Acquisition International November 2012 by AI Global Media

November 2012 / IN THIS ISSUE/

PINOVA CAPITAL

— Joern Pelzer, Partner at PINOVA Capital, gives Acquisition International some insight into the deconta GmbH investment. / 14

www. ACQUISITION-INTL .com

DEAL GURU:

FOREIGN DIRECT INVESTMENT:

POWERING THE FUTURE OF ENERGY:

The 10 Questions Management Teams Should Ask When Undertaking a Management Buy-Out A.I. Examines Current FDI Activity Around The World A.I. Speaks to Leading Professionals in The Industry For a Look at The Future of Energy.

DEALS OF THE YEAR 2012 Novum Capital acquires ES-Plastic Group — Martin Conder, Director and Chairman of Novum Capital Limited, discusses the ES-Plastic Acquisition. / 16 H.I.G. Europe Acquires the Specialty Alumina Business of Rio Tinto Group — Olivier Boyadjian, MD of H.I.G. Europe in France, gives Acquisition International a detailed look at the company and the ALTEO acquisition. / 17

CONTENTS:

November 2012

Editors Comment This month, it was confirmed that the Eurozone is officially in recession. Eurostat, the statistical office of the European Union, reported that GDP fell by 0.1% in the third quarter of the year, following the 0.2% contraction in the previous three months. This is the Eurozone’s second recession since the financial crisis began in 2008.

CONTENTS — November 2012

Professor Paul de Grauwe at the London School of Economics, commented: “We are now getting into a double dip recession which is entirely self-made. “It is a result of excessive austerity in southern countries and unwillingness in the north to do anything else. “Countries in the south have to reduce their deficits, but they cannot if those in the north with a surplus are not willing to help with stimulus. “This divide, even hostility, between countries is stronger than I have seen in the last 20 years. “The degree of austerity has now put so many people in terrible conditions that they reject all of this. That’s a very dangerous situation.” However, there is positive news in Europe, with the UK returning to growth in Q3 2012. Figures released by the Office for National Statistics show that the UK has emerged from double-dip recession with economic growth of 1% in the third quarter. “There is still a long way to go, but these figures show we are on the right track. This is another sign that the economy is healing and we have the right approach,” said George Osborne, Chancellor of the Exchequer. This month we begin our roundup of the deals of the year, highlighting the most significant transactions of 2012 – please turn to page 72 to read more. We also take a detailed look into foreign direct investment around the world, discuss the business environments in a variety of jurisdictions, and examine a number of sectors in detail. Enjoy the issue, Phil Grainger, Editor phil.grainger@acquisition-intl.com

How to get in touch AI welcomes news and views from it’s readers. Correspondence should be sent to; Address/ Acquisition International, Blakenhall Park, Barton under Needwood, Burton on Trent, DE13 8AJ. Tel/ 0844 809 4788 Email/ reception@acquisition-intl.com Website/ www.acquisition-intl.com Find us on/

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ON THE COVER PINOVA CAPITAL INVESTS IN DECONTA GMBH: /14

Joern Pelzer, Partner at PINOVA Capital, gives Acquisition International some insight into the private equity firm’s recent investment into deconta GmbH. NEWS: /04

The Latest News Stories From Around The World.

SECTOR TALK: /12 Private Equity-Backed Energy & Utilities Deals Powered by Prequin.

DEAL GURU: /18

The 10 Questions Management Teams Should Ask When Undertaking a Management Buy-Out

DEAL DIARY: /64 The Latest M&A From Around The World.

DEALS OF THE YEAR: /72

The Best Deals of The Last 12 Month’s

8/ Hedge Fund News 10/ Appointments 16/ Novum Capital acquires ES-Plastic Group 17/ H.I.G. Europe Acquires the Specialty Alumina Business of Rio Tinto Group 20/ Mergers and Acquisitions in South Africa Involving Foreign Companies Post WalmartMassmart Merger 21/ New Patent Review Procedures at the USPTO under the America Invents Act 22/ East Africa M&A 24/ Insurance Due Dilignce – An Overlooked Art 26/ Doing Business in Bulgaria 27/ Doing Business in Cyprus 28/ Doing Business in Israel 30/ Doing Business in Latin America 31/ Doing Business in London 33/ Doing Business in Scotland 34/ Doing Business in Georgia 36/ Doing Business in Turkey 38/ Forming Companies & Doing Business in Bangladesh 39/ Joint Ventures - the Philippines 40/ Capitalising on MENA Investment Opportunities 43/ International Trade: Mitigating Risk and Maximising Opportunity 44/ The Importance of Protecting Intellectual Property 46/ Foreign Direct Investment 53/ Business Valuation & Transaction Pricing in M&A 54/ Double Taxation Agreements 56/ FCPA Compliance: Mitigating Risk in M&A Transactions 57/ Secondary Buyouts – Still Booming 58/ The Risks of the Banking Industry 60/ Powering the Future of Energy 59/ Mapping Global Gender Equality 62/ Transfer Pricing Issues in Cross-Border M&A 63/ The Aviation Insurance Industry

November 2012 /

NEWS:

from around the world

UK Companies Struggle with “The Finance Growth Challenge” finds 2013 Salary Guide from Robert Half A twin speed job market has emerged over the past 12 months and will continue into 2013, finds the 2013 Robert Half Salary Guide. Highly skilled accounting and finance professionals remain in high demand despite more stagnant general job growth. The majority (78%) of UK CFOs say that it is challenging to find skilled financial professionals, and as a result organisations are paying more for the market’s brightest and best candidates. The shortage of strong candidates, together with the general slowdown in new hires, means that finance departments are generally being asked to do more with less: creating the finance growth challenge. Candidates who are particularly in demand include those with strong process analysis change management and project implementation skills as well as those commercially-aware accountants who can add value by performing business partnering functions throughout the business The move towards global financial reporting and regulation means that there is demand from certain companies for IFRS specialists to help prepare for

the January 2015 deadline. Candidates with previous experience in converting organisations from UK GAAP to IFRS can expect to command competitive salaries. Experience in systems implementation is also highly valued. Pension auto enrolment will create a new requirement for systems to be updated and for the finance department to partner with HR and payroll departments to ensure that organisations remain compliant with government legislation. Accountants who can conduct detailed financial and strategic analysis to help companies understand trends affecting the business, identify cost savings and ensure that their firm is well-placed for business expansion are particularly sought after. Up and coming talent is also in demand: companies are looking to the future and shaping their succession planning strategies. Companies are seeking newly qualified accountants with five or more years’ experience – especially for those with some industry experience outside of public practice.

Phil Sheridan, Managing Director, Robert Half UK said: “The hiring climate has evolved to address the finance growth challenge. While some companies lack the revenue growth needed to increase headcount, others cite lack of access to credit and working capital, which is stopping them from hiring the talent needed to commit to new ventures or expand operations. However, our research shows that business confidence has improved, with most CFOs saying that they are more confident in their companies’ growth prospects than last year. Finance professionals are benefitting from this optimism as companies look for additional insight and strategy into business process improvement, cost savings and new revenue sources. “Offering competitive compensation can help organisations attract top professionals and keep them on board. While pay is not the only factor employees consider, an attractive remuneration package can often be the difference between welcoming employees to your team and watching them accept job offers from competing organisations.”

Gresham study finds over 60% of firms are unable to reconcile financial transactions in real-time despite need to comply with new regulation Gresham Computing plc, a leading provider of transaction control solutions to international financial institutions, has announced the results of a recent survey exploring financial institution’s readiness for real-time reconciliation. Respondents to the survey include investment banks, inter-dealer brokers and buy-side firms in New York and London. New upcoming regulations such as Basel III and Dodd Frank are expected to result in additional reconciliations required between different systems – for example to ensure Margin calls from Central Counterparties are reconciled in real-time as there may only be a matter of minutes to deliver collateral to satisfy the margin call. Failure to do so may result in the wrong amount of collateral being delivered with consequent opportunity costs and increased manual workloads.

/ November 2012

Findings of the survey include: • 60% have not yet embarked on real-time reconciliation for any of their asset classes and do not expect to be in a position to move to realtime reconciliation by the end of 2013; • 89% of respondents encounter delays or problems when on-boarding new financial products and putting the necessary risk controls in place. • To overcome the on-boarding delays: o 43% are forced to bypass the main reconciliation system and set up work-arounds in Excel, Access and other similar applications; o 13% set a limit on the number of new products that can be created to avoid building too much of a backlog; o 19% simply add the new requests to their existing reconciliation backlog. • When asked about their state of readiness for intersystem reconciliation: o 44% said they are looking at this but are concerned there will be delays due to the limitations of their existing systems;

o 33% said they haven’t started looking at this and are not yet clear on the final requirements. “The findings of this survey are consistent with the conversations we’ve been having with banks and other financial institutions across the world. The vast majority are struggling to on-board new financial transactions in a timely and cost-effective way and many are still using work-arounds in Excel. New regulations are now putting them under pressure to put in place enterprise-grade solutions that allow rapid on-boarding of new financial products as well as real-time reconciliation,” said Neil Vernon, Development Director, Gresham Computing. He added: “Our understanding of this issue has allowed us to prioritise support for rapid on boarding over the last year – so that Gresham’s CTC solution can on-board new reconciliations in minutes not hours or days, within the framework of a modern reconciliation solution that is enterpriseready.”

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NEWS:

from around the world

European Central Bank publishes report on the access to finance of SMEs in the euro area The European Central Bank (ECB) is has published its seventh report on the results of the “Survey on the access to finance of small and medium-sized enterprises (SMEs) in the euro area”. This survey round was conducted between 3 September and 11 October 2012, covering a sample of 7,514 firms in the euro area. The report mainly provides evidence on changes in the financial situation, financing needs and access to financing of SMEs in the euro area, compared with large firms, during the preceding six months (i.e. from April to September 2012). In addition, it provides an

overview of developments in SMEs’ access to finance across euro area countries. Between April and September 2012, euro area SMEs reported a somewhat lower net percentage change in external financing needs compared with the previous survey (5%, compared with 8%). At the same time, the survey results show that access to bank loans continued to deteriorate; on balance, firms reported a worsening in the availability of bank loans (-22%, compared with -20% in the previous survey round). Moreover, the survey results point to somewhat higher rejection rates when applying for a

loan (15%, up from 13%). Meanwhile, the percentage of respondents reporting access to finance as their main problem remained broadly unchanged (18%, compared with 17%). The survey was developed together with the European Commission. A joint ECB/European Commission survey round is conducted every two years. This particular round was organised exclusively by the ECB, which repeats a part of the survey every six months in order to assess the latest developments in financing conditions for firms in the euro area.

US Institutional Equities Trading is on the Cusp of Restructuring Institutional equities trading in the US is about to be restructured, says TABB Group in “Institutional Equity Trading 2012/13: The Paradox of a New Paradigm,” its eighth annual benchmark study. TABB believes 2013 will be characterised by a new institutional investment landscape where both buy-side firms and sell-side brokers will be focused on restructuring their businesses. Success among brokers will depend on their ability to maintain client trust as they manage the conflicting elements of servicing the industry with limited resources. At stake is striking a balance between relationships and profitability, liquidity and anonymity and expertise and efficiency.

“The most-valued features such as anonymity and expertise stand to be compromised as the sell side will be forced to explore new ways to do more with less,” says Cheyenne Morgan, a TABB research analyst who produced the study with Miranda Mizen, director of equity research. “Maintaining client trust while consolidating multiple roles into a singletouch point will no doubt prove challenging but is a must in today’s environment,” says Morgan, “this at a time when buy-side traders are openly concerned with facing market quality issues, shrinking commissions and low equity volumes.” Buy-side traders tell TABB that they have been preparing for the 2013 slowdown by shortening

broker lists, having difficult conversations with their brokers and addressing which sell-side services they’ll need and how they’ll pay for them. TABB spoke with 66 head traders at US institutional equity management firms managing an aggregate $15 trillion in AUM. Interviews were conducted during August and September 2012. Discussions covered the cumulative impact of declining volumes and commission wallets; adjustments to order allocation; the value of the high- and low-touch trading channels; potential changes to broker coverage models; views on today’s market structure; algorithmic providers and product needs; and block trading and risk requirements.

Higher inflation creates risks for UK recovery prospects, says BCC Commenting on the inflation figures for October 2012, published by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: “The larger than expected inflation increase was mainly due to higher university tuition fees and upward contributions from food, non-alcoholic drinks and transport. With higher utility prices now in the pipeline, it is possible that annual consumer

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price inflation will rise again above 3% in the next few months, before falling during 2013.

from low inflation could be one of the main factors for underpinning domestic demand in 2013.

“Higher inflation is unwelcome news for the UK economy at a time when the government is persevering with its tough austerity plan. In the face of major economic challenges, there is only limited scope for the UK to rebalance towards exports and investment over the next year. In these circumstances, the boost to real incomes resulting

“We believe that the Bank of England should not use additional QE to limit expected falls in inflation over the coming months. Even if it falls temporarily below the 2% target in 2013, this should not be resisted. Instead, the MPC and the government should concentrate on measures that support growth directly and boost lending to businesses.”

November 2012 /

NEWS:

from around the world

AXA Private Equity opens Beijing office Olympic Stadium / Beijing, China Natchapon L. / Shutterstock.com

AXA Private Equity, the leading diversified private equity firm, has opened a new office in Beijing, the firm’s first in China. The move will boost the firm’s presence in Asia as it continues its international growth strategy. AXA Private Equity opened its first Asian office in Singapore in 2005 and has since deployed US$1.3 billion of capital across the region. The firm now has a total of 10 offices across Europe, North America and Asia. The opening of the Beijing office forms an important part of AXA Private Equity’s international development strategy, as Beijing has become an increasingly active commercial and financial hub in the Asia region. The Beijing office will allow the firm to strengthen its relationships with key private equity market players and the business community in Asia. With the increasing level of transactions between Chinese and European companies, a strong presence in the Chinese market is essential for the successful development of AXA Private Equity’s overall growth strategy and its portfolio companies. The firm also sees attractive partnership opportunities with Chinese companies, with Europe having become one of the most important global economic and M&A regions. With its global reach and diverse European portfolio of companies, AXA Private Equity can play a critical role in initiating synergies between businesses from multiple regions internationally.

/ November 2012

AXA Private Equity’s Beijing office will be headed by Jenhao Han, Managing Director and Head of AXA Private Equity Asia. He will be supported by three investment professionals with significant knowledge of the Asian market: Won Ha, Jason Yao, and Colin Wang, all of whom were previously based in AXA Private Equity’s Singapore office. Dominique Senequier, CEO, AXA Private Equity, said: “Despite the ongoing economic uncertainty, we continue to look to the future with our new Beijing office. Our increasing global visibility and ability to attract new investors from Asia, America, Europe and the Middle East, ideally positions us to further capitalize on the significant opportunities for our investors and portfolio companies in China.” Jenhao Han, who has been at AXA Private Equity since 2006, added: “Having a presence in China means we can now further develop our relationships with our Asian counterparties, while increasing our ability to take advantage of the best investment opportunities in the region. A physical presence in China will enable the team to identify synergies between European and Asian portfolios and gain access to more co-investment opportunities. This is an exciting prospect for us.” The launch of the Beijing office continues a successful year for AXA Private Equity. In June the firm secured

its global market-leading Fund of Funds position with the raising of US$8 billion from its Secondary Fund V and commitments from its early-secondary V and primary funds. On the direct side the firm has executed a string of significant transactions in recent months, including the acquisitions of Fives in France, Riemser Arzneimittel in Germany and Novotema in Italy. ABOUT AXA PRIVATE EQUITY AXA Private Equity is a world leader in private equity, with assets of $30 billion managed or advised in Europe, North America and Asia. The company offers its investors a wide choice of funds covering the full range of asset classes: Funds of Funds (primary, early secondary and secondary), Direct Funds including Infrastructure, Small and Mid Market Enterprise Capital, Innovation & Growth, Co-Investment and Private Debt. With offices in Beijing, Frankfurt, London, Luxembourg, Milan, New York, Paris, Singapore, Vienna and Zurich, AXA Private Equity is committed to supporting companies in their long term growth by providing access to its international network. AXA Private Equity sets great store by the regularity and quality of its reporting on the performance of its funds and the performance of the companies in its portfolio, as a service to its investors.

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FUND NEWS:

from around the world

Advent International raises €8.5 billion ($10.8 billion) global private equity fund Advent International, one of the world’s leading firms dedicated solely to private equity, has completed fundraising for Advent International GPE VII Limited Partnership (“Advent GPE VII” or “Fund VII”), with total subscriptions of €8.5 billion ($10.8 billion). The new fund will pursue the same successful strategy as Advent’s six prior GPE funds – partnering with management teams to enable business transformation through revenue and earnings growth. Advent GPE VII will focus primarily on the developed markets of North America and Western Europe and selectively on other global markets. “We are very pleased with the strong reception that Advent GPE VII has received in a highly competitive and demanding private equity fundraising environment,” said David Mussafer, an

Advent managing partner. “Our success is the result of our partnership approach, singular focus on private equity and the hard work of our investment professionals, management teams, operating partners and loyal limited partners.” Advent GPE VII is believed to be the largest buyout fund launched and raised since the start of the financial crisis in September 2008.1 The fund, which launched officially in March 2012, was heavily subscribed by existing investors and also received commitments from a select number of new limited partners, resulting in a broad, well-diversified investor base. “We believe that the current investment environment favors our approach of embracing complexity and applying our industry knowledge

to drive transformation and returns at our portfolio companies,” said Ralf Huep, a general manager at Advent. “Advent GPE VII is already actively investing and we are seeing a number of opportunities that we think will benefit from Advent’s investment approach. As with prior GPE funds, Fund VII has a flexible mandate and will dynamically allocate capital across a variety of deal types and sizes.” Advent has closed one investment through Fund VII – Serta & Simmons Bedding, comprising two of the world’s leading mattress manufacturers – and has agreed to invest in two other businesses – KMD, one of Denmark’s leading IT services and software companies, and Cytec Industries’ Coating Resins business.

Global funds under management reach $84 trillion Conventional assets under management of the global fund management industry climbed by 5% in the first nine months of 2012 to a record $84.1 trillion, some 13% above the pre-crisis peak.

under management, according to the Report. The UK is the second largest centre in the world, and by far the largest in Europe, with 8% of the total, closely followed by Japan.

According to the 2012 edition of TheCityUK’s Fund Management Report, which is sponsored by Cannon Place, funds are likely to reach $85.2 trillion by the end of the year.

Raquel Hughes, Strategy Director at TheCityUK, commented: “On the whole, the global fund management industry has recovered quickly from the sharp fall in assets under management that occurred at the outset of the credit crisis. Most of this recovery has come from market performance rather than new inflows.

Pension assets account for nearly 40% of total funds, with the remainder split almost equally between mutual and insurance funds. Together with alternative assets and funds of wealthy individuals, total assets of the global fund management industry are around $120 trillion. The US remains by far the biggest source of funds, accounting for nearly a half of all conventional assets

“We have found that the longer term effects of the economic slowdown include more cautious investment strategies and more diversification across asset classes and geographical regions. There is also a worldwide trend for fund managers to operate independently of banks and insurance companies.”

The UK fund management industry was responsible for a record £5.1 trillion of funds at the end of 2011. This was up 5% during the year and follows double digit growth in the two previous years. TheCityUK estimates that UK funds under management increased by a further 4% in the first nine months of 2012, with the full year increase likely to reach around 5%. Over a third of UK funds, or some £1.9 trillion, came from overseas clients, a higher proportion than in most other countries. Foreign firms operating in the UK manage more than a half of UK funds. London is central to the UK’s strong international position. Other large fund management centres include Edinburgh, Liverpool, Glasgow, Aberdeen and Manchester. Fund management generated a UK trade surplus of some £4.3bn in 2011. The sector accounts for around 1% of UK GDP and employees some 60,000 people.

Institutional Investors Active in CTA Funds Have More than Doubled Since 2008 There are now 713 global institutional investors with an active CTA portfolio, a significant increase on 2011, when the number stood at 504, and 2008, when just 331 had CTA funds in their holdings. Preqin has conducted in-depth analysis of the CTA industry using its market leading Hedge Fund Investor Profiles database and newly launched Hedge Fund Analyst product.

/ November 2012

Other Key Facts: • 42% of funds of funds invest in CTAs. Public pension funds also show a strong appetite for CTA vehicles, with 25% having a preference for such funds. • 1,298 funds pursue a managed futures theme, with 62% managed from North America, 32% from Europe and 6% from Asia and Rest of World.

• The largest number of CTA launches was noted in 2011. 165 managed futures programs tracked by Preqin were launched last year. Spikes in CTA launches tend to follow years of positive performance for the industry, with large increases witnessed in 2004 (after producing returns of 27.19% in 2003) and 2009 (after posting returns of 19.11% in 2008).

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FUND NEWS:

from around the world

• CTAs have returned 2.00% YTD and 0.35% annualized over the last 12 months compared to 6.32% and 8.02% respectively for the wider hedge fund industry. • Despite muted performance over the past couple of years, CTAs have proven themselves strong performers over longer time frames (posting returns of 8.98% annualized over five years compared to 6.35% returned annually by hedge funds over the same time frame).

• CTA returns also exhibit neutral or negative correlation to equity market returns, as monitored by the S&P 500, and have proven to be good sources of “crisis alpha” in periods where both hedge funds and the wider equity markets are performing negatively. “CTA/managed futures have often been regarded as an “all-weather” investment choice, with historical performance characteristics that make the strategy highly relevant during periods of relatively low returns

and generally rising asset class correlations,” said Amy Bensted, Head of Hedge Fund Products. “Year on year, more investors are adding CTAs to their portfolios of alternative asset funds in order to tap into this diversified liquid source of alpha. Correspondingly, more managed futures vehicles are being launched in order to cater to the growing interest in the strategy. Despite recent disappointing performance by CTA vehicles, investor interest in the strategy continues unabated with 14% of fund searches initiated in October 2012 including a managed future mandate.”

