Spring tide

Clifford Chance again tops the global project finance rankings by deal value. It’s been a pretty rotten time for the sector, but events such as the Arab Spring are giving things a push

It is a bit of a stretch to say that completing 47 transactions worth $36.3bn (£24bn) in a year is slim pickings, but the volume and value of project finance deals needed to put Clifford Chance at the top of trade publication and data provider Infrastructure Journal’s (IJ) league tables were the lowest they have been for a few years.

The top 10 law firms, ranked by total value of completed deals, inked 276 deals in 2012, worth a total of $228bn. That figure was down on 2011, when the top 10 completed 355 deals valued at $262bn. But even that was a poor showing compared with the $336bn totted up by the top 10 in 2010, although deal volume was a bit lower then, at 294. Of course, this is an imperfect method of measurement since two or three firms can include the same deal on their list, but looking at it using another measure, commercial bank lending fell from $159bn to $99bn between 2010 and 2012.

arab spring

Low water mark

2010 was something of a beacon of hope for project finance lawyers. It provided the first sign of a rebound after the two years of decline that followed the debt crisis. But the bounce was short-lived and the past two years have failed to live up to expectations.

Part of that may be because, in 2010, the markets restarted after holding their breath for two years, meaning that on top of new deals, on-hold ones were thrown into the mix, creating what seemed a bumper environment.

Either way, project finance values and volumes have fallen since. Clifford Chance’s comparative dominance between 2011 and 2012 has also fallen away – from a market share of 9.57 per cent to 7.99 per cent.


Nonetheless, membership of IJ’s table is largely a case of ‘the usual suspects’. That said, Mexico’s Galicia Abogados makes an intriguing appearance thanks to three deals worth $6.1bn combined. Meanwhile, White & Case, which often places third, has been shunted down to seventh following a particularly strong year from Clayton Utz, which had the good fortune to land four deals worth a combined $16.7bn.

Sullivan & Cromwell, too, manages to place in the top 10 despite only completing two deals. Both were in the oil and gas sector. The first was the Australia Pacific LNG financing, worth almost $13bn. The other was the Dolphin Energy refinancing across the Middle East for $1.3bn, which closed at the beginning of the year.

Wave of creativity

Despite lower metrics in 2012 the view from partners on the ground is broadly positive.

“It’s been an interesting year,” says Clifford Chance head of energy and infrastructure Andrew Grenville. “It’s not really business as usual for project finance lawyers and people are having to be more creative in structuring the funds, but there’s certainly no reduction in demand for infrastructure and energy assets.

“It’s a market in which there are not many ‘cookie-cutter deals’ and there’s more activity in emerging markets – that’s good for us because we have an integrated global practice. We’ve been doing renewables work in South Africa, Mexico and Thailand, and doing conventional project finance and oil and gas work in [places such as] Ivory Coast and Cameroon.”

Beyond geography, one trend to note, according to lawyers practising in the sector, is that multilateral export credit agencies and multilateral finance institutions such as the European Investment Bank have been working together more closely.

Grenville adds that Clifford Chance’s project finance practice is almost equally split in terms of acting for sponsors and banks – and that’s not an equilibrium that is sought out at a firm level. Clifford Chance also tries to make sure its partners spend as much time acting for sponsors as banks.

Political swell

Two world events that have inspired governments to invest in project finance are the Fukushima disaster in Japan and the Arab Spring. The former, where a nuclear power plant suffered a meltdown in the wake of a tsunami, forced the Japanese to seek alternative power supplies to nuclear.

“Africa is still a big resources play and so is South East Asia – particularly in Japan, with the dash for gas,” says Ashurst global energy, transport and infrastructure head Mark Elsey.

Likewise, project finance lawyers are still seeing more deals in the Middle East in the wake of the Arab Spring of 2010 and 2011.

“Because of the Arab Spring, governments are ramping up projects to deal with unemployment – and it’s not just a case of building condos in Dubai, either,” says Latham & Watkins finance partner Glen Ireland. “It’s aluminium plants and things like that, and the market practice there for governments doing these deals is to adopt a project finance structure.”

Africa also remains a significant area of interest for project finance lawyers. Indeed, one of Africa’s largest project financing deals closed towards the end of 2012. The top two firms in IJ’s table, Clifford Chance and Allen & Overy (A&O), both had the financing for the Egyptian Refining Company’s greenfield project in Mostorod, near Cairo, in their top five deals. Baker & McKenzie, Shearman & Sterling and Slaughter and May also advised on the deal.

Still, it was hard luck for A&O: the firm advised on what is described as the largest project financing in history, acting for sponsors Inpex and Total on the $20bn financing of the $34bn Ichthys project, but the deal closed too late to be included in IJ’s rankings. Herbert Smith Freehills and Latham & Watkins also acted for a syndicate of 32 lenders on the deal, while Australia’s

Allens acted for the joint venture alongside A&O.

But that is the nature of project finance, says Philip Stopford, White & Case’s head of energy infrastructure, project and asset finance across Emea.

“If you get one or two big deals closing in any year that can move tables quite significantly,” says Stopford. “But from our perspective, it’s looking like a strong year and we’re starting with a good book of business.”