Milbank flexes its muscles in Middle Eastern power sector

US firm fights it out with A&O, Shearman, White & Case for Gulf supremacy

Milbank Tweed Hadley & McCloy is just days away from closing two major Middle Eastern power and water transactions. The deals, Sohar in Oman and Al Ezzel in Bahrain, provide further evidence of an impressive year for the US firm that is the culmination of a decade of investment in the Gulf.

The firm’s Middle Eastern strength comes despite not having any presence on the ground, either through a local office or an association, with all five of this year’s major deals handled out of its London office. Milbank’s focus has remained on its core strength in projects, advising lenders and sponsors in the Gulf’s largest power and water developments. It has handled project finance deals valued at a total of some $570m (£307.1m) in the Middle East over the past year, contributing around one-seventh of its global project finance turnover.

Its key rivals for this work – as well as for the Gulf’s other boom areas, in particular liquified natural gas and petro chemicals – are Allen & Overy (A&O), Clifford Chance, Shearman & Sterling and White & Case. Norton Rose is also an increasingly active player.

Part of Milbank’s strength lies in landing key deals throughout the Middle East rather than focusing on just one or two states. The two deals about to close, the Sohar power and water project and the El Azzel power project, in which Milbank is acting for sponsor Tractebel, are located in Oman and Bahrain respectively.

They also provide proof that, despite the departure of two key Tractebel lawyers, Jon Nash and Agnieszka Klish, who have both joined Berwin Leighton Paisner as partners, Milbank has been able to maintain its relationship with the European energy company.

Meanwhile, London-based project finance partner John Dewar – a central figure in most of Milbank’s Middle East power and water work – acted this year, with London managing partner Phillip Fletcher, for lenders on the Tihama power projects in Saudi Arabia. This, the largest power project to date in the kingdom, established power cogeneration facilities located at the site of four outlets owned by oil giant Saudi Aramco.

In Abu Dhabi – where Milbank has historically jostled with Shearman on power-related project financing – Milbank advised lenders in late 2003 on the $1.8bn (£970m) Umm al Nar power and water project.

Milbank secured both Umm al Nar and Tihama through its place on the panel of International Power, which acted as sponsor on both deals. Stephen Ramsay, International Power’s London head of legal, says that of all the firms on its panel (which includes A&O, Clifford Chance, Freshfields Bruckhaus Deringer, Linklaters and White & Case), it gives most work to Milbank. “Milbank’s very active in the Middle East,” he notes. Ramsay also instructed Milbank on two other power project tenders in 2004, although they were ultimately awarded to other consortiums.

The glaring exception on International Power’s panel is Shearman, which has an Abu Dhabi office and which is described as Milbank’s main rival for Middle East project finance work, although Shearman firm has reportedly received some work from the company in recent months.

Milbank has well-established links in Abu Dhabi. After failing to land a role on the Taweelah A2 power and water project, it subsequently scooped a place in 2002 as lenders’ counsel on Taweelah’s big sister deal, Taweelah A1. On Taweelah RO, Abu Dhabi’s recent first independent water project, Milbank acted for the sponsors and Norton Rose for the lenders.

Milbank steadily built up its Middle East practice. It launched itself in the region nine years ago, advising the sponsors on the Gulf’s first power project, Al Manah. Since then it has focused most of its guns on power and water, with occasional forays into petrochemicals and aircraft financing. This year has been one of its best. “Our achievements [in 2003-04] will be difficult to repeat,” says Milbank’s Dewar.

However, with lenders counsel roles for consortiums bidding for two power and water projects in Saudi Arabia – Shoiaba and Marafiq – Milbank looks set to continue to challenge the likes of A&O, Clifford Chance and Shearman for the number one Middle East financing spot.

Rank Firm Value $bn (£bn) Deals % share
1 Allen & Overy 9.62 (5.19) 28 11.08
2 Clifford Chance 5.81 (3.14) 24 6.70
3 Latham & Watkins 4.68 (2.53) 19 5.39
4 Milbank Tweed 3.99 (2.15) 18 4.60
5 Sullivan & Cromwell 3.42 (1.85) 5 3.94
6 Linklaters 3.26 (1.76) 19 3.76
7 Mallesons 2.95 (1.59) 16 3.40
8 Allens Arthur Robinson 2.68 (1.45) 19 3.09
9 White & Case 2.44 (1.32) 13 2.81
10 Skadden Arps 2.38 (1.28) 7 2.74

Source: Dealogic