Nationwide adds four managed volatility funds to core VA line-up As financial advisors continue to seek ways to help clients mitigate risk in a volatile market, Nationwide Financial has added four new managed volatility funds to its core VA line-up. Additionally, the company will add three fund options for its guaranteed lifetime withdrawal benefit, The Nationwide Lifetime Income Rider® (Nationwide L.inc). These options can provide increased equity exposure, including one managed volatility fund. “After experiencing the economic turbulence of the past several years, clients are looking to advisors to provide protection against severe downturns, while maintaining the ability to take advantage of market gains,” said Eric Henderson, senior vice president of Annuities and Life Insurance for Nationwide Financial. “The addition of new managed volatility funds to our core VA product line-up provides more tools to help advisors address this challenge.”

New funds for Nationwide’s core VA line-up include: - American Funds Insurance Series® Protected Asset Allocation FundSM - TOPSTM Protected Balanced ETF Portfolio - TOPSTM Protected Moderate Growth ETF Portfolio - TOPSTM Protected Growth ETF Portfolio New Funds for L.inc The American Funds Insurance Series Protected Asset Allocation Fund will also be available as a Nationwide L.inc investment option. When selected with Nationwide L.inc, the Protected Asset Allocation Fund can offer additional protection from market risk and increases equity exposure to a 60/40 target (ranging from 40 to 80 percent). Additionally, a Nationwide VA with Nationwide L.inc offers a 7 percent simple interest roll-up on the original income

benefit base and a 5 percent payout if withdrawals begin at age 65. Nationwide Financial will also add two non-managed volatility funds back to the Nationwide L.inc investment option line-up. Both offer 60/40 equity exposure: - NVIT Cardinal Moderate Fund - NVIT Investor Destination Moderate Fund

“With some investors becoming more cautiously optimistic, the addition of the American Funds IS Protected Asset Allocation Fund for our Nationwide L.inc rider can help advisors give clients peace of mind with enhanced access to the equity market,” Henderson said.

Pyxis Capital Launches Pyxis iBoxx Senior Loan ETF Pyxis Capital, L.P. has launched the Pyxis iBoxx Senior Loan ETF, a low-cost exchange traded fund that provides investors with access to bank loan investments. Trading has begun on the New York Stock Exchange. The Pyxis iBoxx Senior Loan ETF is the only ETF to track the Markit iBoxx USD Liquid Leveraged Loan Index, a measure of the broad loan market comprised of 100 of the most liquid, tradable leveraged loans as identified by Markit’s Loans Liquidity service. “This is an exciting expansion of our family of iBoxx indices,” said Armins Rusis, Managing Director and

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Co-Head of Information at Markit. “The iBoxx USD Liquid Leveraged Loan Index focuses on the most actively-traded segment of the market and is the only benchmark that incorporates up-to-date loan reference and transaction information from Markit Loan Data, and high-quality valuations from Markit Loan Pricing, making it uniquely-suited for ETF construction.” The fund’s floating rate design typically re-prices rates every 90 days, reducing duration risk and protecting against inflation risk. “In this time of extremely low interest rates, we believe the Pyxis iBoxx Senior Loan ETF is wellpositioned to serve investors who are looking for

income, but don’t want to take on too much risk,” said Pyxis President Brad Ross. “Senior secured bank loans are a defensive asset class with the potential to pay a higher yield.” The fund also builds on the strengths of Highland Capital, one of the largest and most experienced global alternative credit managers. Pyxis, which spun off from Highland earlier this year, tapped Highland’s expertise in the development of the Pyxis iBoxx Senior Loan ETF. “We believe investors will benefit from the institutional expertise and heft that Highland holds in the bank loan and credit universe,” said Mr. Ross.

November 2012 /

APPOINTMENTS:

from around the world

New Head of Portfolio for Business Growth Fund Business Growth Fund (“BGF”), established to help the UK’s fast growing smaller and medium sized businesses, has appointed John Swarbrick as its Head of Portfolio. He will be joining immediately to play a key role in overseeing BGF’s rapidly growing portfolio of high growth entrepreneurial businesses. Stephen Welton, Chief Executive of BGF said: “We are delighted that John is joining BGF. He brings with him a wealth of experience from his 15 years with LDC, a firm with a great and long-standing track record of successfully investing in the UK, and from his time in industry before that. “This appointment completes our senior team and as the pace of our new investment activity continues to increase, we will have further resource available to make positive contributions to our investee companies as they grow and flourish. The ability to support our portfolio companies with additional

investment over the longer term is an integral part of BGF’s approach, and key to help build the bigger British businesses of tomorrow.” John has a strong track record of investing in the UK mid-market and, over the course of his career, has sat on a wide variety of SME boards. Prior to joining LDC and heading up its Leeds office, he was finance director of a private equity backed textile group. John began his career as a corporate finance advisor with PwC. The appointment has been made with the full support of John’s current employers, LDC. He will continue working for LDC in a part time capacity until the end of 2013, supporting John Garner who has been appointed as LDC’s new director in charge of its Leeds Office. He will also retain responsibility for a number of LDC’s investments in Yorkshire and the North East.

John Swarbrick commented: “I am delighted to be joining BGF at this exciting time. Stephen and his team have created a superb business, which has achieved tremendous momentum in a short space of time. We anticipate that this rapid growth will continue and there will be plenty of work to do to provide the level of support that BGF backed businesses deserve. “The transitional arrangements that LDC has agreed are testament to the relationship based approach upon which we pride ourselves. “I think both LDC and BGF have strong futures ahead and their collective commitment to the regional markets is central to their current and future successes. I am proud to be associated with both organisations and delighted to continue to be working with entrepreneurial businesses that are looking to grow over the next five to ten years.”

Menzies Business Recovery appoints new director Menzies Business Recovery LLP (MBR) the recovery and insolvency arm of accountancy firm Menzies LLP, has appointed Robert Pick as director. Robert has extensive experience working on high profile receiverships and administrations across a number of sectors, particularly in property and healthcare. He joins Menzies from a boutique corporate recovery practice, prior to which he was a partner at Grant Thornton, having joined that firm in 1994.

At MBR, Robert will focus on small and medium enterprises (SMEs) and owner managed businesses (OMBs) in distress. Robert will assist directors and companies in identifying issues and implementing decisive solutions to achieve restructuring, recovery or refinancing. In cases where creditors are looking to take enforcement action Robert will use his skills to secure the best possible outcome in a straight-forward and

cost-effective manner impressing upon businesses the correct actions they must take to fulfil their legal responsibilities. Simon Underwood, managing partner at MBR said: “Robert has developed a wealth of experience that makes him a perfect fit to strengthen the team’s existing expertise in the SME and OMB sectors. With this appointment, MBR demonstrates its commitment to expanding the value and scope of our service.”

Schulte Roth & Zabel Announces Expansion of Regulatory & Compliance Practice with Addition of Brian Daly Brian T. Daly has joined Schulte Roth & Zabel as a partner the firm’s Investment Management and Regulatory & Compliance groups. Resident in the firm’s New York office, Mr. Daly concentrates on advising hedge and private equity fund managers on regulatory, compliance and operational matters, including registration and disclosure obligations, trading issues, advertising and marketing, and the establishment of compliance programs. Mr. Daly joins the firm after nearly a decade serving inhouse as general counsel and chief compliance officer at several prominent hedge fund firms. He most recently was with Kepos Capital LP, which he joined in early

2010 as a founding partner. Previously, he served as the principal legal counsel and compliance officer for Raptor Capital Management LP and Carlyle-Blue Wave Partners Management, LP, joining both firms at inception. Mr. Daly began his in-house career at Millennium Partners, L.P., where he became general counsel. “Having worked with Brian as a client of the firm, we have first-hand experience of his knowledge and expertise,” said Marc Elovitz, chair of Schulte Roth & Zabel’s Regulatory & Compliance group. “Brian’s legal insight and industry experience will prove invaluable to our clients as regulatory requirements grow in number and complexity.”

Commenting on joining the firm, Mr. Daly said, “This is an opportune time to focus on regulatory issues in the private fund industry. I am very excited to join SRZ’s Regulatory & Compliance team and help guide our clients.” “We are delighted to expand our market-leading regulatory and compliance practice,” added Alan Waldenberg, chair of the firm’s Executive Committee and chair of the Tax Group. “There has never been a time that our services in this area have been more important to our clients.”

APPOINTMENTS:

from around the world

Principal Global Investors Announces New Head of Emerging Market Equities Principal Global Investors, LLC, a leading global asset manager and a member of the Principal Financial Group®, has named Mihail Dobrinov as head of the emerging market equities team. In this role, Dobrinov is responsible for the management of $9.3 billion in assets, including portfolio management of the $1.62 billion Principal International Emerging Markets fund and $1.8 billion in Asian regional mandates. “We are pleased to announce Mihail as the new lead of the emerging market equities team,” said Barb McKenzie, executive director - chief operating officer at Principal Global Investors. “He is ideally suited to this new role, with 17 years of emerging markets investment experience with Principal Global

Investors. He remains well versed in our time-tested, globally integrated investment process and research platform.” Dobrinov joined Principal Global Investors in 1995 as an international and emerging market debt and currency specialist. He joined the equities team in 2002 and has served as a portfolio manager for emerging markets equities since 2007. He replaces Michael Reynal, who has left Principal Global Investors, in this role. For the last several years, Dobrinov and Reynal have been co-portfolio managers on most of the assets managed by the emerging market equities team, and Dobrinov continues in that capacity. Principal Global Investors has been managing emerging market equities since 1987 as part of its

International Equity strategy, and began managing a dedicated Emerging Markets Equity strategy in 1995. Since then, the firm has developed a suite of complementary emerging markets and regional Asian equity strategies. The Principal has asset management functions in key emerging markets around the globe, including China, Brazil and India. “Mihail’s familiarity with our proprietary Global Research Platform and globally integrated investment process make him a unique fit to take the lead on our emerging market equities team,” said Mustafa Sagun, chief investment officer, equities, at Principal Global Investors. “We’re confident Mihail’s leadership and experience will prove an excellent fit in his new role.”

Dechert Boosts Luxembourg and Pan-European Financial Services Practice with Partner Hire Patrick Goebel has joined Dechert LLP’s financial services and investment management group as a partner in Luxembourg. Goebel was previously with Allen & Overy LLP. “We believe we have the leading financial services practice worldwide, with unrivalled strength and depth across the United States, Europe, Asia and the Middle East. In Europe specifically, we remain unique among law firms in having a presence on the ground in London, Dublin and Luxembourg, Europe’s three key funds jurisdictions. Patrick joining us further strengthens our Luxembourg offering,” said Peter Astleford, co-head of Dechert’s global financial services practice.

Goebel advises on all types of retail and private Luxembourg investment vehicles including UCITS, private equity funds, hedge and other alternative investment funds, real estate funds and funds investing in a variety of non-financial assets. Before joining Allen & Overy Luxembourg, Goebel had been with Banque Générale du Luxembourg SA since 1999 (today BGL BNP Paribas) where his last position was as head of fund engineering within prime fund solutions. “Patrick is a highly regarded and dynamic lawyer in the Luxembourg financial services investment funds space. I’m delighted to welcome him to the firm,” said Marc Seimetz, managing partner of Dechert Luxembourg.

His arrival is the latest in a series of partner additions and expansions for Dechert’s European financial services practice. In January 2012, the firm announced the opening of its Frankfurt office, which is headed by leading funds lawyer Achim Pütz. Two additional prominent financial services lawyers, Carsten Fischer and Benedikt Weiser, have since joined Dechert in Frankfurt. “I am excited at the opportunity to join Dechert’s preeminent international investment funds practice and to be part of its growing presence in the Luxembourg market. No other firm comes close to offering a more compelling platform for my practice,” Goebel said.

Twelve Capital appoints Andrew Townend and Bruno Müller Twelve Capital has appointed Andrew Townend as a Partner and Bruno Müller as Chief Operating Officer, strengthening its risk analysis capabilities and operations management.

Agricole CIB as Senior Credit Officer for insurance counterparties in the UK and Nordic region. Andrew holds a Masters degree in Finance and Investment and an MBA, both from Cass Business School, London.

Andrew Townend joins from Swiss Re where he managed credit risk in structured reinsurance contracts with clients world-wide. His main responsibilities at Twelve Capital will be credit assessment of companies issuing bonds with potential for inclusion in the Insurance Bond Funds and Portfolio Management of those funds. Prior to joining Swiss Re in 2007, Andrew spent four years at JP Morgan working on credit analysis supporting derivatives transactions with counterparties in the EMEA region, and later 3 years with Credit

Bruno Müller joins from Clariden Leu, where he was responsible for Product Finance & Controlling within Asset Management. Prior to joining Clariden Leu, Bruno spent 12 years at Credit Suisse Asset Management where he held various positions along the entire value chain of asset management, and later 3 years at Bank Leu as Head of Product Management. His main responsibilities at Twelve Capital will be Finance and Operations. Bruno holds a Master of Science in Psychology from University of Zurich

and is a Certified EFFAS Financial Analyst and a Chartered Alternative Investment Analyst (CAIA). Urs Ramseier, Chairman of Twelve Capital, said “We are delighted that Andrew and Bruno have chosen to join us. Andrew brings with him many years of specialist experience in credit risk analysis for the insurance market and Bruno adds great strength to our finance and operations function, further enhancing the quality of the service we offer our clients. With the addition of these professionals to our team we substantially augment our credit risk analysis capabilities and further develop our operations infrastructure, leaving us well positioned to continue our current strong growth well into the future.

SECTOR TALK:

Private Equity-Backed Materials Deals

Private Equity-Backed Energy & Utilities Deals

â&#x20AC;&#x201D; Powered by l In the period 2006 to present, the energy and utilities sector, which includes companies operating in energy, oil & gas, power and utilities, has witnessed over 800 deals globally valued at a total of just over $200bn.

No. of Deals

Aggregate Value of Deals ($bn)

70.0

60.0

50.0

40.0

40 30.0

20.0

55 56 75 73 59 53 37 61 49 70 59 68 72 51

7.5 41.5 62.0 11.8 14.0 5.2 2.2 5.6 5.1 4.5 13.1 11.5 15.0 6.6

95 35 18

61 34 17

54 27 17

63 37 19

78 34 15

81 21 21

Breakdown of Private Equity-Backed Energy & Utilities Deals by Region: 2006 - 2012 YTD (As of 8 November 2012) Region

0.0

Aggregate Deal Value ($bn)

In terms of the aggregate value of private equity-backed buyout deals in the sector, global activity peaked in the first half of 2007, with total deals in this period valued at over $60bn. In stark contrast, the aggregate value of private equity-backed buyout deals in H1 2009 reached just over $2bn. As well as seeing the highest global aggregate value of deals, H1 2007 also saw the highest number of deals, with 75 deals announced in this period compared to 37 in H1 2009. After the H1 2007 peak of $62bn, the aggregate value of deals fell sharply to around $12bn in H2 2007, although there were just two fewer deals in this period than in H1 2007. From H2 2008 through to the end of 2010, the aggregate half year deal value barely topped $5bn, although there were periods of high volumes of deals in the energy and utilities sector, most notably in H2 2010 which saw 70 deals valued at only $4.5bn. The global aggregate value of private equity-backed energy and utilities deals has seen a recovery in the past two years, with the half year aggregate amount averaging $13.2bn since the beginning of 2011, compared to an average of just $4.4bn across 2009 and 2010.

2006 2007 2008 2009 2010 2011 2012 YTD

North America 79 Europe 21 Asia & ROW 11

10.0

Number of Deals

Number of Private Equity-Backed Energy & Utilities Deals by Region: 2006 - 2012 YTD (As of 8 November 2012) Region

2006 2007 2008 2009 2010 2011 2012 YTD

On a region by region basis, North America has seen the most private equitybacked buyout deals in the energy and utilities sector every year since 2006. In 2006, 71% of the number of deals globally occurred in North America, with Europe witnessing 19% of the global number of deals and the remaining 10% occurring in the Asia and Rest of World region. The number of deals in North America as a proportion of the global number of deals fell to its lowest point in 2010, with 53% of deals focused on this region. It is interesting to note that this was not due to a surge in the number of deals in either Europe or Asia and Rest of World, but rather as a result of a drop in deal volume in North America, from a peak of 95 in 2007 to just 54 in 2009.

Breakdown of Private Equity-Backed Energy & Utilities Deals by Region: 2006 - 2012 YTD (As of 8 November 2012) 100% 90% 80% Proportion of Total

H1 2006 H2 2006 H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 H1 2011 H2 2011 H1 2012 H2 2012 ytd

10% 19%

70%

12%

15%

17%

16%

30%

28%

31%

54%

55%

53%

2009

2010

24%

/ November 2012

54% 30% 15%

55% 53% 28% 31% 17% 16%

61% 27% 12%

66% 17% 17%

12%

17%

27%

17%

61%

66%

2011

2012 YTD

60% 50% 40% 30%

71%

64%

20%

North America 71% 64% Europe 19% 24% Asia & ROW 10% 12%

Aggregate Deal Value ($bn)

Period

Number and Aggregate Value of Private Equity-Backed Energy & Utilities Buyouts Globally: H1 2006 - H2 2012 (As of 8 November 2012)

Number of Deals

Number and Aggregate Value of Private Equity-Backed Energy & Utilities Buyouts Globally: H1 2006 - H2 2012 (As of 8 November 2012)

10% 0% 2006

2007

2008

North America

Europe

Asia & Rest of World

ACQUISITION INTERNATIONAL

SECTOR TALK:

Private Equity-Backed Materials Deals

Aggregate Value of Private Equity-Backed Energy & Utilities Deals by Region ($bn): 2006 - 2012 YTD (As of 8 November 2012) Region

The volume of deals in Europe and Asia and Rest of World has fluctuated less, with 2007 figures of 35 and 18, and 2009 volumes of 27 and 17, respectively. Also in 2010, the number of energy and utilities deals in Europe as a proportion of the global total reached its highest point at 31%. In recent years the North American energy and utilities sector has seen a recovery in the volume private equity-backed buyout deals, with two thirds of the global number of deals occurring in this region in 2012 to date, and the remaining third split equally between Europe and Asia and Rest of World.

2006 2007 2008 2009 2010 2011 2012 YTD

North America 36.1 Europe 11.1 Asia & ROW 1.9

60 11.7 2.1

8.7 9.5 1.0

5.2 1.3 1.3

6.9 1.1 1.7

18.2 3.7 2.7

An analysis of private equity-backed energy and utilities deals shows that the most common type of investment is leveraged buyouts, with 47% of the number of deals and 58% of their total aggregate value falling under this classification in 2012 to date.

16.7 2.6 2.3

Number and Aggregate Value of Private Equity-Backed Energy & Utilities Deals by Type: 2012 YTD (As of 8 November 2012) Type

No. of Deals

Aggregate Deal Value ($bn)

Buyout Add-on Growth Capital Public to Private

58 25 30 10

12.6 1.3 4.9 2.8

Growth capital deals have accounted for just under a quarter of the amount and aggregate value of private equity-backed buyout deals, while public to private investments have accounted for 13% of private equity-backed buyout deals in the energy and utilities sector in 2012, despite comprising just 8% of the number of deals. The remaining 20% of the number of deals and 6% of their global aggregate value falls into the add-on category. The largest private equity-backed buyout in the energy and utilities sector this year occurred in February, with the acquisition of El Paso Corporationâ&#x20AC;&#x2122;s oil and natural gas exploration and production assets. The deal, which was valued at $7.15bn and ranks as the fourth largest private equity-backed buyout deal in the sector from 2006 to present, was backed by a consortium of investors including Apollo Global Management, Riverstone Holdings, Access Industries and Korea National Oil Corporation.

Breakdown of Private Equity-Backed Energy & Utilities Deals by Type: 2012 YTD (As of 8 November 2012)

Buyout Add-on Growth Capital Public to Private

No. of Deals 47% 20% 24% 8%

Aggregate Deal Value

100%

13%

90% 80%

24%

23%

70% Proportion of Total

Type

Breakdown of Private Equity-Backed Energy & Utilities Deals by Type: 2012 YTD (As of 8 November 2012)

58% 6% 23% 13%

60%

20%

50% 40% 30% 20%

58% 47%

10% 0% Number of Deals Buyout

Aggregate Deal Value

Add-on

Growth Capital

Public To Private

10 Largest Energy & Utilities Buyouts Globally: 2012 YTD (As of 8 November 2012) Firm

Investment Type

Deal Date

Deal Size (mn)

Investors

El Paso Corporationâ&#x20AC;&#x2122;s Oil Buyout And Natural Gas Exploration And Production Assets Cheniere PIPE Energy, Inc. Acteon Buyout

Feb-12

7,150 USD

Feb-12

1,500 USD

Oct-12

800 GBP

Venari Resources LLC Shelf Drilling

Growth Capital

May-12

1,125 USD

Buyout

Sep-12

1,050 USD

Eagle Energy

Add-on

Aug-12

650 USD

Kunlun Energy Company Limited Talos Energy

PIPE

Apr-12

4,659 HKD

Buyout

Apr-12

600 USD

Sage Midstream

Buyout

Sep-12

500 USD

Cheniere Energy, Inc.

PIPE

May-12

468 USD

ACQUISITION INTERNATIONAL

Bought From/ Exiting Company

Primary Industry

Location

Access Industries, Apollo Global Man- El Paso Corporation agement, Korea National Oil Corporation, Riverstone Holdings Blackstone Group -

Oil & Gas

Kohlberg Kravis Roberts, White Deer Energy Warburg Pincus, Jordan Company, Kelso & Company, Temasek Holdings Castle Harlan, CHAMP Private Equity, Lime Rock Partners First Reserve Corporation, Midstates Petroleum Company, NGP Capital Resources Company (Listed Fund ) RRJ Capital, Temasek Holdings

First Reserve Corporation

Oil & Gas

UAE

Carlyle Group, Riverstone Holdings

Oil & Gas

Apollo Global Management, Riverstone Holdings Kaiser Midstream, Riverstone Holdings RRJ Capital, Temasek Holdings

Oil & Gas

Hong Kong US

Oil & Gas

November 2012 /

DEAL OF THE MONTH:

PINOVA Capital Invests in deconta GmbH

PINOVA CAPITAL — Invests in deconta GmbH

l Joern Pelzer, Partner at PINOVA Capital, gives Acquisition International some insight into the private equity firm’s recent investment into deconta GmbH. Mr Pelzer noted that the deal was completed quite quickly; PINOVA were first approached in April and signed the deal in July. The deal was mainly financed with pure equity from the fund, with a small amount of acquisition finance from WGZ Bank, deconta’s home bank. He added that there were no difficulties with the bank financing. “We got very good terms and we find if you have a very good business with good relationships to their ecosystem including their banks, and if you don’t overdo it in terms of the amount of financing and debt financing you want to raise, I think in our market it’s absolutely do-able to have a decent acquisition finance.”

