Will Macquarie panel solve mandate mystery?
28 November 2011 | By Joshua Freedman
17 March 2014
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15 November 2013
Baker & McKenzie, Clifford Chance, Freshfields all in the running to win coveted places on the inscrutable bank’s first-ever legal roster. By Joshua Freedman
The News that Macquarie Group is set to overhaul its way of instructing outside lawyers by appointing its first Europe, Middle East and Africa (Emea) panel might well have caused the odd twinge of concern for the law firms it hires.
There are two main reasons for this. The first is the same with all panel reviews: fees are set to be reduced and firms with a healthy record of advising the Australian bank risk either coming up against more competition for mandates or losing out on a place altogether.
The second reason, however, is more unique to Macquarie. Lawyers who have worked with the acquisitive bank report that it is just a tad private about its inner workings.
“They don’t really like their law firms talking about them,” says one relationship partner.
“Macquarie’s very sensitive when it comes to working on deals they did,” admits another.
“I think they just don’t see the need to shout about what they’re doing,” a third partner points out.
This is all potentially worrying for firms that currently win a lot of work from Macquarie, not least because, if the bank is so secretive, external lawyers might not know what is coming next. One relationship partner admitted to relying on the pages of this magazine for updates on the panel selection process, which the bank hopes to have completed by early January.
Not that the bank is remotely clandestine in the way it selects lawyers. Although its Australian operations have a formal panel, its Emea operations currently work on a relatively formal but still non-panel basis. It is understood that the bank puts out requests to a small number of external firms on a deal-by-deal basis, requesting the usual information about expertise and fees.
“Usually, they ask for two or three firms to put forward proposals on [the basis of] experience and fees, then they pick from that and make a decision,” says one partner.
The exception would be a deal with features that closely resemble another transaction the bank has done recently, in which case it is likely to go to the same adviser.
In 2005 it hired Freshfields Bruckhaus Deringer when the Macquarie European Infrastructure Fund (MEIF) acquired Isle of Wight ferry company Wightlink, with Macfarlanes acting for the seller. The deal was led by Freshfields partner Martin Nelson-Jones.
It then bought another ferry company, Condor Ferries, in 2008, again turning to Nelson-Jones - a sensible choice given that the matter was in the same realm as the Wightlink deal.
Freshfields has also been on the other side of Macquarie deals. Macquarie’s hostile takeover bid for the London Stock Exchange (LSE) in 2005 saw the bank hand mandates to Australian firm Freehills as well as Baker & McKenzie, Linklaters, Simmons & Simmons and SJ Berwin, according to data from financial information specialist Thomson Reuters. That Freshfields was not on the ticket is hardly a surprise - unlike Macquarie, which goes to a number of firms for M&A, Freshfields is the LSE’s longstanding adviser and would in all likelihood have been a shoo-in on the sell side.
When Canadian pension fund CPP Investment Board acquired Macquarie Communications Infrastructure Group in 2009, Freshfields was again the opponent. CPP hired corporate partners Simon Weller in Hong Kong and London corporate partner David Higgins, the firm’s two relationship partners for the client. The Macquarie funds gave the mandate to the group’s usual Clifford Chance contacts, Brendan Moylan and Amy Mahon.
Moylan and Mahon both have previous relationships with Macquarie: Moylan, as one of the magic circle’s up-and-coming corporate partners in the late 2000s, advised the bank on a string of deals, including its £2.5bn acquisition in 2007 of National Grid’s UK broadcast and mobile phone mast business. Moylan was opposite Linklaters corporate partner and TMT specialist Roger Barron, who was acting for National Grid.
Mahon, on the other hand, is a Macquarie alumna herself. She spent two years as associate director and then division director at the bank, sandwiched between spells at Clifford Chance, the second as a partner.
Clifford Chance is also one of Macquarie’s go-to firms in Germany, where private equity partner Kerstin Kopp in Frankfurt advised the bank on its acquisition of a majority stake in GWE Holding in 2008 from Star Capital Group.
A deal list from Thomson Reuters shows that Clifford Chance has acted for Macquarie on the buy side on 10 matters over two decades, with the magic circle firm winning mandates on two deals where Macquarie was adviser to the acquirer.
Of the deals supplied by Thomson Reuters, Clifford Chance was only on the opposite side of a Macquarie deal on one occasion: when Leonardo Srl acquired a stake in Rome’s Aeroporti di Roma in 2007 from Macquarie Airports (MAp), the target turned to Freshfields, while Leonardo and parent Gemina instructed Clifford hance and Italian firms Chiomenti Studio Legale and Gianni Origoni Grippo & Partners.
MAp came up again this summer in a deal that saw the group swap its assets in Brussels Airport and Copenhagen Airport with Ontario Teachers’ Pension Plan (OTPP) in a $1.7bn (£1.1bn) deal.
Allens Arthur Robinson (AAR) and Allen & Overy (A&O) acted for MAp and Freshfields advised OTPP, while Bakers also had a role acting for the Macquarie funds.
So Clifford Chance and Freshfields both stand a decent chance of winning a place on the panel when it is drawn up in the coming months, but if there is one other firm that the Australian bank is closely associated with, it is Bakers.
Bakers has a strong relationship with the bank in Australia, although it still comes up against stiff competition from the top local firms down under, especially Mallesons Stephen Jaques, AAR and Blake Dawson.
“They work with all the big firms in Australia,” says one partner at a London firm. “Bakers are not that high up [in Australia] but do work with them.”
The US firm brought Macquarie to London as a client 10 years ago when Sydney-listed Macquarie Infrastructure Fund acquired Grupo Ferrovial subsidiary Cintra Concesiones de Infraestructuras de Transporte for e816m (£704m). The fund came to Bakers when it was introduced to the London team by the Australian operation, which had been acting for it out of Sydney. It pitched successfully for the deal against a number of competitors including A&O, with Freshfields winning the role on the other side.
The relevant Bakers partner at the time was Timothy Gee, now global head of M&A. He led on the pitch but has since passed on the account to corporate partner Tim Sheddick, who was seconded to Macquarie Capital Funds for five months - no doubt a key factor in the firm’s success in cementing a relationship with the bank.
The Macquarie deal that gave the biggest rewards to outside advisers was probably the £8bn acquisition of utility giant Thames Water in 2006 by Kemble Water, which is controlled by MEIF.
The beast of a deal gave A&O corporate bigwig Alan Paul star billing in a transaction that followed a tough bidding process that saw offers from a number of highly fancied rivals, including Qatar Investment Authority and UBS, which gave its legal work to Herbert Smith.
Travers Smith is another firm that wins work from Macquarie, although its mandates tend to have a different scope from those given to others.
“They’ve used Travers in the UK when it’s quite a UK [-focused] deal,” says one competitor.
The firm advised Macquarie when the bank led a consortium in the £1.8bn acquisition of service stations specialist Moto from Compass, fielding corporate partner Spencer Summerfield.
The bank appears to have a complex way of handing out mandates. Partners say there is no one person who deals with instructing firms, but there are many - hardly surprising given the number of entities under Macquarie’s umbrella.
The bank brought in Mark Topfer as Emea head of legal for fixed income, currencies and commodities a year ago, giving him the mandate to set up an all-encompassing Emea panel, but the bank does not list the names of senior legal staff on its website and will not disclose how many lawyers it has in the Emea area.
Sources hint that the bank’s instructing style is somewhat mysterious. Yet as Macquarie embarks on putting together its first formal Emea roster, outside lawyers may finally feel they have a little more certainty about where they stand. If they get on it, that is.
Deals where Macquarie was acquirer’s or investor’s parent