Sponsored briefing: Mortgages for law firm partners – A Q&A with Emily Bernstein and Chris Duck

Sponsored briefing: Mortgages for law firm partners – A Q&A with Emily Bernstein and Chris Duck

Making partner is a huge step up for any lawyer and it is one that can have a major impact on their earning profile. We spoke to Emily Bernstein and Chris Duck, two of Investec’s private bankers working in this space, about the unique challenges they help clients overcome.

What are the biggest concerns lawyers have once they make partner? Continue reading “Sponsored briefing: Mortgages for law firm partners – A Q&A with Emily Bernstein and Chris Duck”

Sponsored briefing: Q&A – Serdar Paksoy

Sponsored briefing: Q&A – Serdar Paksoy

1. Given Turkey’s recent economic problems, how is this affecting your clients and how can you help mitigate the risks?

Turkey has been going through a period of economic uncertainty since the summer of 2018, when a number of factors led to a sharp devaluation of the Turkish lira against major foreign currencies and a surge in inflation. These volatile economic conditions have affected Turkish companies’ profits as well as their ability to serve their foreign currency debt, resulting in the need for debt restructuring and corporate divestments, especially within large conglomerates. This also led to the issuance of legislation to protect the currency, imposing that certain contracts be denominated in Turkish lira or delimiting the circumstances in which Turkish companies can borrow in foreign currency. The ambitious economic agenda of the Turkish government, however, is expected to put Turkey back on a path of sustainable growth.

We help our clients adapt to the new environment by overhauling their contracts and credit arrangements in order to comply with the new legislation. When acting for foreign players looking to invest in Turkey, we advise on adequate provisions in the transaction documents meant to anticipate the impact volatile economic conditions could have on the agreed deal terms. These may address a variety of issues, such as currency fluctuations between signing and closing, the target’s need for recapitalisation to remain in line with statutory equity ratios, or the necessity to redesign the target’s debt structure.

The current conditions in Turkey also bring significant opportunities for those foreign investors who continue to see the country’s mid-to-long-term business case, with a sizeable growth potential compared to more developed countries in many yet-underpenetrated sectors of the economy. Given Turkey’s history of economic downturns followed by spectacular rebounds, some investment advisers also see the current period as offering attractive valuations for buyers with the prospect of sizeable returns when the market recovers.

2. How has this affected the flow of foreign direct investment, the volume of deals and dispute resolution?

The current economic climate has led foreign investors to be more cautious with their investment plans and the factors upon which they build their business case. We see a significant slowdown in PE investment, since the current market conditions will often not match their pre-defined investment criteria. Strategic investors, on the other hand, continue to see the country’s opportunities, all the more so when it comes to target companies with sales skewed towards exports, which benefit from higher revenue against lower costs as a result of the currency devaluation. Restructuring plans within major Turkish conglomerates can also put on the market potentially attractive targets, which would not otherwise have gone up for sale.

Investors will, however, proceed with caution. Combined with the fact that sellers’ price expectations can initially remain relatively high, this results in longer transaction processes compared to previous years, with negotiations sometimes dragging on for months or being halted several times before the parties finally reach an agreement.

‘The ambitious economic agenda of the Turkish government is expected to put Turkey back on a path of sustainable growth.’

3. Which practice areas are the biggest originators of work and why?

Corporate/M&A and dispute resolution remain the biggest originators of work, with M&A in particular holding itself at a fairly satisfactory level in view of current market uncertainties, as the practice is fed by large divestments and strategic opportunities. We do, however, see significant growth in debt restructuring and insolvency, compliance and investigations, as well as banking and finance work, all of which are driven by the impact of current economic conditions and the market players’ increased caution when proceeding with investments.

4. Do you anticipate a resurgence in infrastructure/project finance?

Although there has been a slowdown in infrastructure project tenders initiated by the government, we expect new tenders to be launched in the transport, healthcare and education sectors in the coming years. Some of these transactions will require sizeable project financing. Turkey has also set itself ambitious renewable energy utilisation targets, which will boost project finance activities in the country.

5. As a global downturn is increasingly possible, how well are Turkish companies positioned?

The Turkish economy remains strongly dependent on exports and foreign direct investment and the country would undoubtedly be affected by a global downturn. The previous major downturn in 2008 had shown that while Turkey’s banking system was at the time comparatively more robust than in Western economies due to strong capitalisation rules, the country was eventually affected by the crisis when the slowdown in its major export markets reverberated on the real economy.