PINOVA Capital is an independent private equity firm focusing on high growth Technology, Engineering and Services companies in German speaking Europe. The fund invests equity between €3 million and €15 million taking minority and majority positions in companies within a revenue bracket of €5 million to €100 million. “We look at a variety of companies and if we see strong growth potential based on technology or service innovation, we like those companies and try to invest,” explained Mr Pelzer. “deconta fits very well into our spectrum of companies.” deconta was founded in 1998 by Wilhelm Weßling and a partner. As a leading equipment supplier for on-site removal operators, deconta is known for solid and innovative solutions with a focus on asbestos decontamination. In addition to the machine and equipment program, deconta provides special solutions for specific customer needs, even on short notice. Furthermore, deconta owns an extensive range of machines and equipment which it leases to customers in a rental model. PINOVA bought shares in deconta as part of a succession plan. Managing shareholder Wilhelm Weßling will maintain a majority stake and will continue to manage the company. Mr Pelzer stated that PINOVA will focus on growing the company internationally. “From the base in Germany they now have subsidiaries in France, Italy, Switzerland, Spain, and Australia. We want to internationalise this company further because it has very strong market potential.”

/ November 2012

According to Mr Pelzer, the deal is good news for deconta’s customers and suppliers as continuity is maintained in the existing markets while the internationalisation is further enhanced: “Now deconta can grow with more speed and focus further on internationalisation. The business can deliver what they have promised in the past, but can do this even more internationally.” PINOVA used Ernst & Young in Munich for financial due diligence, Fichtner Engineering for commercial due diligence, and Roos Legal for legal due diligence. Deconta was advised by VR Unternehmerberatung, a mid-cap orientated Mergers & Acquisitions advisor based in Düsseldorf. Mr Pelzer explained that PINOVA mainly gets its deals from two sources. The first source is the PINOVA’s intermediaries such as M&A advisers, lawyers and auditors who present potential deals. The second source is PINOVA’s own proactive search for companies. “We look into the markets we like and try to find these companies. We approach them and try to convince them whether they would like to sell a stake to us. In the case of deconta it was in the first bracket; an M&A advisor who is well known to us provided us information and an entrance into that company. “In terms of where we can add value, smaller companies often do not have the international network we have. We have a strong expert circle internationally. Quite often we can help professionalise these companies in terms of finance functions, but also bring strategic thinking to the table, which is well received by the entrepreneurs.” When investing, PINOVA always look for an entrepreneurial management on board owning shares, from just 10% to a majority.

“They need to have the same understanding where the business should be in five to seven years, and they should have the same incentive,” he noted. “If you’re a shareholder you have the same incentive, if you’re a manager only you might have a conflict of interest with the shareholders.” Before PINOVA invests in a company it creates a Value Road Map jointly with the management and shareholders. This is a step-by-step plan for the next five years detailing the development of the company. It enables on-going assessment of how the company is progressing. “That is the key and there a several parameters,” explained Mr Pelzer. “It’s a holistic approach; it’s not just based on financial figures. Of course those financial figures are relevant in terms of revenues and margins, but there are other things, for example the professionalisation of certain departments and entering additional markets. “The content of the road map is agreed by all parties before we invest and is further developed during our portfolio over the next couple of weeks. It is then updated every year. We have a clear view of where we want to be in a year from now and a clear view of where we want to be in five years from now. That is not just the view from PINOVA, it’s also the view by other shareholders and managers, and in this case it’s Mr Weßling who is the main shareholder and also the CEO. “Asbestos decontamination is one of the big challenges for the construction industry. Being a leading producer of machines and equipment, deconta is in an excellent position to further grow the business especially internationally,” concluded Mr Pelzer.

Company: PINOVA Capital Name: Joern Pelzer Email: joern.pelzer@pinovacapital.com Web: www.pinovacapital.com Address: Rindermarkt 7, 80331 Munich, Deutschland Telephone: +49 (0) 89 .18 94 254–40

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Novum Capital acquires ES-Plastic Group

NOVUM CAPITAL ACQUIRES ES-PLASTIC GROUP l Martin Conder is a Director and Chairman of Novum Capital Limited, the UK subsidiary of Germany-based Novum Capital Group. Mr Conder stated that ES-Plastic now has a very stable and sustainable financing structure with a significantly reduced debt burden. “This allows management to re-focus on the operational aspects of the business, provide greater certainty for suppliers and maintain a high level of service for their customers,” he said. “The company has an excellent R&D track record and we will support and strengthen its position as the key innovator in the modified atmosphere packaging space.” So far, Novum Captial has no additional investments planned within the food packaging sector and which would be complementary to ES-Plastic. However, the company observes the market carefully and is fully prepared to make a strategic acquisition in this sector should an attractive opportunity arise.

Novum Capital is an independent and owneroperated investment firm with offices in London and Frankfurt. The firm has a wide range of experience and expertise within the areas of financing, including debt, mezzanine and private equity, and financial restructuring. It supports companies as a principal investor by providing financing for expansion, restructurings and recapitalisations and advises third party investors in restructuring situations and in recovering distressed investments.

tool with strong upside potential but less structural risk or as a senior debt-equivalent with strong underlying collateral in direct lending situation,” he explained.

Novum Capital focuses on German transactions with a dedicated team of experienced market professionals based in Frankfurt who understand the local market and have the contacts to generate a strong flow of new opportunities.

“However, during the past couple of years the former ownership structure and suboptimal financing arrangements were a drag on the company’s operating performance and management were continuously burdened with difficulties arising from this. We have successfully refinanced the company and added new liquidity in order to support further expansion in Europe,” he commented.

“Unlike many of our competitors, who are either more financially oriented with a limited acceptance by German businesses or well-connected local investors with a limited financial skillset and track record, we have been very effective in combining a team of highly-experienced professionals with the local contacts to successfully source and execute German transactions,” said Mr Conder. Mr Conder explained that Novum Capital has a very flexible approach, either acting as principal investor investing its own capital or sourcing financing, or acting as advisers helping other investors to recover their capital in distressed situations by utilising its strong connections within the German community of banks, fund managers, intermediaries and advisors. Whilst the firm’s expertise covers the entire capital structure, Mr Conder noted that it has a particular focus on mezzanine transactions. “We appreciate the flexibility of mezzanine capital, which can be used as a private equity-like financing

/ November 2012

ES-Plastic is the leading company in the European fresh product packaging market, in terms of quality and technology. Mr Conder noted that it is well invested and offers a wide range of innovative modified atmosphere packaging products.

The transaction took six months to be completed. Alongside fresh equity, Novum Capital structured a debt package comprising a mixture of local bank loans, factoring, lease financing and a further loan from a UK-based credit opportunity fund. The financing includes new cash for the company and total leverage is conservative at less than 3.5x EBITDA. According to Mr Conder, the refinancing of the existing financing syndicate was time consuming and very delicate since it involved concessions from various stakeholders with conflicting objectives. “At the same time we were negotiating the acquisition itself and the biggest challenge was to negotiate a deal with the vendor and restructure the existing balance sheet in parallel.”

“Novum Capital has a strong deal flow across a range of business sectors, although some of these opportunities are for investment or restructuring advisory roles,” explained Mr Conder. “Whenever we feel able to add value to a financing structure, we are prepared to make additional investments for ourselves as principal investor.” Mr Conder stated that, initially, the main goal for ESPlastic is to stabilise the fundamentals of the current business and ensure solid, sustainable relationships with all customers and suppliers. Novum Capital will then look to ensure that ES-Plastic retains and enhances its position as “best in class” amongst its peer group of companies. “We will be working closely with management over the next 12 months and beyond to support the realisation of further upside potential within the operational business and to invest in the next stage of the company’s growth. ES-Plastic has very strong R&D capabilities and many opportunities to broaden its range of products. Whilst we do not yet have definitive investment plans, there is space on site to add additional production capacity,” he concluded.

Company: Novum Capital Name: Martin Conder Email: info@novumcapital.com Web: www.novumcapital.com Telephone: +49 69 2475 2510

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

H.I.G. Europe Acquires the Specialty Alumina Business of Rio Tinto Group

H.I.G. EUROPE ACQUIRES THE SPECIALTY ALUMINA BUSINESS OF RIO TINTO GROUP l Olivier Boyadjian, MD of H.I.G. Europe in France, gives Acquisition International a detailed look at the company and the ALTEO acquisition. new products, with a strong focus on R&D, and to grow in emerging countries. “The acquisition by H.I.G. fits perfectly within the framework of the growth project that we have initiated. We share with H.I.G. a common desire for sustainable and international development in order to consolidate our position as the global leader,” said Frédéric Ramé, General Manager of ALTEO Mr Boyadjian concluded: “We are very proud to have carried out this significant transaction that falls within our strategy of supporting SMEs in their development. With its recognised industrial know-how, firstrate R&D capabilities and an unequalled range of products developed by a top-quality management team, ALTEO has all the necessary components to successfully execute its market penetration strategy.”

The ALTEO acquisition H.I.G. Europe acquired the Speciality Alumina business of listed global mining firm Rio Tinto Group in July this year. The new group was renamed ALTEO. With a turnover of nearly €300 million, ALTEO is the leading global integrated producer and supplier of specialty non-metallurgical grade alumina, with c.700kt capacity. In recent years, ALTEO has faced a number of challenges and undergone significant transformations, particularly in terms of the development of high value added products. ALTEO is headquartered in the south of France, near Aix-en-Provence, and has four plants in Gardanne (operating the first alumina refinery in the world); La Bâthie (white fused alumina); Beyrède (brown fused alumina); and Alufin (tabular alumina). According to Mr Boyadjian, the strategic reasoning behind the acquisition was the ability to unleash ALTEO’s strong potential along with a high level management team. “The key strengths of ALTEO are notably the recognised R&D and industrial know-how, as well as the strong and diversified client base,” he commented. ALTEO’s future H.I.G. Europe intends to use its resources to reinforce and accelerate, with the management team, the planned development of the business. The goal is to improve the business performance and develop

ACQUISITION INTERNATIONAL

H.I.G. Europe H.I.G. is a leading global private equity investment firm with more than €9 billion of equity capital under management and a team of more than 225 investment professionals worldwide. Based in Miami, with 7 offices in the U.S., 4 offices in Europe, and 1 office in Brazil, H.I.G. specialises in providing capital to small and medium-sized companies with attractive growth potential. H.I.G. invests in management-led buyouts, and has extensive experience of dealing with carve-outs and complex situations. H.I.G. has a deep understanding of the unique challenges and opportunities such situations present, as well as a flexible investment approach which emphasizes speed and responsiveness. Since its founding in 1993, H.I.G. has invested in and managed more than 200 companies worldwide. The firm’s current portfolio includes more than 80 companies with combined revenues in excess of €12 billion.

equipment; and Cobac, leisure facilities). It has also completed its first sale in France: Diam, the European leader in Point-of-Purchase displays for cosmetic brands, initially acquired in 2007. Globally, H.I.G. has extensive experience in carveout transactions. In recent years, H.I.G. completed 15 carve-out transactions worldwide, with notably 5 deals in Europe: ALTEO; Brand Addition (March 2012 – a provider of branded products); Haltermann (July 2011 – a producer of specialty hydrocarbons); Looping (February 2011 – a group of leisure parks); and Fibercore (February 2011 – specialty optical fibre products). “H.I.G., through its local teams with a global network, has the ability to add value and bring know-how on carve-out transactions,” said Mr Boyadjian. He noted that H.I.G.’s investment professionals have considerable operational and transactional experience and deep knowledge of a wide range of industries. With a large team with unique skills and capabilities, and a value-added, “can-do” attitude, H.I.G. provide in-country assistance, in devising strategies to operate and develop businesses on a standalone basis (set-up of finance and procurement departments, attainment of necessary permits, arrangements for independent IT and ERP-systems, new marketing strategies, etc …); H.I.G. is an active investor who strongly supports the management teams in the development of their businesses. H.I.G.’s ability to finance 100% of the purchase price or to offer bridge loans also gives transaction certainty. It offers fast and highly confidential execution of transactions, with rapid due diligence and negotiation processes – in the past, several transactions were closed within a few weeks. It is a long-term partner with no specific time constraints on the holding period.

H.I.G. Europe has a team of more than 40 investment professionals operating from its offices in Paris, London, Hamburg and Madrid. Investment expertise H.I.G. Europe has completed 21 new investments since the beginning of 2011, and is one of the most active private equity investors in Europe. In the first half of 2012, H.I.G. Europe, in France, has successfully executed one acquisition (ALTEO) and two significant build-ups (Jokon, automotive

Company: H.I.G. Europe Name: Olivier Boyadjian Email: oboyadjian@higcapital.com Web: www.higeurope.com Telephone: +33 1 53 57 50 70

November 2012 /

DEAL GURU:

The 10 Questions Management Teams Should Ask When Undertaking a Management Buy-Out

THE 10 QUESTIONS MANAGEMENT TEAMS SHOULD ASK WHEN UNDERTAKING A MANAGEMENT BUY-OUT l With management buy-outs amongst smaller companies on the increase, more and more management teams will have the chance to purchase their business from its owner. Stephen Campbell, a partner at Panoramic Growth Equity, the leading equity investor in fast growing, entrepreneurial companies, has devised the top ten questions management teams should ask when undertaking a management buy-out (MBO).

A management buy-out (MBO) is the purchase of a business from its owner by its existing management team usually with the help of external financial backers. The main reason management teams undertake MBOs is to own and run the business for themselves, in the process offering the opportunity to make a significant capital gain from a relatively modest personal investment. The bulk of the finance required to purchase the business will normally be provided by financial institutions, primarily from banks and venture capital/private equity houses. Debt and working capital facilities (loans and overdrafts/invoice discounting) are typically provided by a bank and are the cheapest form of finance. Stephen comments: “It can sometimes seem a daunting task to consider an MBO and at times, management teams will more than likely be suffering from a number of doubts as to their capabilities in running a business of their own. To help you through this process we have devised the top ten list of questions you should ask before proceeding with an MBO.” They are: 1. Could you run this business better than the current owners?

/ November 2012

2. Would you back this belief with your own cash? 3. Can you explain clearly to an outside investor how you would grow sales, improve efficiency and/or cut costs? 4. Are you ‘back able’? Are there any big gaps in the team, do you have a good finance director and sales director? Is the team together in this, or do any members want to keep the ‘comfort blanket’ of what they know? 5. Are you resilient enough to take months of negotiations, diligence and setbacks until the business becomes yours?

10. If you’re putting your own money into this business, how will you get it back? Have an exit plan. About Panoramic Growth Equity Set up in 2009 by Stephen Campbell, David Wilson and Malcolm Kpedekpo, PGE is the leading equity investor in fast growing, entrepreneurial companies. The Panoramic Enterprise Capital Fund 1 closed in September 2010 and was oversubscribed at £34 million. The Team has over thirty years of collective experience of investing in businesses with revenues of £1 million - £10 million with an average investment level of £2 million. PGE has backed 33 companies since 2001.

6. Would your customers stay with you if you bought the business? Have you asked them? 7. Be honest with yourself – what admin service/ sales leads/general credibility is provided by the current owners that you won’t have when you buy the business? What effects will this have and how do you respond to these gaps? 8. Do you have a trusted advisor who will guide you through the process? If not, try and find one. 9. How will your suppliers respond to a change of ownership, e.g. cut credit terms? Have you asked them?

Company: Panoramic Growth Equity Name: Stephen Campbell Email: stephen@pgequity.com Web: www.pgequity.com Address: 6th Floor, Becket House, 36 Old Jewry, London, EC2V 6EB Telephone: +44 (0) 141 331 5100

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Mergers and Acquisitions in South Africa Involving Foreign Companies Post Walmart-Massmart Merger

MERGERS AND ACQUISITIONS IN SOUTH AFRICA INVOLVING FOREIGN COMPANIES POST WALMART-MASSMART MERGER l Angelo Tzarevski is an Associate and Jennifer Barnett is a Candidate Attorney at Knowles Husain Lindsay. On 29 November 2010 Walmart, the world’s largest retailer, announced that it had offered to acquire 51% of Massmart, a South African wholesaler and retailer of grocery, liquor and general merchandise. In terms of South African competition law, governed by the Competition Act 89 of 1998 (“Act”), the proposed merger had to be notified to the Competition Commission of South Africa (“Commission”), which was to assess the proposal and thereafter make a recommendation to the Competition Tribunal (“Tribunal”). The proposed merger was controversial from the outset, primarily due to Walmart’s negative reputation amongst labour unions. During February 2011 the Commission recommended unconditional approval of the merger. This recommendation was challenged at the Tribunal by a number of South African labour unions and government departments who opposed the merger on public interest grounds. The public interest concerns raised related to the effects that the merger would have on employment, distribution and retail sectors, as well as the ability of small businesses controlled by historically disadvantaged persons to become competitive. Government and unions expressed concern that Walmart would be able to source cheap goods from its highly efficient global supply chain system, and as a result undercut and sideline local South African suppliers. It was contended that this would lead to job losses and overall decline across numerous sectors. It was also feared that competitors of the newly merged entity would adapt their business models to focus more on imports in order to compete, which would diminish the role of South African suppliers and producers. On 31 May 2011 the Tribunal concluded that the merger raised no competition concerns as Walmart was not a competitor of Massmart in South Africa. Despite this finding, in terms of section 12A of the Act, the Tribunal was obliged to determine, whether the merger should be prohibited or approved subject to conditions by having regard to public interest considerations set out in the Act. This involved an assessment of the effect that the merger would have on a particular industrial sector or region, employment, the ability of small businesses or companies controlled by historically disadvantaged persons to become competitive, and the ability of national industries to compete in international markets. Following lengthy hearings the Tribunal imposed a number of conditions to its approval of the merger, the most significant of which were that: 1. The merged entity was to establish a program aimed exclusively at the development of local South African suppliers funded in the amount

20 / November 2012

of ZAR100 million (approximately USD12,5 million), which was to be contributed by the merged entity and expended within 3 years of the approval; 2. The merged entity was to honour existing labour agreements, could not retrench employees on operational requirements for 2 years postmerger and could not challenge the status of the largest representative union for 3 years postmerger; 3. The merged entity was to establish a training program to train local South African suppliers on how to do business with the merged entity and with Walmart. These conditions were imposed to protect public interests. Government and the labour unions appealed to the Competition Appeal Court (“CAC”), contending that the merger should be prohibited outright. In March 2012, the CAC approved the merger and conditions, further imposing a moratorium on mergerrelated retrenchments for 2 years post-merger and a further obligation on the merged entity to reinstate 503 employees retrenched by Massmart prior to the merger. The CAC also ruled that the parties were to commission and fund a study on how local suppliers could respond to the effects of the merger. The Walmart-Massmart merger may be used as a litmus test to measure the friendliness of South Africa as an investment destination. Corporate South Africa expressed concerns that the protracted approval process, the conditions which were ultimately imposed and the high cost which the parties had to expend could adversely affect foreign companies’ perceptions of South Africa as a business destination.

as foods and fertilisers. He further stated that while inviting foreign investments, government would do all it can to protect local jobs and industries. What does this mean for foreign companies wishing to invest in South Africa through mergers and acquisitions involving local companies? Companies considering a merger with or acquisition of a South African company would need to give careful consideration to whether their proposed transaction gives rise to any public interest concerns, as these will be given increased scrutiny during the merger consideration stage. Should there be any concerns then it would be advisable to deal with these at an early stage of the transaction so as to avoid government and labour union opposition and/ or a protracted approval process and increased costs. The Walmart-Massmart merger was protracted because the merging parties failed to propose adequate ways of dealing with public interest issues at an early stage. The parties’ proposals (which were ultimately included in the decisions of the Tribunal and CAC) were only submitted on the last day of the Tribunal hearings. Despite the growing emphasis on ensuring public interest protection during merger approvals, South Africa remains an attractive foreign investment destination. Where public interest concerns arise competition authorities prefer to engage with the merging parties and to allow them to decide on and craft their own conditions in the interests of allowing the transactions to proceed rather than prohibiting potentially problematic mergers outright.

