Linklaters private equity swoop leaves Clifford Chance bemused

Linklaters private equity swoop leaves Clifford Chance bemused” />
Last week (29 January) The Lawyer reported a trio of major hires by Linklaters, all plundered from magic circle firms. In rapid succession Linklaters hired banking stars David Ereira from Freshfields Bruckhaus Deringer and Davide Mencacci from Allen & Overy (A&O) in Milan.

The fact that Freshfields’ biggest banking star decided to walk to a firm that is putting serious investment into finance is telling. In a similar vein, A&O’s Italian operation is nowhere near the force it was after its merger with Brosio & Casati six years ago and has suffered a series of senior exits.

But Linklaters’ third hire was in a different category. As revealed on www.thelawyer. com (1 February), Linklaters has scooped Ian Bagshaw from Clifford Chance. Bagshaw was the rising star of Clifford Chance’s formidable private equity group, having served his time as Adam Signy’s bag-carrier. In a short space of time Bagshaw proved himself an accomplished deal-doer for the likes of Candover and Blackstone.

Bagshaw’s departure will see Clifford Chance closing ranks around Candover in particular. “Candover will be more loyal to Adam and Clifford Chance than to Linklaters,” observes a private equity partner at a rival firm.

Blackstone is in a slightly different category because it shops around slightly more for advisers, although Ashurst has traditionally been in pole position among UK firms. Bagshaw’s nimble footwork in snagging Blackstone deals – he worked on its exit from Southern Cross Healthcare in July 2006 – was helped at the outset by an Ashurst conflict.

Bagshaw’s decision to leave the UK’s biggest private equity franchise sparked genuine bemusement at Clifford Chance last week. “I just don’t know what he’s doing,” lamented a Clifford Chance insider.

Instead, Bagshaw is joining a firm that may be at the top of its M&A game, but whose private equity capability was badly dented by the departures of Graham White and Raymond McKeeve to Kirkland & Ellis last year. Presumably the opportunity for Bagshaw to step out from the shadows of Matthew Layton, James Baird and Signy was simply irresistible.

The money must have helped. Bagshaw made equity in the last round of Clifford Chance partner promotions, but entry-level partners at Clifford Chance were on £370,000 last year, compared with £528,000 at Linklaters. The compelling reason may in the end have been personal: Bagshaw is a close friend of Richard Youle, having worked with him at Eversheds many years ago.

Youle, under the leadership of M&A partner Charlie Jacobs, has kept Linklaters’ head above water in 2006-07. Jacobs is not rebadging himself as a private equity lawyer, but has the internal organisational clout to ensure that private equity is a growth priority for the corporate business.

Hermes Private Equity is a personal client of Youle’s and he has worked with Montagu Private Equity, although the Kirkland team will be defending that relationship. However, Hermes and Montagu are hardly the biggest clients on the block; Bagshaw and Youle have plenty of building work. In the meantime, Bagshaw’s track record on infrastructure deals – he acted for Macquarie Bank on its £2.58bn bid for Associated British Ports – will sit well with Linklaters’ ambitions.

In any case, declares Jacobs, whether or not Bagshaw brings a book of business is irrelevant. “If [Bagshaw] brought no clients with him, it wouldn’t matter,” he says. “If he does bring some, then great.”

Jacobs’ answer is cautiously politic. But there is an intriguing supplementary question. Will Linklaters be earmarking a sponsor-side finance lawyer for the private equity group?It is an issue that caused considerable friction during White’s and McKeeve’s tenure. Clifford Chance and A&O both have partners focusing on it, but there is no such partner identified as such in Linklaters’ little jewel of a leveraged finance group, unless one counts Adam Freeman. But Freeman has his hands full with Lehman and Credit Suisse First Boston, to name but two of his clients.

There is, of course, Ereira. The Freshfields man is due to arrive in May. Ereira, who is recognised as a class act, is also close to Apax, which will be of interest to Youle and Bagshaw. Will Ereira fill that gap?