BLP’s corporate ambitions still burn, but the hunt for a rainmaker goes on
10 November 2008
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Berwin Leighton Paisner (BLP), which built its reputation as a real estate firm, is trying to branch out into the corporate arena.
Don’t be surprised if this statement sounds familiar. Managing partner Neville Eisenberg has been coveting a slice of the corporate market for years.
When he began his third term back in February 2006, he told The Lawyer as much, adding: “I’d be very disappointed if people still thought of us as a real estate firm.”
But while the firm has grown into a very well-respected mid-market player, it is fair to say that BLP has not quite cracked the corporate sector.
Its corporate finance group, which comprises traditionally pure corporate work such as M&A, rights issues and IPOs, has grown significantly over the past few years. The problem is, so has everyone else’s.
In 2005 BLP was placed seventeenth in The Lawyer’s table of corporate practices, raking in £37.5m during the year. This year that figure had grown to £59.5m, but the firm was still rooted at seventeenth place in the corporate league table.
As one senior recruiter puts it: “They haven’t quite made the breakthrough in the corporate arena.”
In spite of this the firm remains ambitious. Head of corporate finance David Collins says he wants BLP to be “the firm of choice outside the magic circle” along with Ashurst and Herbert Smith.
Recent signs are encouraging. The firm’s half-year results show that the corporate finance group is slightly up on budget, growing by more than 3 per cent compared with last year. Utilisation is still around 80 per cent, down from nearly 100 per cent at the height of the M&A boom. This is all the more surprising given that AIM flotations, which are a major part of BLP’s business, have fallen off a cliff.
At the end of 2007 the firm racked up three IPOs in December alone, helping AsianLogic, DQ Entertainment and Randall & Quilter Investment Holdings
to enter the junior market.
Those days are long gone, but the latest Hemscott data on top legal advisers for the sector shows that the firm has since lost only one of its 46 AIM clients, securing sixth place behind AIM stalwarts DLA Piper, LG and Pinsent Masons.
Collins insists that there is still work to be found on AIM, even without the flow of IPOs.
“We’re clearly not just an IPO shop,” he says. “It’s been a bit of a balancing act. There’s been lost revenue from IPOs, but there’s been consolidation of AIM companies, which wouldn’t have happened had the markets been buoyant.”
A look at BLP’s recent deals shows that transactional activity is still boosting its corporate revenue, albeit in smaller chunks than before.
Last month the firm advised AIM-listed online gaming company Playtech on the sale of several parts of its business to William Hill for $250m (£155.79m). In May BLP was instructed by AIM-listed Coal International when the company was bought by Cambrian Mining for £56m. Both deals were in BLP’s “sweet spot” of £50m-£250m, as described by Collins.
If the firm is to achieve its aim of competing with the likes of Ashurst and Herbert Smith, it will need to make the most of its trophy clients. The biggest of these is Tesco, which instructs BLP on the majority of its real estate work.
But BLP has been unable to translate this success to the corporate department, with Tesco remaining ;committed ;to longstanding adviser Freshfields Bruckhaus Deringer for its corporate needs, although BLP does advise on some of Tesco’s smaller transactions – those below £500m.
Collins says the firm is in “as good a position as we’ve ever been” with Tesco, although he admits that winning a place as the main corporate adviser would be a significant boon.
One area where BLP has seen success is in its international strategy. Last year the firm abandoned its best friends approach in favour of a looser referral network.
The exclusive tie-up ;with New York firm Kramer Levin Naftalis ;& Frankel was a casualty of this shift in policy, but according to one former BLP corporate partner, in Europe the move has paid off.
“In the years since they turned that strategy into what it is now, they’ve been more successful,” says the former partner.
The firm has clearly accepted that it does not have the resources to compete across Europe, and instead uses at least two friendly firms in each country. There are some impressive names on the list, including De Pardieu Brocas Maffei in France, Beiten Burkhardt in Germany and Cuatrecasas in Spain. And BLP still works with Kramer in the US, although not exclusively.
According to Collins, referrals from overseas firms and income from BLP’s small offices in Paris, Brussels and Singapore amount to around 20 per cent of the corporate total.
And the firm is about to open in Abu Dhabi on the back of a demand for hotels work. Collins is keen to take advantage, saying: “It’s an interesting point of entry. There are a lot of opportunities there.”
So where next for BLP’s dealmakers? If the firm is to realise is long-stated corporate ambitions, lateral hires are the key.
The firm has successfully raided the magic circle for senior associates (Rob Salter joined from Freshfields in 2004 and now leads the relationship with Balfour Beatty and Tesco), but more are needed.
John Bennett, who heads the wider corporate group, admits: “If you look at the size of the practice, relative to the people we’re competing with, we do have to grow the practice out.”
Both in large-scale M&A and private equity, the practice could use a star hire to take the firm to the next level. In fact, they have been looking for one for several years.
“They’d dearly love to get someone, but in this market it will be very hard,” says one recruiter. “The big names aren’t going to take any risks at the moment. Why would someone leave Herbert Smith, Ashurst or Clifford Chance to go there?”
BLP has not been afraid to splash the cash in other practices, with some headline-grabbing packages for the likes of Robert MacGregor from Clifford Chance and Chris de Pury from Herbert Smith. But for now, it appears, the search for a corporate rainmaker will continue.