Capital times for SA firms
24 September 1996
While UK firms dither about whether to set up in South Africa, South African firms have been operating quietly in London for several years.
The most established is Maitland & Co, which has four partners and four assistants. Partner John Herholdt says: "In Europe our activities are of necessity largely corporate and commercial and we have particular expertise in transnational tax. We are seeing increased banking activity as South African institutions are re-entering the international banking community. Banking is a traditional area of activity in South Africa but offshore work has been circumscribed by the sanctions era. Now Euro-dollar and Euro-rand issues are the order of the day, it is a growing area."
"Similarly, M&A work has always been here. It is taking a different form now because there are fewer difficulties with it now South Africa is politically more acceptable."
Maitlands also has a trust and company administration business which forms companies for its offshore clients and administers them.
Herholdt says: "Our partners and assistants are all resident here. We don't rotate them as I think many foreign firms do. We encourage our people, who are all South African attorneys, to qualify as English solicitors."
He added that the firm kept multinational partnerships under consideration but that "we have very good relationships with the UK firms. Were we to practise English law, we would be in direct competition with them for South African clients. At the moment, we complement rather than conflict with each other."
Maitlands came over in the 1970s to service its client, the Anglo-American Group. Other South African firms are more recent arrivals. For instance, Mallinick Ress Richman & Closenberg has been in London for six years. Partner Michael Richman says: "When we came over, we anticipated things would change but not by as much as they have." Mallinick Ress has been involved in work spanning the telecommunications, food, fishing, mining and leisure industries. "We are mainly interested in cross-border transactional work, which has been made easier by the EU as domestic jurisdictions have had to conform," Richman says.
"We also do a lot for companies who want to get back to South Africa. For instance, companies that withdrew in the mid-1980s found that local companies had taken their trade names. The law is that if you don't use a name for five years, you lose it. We needed to be inventive in some cases."
Another South African firm, Bowman Gilfillan Hayman Godfrey, has also been here for six years. Partner David Anderson says: "The office runs quite happily with two people. If we need more, we can wheel them in from South Africa. You don't need a big office if you have an efficient system.
"We are not just a marketing post here. We are an integral part of our parent firm. You can't always say that of the offices of foreign law firms in London, which are sometimes run as stand-alone practices, completely independent of their parent firms." Bowman Gilfillan specialises in general commercial and corporate finance work, for instance advising financial institutions in London on sale and lease-back transactions and structured and aircraft finance, as well as giving general advice on derivatives and loans into South Africa.
Not everything coming this way from South Africa is rosy though. A much-heralded multinational partnership set up in London two years ago between Cape Town-firm Sonnenberg Hoffman Galombik and Green David Conway has fallen into abeyance.
There is also speculation as to whether any other South African firms are likely to set up in London. One candidate might be the 45-partner Johannesburg firm Deneys Reitz, which specialises in insurance and insurance litigation, and enjoys good relationships with syndicates and insurance firms in London. Partners travel here frequently.
Other South African firms with a sufficient client base to consider moving include Werksmans and Edward Nathan & Friedland. However, as the exchange rate is weak it is thought unlikely that any will come over in the near future.
If any do, Herholdt is not fazed by the idea of a new kid on the block. "It would have to be client-driven for a firm to come here. If it is somebody else's client, we have nothing to lose," he says.
"Fortunately for foreign firms, London is enough of an international financial centre to allow us all to operate. We have been lucky enough to flourish."