Although the present situation may be riskier, with Turkey’s banking system already under tension due to the recent currency crisis, the Turkish economy’s resilience is noteworthy. Turkish companies may still benefit from a competitive advantage with a young, skilled and affordable workforce, and the growing ability they have demonstrated in recent years to export their strengths and know-how to new markets, such as African countries for the construction sector, and hedge their exposure to the local economy with investments abroad.

6. The Turkish central bank’s drive to reboot growth, slashing benchmark rates by 7.5%, and offering incentives for banks to offer credit – what impact is that having in bank advisory work?

Considering the liquidity of Turkish banks, we expect the lower interest rates to promote growth in the Turkish lending market across all segments, including retail and wholesale. The lower interest rates will also promote the refinancing market, especially in infrastructure projects. This being said, the lending landscape in Turkey is already quite busy with ECA [export credit agency] loans, trade finance, IFI [international financial institution] loans, sovereign borrowings and FI transactions.

7. Which sectors are of most interest to M&A/private equity investors?

Investors continue to be consistently attracted to the industrial and consumer goods sectors, as well as transportation and logistics. We also see foreign players increasingly seeking opportunities to invest in Turkish companies with a focus on emerging technologies, especially payment systems and communications technology, and believe this will be a key area of investment in upcoming years. Finally, there have been high-value entries in the Turkish financial sector from Middle East corporate groups, as well as some opportunities in the insurance sector, where a number of sizeable bancassurance arrangements will come up for renegotiation or new tender in upcoming years.

‘We see foreign players increasingly seeking opportunities to invest in Turkish companies with a focus on emerging technologies.’

8. As the Turkish energy sector is being rapidly reshaped, what opportunities does this provide?

Turkey is keen to bring a significant increase in its use of renewable energy in the coming years. These efforts will particularly materialise in the wind sector. The government is expected to announce a number of renewable energy resource zone tenders in the near future. These tenders should be smaller in size than the previous ones, meaning that the Turkish energy sector will offer more opportunities to a diversified group of investors.

9. What impact is there for Turkish companies complying with global regulations and new national regulations, eg the Turkish Data Protection Law, modelled on GDPR?

Given the significance of foreign investment in Turkey, many Turkish companies are well acquainted with the need to comply with global regulations, be it in the field of anti-bribery and corruption (especially FCPA [Foreign Corrupt Practices Act]/UKBA [UK Bribery Act]), international sanctions, data protection, corporate governance or financial reporting standards. Turkish companies with a foreign shareholder, or even a major foreign supplier, will often already apply global compliance standards in a number of areas.

The ongoing harmonisation of Turkish legislation with global regulatory standards is largely supported by the government as a tool to make the country an ever-more attractive destination for foreign investment and is generally welcome by local companies with the ambition to attract new investors despite the added burden on their internal processes.

The Turkish Data Protection Law provides a good example of this trend. Introduced in 2016, the new piece of legislation replaced hitherto scattered and little-enforced privacy regulations with a full-fledged data protection regime, giving companies two years to audit their data processing practices – in many cases for the very first time – and put them in compliance with the new law. This called for an abrupt change in culture, but as in most emerging markets corporates have been quick to adapt. While the legislator had deliberately opted to mirror the Turkish Data Protection Law on the 1995 EU Directive, rather than GDPR, in order to soften the impact of the new regime, we see that many Turkish companies have chosen to transition directly to the higher GDPR standards in order to boost their ability to do business on the international stage.

For more information, please contact:

Serdar Paksoy, managing and senior partner

Paksoy
Orjin Maslak
Eski Büyükdere Caddesi
No:27 K:11 Maslak 34485
Istanbul
Turkey

T: +90 212 366 4757
E: spaksoy@paksoy.av.tr

www.paksoy.av.tr

Paksoy

Sponsored briefing: New practice commenced in 2019 – current status of mandatory mediation in commercial lawsuits

Sponsored briefing: New practice commenced in 2019 – current status of mandatory mediation in commercial lawsuits

Mehmet Selim Yavuz of Yavuz & Uyanık discusses the effects of the new rules

Prior to 2016, the Court of Cassation was the only high court reviewing rulings of the courts of first instance. This led to an enormous workload for the court; hence final rulings could only be reached after a seriously long period of time. The Turkish judicial system was reformed with a view to address this and the appellate courts were established in 2016 as a judicial authority between the courts of first instance and the Court of Cassation. Continue reading “Sponsored briefing: New practice commenced in 2019 – current status of mandatory mediation in commercial lawsuits”

Sponsored briefing: Taking the plunge

Sponsored briefing: Taking the plunge

The office has made a series of bold lateral hires in the last three years. What is behind this?

