Fiscal fiesta

With its boom in IPOs and capital markets, Brazil is the latest hotspot
that law firms are focusing on

Fiscal fiesta The lure of vibrant Brazilian industry has had ­international law firms flocking to São Paulo. The explosive IPO ­market that has characterised Brazil in recent years has caught the ­attention of both UK and US firms, which are now competing for the attention of the ­corporates and financial institutions that are active in the region.

This summer (9 June), The Lawyer reported on US private equity powerhouse Simpson Thacher & Bartlett launching its first office in São Paulo, with New York ­partners Todd Crider and Jaime Mercado spearheading the move.

Given Simpson’s risk-averse approach to international spread, its advance into Brazil signifies a sea change. Once considered an unstable place to set up shop, São Paulo is becoming more attractive.

“What we’ve seen is tremendous growth in the Brazilian market,” says Cleary ­Gottlieb Steen & Hamilton partner Francesca Odell. “It has had long-term growth and stability in the IPO and capital markets sectors. This has really been the turning point for Brazil and firms now have a real reason to be there.”

Skadden Arps Slate Meagher & Flom, Chadbourne & Parke and DLA Piper are among the newcomers to the jurisdiction, while magic circle giant Clifford Chance has been there since 1998. It has one of the largest offices of the international firms, with 25 lawyers on the ground in São Paulo.

“Most firms have one or two ­partners in Brazil,” says Odell. “There are only a few offices with larger teams and these tend to be the firms that have been there for much longer.”

Last year Brazil’s equity market was booming with an astronomical number of IPOs being listed.

Last year Cleary and ­Cravath Swaine & Moore represented the underwriters in GP Investimentos on its record IPO.

While the IPO market has stabilised this year, capital ­markets activity has picked up significantly on the promise of a burgeoning project and infrastructure industry.

“We already do lot of capital markets and corporate work in the region,” says Simpson’s Crider. “Building up a significant presence in projects and infrastructure will also be a huge benefit to the firm in the region. This is an area that’s developing very well at the moment.”

Brazil’s capital and equity markets are developing at a rapid pace but infrastructure in the jurisdiction is underdeveloped. ­However, it is expected that projects and infrastructure deals will take off.

“It has not happened yet,” says Odell. “It has been expected for some time, it’s ­clearly going to happen at some point and I should think firms will be extremely keen to take this on and advance into international deals.”

A booming infrastructure market would give many of the international firms on the ground a lucrative practice that would complement existing corporate and capital markets teams.

With firms such as Simpson planning to increase partner and associate count in this area, it seems a boom in infrastructure is right around the corner.

Focusing on international deals in Brazil is also proving to be worthwhile.

International firms are restricted from practising local law by the Brazilian bar. This makes competition for international aspects of deals fierce, with some firms succeeding more than others.

“Firms such as Simpson, Shearman & ­Sterling and Cleary have been very active in Latin America for a long time and have built very good practices there,” says a partner at a US firm. “It will be interesting to see how these new players do in the market. It’s ­highly competitive and I wouldn’t be ­surprised if some simply fail to make ­traction.”

Brazil’s bright future is appealing to law firms that want to capitalise on a lucrative emerging market. The likes of Clifford Chance and Linklaters have conquered the Middle East and Asia and Latin America is now flavour of the month, promising big-ticket capital markets work and a lucrative future in infrastructure.