The Walmart-Massmart merger was a prominent example of a merger in South Africa which encountered strong government and labour union opposition, a prolonged approval process and the imposing of somewhat stringent conditions. The imposing of conditions to protect public interests in South Africa has been observed post WalmartMassmart in merger decisions such as Kansai PaintFreeworld Coatings, Synergy Income Fund-Khuthala Alliance, and Pioneer-Pannar to name a few. In future, public interest considerations in merger assessment will be given increased attention by South Africa’s competition authorities. In June 2011 President Jacob Zuma announced that the government’s competition policy would be reviewed with a view to improve job creation. He went on to state that the strategic approach would be to ensure lower prices for intermediate and wage goods as well

Company: Knowles Husain Lindsay Web: www.khl.co.za Address: 4th Floor, The Forum, 2 Maude Street, Sandton, 2196 Telephone: +27 11 669 6000 Name: Angelo Tzarevski Email: at@khl.co.za Name: Jennifer Barnett Email: jb@khl.co.za

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SECTOR SPOTLIGHT:

New Patent Review Procedures at the USPTO under the America Invents Act

NEW PATENT REVIEW PROCEDURES AT THE USPTO UNDER THE AMERICA INVENTS ACT l Guy Yonay is a patent litigation partner in Pearl Cohen Zedek Latzer’s New York office. The firm represents a variety of technology clients in patent litigation, as well as before the United States Patent and Trademark Office. In the past, technology companies were able to achieve a defensive “balance of power” with industry competitors by maintaining patent portfolios of roughly equivalent size. This meant that competitors often did not sue each other for patent infringement in order not to get mired in counterclaims and multiplepatent lawsuits. With the advent of non-practicing entities (“NPEs”), this strategy no longer worked. Since NPEs did not make or sell anything, they were not vulnerable to patent counterclaims, and were able to drag industry companies into asymmetric patent litigation – the NPEs had few documents and little discovery exposure, was invulnerable to counterclaims, and paid no attorneys’ fees, since they were usually represented on contingency. Eventually, the quality of these lawsuits began to deteriorate, such that NPEs were suing on patents that were clearly invalid or not infringed, just in order to settle for litigation costs. Such a lawsuit (whether brought by a bigger competitor or a NPE) can be particularly acute for a start-up company, since it tends to bring down the company’s valuation in an acquisition or investment scenario. Such a company may want to show its potential investors or acquirors that it is being proactive in dealing with the threat, while not depleting its resources. Largely in response to such issues, Congress passed the America Invents Act (“AIA”), which created a number of new defensive mechanisms, including inter partes review and post-grant review, that are expected to be effectively used against such NPEs to reduce the time and cost of fighting off meritless patent claims. Of particular interest is the relationship between these new tools and patent litigation in the federal courts. Every technology company should be aware of these options and consider their benefits and drawbacks for each particular situation. Inter Partes Review Inter partes review replaces the previous inter partes reexamination, although it is similar in many respects. Like inter partes reexamination, inter partes review allows any third party to request that the USPTO reexamine the validity of an issued patent, but the basis of the request is limited only to prior patents and publications (i.e., not prior invention, public use, derivation, etc.). However, there are a number of differences. One significant difference is that where the USPTO was previously authorized to order inter partes reexamination based on the threshold finding of a “substantial new question of patentability,” the new

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procedure requires that a requester demonstrate a “reasonable likelihood of prevailing” on the merits of the challenge. Although this may seem like a slight difference, USPTO examiners are showing signs of becoming more critical in deciding whether to order reexaminations. Another new limitation on inter partes review is that the procedure cannot be instituted until at least nine months after the grant of a patent (in order to allow time for post-grant review, discussed below). There are a number of new rules about the interrelation of inter partes review to patent litigation which arose in response to issues encountered in parallel litigation and reexaminations. One criticism of inter partes reexamination was that it took too long for the USPTO to arrive at a final decision. By one statistic, an average time between filing a request for inter partes reexamination and a final decision took approximately three years (excluding appeals). This caused problems in parallel patent litigation – in cases where litigation was stayed pending reexamination, the case was often on hold for years; in other cases, the litigation had reached a verdict before the USPTO made its final determination. The AIA now requires that a final determination in an inter partes review be made within one year from the date on which the review is ordered by the USPTO. Thus, litigation stays are expected to be shorter, and even where not stayed, litigants will have certainty as to the outcome of the reexamination while still relevant to the litigation. In some cases, USPTO delays were used to a defendant’s advantage by delaying until late in a lawsuit to file a request for reexamination, effectively taking out an “insurance policy” against losing at the district court. In such cases, even when a plaintiff had a verdict, courts were loath to enforce judgments where the USPTO ordered reexamination. Therefore, the AIA now requires that a requester involved in patent litigation on a patent may not request its inter partes review more than one year after it was served with the complaint.

matter (e.g., business methods, laws of nature, etc.), indefiniteness, and lack of written description. As with inter partes review, the USPTO must issue its final determination within one year of the order initiating the post-grant review. Choosing Between USPTO Declaratory Judgment

Review

and

Parties that have not been sued by a patent owner who wish to take the initiative are effectively required to choose between having the USPTO or the district court rule on validity of the patent at issue. A party that instituted declaratory judgment for invalidity is barred from requesting post-grant or inter partes review; likewise, if the party first requested review at the USPTO and then brought the declaratory judgment lawsuit for invalidity of the patent, the lawsuit will be automatically stayed pending the USPTO’s determination. The AIA also directs the USPTO to prescribe certain regulations that will make post-grant and inter partes review more similar to litigation. For example, the USPTO will allow discovery of evidence from the parties in inter partes review, including deposition of witnesses submitting affidavits or declarations; issuance of protective orders governing the exchange of confidential information; and the right to an oral hearing as part of the proceedings. Conclusion With these new rules in place, parties have more options for defending themselves against actual or potential patent infringement, but they must carefully choose the vehicle for challenging the patent and its timing.

Post-Grant Review Company: Pearl Cohen Zedek Latzer Name: Guy Yonay Email: guyy@pczlaw.com Web: www.pczlaw.com Address: 1500 Broadway, 12th Floor, New York, New York 10036, USA Telephone: +1 (646) 878-0808 jpeg

The new post-grant review proceeding allows petitioners to request cancellation of patent claims up to 9 months after the date of grant of the patent. One principal difference between post-grant review and inter partes review is that challenges brought in postgrant review are not limited to invalidity based on prior patents and publications. Available challenges also include grounds such as unpatentable subject

November 2012 /

SECTOR SPOTLIGHT: East Africa M&A

EAST AFRICA M&A

l Stephen Dimon, a Senior Associate at Taylor-DeJongh, shares his expertise in mergers and acquisitions in East Africa with Acquisition International. blocks – a legacy of the former marginal frontier perception of the region – that corporate takeovers similar to Cove Energy will often make more sense than asset sales. Further, many of the oil & gas companies currently operating in East Africa are small and midcap independents with limited experience in commercializing gas assets. The monetization of gas fields will require investments on a much greater scale than oil. East Africa will need capital to put a limited portion of this gas to use in the region – gas pipelines, fertilizer plants, and power plants will need to be built. And even after this, local markets will only consume a minute fraction of the expected gas production. The large majority will need to be exported as LNG.

In the PTTEP acquisition of Cove Energy, this summer witnessed the first blockbuster M&A deal as a result of the East Africa scramble. Cove Energy announced its intention to sell its 8.5% stake in Area 1 in late 2011. What followed has been a riveting duel between the supermajor Royal Dutch Shell and Thailand’s PTTEP. On February 22, Shell made their original offer of 195 pence per share, or approximately USD 1.56 billion, which days later PTTEP countered with a bid of 220 pence per share, or USD 1.76 billion. In April, Shell matched PTTEP’s offer and outmaneuvered the company in securing the agreement of the Mozambican Government to greenlight the deal. During this bidding process, however, Anadarko announced significant new discoveries in Area 1, further sweetening Cove’s stake. In late May, hours before the deadline, PTTEP raised their offer to a total of approximately USD 1.9 billion. This bidding war culminated in mid-July, as Shell abandoned its bid leaving PTTEP to finalize the USD 1.9 billion takeover. The intensity of this bidding round, focused on the 8.5% stake in Offshore Area 1, will likely be eclipsed by future M&A activity in East Africa. February 2010 marked the start of the East African gas scramble, which will result in a flurry of M&A activity in the coming years. It was in this month that Anadarko announced a gas discovery at their Windjammer well in Mozambique’s Rovuma

22 / November 2012

Offshore Area 1. Anadarko, alongside partners Mitsui, Cove Energy, Bharat Petroleum, and Videocon, followed this discovery with a consistent string of successful wells, which has built up their recoverable gas reserves to up to 60 Tcf as of their last major discovery in June 2012. Alongside the stunning success of Anadarko’s consortium in Area 1, multiple-Tcf gas discoveries have been announced by ENI in Mozambique, and BG/Ophir and Statoil/ Exxon in Tanzania. Altogether, the announced discoveries of gas resources in place in Tanzania and Mozambique alone are approaching a total of 200 Tcf. That is almost a quarter of Qatar’s proven reserves, and the discoveries are continuing. In the coming years, we can expect to see similar stories to Cove play out through significantly increased M&A activity in East Africa. The incredible run of discoveries back to Windjammer has made East Africa today’s most prolific hydrocarbon exploration province. In all, the US Geological Survey recently estimated that 253 Tcf of undiscovered gas lie off Kenya, Tanzania and Mozambique. With the example of past successes and prospects for further discoveries, many companies are looking to farm into exploration properties for the chance to gain a significant upside. Larger companies will seek to add strategic assets in East Africa to balance their portfolio. A large number of companies operating in East Africa are so small, focused on a few East African

Major international (IOCs) and national oil companies (NOCs) are the only companies with the combination of technical and financial resources to build the needed LNG export infrastructure. First, each consortium seeking to build an LNG plant will need a partner with sufficient LNG experience to reasonably ensure the successful construction and operation of an LNG plant. Next, the companies involved will need to meet the massive financial demands of an LNG project. Anadarko has proposed USD 15 billion as the price tag for their export facilities. And if companies should opt to project finance these plants – a likely outcome, as full corporate financing will be possible for all but the largest stakeholders in addition to paying the equity share, participating companies will need to be large enough to meet the requirements of lenders for any project financing. This will include having a credit rating sufficient to meet the completion guarantee requirement, which means that non-investment grade companies will need to seek alternative, dilutive ways to meet their commitments. To bring any LNG project in East Africa to fruition, we will likely see significant M&A activity to reshuffle the consortia, likely including several blockbuster deals by supermajors seeking to increase their LNG portfolios. The next few years will certainly be interesting for M&A in East Africa.

Company: Taylor-DeJongh Name: Stephen Dimon Email: sdimon@taylor-dejongh.com Web: www.taylor-dejongh.com Address: 34 Smith Square, London SW1P 3HL, United Kingdom Telephone: +44 (0)207 233 4000

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SECTOR SPOTLIGHT:

Insurance Due Dilignce – An Overlooked Art

INSURANCE DUE DILIGNCE

— An Overlooked Art - Part 2 l In the October edition Bill Gloyn looked at the basic insurances likely to be required for a real estate transaction. He now looks further at more specialised products, especially those that the purchaser may need to keep a deal on track. My previous article considered buildings and business interruption insurance. It also touched on Employer’s Liability but it is important not to overlook Public Liability – which protects against claims for damage to third party property or personal injury and death arising out of the ownership and management of the property. This is often included as a separate section in the buildings insurance policy but only for a relatively small amount – say £10 million. The initial disclosures may not include policies that cover a much more acceptable higher limit of indemnity – often reaching in excess of £100 million. These must be searched for as must any specific policy to cover liability arising from pollution. This will be excluded as standard from the public liability insurance and needs a separate policy. Liability claims can be considerable and adequate cover is essential. After all, the intention behind requiring the borrower to arrange insurance is to avoid a situation which puts sufficient financial stress upon the borrower to put the loan at risk. When considering the documents likely to be found in the data room, the asset or property management agreements and those for design professionals and valuers should not be overlooked. These may include a responsibility for arranging or managing insurance. If insurance does not rest with the Managing Agent, the insurance broker’s agreement should be reviewed. The agreements should impose liabilities on the consultants should they be negligent in undertaking their duties. There should be a corresponding requirement to arrange professional indemnity (PI) insurance. This, unlike public and employers’ liability insurance, is an insurance that only covers claims made during the policy period. That is why properly drafted professional appointments should require the cover to be renewed annually for a period after the termination of the contract. This ensures that adequate cover remains in place to pick up any claims post termination – often when the truth emerges! A careful review of the current premium costs should also be undertaken. Are there any outstanding premiums that might have to be paid by the purchaser post completion? Are the premiums in

24 / November 2012

line with market rates or will a change of owner and insurer suddenly trigger an increase, one that will inevitably cause friction with tenants or higher nonrecoverable costs? Are there some ‘behind the scenes’ arrangements with the broker or insurers that might cause future problems for the new owner? Sometimes these issues are not transparent or even visible at all. They require experience and in depth market knowledge to identify and resolve. All of which is best done before rather than after the deal is closed. Before concluding, it is important to consider the role that insurance can play in lubricating a deal that might otherwise fail. For this, there are specialist policies that might be needed – arranged by the purchaser, to put them and the bank in a more comfortable position, but generally paid for by the vendor. There is a suite of policies generally known as legal indemnities. These are designed to provide indemnity in the event that a known, or even unknown, legal issue creates a situation that prejudices the financial viability of an investment. Of these, defective title and restrictive covenant policies are most frequently encountered. Careful enquiries should be undertaken to assess if these are in force. Being policies that have an infinite life and assignable to future owners, the insurance may have been arranged by a previous owner. In addition to any damages that a court might award, legal indemnity policies meet the legal costs of defence and the impact on the investment value of an order against the property owner or funder. In the case of rights of light insurance the cover also extends to meet the costs of demolition or adaptation of the offending property and the subsequent loss of market value. The need for these insurances usually arises from the legal due diligence and it is very important that the consultant for the IDD and the lawyers maintain close contact. This can avoid a problem occurring that seems insoluble and even causes the deal to fail, when a relatively simple insurance solution could get things back on track again.

Although the sale and purchase agreement is likely to impose certain warranties and indemnities upon the vendor – if indeed they are able to assume them, not always the case with a bank or trustee – it is sometimes doubtful if the party actually has the financial ability to meet any substantial claim. In those circumstances, warranty and indemnity insurance may give comfort to the purchaser and the bank that adequate funds would be available. The same goes for tax advice and other deal-critical issues for which indemnity insurance may be available. This is a very specialist area, with few competent brokers or underwriters, which needs to be considered at an early stage in the process. This again underlines the need to take insurance seriously. It is generally essential to satisfy the bank – and the purchaser – that adequate cover is in place. A portion of the huge quantity and high quality of intellectual capital expended on other elements of the deal should be invested in due diligence and the preparation for insurance to ensure that the future is de-risked as much as realistically possible. In that way the purchaser and bank can enjoy the benefits from the deal that are their drivers for doing it. Bill is Chairman of the British Property Federation insurance committee; Treasurer and Past President of the City Property Association and a member of the RICS insurance forum steering group. He has recently led the JLT team advising on the acquisition of an interest in the Meadowhall Shopping Centre.

Company: JLT Specialty Limited Name: Bill Gloyn Email: bill_gloyn@jltgroup.com Web: www.jltgroup.com/ real-estate-insurance-broker Address: 6 Crutched Friars, London, EC3N 2PH Telephone: +44 (0)20 7528 4646

ACQUISITION INTERNATIONAL

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SECTOR SPOTLIGHT:

Doing Business - In Bulgaria

DOING BUSINESS

l Acquisition International’s comprehensive guide to doing business around the world.

— In Bulgaria -----------------------------------------------------------------------Andrey Delchev is the Managing Partner at law firm Andrey Delchev and Partners – Eurolex Bulgaria. ------------------------------------------------------------------------

The firm was established in Bulgaria in 1997 by lawyers who had served as high-level officials in the Bulgarian government. It works in business, infrastructure and ecology areas that require close contact between business and public administration. “Our advantage is that we know very well the mechanisms of the international financial institutions, public, state and municipal administrations and we can speed up to a great extent such projects and avoid the bureaucratic obstacles,” said Mr. Delchev. According to Mr. Delchev, Bulgaria is recovering from the crisis that has affected the market. Luckily, he noted, infrastructure projects such as building new highways, sewage works, water supply and sewerage installations, and energy facilities are powerful instruments for business development. Mr. Delchev explained that Bulgaria was affected by the downturn in Europe, especially in areas such as real estates, construction related to them, transport, and banking, etc. Bulgarian exports also shrunk as a result of the crisis. -----------------------------------------------------------------------Omourtag Petkov is a partner at the law firm of Djingov, Gouginski, Kyutchukov & Velichkov, Sofia, Bulgaria. ------------------------------------------------------------------------

Djingov, Gouginski, Kyutchukov & Velichkov is the largest and one of the oldest and most prominent law firms in Bulgaria, providing first-class legal services in all areas relating to doing business in Bulgaria. Among the greatest advantages of DGKV are its unparalleled resources - the largest legal teams in Bulgaria with experienced and highly knowledgeable lawyers who have proven their capacity to work day and night whenever necessary, providing the firm’s clients with the service they need. Commenting on the current business environment in Bulgaria, Mr Petkov noted that after some improvement in the business and consumer confidence, there is a certain hesitation and even a negative outlook, although the country has seen a much more dynamic business environment in 2012 than in the last few years. “This increased activity in 2012, which has reflected positively on our work as business lawyers, has been fueled mostly by restructurings and a few substantial acquisitions, without many major new

26 / November 2012

“The Bulgarian market is export-orientated and the drop of consumption of our principal business partners – EU, Russia, the neighbour Balkan countries and Middle East countries – naturally led to shrinking exports,” he commented. “However, business is showing currently a trend towards increase.”

“The government’s fiscal policy is restrictive towards keeping low the expense part of the budget. The country has a low deficit and regarding this indicator is one of the best performers in the EU. Other measures would include providing more stimuli for foreign investments.”

Mr. Delchev attributes the growth in FDI this year to the country’s low production costs, cheap labour and advantageous geographical location.

“In 2012 the economic trend is positive, too, i.e. there is growth in the gross domestic product. We expect this development to accelerate in 2013,” he concluded.

“Bulgaria introduced a 10% flat corporate tax, which is very attractive for foreign investors,” he observed. “Our country’s membership in the EU makes Bulgaria low risk for the investors. The currency board that pegs the local currency to the Euro practically eliminates that currency risk.” Commenting on the current key risk factors and obstacles to growth, Mr. Delchev highlighted the corruption in the political and judicial systems, excessive bureaucracy, and numerous permission and licence regulations. He noted that the Bulgarian government is trying to improve the business environment by investing in infrastructure projects, thus opening new vacancies and by developing an appropriate legal framework. investments and greenfield projects,” commented Mr Petkov. “Although the business environment should not be considered worse than what it used to be in the few years prior to 2009 (which saw an unprecedented economic growth in Bulgaria) and the fundamentals should be considered sound, the business engine lacks steam for a significant growth – now that real estate and renewable energy have exhausted their growth potential,” he added. Mr Petkov explained that the downturn in Europe and the problems in the Eurozone have reflected extremely negatively on the Bulgarian economy, with a dramatic reduction of foreign investments, which left the Bulgarian economy almost stagnating. However, it was able to avoid recession thanks to certain exports and large infrastructure projects. “Overall, Bulgarian exports have suffered from the recession in Europe and the problems in the Eurozone (being by far the prime destination for Bulgarian exports), but on the other hand, due to dramatically reduced imports (related to the overall economic downturn) and the good state of the German economy, Bulgaria has experienced an almost unprecedented positive trade balance,” he commented.

Company: Andrey Delchev and Partners – Eurolex Bulgaria Name: Andrey Delchev Email: office@eurolex.bg Web: www.eurolex.bg Address: 6, Nikolay V. Gogol str., 1124 Sofia, Bulgaria Telephone: (+359 2) 401 9160 Fax: (+359 2) 401 9170

“It is still unclear whether the dynamics of 2012 represent a long-term trend or have been purely circumstantial. Overall, we should not expect a major growth in activity or in new investments and the mood is rather cautious, wait-and-see, with modest, reasonably optimistic expectations for 2013. Indeed, a projected growth of 1.5% (according to IMF) is relatively good compared to that of many European economies and is in line with the current economic environment in Europe,” concluded Mr Petkov.

Company: Djingov, Gouginski, Kyutchukov & Velichkov Name: Omourtag Petkov Email: omourtag.petkov@dgkv.com Web: www.dgkv.com Address: 10 Tsar Osvoboditel Blvd., Sofia 1000, Bulgaria Telephone: +359 2 932 1100

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Doing Business - In Cyprus

— In Cyprus Foreign Direct Investment – Route to Cyprus Limassol / Cyprus

-----------------------------------------------------------------------Michalis Avraam is the Executive Director of Michalis Avraam & Partners Limited. ------------------------------------------------------------------------

Foreign Direct Investment into Cyprus reached a peak in year 2009 at €2.5 billion but fell to €0.8 billion in years 2010-11 with the decrease being largely due to the global financial crisis. The EU / US financial and economic crisis left many companies facing a lot of challenges and has restrained entrepreneurial activity. With revenues falling, costs rising and liquidity constrained, companies find it difficult to achieve their goals, whilst expansion plans are delayed until economies start to pick up. Cyprus presents a value proposition to those businesses which are pressed to maintain and increase quality, whilst cutting costs to achieve increasingly higher client expectations. Apart from its strategic geographical place, Cyprus provides a favourable -----------------------------------------------------------------------Constantinos Aristidou leads the Real Estate Practice Group of Democritos Aristidou & Co Law Firm. ------------------------------------------------------------------------

Democritos Aristidou & Co Law Firm was organised as a partnership and operated as such since 1971. The firm is based in Limassol, the commercial centre of Cyprus. Since 1971, individuals, businesses and local authorities throughout Cyprus have put their trust in the firm to provide legal services on a wide range of legal issues. Through the years, the firm has achieved extensive growth and success by anticipating changes in the legal industry, adapting to new demands and business pressures and responding to its clients’ ever-evolving needs. Today, the firm is proud to be one of the most reputable law firms in Cyprus with the ability to serve its clients throughout Cyprus, Europe and every other continent across the globe. By focussing on creative and cost effective solutions, rather than just technical legal advice, the firm seeks to ensure that its clients receive first class results,

ACQUISITION INTERNATIONAL

Further to the above traditional advantages, the huge potential for investment in the coming years will be in the energy sector and in particular the hydrocarbons extraction and processing sector. According to preliminary findings on just one out of the thirteen available plots in Cyprus’ Exclusive Economic Zone, there are five to eight trillion cubic feet of natural gas which could turn Cyprus into a natural gas exporter with investment expected to run into billions of euro. Opportunities will also arise in related sectors such as pipeline construction, power generation and oil import storage. The current plan is the construction of a liquefied natural gas plant at the site which will see the island evolve into a major energy hub in the region.

business environment with well educated human capital and first-rate infrastructure, EU membership benefits, lowest EU corporate tax rate of 10%, stable tax system, an extensive Double Tax Treaty network and efficient legal, accounting and banking services. To increase the attractiveness and competitiveness of Cyprus as a financial centre, tax legislation is constantly being updated and improved. Recent law updates include exemption of 80% of intellectual property income and capital gains from taxation, updates on shipping tonnage tax reinforce Cyprus’ position as a leading shipping and crew management centre worldwide, a new yacht leasing scheme whereby Cyprus has the lowest VAT rate on EU water based yachts, structural amendments on trust law increase the attractiveness of Cyprus International Trusts, and more. All these factors have secured Cyprus’ position into the thriving international business hub it is today. achieve their goals to the maximum, and that they always get more than anyone else would provide them under the same circumstances. Mr Aristidou is an expert in Real Estate transactions. He has, so far, represented more than 150 clients in a variety of sophisticated transactions totalling more than €210 million. He establishes exceptional working relationships with his clients and he acts as a valued counsel in every aspect of the clients’ real estate transactions. He offers the highest quality legal service in a timely and cost-effective manner. Mr Aristidou was born in Limassol, Cyprus in 1974. He studied Law at Aristotle University of Thessaloniki and he holds an LLM Degree in International Commercial Arbitration & Business Law. He also obtained a Post Graduate Diploma in Litigation from Central Law Training of London. He is a Member of the Cyprus Bar Association; a Litigator of the Association of Personal Injury Lawyers of UK No. 9336; a Member of the College of Personal Injury Law of UK; a Member of the London Court of International Arbitration Young

Other potential sectors currently being developed are in the areas of specialised medical institutions and in the sphere of education and tourism.

