Legal Business

Deal View: Despite that late start, Willkie underlines surprisingly forceful City buyout push with hire of GavDav

Deal View: Despite that late start, Willkie underlines surprisingly forceful City buyout push with hire of GavDav

Affectionately known in buyout circles as ‘GavDav’, the long-time duo of private equity specialists Gavin Gordon and David Arnold has finally landed at Willkie Farr & Gallagher from Kirkland & Ellis after months of speculation.

While Kirkland may play down its significance, it is nevertheless a rare and high-profile exit for the Chicago-bred juggernaut and a chance for Willkie – a firm whose progress in the City has been muted compared with many US peers given the quality of its US private equity practice – to finally get its brand on the radar in London.

Legal Business

Global Elite line up on Nestlé’s $10bn skincare business sale to EQT

Global Elite line up on Nestlé’s $10bn skincare business sale to EQT

Latham & Watkins is acting alongside US counterpart Kirkland & Ellis in advising EQT as the private equity house looks to acquire Nestlé’s skincare business, in what could be one of the largest transactions in Europe this year.

Nestlé, which is being advised by Linklaters corporate partners David Martin and Michael Honan, confirmed talks with EQT in May following a competitive auction process with rival buyout funds and industry players all eager to make the acquisition. The group of investors includes Canada’s Public Sector Pension Investment Board and the Abu Dhabi Investment Authority.

Legal Business

Deal watch: City teams fly on £4.6bn Rolls-Royce pension deal as Kirkland and Goodwin take multi-billion dollar mandates

Deal watch: City teams fly on £4.6bn Rolls-Royce pension deal as Kirkland and Goodwin take multi-billion dollar mandates

Big-ticket deals have been fuelling the market in pensions, private equity and fundraising recently with UK top-10 firms and US rivals alike taking the controls on significant mandates.

Legal & General (L&G) handed a joint mandate to CMS and Eversheds Sutherland to advise on its £4.6bn buy-in to buy-out with the Rolls-Royce UK Pension Fund (RRPF), a deal which is billed as the UK’s largest ever bulk annuity and which saw Linklaters act for the trustees.

The pension risk transfer sees the insurer strike its fourth of the five largest deals of this kind in the UK, with the others being British Airways (£4.4bn), ICI (£3bn) and TRW (£2.5bn).

The Eversheds team advising L&G was led by corporate partner Hugo Laing and pensions partner Mark Latimour, alongside CMS partner Thomas Lockley. The Linklaters team was led by global head of pensions Claire Petheram and derivatives partner Mark Brown. The in-house legal team at L&G included Helena Hawthorn, Camilla Curtis and Hannah Kilshaw.

Laing, who also acted for L&G on its £2.4bn buy-out of the Nortel pension scheme and £1.1bn buy-out of the Vickers pension scheme, is optimistic about the market.

‘Volatility in the market can be a good thing for pension deals as it can favourably impact pricing. Insurers buying pension schemes has really boomed in the last few years and the deal values are getting bigger and bigger. The Rolls-Royce deal has shown how big the deals can get and I suspect there will be more of this size to come’, he told Legal Business.

Petheram told Legal Business that the transaction is part of a ‘huge trend’: ‘There is an awful lot of activity in buy-ins where insurers take responsibility for pension liabilities. There has been increased activity in the longevity swap area and that’s only going to ramp up further as corporates look to manage their pension liabilities proactively.’

She added: ‘Insurers represent a gold-standard covenant and there is a willingness on the side of corporates and trustees to lean into these deals. It represents an acceptable position. Trustees have a laser focus on the interests of their members and they can see that deals like this work.’

She expects to see an increase in the number of large-scale transactions over the next 12 months and more innovation in dealing with pension risks.

Kirlkland & Ellis’ City lawyers have also been busy, with the Chicago-bred juggernaut advising investment adviser and repeat customer GLP on the $18.7bn sale of its US logistics business to Blackstone. The firm the same week advised BC Partners-backed United Group on a €220m deal to acquire mobile operator Tele2 Croatia from Tele2 Group.

The GLP deal was co-led by Kirkland corporate partners Michael Steele in London and Michael Brueck in New York, with the team also including real estate partner Kevin Ehrhart in Los Angeles, investment funds partner Kelly Ryan in Chicago and tax partner Mike Beinus in New York.

Simpson Thacher & Bartlett advised long-standing client Blackstone out of New York with a team led by real estate partner Davis Coen.

