The cream of the world’s M&A instructions do not necessarily flow from having a leading project finance capability, but as Freshfields Bruckhaus Deringer found to its cost, it is a specialism you ignore at your peril.
“If you’re not acting for energy companies on projects you risk losing the relationships, and though the work can be less remunerative, it’s a loss-leader,” says one rival partner. ”Freshfields cut back but now wants to be playing in that space again.”
All magic circle firms have reduced the size of their project teams in recent years due to a combination of PFI running out of steam, work becoming more commoditised and rates dropping. The financial crisis did not help either. But the market perception is that, of the four, Freshfields cut too deeply.
The firm clearly had the M&A brand to get it so far in terms of winning deals, while the energy group under Laurie McFadden has undoubted top-tier transactional resources at its disposal, but Freshfields needed to go back into the projects recruitment market after effectively dumping the practice in recent years.
Cue last year’s arrival of senior Allen & Overy (A&O) oil and gas project finance specialist Alan Rae Smith. Since his arrival, the banking partner has been pulling together Freshfields’ project finance capabilities around the globe.
That team includes finance partners Kent Rowey and Melissa Raciti-Knapp covering North and South America from New York. The Middle East remit is covered by Joe Huse, while Asia is down to Don Stokes and Robert Lonergan.
Other key lawyers include Tony Foster in Vietnam, Harnek Shoker in Bahrain and former private equity house Abraaj Capital executive director Pervez Akhtar, who the firm hired last year from magic circle rival A&O to be Middle East corporate head, with Rae Smith helping to bind it all together.
“The rationale is pretty simple,” says Rae Smith. ”Energy-based clients like Freshfields’ offering in areas like M&A, DR and antitrust but felt it was not as developed as it should be on the energy project finance side. Now it’s in the process of being built out.”
Why is that important? Because via project finance a firm’s wider practice gets the nuts and bolts of understanding a client’s business. And with the expected vast spend of the world’s leading energy companies in the coming years, it will pay to be close.
Freshfields has some way to go before its project finance capabilities match those of Linklaters, A&O or Clifford Chance, but its sector-focused approach is attractive to an increasing number of clients.
Since Rae Smith’s arrival Freshfields has displaced Linklaters on BG Group’s panel – appointed by his former A&O partner and current BG general counsel Graham Vinter – and, critically, picked up a place on BP’s panel this year.
Freshfields’ relationship with BP stretches back more than a decade but until recently this was more on the dispute resolution side. The firm handles large amounts of international arbitration for energy companies, which is not seen as a conflict as it tends to be opposite governments.
Around five years ago Freshfields started getting more corporate work from BP. The combination of new general counsel Rupert Bondy and a major incident equalled a panel place for Freshfields.
Freshfields is also making a big push into the African market. In collaboration with The Economist Intelligence Unit the firm produced a report to raise awareness of the potential risks as well as highlight the opportunities that Africa presents to the extractives industry.
New work includes advising Tullow Oil on its proposed acquisition of EO’s offshore Ghana interests; Eni on its proposed purchase of Heritage’s Ugandan interests; Petrofac on its purchase of a 15 per cent stake in Nigerian Seven Energy; and Amni on its portfolio of operations.
Freshfields also sells itself on its dispute-handling skills, launching a global investigations practice in 2010.
Alan Rae Smith, Laurie McFadden, Kent Rowey, Joe Huse, Sebastian Lawson
Top three sectors
Oil and gas
Mining and minerals
Top three geographical regions
Russia (and former Soviet republics)
Middle East and North Africa
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