Company: Michalis Avraam & Partners Limited Name: Michalis Avraam Email: info@amicha.com Web: www.amicha.com Address: 8 Digenis Akritas Avenue, Office 403, CY-1045 Nicosia, Cyprus Telephone: +357 22346080

International Arbitrators Group YIAG; a Member of the International Bar Association; a Consultant of the Legal Consultants and Disputes Resolution Centre of Jordan, a Member of “THEMIS” – a nonprofitable company which organises law seminars and other related events; and a Member of the Cyprus Arbitration & Mediation Centre (CAMC). Mr Aristidou has a brief working experience with city law firms in London.

Company: Democritos Aristidou & Co Law Firm Name: Constantinos Aristidou Email: info@aristidou.com Web: www.aristidou.com Address: 80 Griva Digeni Ave, Swepco Court 6, 3722 Limassol, CYPRUS Telephone: +357 25585811

November 2012 /

SECTOR SPOTLIGHT:

Doing Business - In Israel

— In Israel Aerial View Of Tel Aviv At Night

-----------------------------------------------------------------------Eyal Bar-Zvi is a founder of Bar-Zvi & Ben-Dov, Law Offices. ------------------------------------------------------------------------

The law firm of Bar-Zvi & Ben-Dov was founded in 2006 by Eyal Bar-Zvi – an attorney, economist and holder of a master’s degree in law, a recognized expert in corporate governance, startups and hightech – and by Yariv Ben-Dov, an attorney, economist and veteran businessman, as a boutique law firm specializing in high-tech, M&A, international taxation and transfer pricing. Both founders boast over 10 years of experience in their field, and have consulted to both local and international entities in complex transactions. Business Environment; Encouragement: Throughout the recent years, while the economic turmoil has taken its toll from many well established economies, and despite the political issues and the lack of natural resources, Israel has continued to show constant economic growth, which has led many nations to turn their attention to the small country, which is now considered by many to be in the leading edge of high-tech, clean-tech, and medical fields. Multinationals such as Intel, Siemens, Google, Samsung, HP, and others, have long established a base of operations here, with R&D, manufacturing, and Venture Capital investments. Due to the relative lack of natural resources (aside from recent natural gas developments and exploitation), Israel is based on – and therefore encourages and supports – innovation and entrepreneurial spirit. Such support is mostly provided by the Israeli Office of Chief Scientist (known as the OCS), which offers a wide array of incentives, whether in form of grants provided directly to a company (against

28 / November 2012

payment of royalties), facilitating OCS support and tax exemptions for high-tech and manufacturing plants, the incubator programs, academic joint R&D programs, etc. However, one must remember that selecting to utilize OCS assistance may pose certain limitations regarding the sale of the developed intellectual property, the transfer of manufacturing functions to foreign countries, and the payment of royalties. Israel’s higher education institutions are also strongly connected with innovation, as they often maintain their own incubators and accelerators for the use of entrepreneurs-students, and make efforts to commercialize intellectual property developed within the university, by their staff. The latter, allowing third parties to receive a license for such technologies, and utilize them in cooperation with or against royalties payable to the university. Advantages; Obstacles; Incentives: Israel encourages foreign investments, by providing certain tax benefits. Such benefits have led Intel to increase its business activities in Israel, and in addition, have recently led Apple and Barclay’s Bank to setup R&D centers in Israel, in addition to Google, which is already active in Israeli for a couple of years, and other giants such as HP, Siemens and Samsung mentioned above. Furthermore, Israel is a member of the major conventions regarding intellectual property rights, and the enforcement thereof. Israelis tend to think “out of the box”, an ability which some believe to be acquired in the scope of their military service. This ability grants them a unique advantage, especially in the high-tech field, as it enables them to solve difficult problems

while applying relatively simple measures, thereby maintaining quality outcomes. This makes the Israeli labor a “sought-after product”, especially so during M&A, but one should note that the Israeli labor laws, which grant employees with certain benefits, whether mandatory or customary, are not always in line with US, EU or other legislation, and require specific care (for example contribution to severance payment, mandatory contribution to pension funds, education funds, recreational payment, company car, special rules re Employee Stock Option plan, etc.). Any M&A should also take into account the specific corporate legislation in Israel, which although based upon well-established systems, such as those of the UK and of the US, is still relatively stricter in the duties it applies to board members and other officers of the company, and the specific transfer pricing rules, which although adhere to those of the OECD, include certain specific reporting duties by the Company’s officers.

Company: Bar-Zvi & Ben-Dov, Law Offices Name: Eyal Bar-Zvi Email: eyal@bbl.co.il Web: www.bbl.co.il Address: 15 Abba Hillel Rd., Ramat-Gan Telephone: +972-3-7522280

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Doing Business - In Latin America

— In Latin America eye at Latin-IQ was a decision by an Argentine judge to embargo the assets in Argentina belonging to US energy company Chevron. What was interesting was that this was not in response to any supposed wrongdoing by Chevron in Argentina. In effect, it was a ruling in ‘sympathy’ to an earlier Ecuadorean court order that awarded $19bn to the plaintiffs who had challenged Chevron over alleged environmental damages in the Ecuadorean Amazon, which came after years of legal wrangling in Ecuadorean and US courts. Chevron refused to settle the sum to the Ecuadorean plaintiffs, and this led to the Argentine judge’s ruling. At Latin-IQ we think multinationals, especially mining and energy companies, which have investments in several countries in Latin America should assess what the risks are that a ruling in their favour over a small or seemingly isolated environmental-related dispute in one jurisdiction might not be the end of the story, as this could unexpectedly trigger rulings or injunctions against them in another jurisdiction.

Skyscrapers at Cinta Costera, Panama City / Panama

Argentina was also at the centre of another interesting cross-jurisdiction litigation development. Ever since Argentina defaulted on its foreign debt in 2001, several creditors in the US have doggedly challenged the Argentine state in US courts in an attempt to recover funds. But in October one US hedge fund scored a symbolic victory when it managed to ensure that a court in Ghana – across the Atlantic Ocean in Africa – executed an injunction seizing an Argentine naval ship that had docked in port.

-----------------------------------------------------------------------Andy Webb-Vidal is CEO of Latin-IQ Corporation, a boutique business intelligence and risk consultancy specialised in Latin America. ------------------------------------------------------------------------

Latin-IQ is recognised as the leading provider of bespoke business intelligence in Latin America. Latin-IQ undertakes a number of services in the region, ranging from corporate, litigation and regulatory investigations to complex reputational due diligence, asset searches, and market entry analyses. The last quarter in summary Overall, Latin America’s economies have been doing reasonably well during the past quarter, most are growing at a decent rate, and at Latin-IQ we sense there is less concern now than there was a few months ago over the knock-on effects from the economic and debt crisis in Europe. The region’s largest economy, that of Brazil, has not decelerated as fast as some predicted, and indeed there are already some signs suggesting it will see a modest rebound in the coming months, which is good news. However, Brazil still has major structural bottle-necks that are a brake on growth, perhaps the most important of which is its inadequate infrastructure. To tackle this, President Dilma Rousseff announced a plan to sell off a number of concessions in 2013

30 / November 2012

to develop several types of infrastructure, and these concessions are likely to attract considerable interest from foreign investors. Still, the Brazilian economy is vulnerable to external factors, especially Argentina, which accounts for some 20% of Brazilian manufactured exports. The Argentine economy has contracted this year and we think the chances of a rebound in Argentina next year are low. At the northern end of the region, the Mexican economy is doing very well, and moves towards reforming the country’s labour laws and potentially opening up the energy sector to foreign investment have injected a sense of optimism. In the short-term Mexico might be vulnerable to economic factors in the US, where there are renewed concerns about the so-called fiscal cliff. One development has raised some concerns in Colombia: in October the country’s largest securities brokerage, Interbolsa, failed, leading the financial authorities to liquidate the company. Although the regulator said it was a one-off case rather than symptomatic of wider liquidity problems in the financial sector, at Latin-IQ we think this has set off alarm bells in some quarters. But beyond that Colombia continues to attract a strong flow of foreign investment, as are Chile and Peru. Emerging trends One very interesting development that caught our

Predictions Probably the most encouraging prospects in the short term are the expectations for labour market and energy sector reform in Mexico, and the plan for infrastructure development in Brazil. We think these will come to fruition. Although these reforms may well be delayed and end up being diluted or only partially implemented, they will nonetheless be positive growth stimulators in the two largest economies in Latin America. In terms of demand for investigative services from our clients, at Latin-IQ we’ve seen a steady increase in interest in anti-corruption investigations, and we think that will continue as businesses take steps to ensure they do not fall foul of anti-corruption legislation back home, such as the FCPA in the US and the Bribery Act in the UK.

Company: Latin-IQ Name: Andy Webb-Vidal Email: awv@latin-iq.com Web: www.latin-iq.com Address: 16th Floor, Plaza 2000, 50th Street, Panama City, Panama Telephone: +44 (0) 845 680 8026

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Doing Business - In London

â&#x20AC;&#x201D; In London l A third of the total UK M&A transactions are announced in London, the value of which accounts for almost two thirds of the total UK M&A Activity. The Olympics has brought some welcomed attention to London which will hopefully help to stimulate growth; however the short term inconvenience has seen a lot of deals put on hold until the end of the games.

ACQUISITION INTERNATIONAL

RT Coopers is a specialist law firm based in the City of London with offices in Chicago. We serve our clients globally with our associate offices extending as far as Germany, South Africa, United Arab Emirates, the Caribbean, USA, Canada to India. The firm specialises in corporate finance including, M&A transactions, pharmaceutical law, regulatory law, intellectual property law and biotechnology. RT Coopers advises a range of clients across various industry sectors such as Pharmaceuticals, Biosimilars, Life Sciences and Biotechnology, Energy and Infrastructure and Information Technology.

Company: RT Coopers Solicitors Web: www.rtcoopers.com Address: Frazer House, 38 Leman Street, London E1 8EW Telephone: +44 20 7488 9947 Fax: +44 20 7173 6291 Email: enquiries@rtcooperssolicitors.com

November 2012 /

SECTOR SPOTLIGHT:

Doing Business - In Scotland

— In Scotland “Interest rates have now been at an all-time low for a long time. Although a number of businesses are cash rich they are wary of investing this with so much uncertainty in European markets.”

Bridge reflection across the River Clyde at night

The current budget deficit for the whole of the UK is 8.3% and, according to Mr Hughes, “any budget deficit must come home to roost”. He stated that it is imperative that this is kept under control. “Unfortunately, there are competing demands and self-interest is always a threat,” he commented. “An example of this is the funding of the public sector pensions by private taxpayers who have less generous pensions or no pension at all. This is a glaring iniquity but one that is difficult to solve. Politicians of all parties need to take a step back and work out a constructive plan over a prolonged period to reduce the deficit.”

-----------------------------------------------------------------------Tom Hughes is one of four general practitioners within the practice of Gerber Landa & Gee, CA in Glasgow. ------------------------------------------------------------------------

For the past two decades Mr Hughes has specialised in corporate reconstruction and recovery, including the stabilisation and refinancing of Partick Thistle Football Club in Glasgow, several judicial factories for the Law Society of Scotland and administrations, including travel agents and other retail and general businesses. Gerber Landa & Gee was formed by an amalgamation of three practices in 1968. Since then it has developed a substantial portfolio of family businesses across the retail, wholesale, manufacturing, leisure and professional sectors. The firm advises and supports all types of business from formation or acquisition to cessation or sale. The firm is currently a four Partner practice with 25 employees, which allows it to provide compliance backup in taxation, accounting and auditing, although the firm particularly prides itself on its ability to provide business advisory services using its experience to enhance the growth of its clients in their particular area. “It goes without saying that the near collapse of the banks caused havoc in the Scottish economy as well as the UK economy,” said Mr Hughes. He noted that unbridled lending in the decade leading up to the collapse lulled people into a false view that economic growth could be exponential. “Confidence took a severe dent and the political uncertainties in the Eurozone have not helped. Until an element of confidence and trust in the Government, the economy and the banks returns there will be slow progress.”

ACQUISITION INTERNATIONAL

Mr Hughes stated that, as with any economy, foreign investment is very desirable. It is, however, important that Scotland is able to encourage generic investment from Government or the private sector based in Scotland. He believes that pump priming in all of these areas is essential for future economic growth. Many businesses have struggles since the collapse of the banks in 2008. According to Mr Hughes, the increase of the Value Added Tax rate to 20% and employer’s National Insurance to 13.8% have not helped. “The banks have been relatively benign but indications in the current year are that they are taking a more active part in calling in debt,” he added. Discussing the sectors contributing to Scotland’s growth, Mr Hughes explained that the oil and whisky industries have been stalwarts of the Scottish economy for a long time. The public sector has also played a major role. “Different factors create uncertainty in all of these areas and it is not yet clear that renewable energy is the answer,” he observed. “Construction is also important and the Commonwealth Games in Glasgow in 2014 may kick-start sustained growth in several areas. Probably all areas of the UK face similar challenges, apart from Aberdeen and London who have unique advantages because of their locations.” Commenting on the factors that have contributed to Scotland’s slowed growth of 0.8%, Mr Hughes stated that the economic growth throughout the ‘New Labour’ Government in the UK was unsustainable and supported by debt. He noted that there had to be a severe correction and that Scotland is not alone in suffering from reduced growth.

Mr Hughes suggests that the Scottish Government could invest heavily in the public sector to boost growth. However, he noted that it is likely that there will need to be budget cuts. In these circumstances private sector growth must be encouraged and political and fiscal strategies should focus on upon this. It would include the encouragement of foreign investment by promoting the skills and quality of life within Scotland. “I am not convinced that the Scottish or the UK Governments have worked out how to ensure strong and sustained growth without increasing private debt and the budget deficit,” said Mr Hughes. “World Governments and the banking system have been all over the place for the past five years. Until there is stability it is difficult to predict economic growth anywhere with certainty. “History shows, however, that Scotland and Britain are resilient. The recent generations have been very fortunate with no World Wars, many fatal illnesses controlled and generally availability of jobs and constant improvement in the standard of living. It may be that we are reaching an era where there is going to be less cars, less televisions, and less holidays, although the plethora of iPhones and iPads contradict this. Prosperity does not necessarily have to be financial. It is, however, one factor that affects quality of life. If Governments are able to deal with the economic difficulties with compassion for the less fortunate, then I see prosperity of a different kind in the future,” he concluded.

Company: Gerber Landa & Gee Name: Tom Hughes Email: tom.hughes@gerberlandagee.co.uk Web: www.gerberlandagee.co.uk Address: 11/12 Newton Terrace, Glasgow, G3 7PJ

November 2012 /

SECTOR SPOTLIGHT:

Doing Business in a Transcontinental Country: Georgia

â&#x20AC;&#x201D; In a transcontinental country: Georgia Tbilisi / Georgia

-----------------------------------------------------------------------Kakhaber Kakhiani is the Director of Microfinance Organization Easycred Georgia LLC. ------------------------------------------------------------------------

For this purpose Microfinance Organization Easycred Georgia LLC organizes training for the colleagues every year to reach maximal results.

Microfinance Organization Easycred Georgia LLC was established on November 19th of 2008 in the city of Tbilisi. The Organization passed registration at the Financial Supervision Agency on February 20th 2009 under the order N20.02/1 and in pursuance of the Georgian law.

Every loan in the company is collateralized with real estate and gold.

Microfinance Organization Easycred Georgia LLC has created a team of professionals, who render their clients high quality service.

Also, our company never forgets ethnic minorities, for this reason, we open a new branch in Manueli. We strongly believe that our support is very important for agriculture, so we start to support agricultural loans, with maximal low percent.

The main goal of the organization is to provide fast and quality service, even the time-consuming procedures should be done in minutes that clients should not have to wait. -----------------------------------------------------------------------Margarita Artylakva is the Complementary Director of International Law-Consulting Group Artylakva & Partners LTD. ------------------------------------------------------------------------

International Law-Consulting Group Artylakva & Partners LTD â&#x20AC;&#x201C; ILCG was founded on foreign investments. By now it is one of the leading legal companies in Georgia. What is most important and distinguishes ILCG from other competitors is the services in various foreign languages. The company staff masters excellent Georgian, Russian, English, Spanish and Ukrainian languages, and if needed can suggest a specialist of any language.

34 / November 2012

Microfinance Organization Easycred Georgia LLC is a member of Microfinance Association in United Kingdom.

Company: Microfinance Organization EasyCred Georgia LCC Name: Kakhaber Kakhiani Email: k_kakhiani@easycred.ge Web: www.easycred.ge Address: 64 Mitskevichi Street, 0194 Tbilisi Georgia Telephone: +995 32 2 196 196 Fax: +995 32 2386 664

Microfinance Organization Easycred Georgia LLC is ready for the further growth and development.

Today, the company serves mostly legal entities, namely, developer, communication and investment companies. In ILCG one-time consulting is delivered to clients, but , mostly, complex legal services are suggested. This packet involves ideas for founding a company and involves all the stages of its activities. ILCG suggests its clients Internet service, through e-mail the company specialists introduce relevant corrections into the sent documents and again through Internet send them back to the client. ILCG is innovative, never stops on achieved and keeps introducing new technologies for delivering perfect services to its client.

Company: International Law Consulting Group Artylakva and Partners LTD Name: Margarita Artylakva Email: meg_margarita@yahoo.com Web: www.ilcg.ge Address: 11 Apakidze Street (Tbilisi Business Centre), Tbilisi, Georgia Telephone: +995 79 70 00 99

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Doing Business in a Transcontinental Country: Turkey

— In a transcontinental country: Turkey OTHER EXPERTS IN THIS AREA

Company: Koyuncu Law Office Name: Ahmet Koyuncu Email: av.ahmetkoyuncu@gmail.com Web: www.ahmetkoyuncu.av.tr Address: 1378 Sok. No:6/12 Akademi Apt., 35220 Alsancak İZMİR, TURKEY Telephone: +90.232.463.34.65 (pbx)

-----------------------------------------------------------------------Akugur Law Office, founded in 2006 by Mehmet Akugur, renders best quality legal and consultancy services through its professional team, its commitment to perfection in client services and with its extending business potential as well as its expertise in the various disciplines of law. ------------------------------------------------------------------------

Akuğur Law Office is providing legal and consultancy services to major international, domestic and multi-national companies on a wide range of legal issues that have an impact on their operations, and the office has taken a prestigious place in the legal market together with its coordinated and integrated, professional approach, advanced experience and introduces preventive and guiding legal services by transforming the existing and potential risks of clients into business decision support services and therefore creating an essential added value for its clients. According to Mr Akugur, one of the biggest advantages of being geographically a transcontinental company is being part of two continents with different levels of economic and cultural growth. “While doing business, we take the opportunity of bring parties from different continents together in

36 / November 2012

an impartial and business-friendly environment with numerous investment opportunities, mostly in Istanbul as well as in other cities,” he commented. “For instance, Asian companies aiming to reach European customers can easily achieve their purpose by investing in Turkey without going too far west since for Asia, Turkey is the gate to Europe.” Mr Akugur explained that Turkey is a European country as well as a transcontinental country and Turkish mainstream legislation is already in line with the relevant European legislation and directives. Therefore, while traditions of eastern countries have reflections over the Turkish people and culture, doing business is regulated by the rules of the western world setting forth the principles of transparency and effectiveness. “Oppositely, in addition to certain western companies, several companies of the eastern world having resources for investment deem Turkey as one of the most suitable countries to invest in due to the reasons set forth above,” he added. Mr Akugur observed that the Turkish economy is in stable growth and that there are many areas of the economy that are still open for doing business in.

“In the last years, Turkey became one of the best countries to invest in due to several reasons, some of which are its liberal and successful economy, qualified cost-effective workforce, tax advantages and treaties for prevention of double taxation, incentives, and a large domestic market. “We believe that Fitch Ratings’ recent upgrade of Turkey’s investment rating from “BB+” to “BBB“ shall also have a positive impact in the number of potential foreign investors in doing business in Turkey,” he concluded.

Company: AKUGUR LAW OFFICE Name: Mehmet Akugur, LL.M. Email: mehmeta@akugurlaw.com Web: www.akugurlaw.com Address: Levent Mahallesi, Cilekli Caddesi, No:10 Levent, Besiktas-Istanbul/TURKEY Telephone: +90 212 286 48 28

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Doing Business in a Transcontinental Country: Turkey

“With its young and educated human resource and its well established business infrastructure, Turkey has various attractive features for foreign investors.” Mr Çelen noted that the average growth rate of 5.53% for the last 10 years, which is well above many OECD countries, implies a dynamic and growing economy. WTO outputs also state Turkey is among the most dynamic 20 countries in the world trade. “The Turkish Government considers foreign capital as an essential factor in its efforts to rank among the top economic powers of the world at the end of the 20th century,” stated Mr Çelen. He explained that flexible foreign investment policies have been introduced as a part of the liberalisation of the Turkish economy. “The foreign investment legislation provides a secure environment for foreign capital via support from several bilateral and multilateral agreements and organisations, granting such capital the same rights and obligations as local capital, while guaranteeing the transfer of profits, fees and royalties, and the repatriation of capital.