The sale includes logistics properties owned across 3 separate GLP US funds and totals 179 million square feet of urban logistics assets, claiming to be the largest ever private real estate transaction in the States.

London corporate partner David D’Souza led the Kirkland team advising United Group, supported by David Higgins, debt finance partner Neel Sachdev, capital markets partner Matthew Merkle, technology & intellectual property transactions partner Jenny Wilson and tax partners Tim Lowe and Jan Hobbs. The team was also supported by local law firms Divjak Topic Bahtijarevic, Karanovic Partners and Setterwalls.

Tele2 was advised by Schoenherr through its offices in Austria and Croatia, having acted for Tele2 on a number of other disposals in the region. D’Souza said the acquisition will enable United Group to widen the services that it provides and its coverage across Europe.

Having crept largely unnoticed up Legal Business’ Global London table this year, Goodwin Procter’s City office has been making waves, announcing two major fundraisings in the same week.

The Boston-bred firm advised Glennmont Partners on the €850m closing of its Clean Energy Fund III to invest in clean energy infrastructure projects in Europe. The Goodwin team was led by London partners Michael Halford, Alexandrine Armstrong-Cerfontaine and Laura Charkin.

Although led out of New York by partners David Watson and James Donohue, Goodwin also advised Advent International on its $17.5bn fundraise for its ninth global private equity fund GPE IX Limited Partnership.

The fund surpassed its $16bn target after six months in the market while Advent’s previous global fund, GPE VIII, closed on $13bn 2016.Halford and Charkin also advised on the deal out of London.

Halford told Legal Business the Glennmont transaction was a sign of increased interest in renewable energy investments as indicated by the fund’s diversification of investors into the US and Asia. ‘The market is very active and this is a great time to be raising funds. We are expecting more funds activity over the summer.’

Watson said that Goodwin has acted for Advent since its formation in 1984 and has personally advised the private equity house since 1988. He notes an uptick of interest in the ventures space and a migration from its traditional heartlands of California and Boston over to New York.

nathalie.tidman@legalease.co.uk

Legal Business

Deal watch: Kirkland and Linklaters take care of Nestlé business as UK advisers get busy in Europe

Deal watch: Kirkland and Linklaters take care of Nestlé business as UK advisers get busy in Europe

International investors have been keeping UK and US counsel busy this week, with Linklaters and Kirkland & Ellis winning roles on Nestlé’s proposed $10bn sale of its skincare business.

Eversheds Sutherland, Pinsent Masons and Ashurst, meanwhile, were all in action as Japan’s largest housebuilder, Sekisui House, entered the UK market, and Herbert Smith Freehills (HSF) advised Spanish company Cellnex in a multibillion-euro series of acquisitions on the continent.

Kirkland’s private equity partner Roger Johnson is advising longstanding client EQT as the private equity house confirmed it is partnering with Abu Dhabi Investment Authority and Canada’s Public Sector Pension Investment Board to acquire Nestlé Skin Health for $10.1bn.

Linklaters’ corporate partners David Martin and Michael Honan are acting for Nestlé as the Swiss group enters exclusive negotiations for what could be one of the largest transactions in Europe this year.

Latham & Watkins is advising EQT on the financing, led by London partners Dominic Newcomb and Jennifer Engelhardt.

Founded in 1981 as Galderma and operating as a subsidiary of Nestlé since 2014, the Lausanne-headquartered skincare company employs more than 5,000 people across 40 countries. According to EQT’s plans, the company will take back its original name and keep its headquarters in Switzerland while focusing on international expansion, particularly in the US.

Elsewhere, Eversheds corporate partner Alistair Cree led a team advising regeneration company Urban Splash as it signed a £90m joint venture with Homes England and Sekisui House. The deal marks the entrance of the Japanese housebuilding giant into the UK with a view to deliver thousands of homes across the country. Pinsents partner Scot Morrison led the team advising the government body, while Ashurst’s Hiroyuki Iwamura acted for Sekisui.

‘Sekisui is the world’s largest housebuilder, it has the balance sheet of all the UK housebuilders combined,’ Cree told Legal Business. ‘The plan of the joint venture is to invest and develop the modular housing model, where houses are built off-site, and roll it out across England – in this way houses can be built much more quickly.’

He added: ‘It’s a real vindication of the Urban Splash business, because you’ve got someone with a real reputation investing into a business that is based in the North West of England.’

