Although many of Europe’s legal markets are suffering from a downturn in deal and transactional activity as a result of the ongoing global credit crunch, the change in Portugal is notable but not dramatic.
The slower speed of the Portuguese economy means that opportunities continue to exist for domestic and international investors, albeit not on a scale comparable to that seen in many other Western European countries. Portuguese firms are seeing less of a swing in deal activity, and notably so when compared with neighbouring Spain.
Jorge Bleck, head of corporate at Linklaters in Lisbon, says: “Two years ago Portugal saw two multibillion-euro deals – Sonaecom’s takeover attempt of Portugal Telecom and Millennium BCP’s bid for Banco BPI – but these were atypical of a market in which the majority of deals continue to be valued under e500m [£396.38m].”
The e11.9bn (£9.43bn) value of the Sonaecom bid alone was equal to the value of all other M&A deals in Portugal that year.
Nevertheless, in the face of increasing international investment competition from the new EU accession countries of Central and Eastern Europe, the Portuguese government has sought to enliven the domestic economy with the announcement of a series of largescale infrastructure schemes.
Four major road concessions programmes are now in progress, to which the government has already appointed public law specialists Sérvulo & Asociados and Jardim Sampaio Caldas & Associados as advisers.
Portugal is also seeing its first hospital PPP project, a e100m (£79.28m) 250-bed unit to be built at Cascais. Carlos Aguiar Ferreira de Lima & Associados is advising the sponsors, Linklaters is advising the financing bank Caixa Banco de Investimento, and Barrocas Sarmento & Neves represented the government. Next up is a 780-bed, e800m (£634.21m) hospital at Braga, where Linklaters is advising one of the bidding consortia, followed by a 280-bed facility at Vila Franca and another with 565 beds at Loures. A further eight hospitals are planned.
All eyes are now on the expected tender launch for the Rave high-speed rail link to be built between Lisbon and Pombal. A further extension to Porto is also planned, as is a connection from Lisbon to Madrid. The contracts for this e8.5bn (£6.74bn) PPP should be made public by the end of 2009.
Elsewhere, Lisbon’s new e4.9bn (£3.88bn) airport will now be built at Alcochete instead of Ota. A tender should be released in 2009 following a reassessment of the infrastructure requirements for the new site. Morais Leitão Galvão Teles Soares da Silva is advising the government on this build, finance, operate and transfer concession.
It is no surprise, then, that Portugal’s major law firms are trying to expand their public law capacity (encompassing planning, finance and administrative expertise). The most notable hire in recent months has been that of Bernado Diniz de Ayala and a team of lawyers from Sérvulo, who moved to the Lisbon office of Uría Menéndez – which lost its own public law team to Serra Lopes Cortes Martins last December.
Lawyers report, however, that the big opportunity for Portuguese law firms at the moment is the international expansion of their clients. Portuguese infrastructure, banking and construction companies are turning their attention abroad and winning contracts across Latin and North America as well as in Central and Eastern Europe.
Infrastructure company Brisa, for example, is currently part of a consortium bidding for the e1.3bn (£1.03bn) contract to rebuild the 36km North Tarrant Express, Trans-Texas Corridor TTC-35 toll road.
“The fact that we know the [Portuguese] clients, their risk profile, the soft-spots, the overall strategy and goals, the compliance requirements, for example, can make a significant difference in terms of ensuring a seamless transaction process, wherever they do business,” says João Vieira de Almeida, managing partner of Vieira de Almeida, which has advised Brisa, among others, internationally.
Meanwhile, Portugal’s energy companies EDP and Galp Energia are capitalising on the global demand for both renewable and hydrocarbon energy sources.
May saw EDP float 25 per cent of its renewables division, EDP Renováveis, for e1.8bn (£1.43bn) – the largest IPO in Europe this year. And in recent months it has also expanded into the US market, where its e1.5bn (£1.19bn) acquisition of Horizon Wind Energy makes it the third-largest Portuguese wind power operator.
In addition, Galp is among those oil and gas companies that are capitalising on the significant recent discoveries off the coast of Brazil – potentially the largest new offshore oil find in 30 years – as well as expanding into neighbouring Spain, where it has acquired Italian Agip’s and US Exxon Mobil’s outlets.
Indeed, the perception is that companies need to hedge against domestic difficulties by expanding internationally.
“We’ve seen our clients continue to expand abroad, more so in the past two years than ever before,” says Manuel Barrocas, partner at Barrocas Sarmento Neves.
Many see Brazil as a natural foreign outpost, where all the major Lisbon firms enjoy excellent links, but it is Africa where lawyers are capitalising most on the country’s colonial ties, and where they are increasingly regarded as the de facto entry route for international investors.
Firms such as PLMJ, Barrocas and Raposo Bernardo & Associados all have long-established Angolan and Mozambique joint ventures. Raposo Bernardo is also a prominent player in the other former colonies of Cape Verde, Guinea-Bissau and São Tomé e Príncipe.
A win-win situation for all, some suggest.
“If the economic events of the past year have shown us anything it’s that for every crisis, there’s an opportunity,” says Miguel Teixeira de Abreu, managing partner of Abreu Advogados.
Scott Appleton is contributing editor at Iberian Lawyer