-----------------------------------------------------------------------Arif Çelen is the Managing Partner of ÇELEN Ltd. ------------------------------------------------------------------------

Mr Çelen began by explaining that Turkey enjoys a very special location at the crossroads between East and West, overlapping Europe and Asia geographically. “Due to Turkey’s geopolitical location in the region, Turkey as a natural bridge between both East-West and North-South aces, creates an efficient and cost effective outlet to major markets,” observed Mr Çelen. “Further, its unique position at the crossroads of the world trade routes and its proximity to the energy producing regions in Central Asia are factors that further raise its potential for the coming years.” Mr Çelen noted that Turkey is located at the gateway of Middle East and Caspian petroleum and Central -----------------------------------------------------------------------Merve Akkuş is an associate in Bezen & Partners, also a member of the Istanbul Bar. ------------------------------------------------------------------------

Bezen & Partners has extensive experience in complex cross-border transactions and a strong team consisting of both foreign and local qualified lawyers who are members of many international groupings. The partners previously worked at magic circle law firms and in Turkish Governmental Authorities. Turkey, due to its geographic location, is a natural bridge between Europe and Asia. It therefore attracts investors from both European and Asian countries. The ports located in Turkey constitute open doors for both Caspian and Mediterranean countries. The biggest advantage Turkey has over other transcontinental countries is its stable political environment, (which in recent months is in stark contrast to its neighbours) its highly regulated banking system and its favourable demographics. The young population of Turkey (16.8% are aged between 16 and 24) also plays a critical role in contributing to both growth in production and growth in the working force of Turkey.

ACQUISITION INTERNATIONAL

Asian natural gas to the west, which are regarded as the future energy reserves of the world. Furthermore, Turkey is the leading investor in the Caucasian and Central Asian Turkic Republics. “Due to her strong cultural and historic ties, Turkey provides privileged access and a perfect base to develop business with these countries,” he commented. “With a population of 75 million and an increasing consumer purchasing power, Turkey offers a huge and dynamic domestic market to investors. The new quality orientated generation in both manufacturing and services sectors ensures high quality levels. The Turkish qualified labour force is well-known with its skills and learning capacity and competitive labour rates offer cutting-edge for industries.

The current business environment is highly energetic and hopeful as Fitch raised Turkey’s rating to BBB- from BB+ in November. This upgrade raised expectations and the market expects similar upgrades from S&P and Moody’s. The biggest factor contributing to growth is foreign investments which are expected to increase off the back of the improved ratings. Furthermore, the incentives that the government put into place has helped attract foreign investors throughout the country which has already reached approximately € 10 billion since June. The incentives operate on a regional basis and also provide government incentives for asset management companies founded in Turkey and the international funds run by these companies. Even though the current market circumstances are highly positive and energetic, the unstable political environment in neighbouring countries such as Syria cannot be ignored. It is estimated that around 120,000 refugees have crossed the border onto Southern Turkey. Further, European countries

“Several investment incentive alternatives have been introduced such as free energy, free land and government contribution to labour costs in addition to traditional corporate tax and VAT exemptions for investors,” he concluded.

Company: ÇELEN SMMM Ltd. Sti. Name: Arif Çelen Email: inbox@celenltd.com Web: www.celenltd.com Address: Büyükdere Cad. Ferro Plaza No:155/9 Zincirlikuyu – Istanbul TURKEY Telephone: +90 212 347 41 25 (pbx) Fax: +90 212 347 41 27

having contributed €24 billion in trade to Turkey in the first in the first two quarters of 2012 may have to reduce investment if the Euro zone crisis intensifies. Regardless of the difficulties faced by its neighbours, the outlook for the next five years is currently positive.

Company: Bezen & Partners Name: Merve Akkuş Email: merve.akkus@bezenpartners.com Web: www.bezenpartners.com Address: Eski Büyükdere Caddesi No: 14, Park Plaza, Floor: 12 No: 29, 34398 Maslak, Istanbul Telephone: +90 (0) 212 366 6813

November 2012 /

SECTOR SPOTLIGHT:

Forming Companies and Doing Business in Bangladesh

FORMING COMPANIES & DOING BUSINESS IN BANGLADESH l Over the past 5 years, Bangladesh has been growing at an annual rate of approximately 6%, mainly due to its progressing industrial and services sectors. This growth has made the country an increasingly attractive option for entrepreneurs looking to take advantage of opportunities in this challenging economic climate. Bangladesh entices these investors with some very attractive ‘pull factors’; rapid growth and the introduction of freer trade and investment policies, 100% foreign ownership, no minimum capital requirement, tax exemptions including interest on loans, capital gains tax and costs incurred from remuneration paid for foreign technicians in certain sectors and finally, there is no shortage of major international banks offering competitive services to business customers. Acquisition International speaks to experts in Bangladesh for their view on the country and its advantages for business. Dhaka / Bangladesh

OTHER EXPERTS IN THIS AREA

Company: S. F. AHMED & CO, Chartered Accountants Name: Md Moktar Partner Email: sfaco@sfahmedco.org sfaco@citechco.net Web: www.sfahmedco.org Address: House 25, Road 13A, Block D, Banani, Dhaka 1213, Bangladesh Telephone: +880 2 881-6467 -----------------------------------------------------------------------A.K.M. Rafiqul Islam is the active Chairman of Rangamati Waterfront, a leisure and hospitality resort. ------------------------------------------------------------------------

business chambers, the government withheld from introducing the change in the Company Law.

Commenting on company formation levels in Bangladesh, Mr Islam explained that growth potentiality is 6%+ annually, and that it went as high as 8%. This, he noted, is a situational advantage as well as availability of manpower.

According to Mr Islam, Bangladesh enjoys a special situation in respect of Textiles & Garments – 80% of Bangladesh’s foreign exchange comes from this sector. He noted that, besides its traditional markets in the US and EU, it is expanding to India, China, Japan, Russia and South America. Leather and leather goods such as shoes, bags, and accessories are picking up every year.

He added that per capita income of Bangladesh is higher than in India. In terms of doing business in Bangladesh, the country ranks higher than India, Bhutan and Afghanistan, as per the IFC index for 2013. Bangladesh is ranked 129, India 132, Bhutan 148 and Afghanistan in 168. Mr Islam explained that Business Chambers, headed by FBCCI, is very active in protecting the interests of business and industry. Recently, the government went back from its decision to amend Company Law 1994, enabling the government to appoint an administrator in a private company found delinquent. Due to strong opposition and a stand from the

38 / November 2012

Mr Islam is confident that industrial growth will be impressive in the next 12 months, especially in textiles, garments including knit fabrics, sweaters, and leather goods. “Already the outline of growth in the production and export of garments and shoes would exceed double digit figures (ranging between 20% to 30%) in spite of the recession in the EU an stagnation in the US,” he explained. “Nothing is made available on a platter, but the entrepreneurs take the risk based on the indication

study and seeing what others are doing. If you are out of the Dhaka City at night you will find illuminated high rise buildings busy making garments to catch up the shipment. Bangladesh was never in the ship building business except for making small boats for riverine communication. Today, we are making ships for the German and the Scandinavian ports,” he concluded.

Company: Rangamati Waterfront Name: A.K.M. Rafiqul Islam Email: rangamati.waterfront@gmail.com Web: www.rangamatiwaterfront.com Address: Concord Tower, Flat #602, 113 Kazi Nazrul Islam Avenue, Bangla Motor, Dhaka-1000 Telephone: 88-02-9341086

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Joint Ventures - the Philippines

JOINT VENTURES

— the Philippines

l Joint ventures (JV) are becoming an increasingly common way for companies to form strategic alliances; joining forces with a company with the right distribution channels, technologies and finance can help to grow the bottom line, develop new products and move into new markets. Suitable for businesses of all sizes, multinationals right down to SMEs have found JV to be one of the most popular methods of expanding business in recent years. But whilst joining forces with another firm allows you to share resources, expertise and reward, you also share the risks; entering into a JV is a major decision. Acquisition International speaks to Roderico V. Puno and Christina E. Reside to find out how to ensure a joint venture is a success. energy projects under a service contract with the Philippine Government are not considered separate taxable entities, and are not subject to corporate income tax.

Manila / Philippines

Because a joint venture is essentially contractual in nature, the success of a joint venture will depend largely on the compliance by the joint venture parties with the terms of the joint venture contract. And since a joint venture relationship is also personal in nature, it is imperative that the joint venture parties continue to repose trust and confidence in each other. It is also vital that the interests of the joint venture parties remain common and unified, and do not become divergent, while the relationship exists. A joint venture will only be successful if the relationship of the parties does not break down.

-----------------------------------------------------------------------Roderico V. Puno is a Senior Partner and Christina E. Reside is a Partner of Puno & Puno. ------------------------------------------------------------------------

In the Philippines, a joint venture is a common strategic arrangement for undertaking infrastructure, construction and energy projects, and for accommodating foreign investments in activities that are subject to foreign equity restrictions. They are primarily governed by Philippine laws on contracts. The prevailing legal principle in Philippine jurisprudence is that a joint venture can be characterised as a form of partnership. Applying Philippine partnership law, joint ventures may generally be constituted in any form as long as all the elements of a valid contract are present. The formation of joint ventures does not require the prior approval of the State, except joint ventures that are registered as corporations or formal partnerships with the Philippine Securities and Exchange Commission.

ACQUISITION INTERNATIONAL

The law protects the “personal” and fiduciary relationship of the joint venture parties, which, similar to the relationship of partners, is typified by the principle of delectus personae. A third party may only be admitted to the joint venture with the consent of the other parties. Also, a joint venture can easily be dissolved by the will of a party. Consistent with the feature of “unlimited liability” in partnerships, parties to a joint venture are liable to creditors with their separate property beyond their contributions, except in the case of limited partners. Also, under the principle of “mutual agency”, joint venture parties are agents of each other, and the act of one party in carrying out business generally binds the others. Joint ventures are taxed like a corporation and are subject to corporate income tax. However, unincorporated joint ventures for construction projects and petroleum, coal, geothermal and other

Company: Puno & Puno Law Offices Web: www.punolaw.com Address: 12th Floor East Tower, Philippine Stock Exchange Center, Exchange Road, Ortigas Center Pasig City 1605, Philippines Telephone: +632 631 - 1261 to 64 Name: Roderico V. Puno Email: rvpuno@punolaw.com Name: Christina E. Reside Email: cereside@punolaw.com

November 2012 /

SECTOR SPOTLIGHT:

Capitalising on MENA Investment Opportunities

CAPITALISING ON MENA INVESTMENT OPPORTUNITIES

l There’s no doubt that the Arab Spring Uprisings and economic difficulties have dominated recent press coverage about the MENA region Over the last decade, the region has been growing at 5% and suffering unemployment above 10%. The absence of strong growth in the region has been a serious constraint to employment and one of the major issues is the rapidly growing labour force – there are simply not enough jobs to support these jobseekers. There are however plenty of opportunities; the potential for highly profitable investment in MENA is enormous, but many investors remain unaware of the past record and current opportunities. It is an area rich in natural resources, with an increasingly well educated workforce and plenty of room for private sector growth. According to research from Barclays, two thirds of British retailers expect their overseas sales to increase over the next five years and rank the MENA region fifth highest globally as their preferred future destination. Acquisition International speaks to MENA experts to learn more about the region the opportunities it can provide. Dubai / United Arab Emirites Anna Omelchenko / Shutterstock.com

economic expansion which has weathered the global financial crisis as well as many political milestones in recent years.

reform programs in order to promote economic activity, enhance socio-economic levels and reduce disparities amongst the population,” he explained.

“On the back of steady oil prices, large fiscal power and the governmental efforts to diversify the economies away from hydrocarbons and to promote the role of the private sector, investment opportunities are now available in a large number of sectors and niche segments which are benefiting from high and growing income levels and largely attractive demographic dynamics,” he commented.

Defensive sectors like healthcare, education, food and beverage, power, utilities and retail are benefiting from attractive income-demographic dynamics and a misbalance between supply and demand, observed Dr. Solh. Services catering to the basic needs of populations are poised to benefit from the long-term economic expansion.

In the rest of the MENA region, Gulf Capital considers Egypt a key investment destination in the long term. This is because the country has had, to-date, the most orderly political transition among Arab Spring countries and is on track to rebuild investor confidence, notwithstanding short-term challenges.

-----------------------------------------------------------------------Dr. Karim El Solh is the CEO of Gulf Capital Pvt. JSC. ------------------------------------------------------------------------

According to Dr. Karim El Solh, CEO of Gulf Capital, local economies in the GCC region, barring Bahrain, have been able to weather the regional political disturbances as they have benefited from solid socioeconomic fundamentals and on-going reforms. He explained that the business environment continues to be largely attractive by global standards as the GCC now offers business-friendly environments to local and global investors in addition to a long-term

40 / November 2012

“Gulf Capital believes in the potential of the MENA region, in particular its target geographies of GCC and Egypt based on the above-mentioned fundamentals. It continues to see above average growth in many niche sectors and a vast untapped pool of opportunities when compared to similar global emerging economies,” he concluded.

“Investors are already scouting for opportunities especially as the country is an economy at the very early stages of its economic development. When considering its large and growing population, Egypt is a large emerging market with a huge catch-up growth ahead,” said Dr. Solh. Post-Arab Spring, Dr. El Solh believes that the majority of the MENA region (outside GCC) presents vast untapped investment opportunities. When compared to other emerging markets, many of these countries have the potential of catch-up economies, with a huge growth gap to fill in many sectors and niche segments. “To capitalise on these potential opportunities, the new governments have to implement large scale

Company: Gulf Capital Name: Dr. Karim El Solh Email: kelsolh@gulfcapital.com Web: www.gulfcapital.com Address: Sila Tower, 25th floor, Sowwah Square, Al Maryah Island, P.O. Box 27522, Abu Dhabi, United Arab Emirates Telephone: +971-(0)2-671 6060

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Capitalising on MENA Investment Opportunities Doha skyline at night / Qatar

-----------------------------------------------------------------------Mohamed Khodeir is a Partner and Head of the Qatar Office at Al Tamimi & Company. He has worked at the company for seven years. ------------------------------------------------------------------------

Al Tamimi & Company is the largest regional firm in the Middle East with over 200 lawyers, located in ten offices across six jurisdictions, practicing in different areas of law, including: corporate; commercial; banking & finance; dispute resolution; construction & engineering; transportation; maritime; insurance and technology; and media & telecommunication. “The advantage our firm holds is the focused local law capabilities, having civil law trained lawyers working closely with common law practitioners from all over the world to provide a bed of services that is unique that meets international standards, yet takes into account enforceability and local law requirements,” commented Mr Khodeir. “Our firm is a regional firm with local practices – each jurisdiction adopting high international standards in the quality of services provided to our clients from all over the globe and those who are based in the region.” Mr Khodeir describes the business environment in the MENA region as “full of opportunities with all the potential growth levels and existing ones”. However, he noted that with such growth rates and opportunities one must pay attention to precautionary measures, learning from the experience of other jurisdictions and the failures of companies all over the world. “This requires a sense of duty of care on all those working in or advising on business related matters, along with adopting precautionary measures to be able to go through fast growing business and any economically driven slow times that will and do happen,” he added. While Mr Khodeir does not believe that the growth rate in the region is as low as has been reported, he stated that the factors influencing the rate include political instability in some parts of the region along with the globalisation impact that attached the region to the US and Euro zone. “As such, one cannot say that there has been the same growth level similar to five years ago. However, the

ACQUISITION INTERNATIONAL

growth levels in the MENA region have not been at a rate that one would criticise too much, given all that has been happening in the region over the past two years,” observed Mr Khodeir. He explained that, in many businesses, reports indicate that one of the factors that cause investors to hesitate when investing in the MENA region is the regulatory regime, and the swiftness of the process to establish and maintain businesses. “There have been many efforts to address these aspects in the region, yet there is a lot more work that can be done to ensure the establishment existence of businesses and relevant transactions on the capital markets and M&A activities as well are better facilitated. “As such there is no end to regulatory improvement similar to anywhere else in the world, particularly taking into account the historical nature of the development in the region which has not yet established long-lasting practices that can be referred to in all details. Thus one has to approach business related activity with a novel method yet taking into account the local regulatory requirements while continuing to work closely with regulators to propose ideas on how to continue improving the regulatory frame work.” Commenting on the effect of the Arab Spring, Mr Khodeir stated that it will open opportunities for many jurisdictions once stability has returned to the affected nations. He noted that there are a lot of infrastructure activities to be conducted, which creates many job and business opportunities all over the jurisdictions.

Mr Khodeir observed that countries such as Egypt and KSA have a high population, which is an advantage in terms of size of the market and a disadvantage in terms of the level of growth needed for a country like Egypt. He added that there are challenges of a different nature in jurisdictions with a low population, in terms of increasing the size of market demand. Discussing the most attractive and promising sectors, Mr Khodeir highlighted infrastructure, technology and media and telecommunications. He noted that Al Tamimi & Company has already taken steps towards being able to provide a high level of services in different sectors, including those mentioned above. For example, the firm has a designated focused technology, media and telecommunication (TMT) practice, which is capable of providing the level of expertise clients working in such sectors require. “Although size is not the sole requirement to provide high level service, it is important to have sufficient resources capable of handling all client needs on the ground instantly,” he explained. “The size of our firm, being the largest in the Middle East, allows us and places us in a very unique position in that respect, particularly as we give attention to cost efficiency and high quality services, along with the numerous resources and creative capabilities we have. All these factors assist us to address the client needs in all sectors of business and transactional activities, along with the local knowledge they require. “I am quite certain that the MENA region, within five years, will be in a better place given the vast opportunities available for investment and growth. I have no doubt in this regard,” he concluded.

Mr Khodeir believes that the most attractive investment destinations in the MENA region are Qatar, UAE, KSA, Libya and Egypt. He noted that these jurisdictions have different key strengths. “For example, UAE has built in strong infrastructure that opens up more expansion opportunities in the region, while Qatar has a major vision that it is working to achieve, which requires a lot of work in different dimensions,” he explained. “On the other hand, Egypt and Libya have a lot of revamping and development to work on in terms of regulatory governance requirements and major infrastructure opportunities.”

Company: Al Tamimi & Company Name: Mohamed Khodeir Email: m.khodeir@tamimi.com Web: www.tamimi.com Address: PO Box: 23443, Doha, Qatar Telephone: +974 4457 2710

November 2012 /

SECTOR SPOTLIGHT:

International Trade: Mitigating Risk and Maximising Opportunity

INTERNATIONAL TRADE

— Mitigating Risk and Maximising Opportunity

l Trading internationally can open many new avenues for a business and allow access to a broader scope of clients. However, increasing trade volumes together with greater scrutiny of cross border flows and a focus on compliance with export controls and import regulations, the senior management of a business can find themselves faced with some rather complex and costly challenges. Acquisition International discusses international trade with specialists in the field. CANADIAN PERSPECTIVES ON INTERNATIONAL TRADE -------------------------------------------------------------------Greg Kanargelidis is a Partner at Blake, Cassels & Graydon LLP. -------------------------------------------------------------------Trading internationally provides opportunity to increase profits by enlarging a company’s customer base; however, it also presents additional risks – that, if not managed appropriately, can lead to significant financial penalties and even criminal liabilities. Different countries have their own specific rules regulating trade and investment. There are restrictions on imports and exports, customs requirements, tax liabilities, ownership rules and a host of varied circumstances that make international trade and investment particularly complex.

The Canadian government has engaged in a vigorous and robust economic sanctions enforcement program, as an instrument of Canadian foreign policy, and we anticipate that this trend will continue. Sanctions, which apply to Canadians and anyone doing business in Canada, establish trade, financing and investment restrictions on exports, imports, and other business activities. Canada imposes unilateral sanctions under the Special Economic Measures Act. The penalties for non-compliance with Canadian sanctions legislation are severe, including imprisonment for up to five years and unlimited monetary fines.

Companies engaged in international trade with Canada need to ensure compliance with customs requirements and import controls to prevent significant liability. All goods imported into Canada are subject to the provisions of Canada’s Customs Tariff and the Customs Act and those that require permits are listed on the Import Control List. Non-compliance with customs laws can result in several enforcement measures, including seizures, ascertained forfeitures, or the imposition of administrative monetary penalties. It is advisable for companies to enlist an expert

In addition to ensuring compliance with Canadian regulations, foreign companies with Canadian entities should structure their affairs to maximize the benefits offered by trade agreements. With many trade agreements in force and many more in the negotiation phase, Canada is continually striving to strengthen economic ties with other regions. Canada recently signed a bilateral investment treaty with China, is presently in free trade agreement negotiations with the European Union, and was recently invited to join the Trans-Pacific Partnership.

UNCOVER HIDDEN TREASURES IN GLOBAL ACQUISITIONS: APPLICATION OF CUSTOMS AND TRADE STRATEGIES TO LOWER COSTS -------------------------------------------------------------------Tom Travis is the managing partner of Sandler, Travis & Rosenberg, P.A. -------------------------------------------------------------------Along with delving into a company’s import/export practices during the due diligence process to ascertain if there is liability or exposure, Sandler, Travis & Rosenberg and Sandler & Travis Trade Advisory Services, a leading global customs and trade firm, recommends scrutinizing a company’s operations prior to a merger or acquisition in order to uncover opportunities to reduce costs, increase margins, and reap substantial savings for investors and customers through application of customs and international trade laws and agreements.

programs are met. A complete analysis of such potential cost-savings should be part any review.

Avoid Paying Duty with Free Trade Programs In general, Free Trade Agreements (FTAs), Economic Partnership Agreements (EPAs) and Special Preference Programs allow for qualified goods to be imported into member countries under duty free or preferential rates thereby dramatically reducing landed costs. Frequently companies fail to discover or maximize such opportunities.

Adopt the First Sale Rule to Reduce Your Import Tax Bill Companies involved in multi-tiered import transactions can lawfully minimize import duties, fees, and taxes by basing the customs import value on the factory’s sales price to an intermediary rather than the intermediary’s sale price to the importing company. This First Sale Rule or Middleman Pricing is in force in the US and the EU.