Outside the UK there were rich pickings for HSF, as a team led by Paris corporate partner Edouard Thomas advised Spanish telecom infrastructure company Cellnex on its €2.7bn acquisitions in France, Italy and Switzerland.

Cellnex agreed to acquire a series of mobile towers in France and Italy from telecom company Iliad, for €1.4bn and €600m respectively, while in Switzerland it acquired communication sites from Salt.

Alongside HSF, the deals involved Paul Hastings, which advised Salt in Switzerland led by London corporate partner Garrett Hayes, and a number of independent firms across the continent.

French champion Bredin Prat advised Iliad in France and Italy, Italian firm BonelliErede acted for Cellnex on Italian law aspects, and Bär & Karrer advised Cellnex in Switzerland.

marco.cillario@legalease.co.uk

Legal Business

Kirkland private equity duo quit for Willkie Farr

Kirkland private equity duo quit for Willkie Farr

Long-rumoured to be on their way out of the US giant, Kirkland & Ellis private equity duo David Arnold and Gavin Gordon are set to join Willkie Farr & Gallagher.

The pair joined Kirkland from Ashurst in 2010 in one of the firm’s first major laterals in private equity in the City. Clients Gordon has worked with include Cinven, ABRY Partners, KKR and Vista, while Arnold’s list include CapVest Partners and Montagu Private Equity.

Gordon commented: ‘Willkie has one of the most attractive cross-border private equity platforms and a stellar reputation across both the European and US markets, making it an ideal fit for our practice and continued growth.’

Willkie chairman Steven Gartner added: ‘Gavin and David, two well-established leaders in the market, are a terrific addition to our premier private equity platform, and to our London office. They join Claire McDaid, widely regarded as being one of the top private equity practitioners in the market, and a team that has added tremendous value to our clients and to our success. This new complement of talent further deepens our bench and benefits our clients worldwide.’

Their departure follows a number of high value hires for Kirkland in recent months as part of its push upmarket in the private equity space. The world’s highest earning law firm tapped Freshfields Bruckhaus Deringer twice for two of the most touted private equity hands in the City, hiring Adrian Maguire in January 2019 and David Higgins in December 2017.

The hires from Freshfields also see the Chicago-based giant turn to more mainstream deal advisers, a move reflected in Jon Ballis becoming chair in 2020, in a move expected to usher in a more consensual style than current chair, Jeffrey Hammes.

Kirkland has also tapped Linklaters several times over the years, most successfully with the hire in 2015 of Matthew Elliott. The firm has, however, also seen numerous departures amid a clash between the London office old guard and new hires including finance partner Stephen Lucas from Weil Gotshal & Manges in 2014.

De facto office head Graham White, London funds practice founder Mark Mifsud and finance veteran Stephen Gillespie left between the second half of 2014 and the first half of 2015: the first two to Fried, Frank, Harris, Shriver & Jacobson; the other to Gibson, Dunn & Crutcher. High-yield guru Ward McKimm left for Freshfields in 2015, while Dechert recruited a private equity and finance team, including European debt finance team founder John Markland, between 2016 and 2017.

An even bigger hit came when Sidley Austin recruited six partners from the London office and seven from the Munich office between February 2016 and March 2017, including veteran private equity partners Erik Dahl and Christian Iwasko.

A Kirkland spokesperson said: ‘We appreciate Gavin and David’s contributions to the firm and wish them all success in the future.’

marco.cillario@legalease.co.uk

Legal Business

Global London: The Big Long – Inside Sidley’s daring attempt to relaunch as a private equity leader

Global London: The Big Long – Inside Sidley’s daring attempt to relaunch as a private equity leader

Summer 2015. Four US lawyers meet at Nobu restaurant in London. Sidley Austin management committee chair Larry Barden and Europe head George Petrow have invited two City-based lifers from long-time Chicago rival Kirkland & Ellis: private equity (PE) partners Erik Dahl and Christian Iwasko. On the table is a plan to shake up Sidley’s loss-making London operation by building a PE practice from scratch. Dahl and Iwasko are sceptical, but their patience with Kirkland has been worn thin by its latest round of top-dollar hires.

A few weeks later, Dahl and Iwasko sneak out of a Kirkland partner conference in Chicago to meet Barden and Petrow again. Doubt is giving way to enthusiasm: Sidley is prepared to invest an eye-catching sum and give the duo free reign. Six months later, the deal is signed. Dahl, Iwasko and four other London partners join Sidley in February 2016.

