they pay their partners.

Both legacy firms will use the same core ladder but the limited carve-outs will allow the legacy Freehills side to pay additional bonuses to high billers or star laterals. A statement announcing the move described this as a ‘variable, performance-related component to the system that is specific to Australia partners above a certain point in the lockstep’. There will also be a common bonus pool to reward ‘exceptional partner performance’.

The new, more merit-based system replaces Herbert Smith’s rigid lockstep, though it will run to the same range as the legacy City firm’s current system, which runs from 43 to 100 points.

CEO David Willis told Legal Business: ‘We went through a sequential consultation process and ended up with one proposal that we put to the partnership. There were lots of ideas put forward during the consultation and some weren’t as popular as others.’

‘The vast majority of the remuneration system is common to both partnerships. The difference for the partners in Australia won’t affect a large number of people. The bonuses allocated annually to all partners will be modest.’

The percentage of the firm’s profit pool that will be allocated to bonuses for legacy Freehills partners is understood to be around 5%.

The firm required a 75% majority vote in each of its partnerships to get the new system through. The vote was completed last week. Partners’ performance will be assessed using a ‘balanced scorecard’ approach, the firm said.

The exceptions from lockstep will not be available to legacy Herbert Smith partners and according to the firm these measures reflect ‘the nature of partner remuneration systems in the Australian market’.

The unusual compromise was agreed after four earlier sets of proposals sent in October failed to win support. These included more radical measures, such as discretionary gates, which were unpopular with London partners. The new system comes into place at the start of the 2014 financial year.

The ratified deal has been viewed as a somewhat unwieldy compromise that was necessary to bridge the two legacy sides of the firm, which will raise questions for some over the degree of integration between the two sides. The two firms combined formally on October 2012.

Legacy Herbert Smith’s lockstep had fixed-share partners serving four years before making it onto the equity ladder, which runs from 43 to 100 points. Freehills operated a core ‘ladder’ running to 120 points, though up to another 40 points can be handed out as bonuses, which are typically given to top-performing partners and laterals. The Freehills models meant that partners can earn well over £1m, in comparison top of equity at Herbert Smith of £933,000 during the 2011/12 year, when the City law firm saw profits per equity (PEP) partner of £840,000.

The firm is also voting on its new chief executive or joint chief executives by the end of the year, as David Willis and Gavin Bell will step down in April 2014. Partners viewed as likely contenders include litigation head Sonya Leydecker, UK managing partner Ian Cox, global head of corporate Mike Ferraro and EMEA managing partner Allen Hanen.

david.stevenson@legalease.co.uk