FTAs and EPAs are constantly evolving and experts must be employed to assist companies with setting up systems and ensuring that the rigorous requirements of the

Take Advantage of Inward/Outward Processing Relief If the company imports goods that it later processes

ACQUISITION INTERNATIONAL

knowledgeable in the core customs areas including tariff classification, valuation, origin, import quotas and import licences, and who possesses the ability to guide them on compliance with customs and trade laws and regulations.

Consider Taking Advantage of Free Trade Zones Free trade zones (FTZ) and bonded facilities are designated geographical areas where imported goods can be warehoused and duty and VAT payments held in abeyance until the goods are shipped to the customer. Because parts used in the manufacture of goods often carry higher duty rates than the finished products, importer/manufacturers may be able to bring goods into the zone, produce the finished product, and then only pay duty on the rate for the finished product. If the company you are acquiring is involved in manufacturing using imported goods, re-exports goods, or stores imported goods prior to resale, the potential benefits of FTZs and bonded facilities may be significant.

It is the responsibility of businesses to understand the international trade law requirements of the countries with whom they interact and to monitor their activities and relationships to ensure compliance. Companies would benefit from enlisting the help of an expert to advise on applicability, exemptions and compliance issues. Greg Kanargelidis is a Partner at Blake, Cassels & Graydon LLP. Greg’s practice embraces all areas of international trade including export and import controls, trade remedies, customs, dispute resolution and international trade agreements. Greg is frequently recognized in numerous publications as a leading practitioner in the field.

Company: Blake, Cassels & Graydon LLP Name: Greg Kanargelidis Email: greg.kanargelidis@blakes.com Web: www.blakes.com Address: 199 Bay Street, Suite 4000, Commerce Court West, Toronto, ON M5L 1A9, Canada Telephone: +1 416-863-4306

and exports, it can claim Inward Processing Relief (IPR) through either suspension (duty and VAT avoidance) or drawback (duty and VAT reclamation), where the government reimburses the exporter for amounts previously paid. Outward processing regimes permit duty savings where domestic content is used in the manufacture of products to be imported from other countries. Due diligence in the import/export arena is an ongoing dynamic process. While regular import/export process reviews are recommended to ensure that the company is not only in compliance with applicable laws, regular reviews can also reap great benefits by uncovering opportunities for savings.

Company: Sandler, Travis & Rosenberg, P.A. Name: Thomas G. Travis Email: ttravis@strtrade.com Web: www.strtrade.com Address: 1000 NW 57th Court, Suite 600, Miami, Florida, 33126 Telephone: +1 305 894 1001

November 2012 /

SECTOR SPOTLIGHT:

The Importance of Protecting Intellectual Property

THE IMPORTANCE OF PROTECTING INTELLECTUAL PROPERTY

— Safe hands for your brands l Intellectual property (IP) rights are valuable assets for any business, possibly among the most important it possesses. The IP rights of a business can set them apart from their competitors, form an essential part of their marketing or branding and can often be used to secure loans or sold or licensed providing an important revenue stream. It can be surprising to some how many aspects of the business can be protected, from the company name or logo to designs, inventions and works of creative or intellectual effort. It is of the utmost importance that the senior management of a business understand the importance of their intellectual property and seek the right advice in order to ensure that it is protected. Wildbore & Gibbons LLP pioneered trade mark monitoring by establishing Trade Marks Directory Service (usually called TMDS) in 1942. This enabled subscribers to be kept informed of the publication of potentially conflicting trade mark applications at home and abroad and to give them the opportunity of opposing them. The firm acts for all types of client, including: publishers; insurance companies; merchant banks; fashion houses; Government departments; and National Parks. Wildbore & Gibbons’ major clients include: Aviva plc; The Economist Newspaper Limited; Nomura International plc; William Grant & Sons Limited; Wadworths; Pinewood Studios; McLaren Racing; Thomas Pink Limited; Elemis Limited; Fitness First Limited; and Bourne Leisure Limited. -----------------------------------------------------------------------Protecting your Intellectual Property – Brand protection and Brand management. ------------------------------------------------------------------------

Wildbore & Gibbons LLP are the most experienced independent trade mark specialists operating in the UK –established in London in 1887. One of our first clients, John Begg Limited, a whisky distillery, was among the first companies to register a trade mark under the UK Trade Mark Registration Act of 1875. Unlike other lawyers, the firm works exclusively in trademarks and designs. This specialisation allows the firm to guide clients through the legal and

44 / November 2012

business issues that they may face when establishing, protecting and promoting their brand. The expertise of the Wildbore & Gibbons team saves clients both time and money while ensuring comprehensive protection for their trademarks and the visual features of their products. Wildbore & Gibbons LLP acts in all kinds of matters relating to trademarks and designs, including: searching; registration; renewal; licensing; assignments or other transfers of rights; cancellations; infringements; and passing-off. The firm also manages domain name portfolios and acts for its clients in domain name arbitrations and proceedings.

Company: Wildbore & Gibbons LLP Name: John F Kennedy Email: john.kennedy@wildbore.eu Web: www.wildbore.eu Address: Wildbore House, 361 Liverpool Road, London N1 1NL Telephone: +44 (0)20 7607 7312

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Foreign Direct Investment

FOREIGN DIRECT INVESTMENT

— in and out of...

l Foreign direct investment is in great demand; after all it doesn’t only bring capital, but plays a vital role in importing technology, experience and human skills. 2012 has seen a pickup in global levels of FDI, according to the Institute of International Finance, net FDI flows will this year hit around $513-billion and next year, the figure is estimated to reach $536-billion, not too far off the all-time record of $560-billion in 2008. Amidst turbulence in the global investment community, one element has remained constant since the onset of the financial crisis and that is the flow of foreign direct investment from the developed world into emerging markets. Acquisition International examines current FDI activity around the world.

— Chad

-----------------------------------------------------------------------Kossi Mangua Nabia is the Managing Partner and chartered accountant at FECMA CHAD – Audit and Accountancy Firm. ------------------------------------------------------------------------

Commenting on Chad’s approach to foreign direct investment, Mr Nabia noted that the country is performing administration in relation to FDI. There is an agency (ANIE – Agence National des Investissements et des Exportations – www.anie-tchad.com) to promote FDI and dedicated to any investors interested by Chad. “An investments chart exists (law voted by the National Assembly) that promotes investment in our country,” he added. “Some fiscal advantages are listed in the aim to facilitate FDI in the country.” Mr Nabia observed that the oil extraction and production, agriculture, industry and services sectors in Chad attract the most capital, and that France, China, India and the USA are the main countries responsible for FDI into the country. “Chad has witnessed growth since the beginning of oil production in 2003; but in recent years Chad

— Japan -----------------------------------------------------------------------Junya Naito is a Partner at Momo-o, Matsuo & Namba. ------------------------------------------------------------------------

Momo-o, Matsuo & Namba is a middle-sized corporate law firm in Tokyo, Japan with expertise in various areas of law including cross-border transactions, M&A and complex domestic and international litigation/arbitration. While many of the firm’s partners are nationally and internationally recognised experts in their fields of practice, it has maintained a small-firm mind-set when it comes to the individual attention clients deserve. To ensure this, each partner maintains close and direct contact with his or her clients. Mr Naito explained that Japan’s approach to foreign direct investment depends on the industry. However, as a general rule, he stated that Japan is no less accessible than other developed countries. Several laws and regulations are relevant including

46 / November 2012

is promoting other sectors like agro-business to increase FDI,” he explained. “We think that many sectors present opportunities for investors. We can mention services (bank, finance, insurance on life, TIC “technology on information and communication” audit, management and training), oil extraction and production, electricity and water (new energy like solar or wind), and transport by rail.” According to Mr Nabia, reforms are necessary to make Chad more attractive and accessible to foreign investors. “For example, if we read the Doing Business report 2013 the rank of Chad is 184 out of 185 countries,” he commented. “It means that there are a lot of reforms to do if the country needs to increase FDI in a few years. We think that the most important reform is concerned with the fiscal law and the rate of tax on benefits which is 40% and the highest in Central Africa.” With these reforms necessary to improve the FDI environment, Mr Nabia concluded that the level of foreign investment in the country will not really increase in 2012/13.

Company: FECMA - TCHAD Name: NABIA Kossi Mangua Email: kossi.nabia@yahoo.fr or kossi.nabia@fecma-expert.com Web: www.fecma-expert.com Address: BP 2179 Avenue Charles de Gaulle, N’Djaména CHAD Telephone: +235 22 53 36 88 or +235 63 55 87 99 Company: ANIE (Agence Nationale des Investissements et des Exportations) Name: ADOUM Youssouf Email: adoum.youssouf.ibrahim@gmail.com Address: BP 424 Ministère du Commerce et de l’Industrie (MCI) Telephone: + 235 66 71 54 53/99 47 22 46

the Foreign Exchange and Foreign Trade Law and specific industrial laws.

“Participating in the Trans-Pacific Partnership (TPP) would also facilitate FDI,” he added.

“Inward FDI peaked in 2008 and has declined thereafter,” observed Mr Naito. “Outward FDI decreased after 2008 but it has been substantially expanding thereafter because of the strong yen.”

“Increases in FDI require political and economic initiatives, but as the general election is approaching, we do not foresee drastic changes or improvements in FDI in the near future,” he concluded.

The main countries responsible for FDI into Japan are the United States and China (including Hong Kong). According to Mr Naito, the sectors receiving the most capital change every year, however FDI to the financial sector has been declining. The main targets of outward investment from Japan are ASEAN countries and Eastern European countries. Mr Naito believes that the greatest opportunities for investors, both inside and outside Japan, lie in the healthcare and telecommunication sectors, among others. Commenting on how Japan could be made more attractive and accessible to foreign investors, Mr Naito stated that a key factor would be to open labour markets.

Company: Momo-o, Matsuo & Namba Name: Junya Naito Email: naito@mmn-law.gr.jp Web: www.mmn-law.gr.jp Address: Kojimachi Diamond Building 6F, 4-1 Kojimachi, Chiyoda-ku, Tokyo 102-0083, Japan Telephone: +81-3-3288-2080

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Foreign Direct Investment

— Argentina

Buenos Aires / Argentina

-----------------------------------------------------------------------Carlos E. Alfaro is the Managing Partner of ALFAROABOGADOS, a corporate and finance law firm from Argentina. ------------------------------------------------------------------------

“Knowledge, experience, expediency and commitment are the trademarks of our practice,” said Mr Alfaro. “We dedicate non-billable hours to understand the needs, goals and strategy of our clients in the understanding that we are partnering in their success and efficiency.” According to Mr Alfaro, Argentina is still a country open to foreign direct investments but is in the process of refocusing its geopolitical economic strategy. He noted that from an open market import dollar controlled economy, the government is establishing new regulations aiming to induce more local production, import substitution, pesification of local transactions, improving tax collection and providing opportunities for investments in oil and gas exploration, mining exploration and production, infrastructure development, nuclear and hydro electrical projects and alternative energy. “As the economy is based in increasing consumption by maintaining salaries above inflation rates there is also an opportunity for reputable fashion retailers, manufacturers of appliances, or other consumer products to partially produce their products locally,” commented Mr Alfaro. He explained that the Argentine Constitution guarantees foreign investors equal treatment to nationals of Argentina. No prior authorisation is needed to invest or carry out economic activities in Argentina. There are limitations that have been established as it happens in other countries according to the sector. For example, in agricultural land there is a limit on the number of hectares a foreigner can hold, like in Brazil; in the media sector there has to be reciprocity from the country of origin of the investor; and there are limitations if investments are coming from an offshore jurisdiction. “According to the OECD Argentina is a very open economy and is only after Germany in the index of restrictions,” added Mr Alfaro. “This is a fact that contradicts much news that has appeared in the media recently. Argentina has also signed 58 foreign investment treaties, while Brazil has only 14.”

“Argentina has the third largest reserve in the world of shale,” he explained. “Therefore, it is and will attract FDI investments in the years to come. It is calculated that the sector may receive more than fifty billion dollars in the next five years if the regulatory conditions are appropriate.” Mr Alfaro stated that the economic benefits of these investments are very important for the sustainability of a growing economy in Argentina. Salaries in the mining sector are the highest in the country – six times higher than a salary in the agricultural sector. Salaries in the oil and gas sector are not far away. “Both sectors require supplies, services, equipment, transportation and engineering companies,” commented Mr Alfaro. “It has the same economic benefit as the automobile companies in the sense that they generate auto parts and services business activities beyond their production facilities. “The automobile industry is already developed but under the new strategy of the government of import substitution there is an opportunity for auto parts manufacturing in Argentina.”

The level of FDI, without considering the process of privatisation of state owned enterprises at the beginning of the 1990’s, has remained steady and has increased in the period 2003-2001. The average for this period is US$5,480 million.

The main countries targeted by outwards FDI from Argentina are: Brazil (oil, consumer products, automobile, trade, airports); Colombia (infrastructure projects, airports); Peru (oil and gas transportation, public transport, LNG); China (trade); Mexico (automobiles, joint ventures in the fashion and consumer product sector); and the USA (real estate, banking). Mr Alfaro noted that Argentina is not a traditional outward investor country.

Mr Alfaro noted that FDI into Argentina originates in a variety of countries. Traditionally, these investments came from the USA, UK, Germany, France and Spain; however during the last ten years other countries have become active in this field, including Brazil, India, Canada and China.

Mr Alfaro stated that the energy, mining and automobile sectors are the most dynamic inside Argentina. He explained that other sectors may benefit from the fact that Argentina, together with Brazil, is creating the fourth largest consumer market in the world by incorporating Venezuela to Mercosur.

The mining sector has attracted by far the most capital in the last five years, and Mr Alfaro believes that this will continue to be the case in the future, although it will be rivalled by investments in the oil and gas sector.

“Both countries have incorporated millions of lower income people into the middle class with some disposable income that has been spent in durable goods thanks also to consumer financing,” he commented.

ACQUISITION INTERNATIONAL

According to Mr Alfaro, a more stable regulatory framework is needed to make Argentina more attractive and accessible to foreign investors. He explained that there are two kinds of new regulations in place in Argentina: temporary and structural. “The temporary regulations are those enacted for the purposes of maintaining the two pillars of the economic model which are fiscal and trade surplus,” he said. “The structural ones are related to import substitution, promoting local production and dedollarisation of the economy. The country is in the middle of such process that has created uncertainty in local as well as foreign investors.” Mr Alfaro predicts that FDI will remain at its current levels in general in 2012/13, but expects that it will increase in the sectors highlighted above. “These sectors are not affected by the changes in the regulatory framework mentioned above. According to the International Monetary Fund the economy of Argentina will grow 3% in 2013. Though this is only a sustainable level equal to the population growth and inflation, it positions Argentina well for the boom to be created by the development of the oil and gas and mining production by the year 2015. An external factor still to be considered is the potential recovery of China and the USA which are the engine of growth for Latin America in general,” he concluded.

Company: ALFARO-ABOGADOS Name: Carlos E. Alfaro Email: cealfaro@alfarolaw.com Web: www.alfarolaw.com Address: Avda. Libertador 498, Buenos Aires, Argentina Telephone: +54-11-4393-3003

November 2012 /

SECTOR SPOTLIGHT:

Foreign Direct Investment Quito / Ecuador

— Ecuador -----------------------------------------------------------------------Alberto Gomez de la Torre, associate attorney, joined Bustamante & Bustamante Law Firm in January 2012. ------------------------------------------------------------------------

The Bustamante & Bustamante Law Firm provides legal assistance in all corporate law areas, including banking, insurance, mining, oil and gas, foreign investment, incorporation and administration of corporations, tax and labour advice; immigration, contracts and various other legal services, including litigation. For attracting FDI, the Government has made genuine efforts by enacting new regulations to correct market distortions and to offer foreign investors a stable environment. However, in the last five years, Ecuador has followed an inconsistent approach towards foreign direct investment. Latin America and the Caribbean achieved record figures of FDI in 2011, with an increase of 21%, as compared to 2010, representing 10% of the world’s FDI; however, Ecuador has been the exception holding second to the last place (only behind Paraguay). From the investor’s perspective, this is the consequence of Ecuador being too close to the 21st century political systems implemented in Venezuela and Bolivia, and the Government’s discourse fostering autonomy and independence from “neoliberal” economies. In the last three years, Congress has been successful in passing a number of regulations and mechanisms for correcting market distortions, and bolstering international investment such as: (i) the Production Code, which guarantees fair play among competitors, transparency and efficiency at the local market, and certain rights to foreign investors, mainly non-

48 / November 2012

discriminatory treatment and the repatriation of profits; (ii) the double taxation treaties with several countries, mainly Canada, China, Chile, Brazil and Spain; and (iii) the Market Control Act, which prevents the formation of monopolies by public and private corporations while regulating significant market matters, such as antitrust and unfair competition practices. In December 2007, however, Congress passed the Law Reform for Tax Equity that has sparked an adverse impact on imports and is seen by investors as a threat because of the 5% tax on money outflows from Ecuador, excluding the repatriation of profits. Currently under debate in Congress is an “urgent” bill of law for changing the tax regime, by which the Government intends to reduce the net profits of the private banking sector to finance a free subsidy for the poor on the grounds that the wealth generated by this sector should be better distributed among the people. In addition, the Government has gained control over the legislative and judicial branches, and foreign investors perceive this situation as a threat to their investments. From 2007-2011, FDI in Ecuador amounted to US$ 2.536 billion. During 2008, the greatest inflow of funds - US$ 1.006 billion was assigned to the mining sector. The year 2010 saw the lowest level of FDI at US$ 158 million. FDI did better in 2011 - US$ 584 million. The figures for 2012 are not very optimistic. The 1st quarter of 2012 shows a modest amount of FDI at US$ 109 million. From 2007-2011, Panama was the country that contributed with the highest FDI in Ecuador, followed by Spain and China. During the first quarter of 2012, FDI was made by different players: the United States of America, with 23% of the FDI, followed by Canada, with 18%, and then China with 16%, mainly in the oil and gas industry and related services.

In the 1st quarter of 2012, mining was the leading sector, with 43.2%, attracting new investment, followed by the manufacturing industry, with 27.1%, and commerce, agriculture and fisheries, with an aggregate 25.8%. Other sectors received a total of 3.9% of FDI. Despite the Government’s efforts to reduce Ecuador’s dependency on the oil industry, the country’s national budget still heavily relies on this sector. Therefore, this activity, together with the mining and manufacturing sectors, will become a target for FDI. The 11th Oil Bidding Round recently announced by the Government hopes to attract 1.2 billion dollars’ worth of investment. Contracts resulting from this process are expected to be signed by the end of 2013. In early 2013, presidential elections will be held in Ecuador. The Ecuadorian FDI rates will depend upon the results of the elections. Recommendations to promote FDI in Ecuador are: -

Eliminate a number of regulations and barriers that discourage FDI; - Strengthen the presence of the private sector so it can react quickly to market forces; and - Offer to investors an environment of legal stability.

Company: Bustamante & Bustamante Law Firm Name: Alberto Gomez de la Torre Email: agomez@bustamante.com.ec Web: www.bustamanteybustamante.com.ec Address: Av. Patria y Amazonas, Edif. Cofiec, Piso 11, Quito-Ecuador Telephone: +593 2 2 562680 Ext. 286

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Foreign Direct Investment

— Poland -----------------------------------------------------------------------Tomasz Dąbrowski, Managing Partner, Warsaw and CEE, and Michał Karwacki, Counsel, at Salans discuss foreign direct investment in Poland. -----------------------------------------------------------------------Salans is a top-tier, international law firm recognized for its strong emerging markets practice. With a team of over 150 lawyers and tax advisors in Warsaw, highly ranked and recognized for their expertise and achievements in numerous areas of law and industry sectors, Salans is both the largest and a leading full-service force in the legal market in Poland. FDI in Poland The 2011 inflow of foreign direct investments to Poland totalled approx. EUR 9.9 bn and was 47% higher than in 2010. Over 80% of the FDI inflow came from European Union countries, the remainder, notably though not exclusively, coming from the USA, China and India. The biggest investment project was the EUR 353 M investment of the car producer Fiat Auto Poland in a new production line in its existing plant in Tychy.

— Tanzania -----------------------------------------------------------------------Hon. Nimrod E. Mkono is the Managing Partner of Mkono & Co. Advocates in association with SNR Denton. -----------------------------------------------------------------------Mr Mkono explained that Tanzania is the leading FDI destination in the East Africa region. In the last decade the total FDI stock in Tanzania exceeded US$6 billion. He noted that Tanzania has improved the overall legal framework for investment activities in the country over the last several years. The government is engaged in advertisement of its investment opportunities in the country and abroad. “In this regard, Tanzania has participated and hosted many international investment forums,” he commented. “These forums provide foreign investors with the opportunity to explore investment opportunities in the country and to meet with their potential domestic counterparts.” Importantly, Tanzania is party to a number of bilateral and multilateral international treaties including the Multilateral Investment Guarantee Agency (MIGA), the International Centre for the Settlement of Investment Disputes (ICSID, the Convention for the Protection of Industrial Property and

— Nigeria -----------------------------------------------------------------------Emmanuel Dike is General Counsel at the Regional Centre for International Commercial Arbitration, Lagos. -----------------------------------------------------------------------The Regional Centre for International Commercial Arbitration, Lagos, is an international arbitral institution involved in the settlement of disputes arising from international commercial transactions; as well as disputes arising from foreign direct investments. Mr Dike explained that Nigeria has embarked upon an aggressive foreign investment drive since 1999. He noted that a number of government agencies organise road shows to showcase Nigeria’s potential for foreign investment. Trade missions to other countries are frequently embarked upon by government officials to meet potential investors who may be willing to invest in Nigeria. “Moreover, Nigeria is the only country in sub-Sahara Africa that is hosting the AALCO Regional Centre for International Commercial Arbitration,” he commented. “Recently Nigeria

ACQUISITION INTERNATIONAL

Due to the worsening economic conditions in the EU, the volume of FDI in Poland weakened in 2012. We have recently witnessed the cancellation of investments which were to be launch in 2012, including the withdrawal of India’s Apollo Tyres from its planned construction of a tyre production facility in Poland.

foreign investors, Poland offers other forms of state aid such as grants and various local public support schemes.