Legal Business

Kirkland breaks $5m PEP and outguns Latham again to stay world’s highest-grossing firm

Kirkland breaks $5m PEP and outguns Latham again to stay world’s highest-grossing firm

Kirkland & Ellis has hiked revenues by more than $500m to remain the world’s highest-earning law firm, as global turnover surged to $3.76bn.

The Chicago-bred giant today (21 March) revealed results for the 2018 financial year, confirmed a 19% hike in revenues against $3.165bn the previous year. Profit per equity partner (PEP) topped $5m for the first time, up 7% to $5,037,000 on the $4.7m for 2017. Revenue per lawyer was up nearly 3% to $1.63m.

The firm would not disclose regional breakdowns for revenue but London is believed to have outpaced global growth considerably, growing revenue from around the $300m mark last year to about $380m. It has been one of Kirkland’s fastest-expanding offices, growing a striking 139% since 2013 with headcount in the City growing 28% in 2018 alone to reach 304 fee-earners. This compared with a 15% global headcount increase adding more than 300 lawyers to reach 2,306.

The stellar year has been on the back of a thrusting private equity M&A market and a number of standout restructuring matters, particularly in the retail space, in the UK and in the US.

Kirkland also set a blistering pace with internal promotions in the City with a sizeable 10-strong round of City promotions within a huge 122-strong global investment in keeping with its fast-track partnership model.

In London, the marquee hires of David Higgins from Freshfields Bruckhaus Deringer and Nicola Dagg from Allen & Overy, a move marking the Chicago-bred giant’s first foray into investing in IP litigation, have been symbolic in 2018.

The hire of private equity’s most wanted, Adrian Maguire to follow in the footsteps of his former boss Higgins earlier this year meant that Kirkland continued to make waves into 2019.

Latham last month announced it had added $323m to its top line in 2018, momentarily becoming the highest grossing law firm in the world, as PEP rose 6% to $3.45m. Revenue per lawyer rose 6% to $1.33m, as lawyer headcount rose 4% to 2,540. Last year revenue rose 9% to $3.06bn and PEP 6% to $3.24m.

Nathalie.tidman@legalease.co.uk

For more on Kirkland’s ascent to the top of the Global 100, see  Global 100: Wrecking ball – Inside Kirkland & Ellis’ creative destruction

Legal Business

Comment: Beyond barbarian – Another stride as Kirkland signs private equity’s most wanted

Comment: Beyond barbarian – Another stride as Kirkland signs private equity’s most wanted

If the news in late 2017 that Freshfields Bruckhaus Deringer private equity veteran David Higgins was joining Kirkland & Ellis was an insult to his Magic Circle firm, the announcement barely into 2019 that Kirkland was following up with his colleague Adrian Maguire looks like grievous injury.

The record-breaking transfer of Higgins was a symbolic reverse and a significant demonstration of Kirkland’s determination to push into mainstream sponsor work in Europe. Yet it was not entirely unexpected – there had been indications that Higgins was becoming disenchanted due to issues with Freshfields’ finance practice and a lack of a more meaningful leadership role. Where he went was more surprising than the matter of his departure.

There is no such caveat with Maguire, who without doubt topped the hiring wish lists of the elite private equity teams in the City. As Kirkland celebrated, Simpson Thacher & Bartlett is in mourning to have missed the opportunity and the firm is not alone.

If Higgins could be (just about) cast by critics as seeking the kinder deliverables of management and a final chapter to his career, Maguire is in his mid-forties prime and a universally-liked operator in a field that breeds abrasive individualists by default.

He was regarded as a team player and staunch Freshfields loyalist. As such the consensus among buyout veterans is that this loss is considerably more damaging for the City giant than the Higgins episode.

Reasons given for the abrupt change of heart are apparently some familiar concerns regarding the calibre of Freshfields’ finance practice at a time when expectations of Anglo-American debt coverage have never been higher. Some point to the presence of his old friend, Rory Mullarkey, at Kirkland, in addition to a host of familiar Freshfields hands having already moved, as making the understated Maguire comfortable to sign up. Despite earlier protestations of loyalty, over a lengthy sabbatical beginning in early summer the die was cast.

