As private equity houses come under increased scrutiny, 3i general counsel Tony Brierley is having to build new relationships. By Malar Velaigam
The private equity sector is in the hot seat. The sector’s impact on the economy has been the focus of much government and public debate in recent weeks. Meanwhile, a UK report on corporate governance in the sector published by Sir David Walker last month (July) has called for greater transparency through voluntary reporting of funding and profits and publication of annual financial reports.
3i Group general counsel and company secretary Tony Brierley is at the forefront of such debate. As the legal face of the UK’s only private equity and venture capital business listed in the FTSE100, he assists many of the group’s discussions with government policymakers and regulators around the globe, although chief executive Philip Yea has been heading the discussions on the Walker report.
It is a responsibility that Brierley terms “relations between regulators” and sees him travel the world engaging in lengthy, if not always conclusive, debates with regulators such as the Financial Services Authority on issues such as private equity policy and private equity regulations.
With 3i’s growing global presence, which currently includes offices across Central and Eastern Europe, the Arabian Gulf States, Asia and the Americas, Brierley has to have a strong support system to rely on for the firm’s day-to-day and transactional legal concerns.
As such, the group’s 16-lawyer in-house legal team is split into two separate operational groups, with the investment group handling all external transactional matters and the corporate group looking after what Brierley terms day-to-day “internal matters”, which he prefers to keep largely within the remit of the in-house team.
“The corporate team handles things such as a return of capital through B-share issues,” explains Brierley, “which we usually don’t use outside counsel for.”
As Brierley’s time is often monopolised by high-level strategic and regulatory concerns, his second in command, director of legal services David Dench, oversees the day-to-day operations of both legal sub-groups and keeps Brierley updated on their activities.
“Three years ago 3i’s lawyers used to sit and negotiate contracts,” explains Brierley, who has since made a concerted effort to narrow the legal team’s focus on to “value-added work”, rather than spending time on “routine tasks” that are easily outsourced to 3i’s preferred external law firms. Brierley uses the term “value” to describe company, industry or country-specific knowledge and experience gained from working on deals that cannot be bought externally.
In order to maintain this focus, 3i’s lawyers are not involved in drafting documentation, which is entirely outsourced, dependent on the geographical location of each individual deal. However, the in-house team may become involved in negotiations and structuring deals if they are able to add ’value’ through specific expertise.
When 3i does turn to external counsel, Brierley admits that he is often just looking for that “one individual partner” who has private equity depth and fits culturally with 3i.
In fact, in 2004 3i appointed a panel of advisers based on individuals rather than firms. This included Chris Hale and Charlie Barter at Travers Smith, Charles Meek of Macfarlanes and James Baird at Clifford Chance. The Lovells relationship is meanwhile widely seen by the market to have been downgraded since relationship partners Marco Compagnoni and Derek Baird moved last year to Weil Gotshal & Manges and Allen & Overy respectively.
Although Brierley does not identify “one individual partner” at Slaughter and May, he does cite the firm as the company’s principal corporate counsel, saying it is usually instructed to provide corporate advice on matters such as share issues and contracts.
With 3i’s asset pool at more than £2.2bn, the private equity house is constantly on the acquisition trail, leaving Brierley with his work cut out even after 24 years with the company.
“As much as I’ve planned my day, you can guarantee something else will come along,” he says, adding that he never expected to stay at the company for so long.
In fact, the group’s infrastructure fund, advised by Clifford Chance, has just announced its acquisition of a 45 per cent stake in Oiltanking Singapore, Oiltanking Amsterdam and Oiltanking Malta from Oiltanking Gmbh and Malta Freeport Corporation.
Sometimes the action never stops.
General counsel and company secretary
|Title:||General counsel and company secretary|
|Sector:||Private equity and venture capital|
|Reporting to:||Chief executive Philip Yea|
|Number of employees:||750|
|Legal capability:||16 lawyerss|
|Main law firms:||Clifford Chance, Macfarlanes, Slaughter and May, Travers Smith, Weil Gotshal & Manges|
|Tony Brierley’s CV:||
Inns of Court School of Law
1981: Barrister, Inner Temple
1983: In-house lawyer, investment group, 3i Group
1991: Joint head of investment legal group, 3i
1995: Deputy company secretary, 3i
1996: Company secretary, 3i
1996: Appointed to 3i’s management committee
1998: General counsel, 3i