The biggest players enjoyed a return to form in the beleaguered banking and finance sphere, with their mid-market rivals looking on enviously. Andrew Pugh provides the lowdown
All finance practices had a difficult 2008-09, when they bore the brunt of restructuring, but 2009-10 saw a distinct pick-up in the finance market.
Although capital markets was volatile, Allen & Overy (A&O) pulled in one of the choisest structured deals of the year with its representation of Lloyds Banking Group on its £2.47bn residential mortgage-backed securitisation (RMBS) issue – the first RMBS issuance since the credit crisis (February 2010). Elsewhere, banking (where, like Clifford Chance, A&O had made deep cuts, particularly on the leveraged finance side) had a stormer. With some £499m in total revenues, A&O was pulling in £2.33m per partner and was involved in a number of major deals for both sponsors and lenders. A standout deal saw partner George Link advising the banks on the e1.7bn (£1.4bn) Springer Science & Business Media debt refinancing, which led to one of the biggest European buyouts of 2009, with a secondary sale from Candover and Cinven to EQT.
Structurally, the mezzanine market may have frozen over, but high-yield was going great guns despite a hiccup in the latter part of the financial year following the Greek crisis. A&O’s move to recruit high-yield specialist Kevin Muzilla from Milbank saw the firm catching the trend early – and benefiting. One of his first deals in January was to advise Manchester United on its £500m bond issue (Latham acted for the banks). The hire of Muzilla to bolster A&O’s issuer side was echoed by Freshfields Bruckhaus Deringer this July when it hired Gil Strauss from Simpson Thacher & Bartlett straight into the equity. The arrival of high-yield as a dominating force within finance underlines the changing transactional landscape for banking lawyers.
In the pink
Linklaters, which had been buoyed in the previous year by the mammoth Lehman Brothers administration, polished up its mega restructuring credentials with its roles for RBS and for Lloyds on the Government’s asset protection scheme, but continued to be visible on a series of more conventional market transactions: partner Stephen Lucas acted for Commerzbank and RBS on the corporate restructuring of Schaeffler Group; partner Gideon Moore acted for the arrangers of the e690m funding of CVC Capital Partners’ acquisition of Anheuser-Busch InBev’s Central and Eastern European operations (the largest new-money financing of 2009); Moore also advised ING on the debt financing of Apax Partners’ £975m acquisition of Marken from Intermediate Capital Group; and partner Nick Syson advised Nomura and Calyon on KKR’s £955m acquisition of Pets at Home from Bridgepoint.
Freshfields had a strong year in both restructurings (Four Seasons, Zim and McCarthy & Stone) and new-money deals. Partners such as Chris Howard and Presley Warner excelled. Freshfields’ lean practice accounts for 20 per cent of total firm revenue, but only 17 per cent of total partners.
Clifford Chance put its difficult 2008-09 behind it to post some of its best figures for three years. It grossed a total of £486m, of which £348m was banking and £138m was capital markets. Its biggest acquisition finance deal was advising HSBC (partner Nicola Wherity) on its £1.25bn loan to fund Reckitt Benckiser’s takeover of SSL.
Down a bit
Below the big four revenues at best held steady. Ashurst’s neat leveraged finance team remained busy and kicked off its summer in 2009 with a role on the landmark secondary buyout of Wood McKenzie, bought by Charterhouse from Candover for £553m. Mark Vickers advised Lloyds, Bank of Scotland, HSBC and Nomura. It continued to be active in the upper mid-market and saw its turnover inch up from £63.2m to £67.4m.
Lovells, in its last year before merging with Hogan & Hartson, edged up by just £1m to £107m, mainly through restructuring work. Although the complex structured investment vehicle restructurings that occupied Lovells’ practice in 2008-09 tapered off, the firm was involved on the £3.5bn financial restructuring of Pearl Group, advising the senior syndicate banks. Lovells’ acquisition finance highlight was on Kraft’s e9.8bn hostile bid for Cadbury, where it had a subsidiary role advising Citibank, Deutsche Bank and HSBC on the English law aspects of the financing.
DLA Piper’s turnover of £81.3m yielded a low average revenue per partner of £753,000 – something new banking head Bob Charlton will be looking to improve, although his first priority is to cohese the national and Europe, Middle East and Asia practices. The firm’s trade, energy and project finance practice held up well, with work such as the Intercity Express fleet programme.
Table: TOP 15 FINANCE PERFORMANCES, 2009-2010 (Click image for full version)