It is not even that by the standards of the stratospheric numbers that get kicked around in private equity you can class the move as an obvious dash for cash. Maguire was regarded as less money motivated than many peers and his hire was a good deal cheaper than the $10m transfer of Higgins. Other firms would have matched or exceeded his package.

Freshfields has inevitably moved into damage-limitation mode.

Certainly, the appointment is a demonstrable sign of the extent to which Kirkland’s thrusting culture and ambitions are edging closer to establishment norms, a core aim of chair-elect Jon Ballis. As one Kirkland hand notes: ‘We’ve always wanted to hire [Maguire]. Five years ago he wouldn’t have even returned our call.’

Freshfields has inevitably moved into damage-limitation mode and, despite a period in which only the charitable could say it has been a confident few years at Fleet Street, has a solid case to make in the context of private equity.

For mainstream European-centric sponsor work, it remains the pacesetter, with an enviable roster of clients, deals and talent (though the excessively-derided Clifford Chance still stands up considerably better than most peers allow). But the gap with key US rivals continues to close and on European deals with a clear US influence, it is no longer first choice.

Overall, Freshfields’ response remains unsatisfying and in places bordering on
the naïve. The ground is shifting underneath it sufficiently that it will need a more substantive strategic answer to such losses of talent in future. In contrast, Kirkland is to announce another year of robust growth. The firm has taken another notable step forward.

alex.novarese@legalease.co.uk

Legal Business

Beyond barbarian: Kirkland signs PE’s most wanted

Beyond barbarian: Kirkland signs PE’s most wanted

If the news in late 2017 that Freshfields Bruckhaus Deringer private equity veteran David Higgins was joining Kirkland & Ellis was an insult to his Magic Circle firm, the announcement barely into 2019 that Kirkland was following up with his colleague Adrian Maguire looks like grievous injury.

The record-breaking transfer of Higgins was a symbolic reverse and a significant demonstration of Kirkland’s determination to push into mainstream sponsor work in Europe. Yet it was not entirely unexpected – there had been indications that Higgins was becoming disenchanted due to issues with Freshfields’ finance practice and a lack of a more meaningful leadership role. Where he went was more surprising than the matter of his departure.

Legal Business

Buyout star Adrian Maguire to join Kirkland in body blow to Freshfields

Buyout star Adrian Maguire to join Kirkland in body blow to Freshfields

One of the most touted private equity names in the City, Adrian Maguire, has quit Freshfields Bruckhaus Deringer to join Kirkland & Ellis just over a year after his former colleague David Higgins made the same move.

Freshfields-bred and regarded as a loyalist to the firm, Maguire is leaving the Magic Circle outfit after more than two decades in what will be seen as a notable setback for its attempts to limit the damage of Higgins’ $10m move in December 2017.

For Kirkland it is another significant step forward in its attempts to bulk up its European M&A firepower. Clients of the highly-regarded Maguire include Cinven, Carlyle and Advent International.

The US firm, which last year became the highest grossing in the world as turnover hit $3.165bn, recently made another step in this direction, recruiting a corporate duo from Linklaters to launch its second continental base in Paris.

The firm’s profit per equity partner now sits at $4.7m, giving it the chance to offer huge packages to marquee deal partners.

Coupled with the hire of Higgins, Maguire’s move also sees the Chicago-based giant turn to more mainstream deal advisers, a move reflected in the anointment of Jon Ballis as chair, who is expected to usher a more consensual style than current chair Jeffrey Hammes when he takes over in 2020.

A spokesperson for Freshfields said: ‘Adrian has been a valued friend and colleague over the course of his career with us and we wish him all the best in his new role. We have had a phenomenal year advising clients in 2018, and the strength and depth of our private equity practice is second to none. Adrian’s departure does not change that.’

Maguire took a six-month sabbatical from Freshfields from June to November last year, and a partner at the Magic Circle firm pointed out that the team had its best year ever despite Maguire’s absence. Highly-rated players still at the firm include partner Charles Hayes.

Yet the symbolism of the move for the City legal scene is hard to overstate. If even a Magic Circle loyalist like Maguire can be persuaded to switch to a US rival, fresh questions will be raised about the London elite’s ability to retain key talent. Freshfields had in 2017 gone through a shake-up of its partnership designed to help it keep its star partners from the clutches of higher-paying US rivals. This latest departures suggests it was too little, too late.

marco.cillario@legalease.co.uk

For more on Kirkland & Ellis’ meteoric rise, see ‘Wrecking ball’ (£)