Suhrud Mehta (SM), co-London managing partner, Milbank: At one level you could say it has been bold and at another level you could say it just made perfect sense for us to make these moves in areas in which the firm has historically been strong. Until the right people came along, we were not prepared to take the plunge. Taking capital markets first, the focus there was to combine the strong reputation we have in leveraged finance with an equally strong capital markets practice that existed at Shearman & Sterling under Apostolos Gkoutzinis. To take a big slug of that and bolt it on to our existing leveraged finance business here was a very powerful thing to do. The combination has been electric. Continue reading “Sponsored briefing: Taking the plunge”

Sponsored briefing: Legal tech – Too much of a good thing?

Sponsored briefing: Legal tech – Too much of a good thing?

Artwork and imagery used by kind permission of Haynes Publishing Group, a leading supplier of content, data and innovative workflow solutions for the automotive industry and motorists. For more, see www.haynes.com

 

Neota Logic

Nearly $1bn was invested in legal technology and New Law disruptors in 2018. That was across more than 50 funding rounds and included start-ups through to more established players, according to research from Investec. Venture capital, private equity, non-legal companies and trade buyers are increasingly interested in what they see as a highly-lucrative legal sector.

The frequency and scope of legal tech funding has also jumped markedly: a Thomson Reuters report in mid-2017 put investment into UK legal tech start-ups at just £16m in the previous 18 months. Hundreds of legal tech companies have subsequently popped up. Every law firm is quick to tout its latest innovation or partnership with a technology provider, while some even have incubators where they work with start-ups over several months, honing products. Continue reading “Sponsored briefing: Legal tech – Too much of a good thing?”

Sponsored briefing: 2019: diversity and new rules for Portuguese corporate issuers in debt capital markets

Sponsored briefing: 2019: diversity and new rules for Portuguese corporate issuers in debt capital markets

Diversity. This is a fair word to describe Portuguese debt capital markets in 2019. We have seen a bit of everything this year: new issuers, including Transportes Aéreos Portugueses, Sociedade Independente de Comunicação and Casais, SGPS, and from the public sector, the Autonomous Region of the Azores, frequent issuers, including Sport Lisboa e Benfica – Futebol SAD, Mota-Engil, José de Mello Saúde and Galp, and from new structures, including the combination of subscription and exchange offers to retail and institutional investors, and the segregation of books by types of investors (retail vs eligible counterparties and professional clients in retail offerings), and even a new prospectus regulation. Lastly, at the top of the list, new investors and alternative funding sources for Portuguese issuers. This is good news in a year that, on the regulatory front, turned a page with the enactment of the new EU Prospectus Regulation and related delegated regulations.

As from 21 July 2019, new rules were required to be followed in the preparation of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market. New rules were also adopted in respect of related advertisements.

Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 (New Prospectus Regulation), although maintaining the essential structure inherited from its predecessor, introduced new requirements aimed at simplifying an issuer’s access to capital markets, notably frequent issuers or issues by small and medium-sized companies, and ensuring that the information contained in a prospectus is as useful as possible for its readers (potential investors).

Critical chapters of the prospectus, such as the summary and the section on risk factors, have also been affected. The summary was reduced and reshaped to be modelled as much as possible on the key information document, with the goal of making it shorter, simpler and easier for investors to understand. To achieve this goal, the language used in the summary should be plain and non-technical, presenting the relevant information in an easily accessible way. Following this route, summaries will become a more useful source of information for investors (notably retail investors), focused on providing key information that helps investors take more accurate investment decisions.

