Simpson Thacher & Bartlett

Simpson Thacher blindsided most in the legal market when, as exclusively ­revealed in The Lawyer, in April this year it ­unveiled plans to open an office in Houston with the hire of Vinson & Elkins banking ­partner Robert Rabalais.


David Lieberman
David Lieberman

The move underlined ­Simpson’s ambitions of raising its profile in oil and gas circles, a sector in which it had been ­involved for decades but which the firm now believes requires an on-the-ground presence in the US oil and gas capital.

The move was particularly driven by key underwriting clients, such as: JPMorgan, which Simpson represented in connection with a $5bn ­revolving credit facility and $2bn debt offering for Anadarko Petroleum Corporation; Kohlberg Kravis Roberts (KKR), for which it acted on its investment in Hilcorp Energy Company’s ­development of oil and gas properties in South Texas; and Blackstone Energy Services.

As Simpson corporate partner and energy and infrastructure practice group chair David Lieberman told The Lawyer at the time, the move “made sense” for the New York firm in the context of a booming ­transactional energy market coupled with the firm’s banking and private equity client base.

“JPMorgan is one of Robert’s biggest clients and over the past several years it’s also been one of our top-three clients,” ­Lieberman said. “Strategically we think it’s a good opportunity for us to capture more work in the oil and gas space.”

The move certainly caught the attention of the market, ­although it has also caused some head-scratching among die-hard energy specialists.

“Simpson wouldn’t want to be [in Houston] on a large scale but they won’t want it to be a mail-drop of three guys either,” says one. “The challenge for the high-end New York or London firms with a PEP way above $2m is that it’s very hard to ­figure out what the gameplan is. There could be a similarly ­dilutive effect on profits if a firm opened up in Houston to opening up in Canada and ­Australia.”

Certainly the firm is unlikely to ’do a Latham’ and populate the office with a steady stream of laterals, a stark contrast in the two firms’ strategies. But there is no doubt that Simpson recognised the need to have ­increased credibility in the oil and gas sector, which means additional expertise.

Even its rivals would admit Simpson has more expertise in the energy sector now than it did five years ago, primarily as a result of what key clients such as KKR, Blackstone and the major investment banks are ­doing.

Simpson is also targeting the renewables sector, having ­advised on a string of major ­financings recently.

But it is in the power sector where Simpson has seen most activity over the past few months. This year’s role ­advising US-based PPL ­Corporation, a client since

But it is in the power sector where Simpson has seen most activity over the past few months. This year’s role ­advising US-based PPL ­Corporation, a client since
the 1920s, on its acquisition of E.on UK’s Central Networks electricity distribution business for around £3.5bn well reflects its approach to the global ­energy market.

For ’global energy market’ read top-tier M&A and ­financing mandates. Less than six months before the UK deal, a team led by Simpson capital markets head Vince Pagano, along with corporate partner Mario Ponce and banking ­partner James Cross, ­represented PPL on its
$7.63bn acquisition of E.on US, one of the largest-ever ­buyouts by a regulated entity.

While the latter deal takes the prize for sheer size, the UK deal underlined the solidity of ­Simpson’s relationships with its core clients, which, in PPL’s case, had been strengthened by the addition of UK M&A ­partner Adam Signy from ­Clifford Chance.

The likelihood is that without Signy, Simpson would not have picked up the English-law work on the deal – indeed, Simpson still looks a little skinny in terms of UK M&A capability and filling that out is understood to be a strategic priority.

The appetite for the investment that the New York firm made in Signy, and later on the funds side with Clifford Chance London head Jason Glover last summer, is also reflected in its decision to open in Houston this summer.

Star partners

David Lieberman, Vince Pagano, Robert Rabalais, Ken Wyman

Top three sectors

Oil and gas

Renewables

Electricity/power

Top three geographical regions

The US

China

Canada

Top deals/projects

Acquisitions for PPL including E.on UK’s Central Networks and E.on US

Client: PPL

Lead partners: Vince Pagano, James Cross, Adam Signy

Alta Wind, $1.2bn financing of four wind projects developed by Terra-Gen Power

Client: Lending banks

Lead partners: David Lieberman, Ken Wyman

KKR relationships with RPM Energy, Premier and Accelerated Oil Technologies

Client: KKR

Lead partner: Andrew Smith