Magic circle firm’s private equity crown slips as Latham ‘targets’ superclient Carlyle
Clifford Chance’s private equity (PE) team is looking somewhat depleted following a series of exits. The incoming global corporate chief – most likely to be partner Guy Norman following an uncontested election – will have a big job on his hands.
The departure of new-generation partner Kem Ihenacho last week for Latham & Watkins marks the eighth PE exit in five years – four of whom ended up at the US firm.
“The market knew Kem was considering going in the autumn,” one source claims. “He was going to go a few months ago and was persuaded to stay by Clifford Chance. Obviously things have changed.”
The funds team at Latham is taking the shape of a young Clifford Chance PE practice. It now houses former funds head David Walker, heavyweight Tom Evans as well as partner Nick Benson, who joined Latham after leaving for Weil Gotshal & Manges in 2011.
The US trend kicked off when Adam Signy defected in 2009 for Simpson Thacher & Bartlett, to be followed out the door by funds head Jason Glover in 2010. That was followed by the dramatic defection of trio Ed Gander, Nigel Clark and Benson to set up a new funds practice at Weil Gotshal in 2011 with tax specialist Jonathan Kandel.
Sources suggest the target for Latham has been PE firm Carlyle Group.
“What Latham has done with CC is very client-led,” says a source. “The Latham strategy was all about Carlyle.”
The PE house was a lucrative client for Clifford Chance, which advised it on between three and six deals annually between 2007 and 2012. Walker is understood to have led an average two a year for Carlyle as well as Equistone Partners.
Adding Ihenacho will only serve to bolster that relationship. As co-chair of the firm’s corporate Africa strategy, not only is he key to the new generation of partners taking over the Carlyle relationship but central to its dealings in new jurisdictions.
But what of other key clients? Despite the exits the firm has held on to some key relationships. The firm’s tie to CVC Capital Partners may have weakened briefly with former PE head James Baird’s retirement in 2011. Simpson Thacher also ate into the firm’s relationship with Kohlberg Kravis Roberts’ (KKR) with the hire of Signy.
Simpson Thacher had long been KKR’s adviser in the US and in 2010 passed over the magic circle firm on its £955m buyout of Pets at Home.
But Clifford Chance partner Brendan Moylan, who remains at the firm, swooped in to take up the PE giant’s acquisition of South Staffordshire Water and Cambridge Water.
The firm has held on to some key mandates with corporate partners stepping up to the plate and young guns coming through. Clients such as Permira are now the preserve of seasoned heavyweight Jonny Myers.
A source says: “[Myers] has been involved with a lot of the big clients for a long time.”
London corporate head Simon Tinkler is also keen to stress the re-emergence of erstwhile corporate top-dogs. Former London corporate chief David Pearson is back on full-time fee-earning.
“You lose a bit of Matthew but you gain a lot of David,” says Tinkler.
Partner Nigel Wellings is also heading back from the Middle East in the next 12 months and is ready to get to work.
In terms of the new guard, partner Amy Mahon looks after Equistone with Tinkler. Mahon, who re-joined Clifford Chance in 2008 after a stint at Macquarie, was intended as a key contact for Carlyle, CVC and Permira, and will now be a pivotal player in the team.
But sources say that the exits of key heavyweights will have a lasting impact on the firm, which is left with a lack of pure PE partners.
One says, “I don’t think there’s anyone within Clifford Chance who would say they don’t prize [PE]. It was always the golden part of the firm. But I think you reach a point where it’s like SJ Berwin, where the crown jewels have been weakened and weakened and people say ‘do we see them as a threat any more – do they still have the leading market position?’”
And that’s the killer question.