Rules regarding risk factors have also been amended and detailed. The main purpose of disclosing risk factors in a prospectus is to ensure that investors are aware of the major potential risks relating to the issuer and the securities, and that they make investment decisions based on their knowledge of these risks. In order to avoid long generic descriptions of risks that often serve only as disclaimers, the New Prospectus Regulation and related ESMA Guidelines require that the risk factors be limited to those which are material and specific to the issuer and the securities being offered or admitted to trading. The relevant risks are now required to be described adequately, organised by categories, and those considered most critical by the issuer should be presented first. The main reason for organising the description of risk factors according to these new rules is to present the information contained in a prospectus in an easily analysable, concise and comprehensible form. Whereas the above does not appear to constitute a great challenge for issuers, the need to assess (and eventually quantify) the impact of each risk on the issuer seems to be harder to address, notably because the information available may not be sufficiently reliable to be included in a formal document such as a prospectus. The New Prospectus Regulation and related ESMA Guidelines admit the use of a qualitative scale of low, medium or high, and precedents so far have shown that issuers tend to prefer this alternative.

Also of importance are the new rules in respect of advertisements, particularly the relevant required content. The word ‘advertisement’ is now required to be prominently included in any advertisements disseminated to potential retail investors, and legal disclaimers are required to include statements and recommendations to investors highlighting the need to read and consider the prospectus carefully before investing, rather than simply relying on the approval of a prospectus as a sign of endorsement of the securities being offered or admitted to trading. So far, these new rules have proven to be susceptible to being followed, although in some cases, notably television and radio advertisements or advertisements of more limited dimensions, the new rules have had an impact on the advertisement and its purpose.

The available experience shows that the changes introduced by the New Prospectus Regulation have been successfully handled by issuers and that complying with these new rules has neither discouraged the use of capital markets, nor affected timelines for the approval of a prospectus, notably in Portugal, where this responsibility falls on the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários), as was the case in the first new prospectus-compliant public offering targeting the retail market – the combination of subscription and exchange notes issue launched by Mota-Engil in October. Therefore, with the benefits of a renewed legal and regulatory framework and of an environment where low interest rates facilitate access to funding, 2020 is likely to follow in line with the current year, promising continued intense activity and diversity.

For more information, please contact:

Pedro Cassiano Santos (pictured, left)

Partner and head of the banking and finance practice

E: pcs@vda.pt

Hugo Moredo Santos (pictured, centre)

Banking and finance partner

T: +351 21 311 3366

E: hms@vda.pt

Benedita Aires (pictured, right)

Banking and finance partner

E: bla@vda.pt

VdA

Rua Dom Luís I, 28

1200-151 Lisbon

Portugal

www.vda.pt

Sponsored briefing: Turkey M&A outlook: 2020 and beyond

Sponsored briefing: Turkey M&A outlook: 2020 and beyond

Gamze Çiğdemtekin (pictured, left) and İpek Batum (pictured, right) of Çiğdemtekin Çakırca Arancı assess what lies ahead for the deals market over the next few years

Global economic uncertainties have affected the M&A market, and the recession in the Turkish market was as expected for 2019. According to the data reported on M&A transactions in 2019, the volume of the total M&A transactions in Turkey was $7.4bn. While many economists predict the M&A market may slightly fall in 2020, Turkey’s New Economic Program has optimistic targets that give confidence to investors to take advantage of the current market and expect higher returns in the next three years. Furthermore, there are significant opportunities still available for investors, with emerging sectors taking the spotlight. Continue reading “Sponsored briefing: Turkey M&A outlook: 2020 and beyond”

Sponsored briefing: Notable developments in Turkey’s oil and gas policy

Sponsored briefing: Notable developments in Turkey’s oil and gas policy

Yazıcı’s Kerem Arıç explores three key areas of growth for the country’s energy sector

Due to its dependence on oil and natural gas imports, Turkey has been in need of structural changes in its energy sector. Although the share of natural gas in power generation was significantly reduced in 2019, the overall reliance on natural gas and oil imports creates major challenges both from a commercial and strategic perspective. To overcome these challenges and increase its energy security, the Turkish government made a fundamental decision to move from a role of investor to a role of policy maker and regulator. As a result, Turkey’s oil and gas policy has been mainly driven by the following ground rules: Continue reading “Sponsored briefing: Notable developments in Turkey’s oil and gas policy”

Sponsored briefing: Mediation on the rise in Turkey

Sponsored briefing: Mediation on the rise in Turkey

Eda Cerrahoğlu Balssen (pictured, left) and Sezin Dündar (pictured, right) of Cerrahoğlu discuss the legal requirement for mandatory mediation in commercial disputes

Turkey was introduced to mediation in 2012 with the adoption of Law No. 6325 on Mediation in Legal Disputes (Mediation Law), which regulates the mechanism of voluntary mediation. Continue reading “Sponsored briefing: Mediation on the rise in Turkey”