Poland was part of a programme for the convergence and integration of Polish and EU legal norms before it joined the EU in 2004. As a result, Poland reformed its legal system to the extent needed to ensure that the gap between the two legal environments was not unsustainable. However, it’s important to keep in mind Poland’s history, as it influences certain matters such as the real estate regime. Poland currently offers investors 14 special economic zones (SEZ). Investors who obtain a permit to operate in a SEZ are exempt from corporate income tax. Exemptions differ and for large investors it can be up to 30%, 40% or 50% of their investment outlays. This includes either capital expenditure incurred to develop the investment, which may only include entirely new assets in case of large investors, or employment costs for two years. The SEZ regime is currently designed to continue until 2020, but efforts are being made to extend it to at least 2026. Apart from the SEZ exemptions, which are extremely popular with the Convention on Recognition and Enforcement of Foreign Arbitral Awards. “These arrangements guarantee the security of FDI against losses arising from armed conflict or international disorder and protection against nationalization. Further, they ensure transfer of profit, dividends and capital,” added Mr Mkono.

Company: Salans Web: www.salans.com Address: Rondo ONZ 1, 00-124 Warsaw, Poland Name: Tomasz Dąbrowski Email: tdabrowski@salans.com Telephone: +48 22 2425 601 Name: Michał Karwacki Email: mkarwacki@salans.com Telephone: +48 22 2425 659 in the Mnazi Bay area point to a promising future in the hydrocarbon sector. Natural gas currently fuels the generation of 450 MW of electricity, an operation that consumes 63 million standard cubic feet of gas a day and there are 19 gas to electricity plants in the country connected to the Dar es Salaam natural gas pipeline network. Average industrial consumption of natural gas is around eight million standard cubic feet a day,” he concluded.

Most of the FDI into Tanzania originates from the United Kingdom due to the colonial history between the two countries. Reported figures indicate that 23% of registered projects originate from UK, 15% from India, another 15% from Kenya, 10% from the Netherlands, 10% from China, 10% from the USA, 7% from South Africa, 5% from Canada, 3% from Germany and 2% from Oman. With its peaceful traditions , strong macroeconomic policies, stable political climate and plentiful natural resources, Mr Mkono believes Tanzania has much to offer to foreign investors. The country has had considerable success in attracting FDI; for the year 2012/13 Tanzania’s gas reserves have the potential to bolster both the country’s electricity supplies and economic stability. “While gas potential in Tanzania has largely been underexplored and proven reserves are still under exploited, recent extraction successes at Songo Songo Island and

has liberalised its tax regimes as well as its entry visa requirements for foreign investors. The foreign investor can repatriate profits and dividends from Nigeria without restriction. Nigeria now runs one of the world’s least restrictive and most liberalised economies for foreign investment.” According to the UNCTAD World Investment Report, 2012; inflows of FDI into sub-Sahara Africa jumped from $29.5 Billion in 2010 to $36.9 billion in 2011; and Nigeria topped the list of five major FDI recipients in Africa in 2011. Mr Dike noted that the country’s FDI prospects for 2012 are promising, as strong economic growth, ongoing economic reforms and high commodity prices have improved investors’ perception. He explained that the US, The Netherlands, China and United Kingdom are the main countries responsible for FDI into Nigeria, and that the sectors attracting the most capital are oil and gas, telecommunications and recently construction. He added that African countries are the main targets of outwards investment from Nigeria, and he believes that the greatest opportunities for investors lie in the oil and gas sector, both inside and outside the country. In order to make Nigeria more attractive and accessible to foreign investors, Mr Dike belives that it is necessary to

Company: Mkono & Co. Advocates in association with SNR Denton Name: Hon. Nimrod E. Mkono Email: nimrod.mkono@mkono.com Web: www.mkono.com Address: 8th Floor, Exim Tower, Ghana Avenue, P.O. Box 4369, Dar es Salaam, Tanzania Telephone: (+255 22) 211 8789/90/91 (+255 22) 211 4664

sustain the initiative to rid the country of corrupt officials and their foreign collaborators. “Africa is becoming more and more the focus of the world as the next investment destination. Nigeria, being a very important country in Africa, is likely to take the lead in new foreign investments coming to Africa in 2013,” he concluded.

Company: Regional Centre for International Commercial Arbitration, Lagos Name: Emmanuel Dike Email: info@rcicalagos.org emmadike@yahoo.com Web: www.rcicalagos.org Address: 6th Floor, Union Marble House, 1 Alfred Rewane Road, Ikoyi, Lagos, Nigeria Telephone: 234 1 2705516, 234 8033025565

November 2012 /

SECTOR SPOTLIGHT:

Foreign Direct Investment investments routed through the Netherlands mainly for tax structuring purposes,” explained Mr Ustun. “The share of Asian investors (including the Middle East) has also been approximately 12% over the last five years whereas the share of FDI coming directly from US has been slightly less than 10% in the same period.”

Istanbul / Turkey

— Turkey -----------------------------------------------------------------------Ayhan Ustun is an M&A tax Partner at KPMG in Turkey (Yetkin Yeminli Mali Musavirlik A.S. is the Turkish member of KPMG International representing tax services in Turkey). ------------------------------------------------------------------------

According to Mr Ustun, while Turkey locates itself as one of the fastest growing economies in the world with a positive outlook, the country has certain macro-economical challenges such as the current account deficit and demanding young population. “The financing of this deficit through shortterm liquidity also creates a fragile financial environment,” he commented. “Therefore Turkey aims to implement a liberal policy to encourage FDI into Turkey”

— DRC -----------------------------------------------------------------------David Luboya Kayaya is an owner of EBIC Expertise Business International Corporation. ------------------------------------------------------------------------

Expertise Business International provides the following services:

Corporation

Chartered Accountant – Taxation – Real Estate Accountancy and Tax; expertise technical and economic capital; study, advice, assistance and training; and Auditing and contributions. Accounting Design and implementation of administrative procedures manual and financial; implementation of the accounting organisation; preparation and certification of annual financial statements; financial reporting; assistance to the audit accounting and financial monthly, quarterly and yearly; capacity building in management accounting, financial, budgetary and analytical; support program and project funded by donor funds; and calculating monthly wages. Statutory Auditors and contributions Acquisitions, mergers, divestitures; and the mission to rule on the legality and fairness of the accounts submitted by the executive.

50 / November 2012

According to figures released by the Ministry of Economy, Directorate of Foreign Investment and Incentives, FDI into Turkey reached an all-time high in 2007 and also remained strong in 2008. However, with the impact of global financial turmoil, FDI into Turkey remained low in 2009 and 2010. The FDI figures showed a recovery in 2011 and the six months results of 2012 also strengthened this trend which is expected to increase over 2011. However, Mr Ustun believes it is unlikely that the high FDI figures of 2007 and 2008 will be reached at the end of 2012. The main source of FDI into Turkey is dominantly EU countries, which account for approximately 75% of the total FDI into the country over the last five years. These countries mainly include the Netherlands, Germany, France, and the UK. “It should be noted that a considerable part of the investment coming through the EU (in particular the Netherlands) are known to be third country

Tax system Declaration and filing state tax; tax litigation; and assist in maintaining records and logs by the mining legislation. Economic and technical expertise of property Works intakes investigation stocks; reviews of heritage knowing and effectively manage capital; and know the value of real estate assets. Asset management Physical inventory descriptions of goods; identification of goods by labelling barcode; codification analytical and geographical inventory; reconciliation of physical reality with the basis of accounting; the implementation of methods and tools for monitoring.

“The outlook for 2013 and onwards is still positive but depends on many factors, both internal and external, including but not limited to political and social stability in the region. It is also expected for a long time that the investment grade of Turkey may be increased to a satisfactory level - Fitch recently announced that they will increase Turkey’s investment grade from BB+ to BBB level. Although the enactment of new Commercial Code and introduction of an enhanced Investment Incentive Regime in 2012 are all positive movements for foreign investors, there is still room for improvement to make Turkey a more consistent and reliable environment for international investors,” he concluded.

Company: KPMG Turkey Name: Ayhan Ustun Email: ayhanustun@kpmg.com Web: www.kpmg.com Address: Kavacık Rüzgarlı Bahçe Mah. Kavak Sok.No:29, Beykoz 34805 İstanbul Telephone: +90 (216) 681 91 00 Ext: 9020

IT Web design; herbagement; IT support; and sale of media. EBIC Services distributes floor management software. Mr Kayaya noted that China, India, Canada, Australia and South Africa are the main countries responsible for FDI into the DRC, and that the mining, travel and food sectors attract the most capital. He explained that the DRC’s accession to OHADA has made things easier for the country in terms of FDI. OHADA (Organisation pour l’Harmonisation en Afrique du Droit des Affaires) is a system of business laws and implementing institutions adopted by West and Central African nations.

The value of real estate assets Promote the sale or purchase, implement a real estate strategy; provide an estimate of expertise in negotiation; and getting a bank loan. Marketing and Distributions Market research; analysis of needs; analysis and study social, political and economic; promotion; and distribution. Planning and coordinating events Coordinate logistics; promotion of the event; coordination and resource persons and participants involved; and evaluation of the event.

Company: Expertise Business International Corporation Name: David Luboya Kayaya Email: ebicorporation@gmail.com Web: www.ebicorporation.jimdo.com Address: Bd M’siri commune de lubumbashi Telephone: +243 997240362/083216604

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Foreign Direct Investment countries, attracting FDI inflows in excess of US$1 billion in 2010/2011, and Mr Haimbe states that this is an indication of its attractiveness to FDI. He mainly attributes this to the stable political and economic environment in the country. Mr Haimbe highlighted the overwhelming need for infrastructure development in Zambia as a significant contributor to the country’s attractiveness as an investment destination, as it encourages policy makers to create a conducive investment environment. He also noted the country’s continued effort at improving the business environment through programmes such as the Private Sector Reform development programme. Other factors include its strategic geographical location, guaranteeing access to markets in neighbouring countries, and its abundant natural resources.

— Zambia

-----------------------------------------------------------------------Mulambo H Haimbe is the Managing Partner of Malambo and Company. ------------------------------------------------------------------------

Malambo and Company is a general legal practice. Its core practice areas are: dispute resolution, including civil litigation, mostly in respect of commercial matters and commercial arbitration; banking and finance; and corporate law. UNCTAD rates Zambia as one of the top five host and home economies among the least developed

— Vietnam

-----------------------------------------------------------------------Stephen Gaskill is a Partner of Advisory Services at PricewaterhouseCoopers (Vietnam) Ltd. ------------------------------------------------------------------------

Vietnam has an open and liberalised approach to foreign investors which compares favourably to many other countries in the region. “Although Vietnam still ranks quite low in terms of the ease of doing business, the Government has, over the past 20 years, put significant efforts into creating favourable conditions for foreign investments in the country, including a programme of administrative reform focusing on reducing administrative burdens,” said Gaskill. In 2006, Vietnam issued the Law on Enterprises and the Law on Investment, which apply to both foreign direct investors and Vietnamese investors, who are therefore governed by the same legal framework except in relation to certain sectors where foreign ownership is still restricted. “For foreign investors from WTO countries, foreign ownership restrictions can only be applied in accordance with Vietnam’s WTO commitments,” he explained. Vietnam has been a favourable destination for investors for many years, in particular those from

ACQUISITION INTERNATIONAL

In order to make the country more attractive and accessible to foreign investors, he believes that more visibility is required via the promotion and marketing internationally of the country’s investment potential, with emphasis on the gains it has scored in terms of governance, political and economic stability and the rule of law. “Further, its investment policy must be in keeping with recent trends requiring that FDI, in addition to achieving its core objectives, is tailored towards sustainable development in non-core areas such as social and environmental protection,” commented Mr Haimbe. “It is expected that the level of FDI inflows in 2012/13 will increase to match (or even surpass) the peak experienced during 2007/08,” he concluded.

Commenting on the regulations in place relating to FDI, Mr Haimbe stated that there are statutory provisions set out in the Zambia Development Agency Act that offer investor protection, guarantees and incentives. According to the UNCTAD World Investment Report 2012, FDI inflows into Zambia for 2011 were US$1,982 million, while outflows were US$1,150 million. Mr Haimbe noted that the primary extractive industry sector attracts the most capital, mainly in mining, and that the largest investment deal seen in the immediate past was a Greenfield mining investment by China. In Mr Haimbe’s opinion, the most sustainable sectors are tourism, agriculture and, to a lesser extent, the energy sector.

Japan, Taiwan and Korea. Committed FDI peaked in 2008 at over US$70 billion, but decreased significantly in subsequent years due to the global economic crisis and the downturn in the local real estate sector. However, in 2011, the amount of committed FDI was considerable at approximately US$15 billion, higher than that of many other countries in the region. “Vietnam is a net capital importer,” said Gaskill. “Only in recent years have Vietnamese companies started investing in foreign countries. The key export industries are oil and gas, telecoms, and manufacturing.” Japan remains the top investor in Vietnam in terms of disbursed capital, followed by other Asian countries such as South Korea, Singapore, Taiwan, Hong Kong and Malaysia. China has recently moved up into the top five foreign investors in Vietnam, bypassing Taiwan and Malaysia. US investors are in the top 10 with the presence of big names such as General Motors, GE, Ford, P&G, PepsiCo, Coca-Cola, Intel, Microsoft, etc. Due to low labour costs, Vietnam has developed as a production base for textile and footwear manufacturers, primarily for international sportswear companies such as Nike, Puma and Adidas. In addition, an increasing number of technology companies such as Canon, Samsung, Intel, Fujitsu, Nokia, and Foxcon have set up assembly plants in Vietnam. After the manufacturing sector, real estate

Company: Malambo and Company Name: Mulambo H Haimbe Email: mhaimbe@malamboandco.com or info@malamboandco.com Address: Moomba House, Plot 18959, Off Katima Mulilo Road, Olympia Park, P/Bag E342, Lusaka, Zambia Telephone: +260 211 295194

and infrastructure have also attracted significant amounts of FDI. The greatest opportunities for investors lie in sectors that offer greater added value such as services, consumer products manufacturing and distribution (tapping into the growing demand from an increasingly affluent middle class) and infrastructure. “The Ministry of Planning and Investment has projected nearly US$15 billion of FDI inflows in 2012 and similar levels in 2013. The Vietnamese government has launched an ambitious plan to improve the legal framework and administrative system to attract a greater number of foreign investors, which may have a positive impact on FDI levels going forward,” concluded Gaskill.

Company: PricewaterhouseCoopers (Vietnam) Ltd. Name: Stephen Gaskill Email: stephen.gaskill@vn.pwc.com Web: www.pwc.com/vn Address: 4th Floor, Saigon Tower, 29 Le Duan Street, District 1, Ho Chi Minh City, Vietnam Telephone: +84 8 38240125 Mobile: +84 909229467

November 2012 /

SECTOR SPOTLIGHT:

Business Valuation & Transaction Pricing in M&A

BUSINESS VALUATION & TRANSACTION PRICING IN M&A l In this ever-changing and somewhat challenging climate valuing a business can prove difficult, and different parties involved in a prospective acquisition may have different ideas of how much a company is worth. In an increasingly global business environment the valuation issues surrounding corporate transactions have become more complex than ever. The purchaser must determine whether the purchase will be beneficial to them. In order to do so, they need to be confident in how much the company being acquired is really worth. Naturally the seller is likely to value the company at as a high as price as possible while the buyer will want to get the lowest possible price they can. Completing a successful transaction requires a sharp focus on the relationship between risk and return, the risk of purchasing an over-priced business and failing to integrate effectively can prove rather costly. Valuation services are essential for acquirers and sellers alike, such experts can prove to be a critical part of the deal team. Acquisition International speaks to Pieter Christiaan van Prooijen, a Partner at Hermes Advisory in the Netherlands, for his view on valuation issues. the valuation and to see how the scenarios impact the repayment capacity of the debt, the internal rate of return, cash to cash multiples, etc. “By building the scenario’s our client gets a sense of realism about the valuation and gets to understand the point of view of the other side.” “We work towards an agreement on the scenario with our client and with our counterparty. Thereafter, we show them the impact on the theoretical valuation and the IRR / cash to cash multiples. The aim is to narrow the valuation range which exists between the buyer and the seller.” Mr Van Prooijen concluded by observing that the transaction market remains depressed, as are transaction prices. “The developments of the dispute resolution and forensic valuation market are more favourable as a result of more conflicts (for instance related to earn out structures) and awareness of parties to substantiate the level of their claim by valuation experts.” comments Inge Lisa Toxopeus responsible for the Dispute and Forensic practice of Hermes Advisory.

-------------------------------------------------------------------Hermes Advisory is a Dutch consultancy firm specialised in Corporate Finance and Dispute Resolution & Forensic Services. -------------------------------------------------------------------Commenting on the current economic climate in relation to M&A, Mr Van Prooijen noted that debt levels are significantly lower compared to four years ago. Furthermore, investors are selective in doing transactions and the requested IRR is higher compared to pre-crisis levels. Mr Van Prooijen explained that for private placements, terms and conditions from the investor’s side became much tougher compared to four years ago.

ACQUISITION INTERNATIONAL

“(Informal) investors are very reserved these days. It takes a lot of convincing to get a syndicate of investors on board.” “These days, we are very critical about the potential success of a private placement traject. If the valuation in our eyes is too rich, if the entrepreneur is not realistic about the terms and conditions and we do not see a likely investor, we reject the assignment. Better to say no in advance than to build up unrealistic expectations.” When assisting prospective acquirers and / or sellers to come to an agreeable fair price for a target company, Hermes Advisory’s discussions mostly begin by defining a realistic forecast for the company. The firm always makes a scenario analysis to see the impact on

Company: Hermes Advisory B.V. Web: hermes-advisory.com Address: Julianalaan 8, 3743 JG Baarn, The Netherlands Telephone: +31 6 30154753 Name: Pieter Christiaan Van Prooijen Email: vanprooijen@hermes-advisory.com Name: Inge Lisa Toxopeus Email: toxopeus@hermes-advisory.com

November 2012 /

SECTOR SPOTLIGHT:

Double Taxation Agreements

DOUBLE TAXATION AGREEMENTS l Most people are generally familiar with the concept of double taxation. Corporate lawyers and accountants regularly raise the issue when asked by entrepreneurs about choosing the right business entity for a new company (or for an existing company looking to grow and insulate its owners from personal liability). Tax treaties/double taxation agreements prevent double taxation and fiscal evasion, whilst fostering cooperation between the home nation and international tax authorities by enforcing their respective tax laws. Double taxation remains a hot button political issue and new and existing business owners need to be informed as they make critical business decisions regarding incorporation or the creation of some other formal entity. The number of countries who have entered into treaties with each other in order to mitigate the effects of double taxation is on the rise and such treaties may cover anything from inheritance taxes to royalties. The stated goals for entering into a treaty often include reduction of double taxation, eliminating tax evasion, and encouraging cross-border trade efficiency, and it is generally accepted that tax treaties improve certainty for taxpayers and tax authorities in their international dealings. A selection of these entities is listed here: • • • • • •

— Malta

-----------------------------------------------------------------------Dr David Tonna is a Partner and CEO of Mamo TCV Advocates. ------------------------------------------------------------------------

Mamo TCV Advocates evolved from the merger in 2000 of two leading Maltese law firms – Tonna Camilleri Vassallo & Co., and John Mamo & Associates. Today, the firm is one of the largest legal practices in Malta. Operating from offices in the capital Valletta, the practice offers an impressive depth and breadth of expertise which enables the firm to handle a variety of different legal areas, and provide, in essence a ‘onestop’ service to clients. Dr Tonna noted that, given the rapid pace of economic globalisation in recent years, foreign economic investment and transnational commercial enterprises have grown considerably. “The economic activity is normally carried on through a variety of entities or in a variety of ways, chosen due to factors and characteristics the different entities possess and their suitability for certain situations,” he commented.

54 / November 2012

Companies with Limited Liability (various categories can be set up); Partnerships (having only partners with unlimited liability or some of its partners with limited liability); Foundations, set up for a specific purpose (with either limited liability or otherwise); Trusts; Contractual arrangements; Civil partnerships.

“The choice of entities depends on its characteristics as deemed suitable by the person making the economic contribution or investment – however Limited Liability Companies are the most popular type of entity used,” added Dr Tonna. He explained that double taxation is an established issue for the carrying on of business generally, and affects business on a day-to-day basis by increasing costs and reducing cash for business. “Whilst double taxation is not considered to be a positive thing generally, it is only in a small number of instances that states have actually taken the steps to reduce or eliminate double taxation, through the implementation of domestic measures or in income tax cases by concluding double taxation agreements bilaterally (or multilaterally) with other states,” commented Dr Tonna. “The ever growing expansion in transnational commerce has led States to negotiate, sign and enact into national law, a complex network of bilateral and multilateral tax treaties or agreements. These international tax treaties prescribe a set of rules and guiding principles aimed at determining which tax is permissible in cross-border situations.” Dr Tonna observed that, as with any bilateral arrangement, the successful attainment of the double taxation treaty’s objectives largely depends on both

contracting states adhering to and complying with the provisions stipulated therein. In order to maximise all potential benefits under the treaty, both contracting states are expected to co-operate with each other in a concerted effort. “If one were to use as an example, Article 26 of the 2012 Double Taxation Relief Order signed with Switzerland, the competent authorities in both contracting states are called upon to exchange information in furthering the fiscal interests of both states, and as in other treaties a mechanism is set up for mutual agreement on disputes that arise. This generally helps foster cooperation between the contracting parties,” explained Dr Tonna. Dr Tonna stated that is very difficult to make predictions relating to double taxation agreements, since such treaties are largely bilateral arrangements and are not necessarily restricted by multilaterally agreed criteria. “At the same time, it is likely that certain aspects of double taxation agreements, such as exchange of information, would be the subject of wider multilateral agreements such that the obligations states will regulated by factors beyond double taxation agreements,” he concluded.

Company: Mamo TCV Advocates Name: Dr David Tonna Email: david.tonna@mamotcv.com Web: www.mamotcv.com Address: Palazzo Pietro Stiges, 103, Strait Street, Valletta VLT1436, Malta Telephone: (+356) 21 231 345 / 21 232 271

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Double Taxation Agreements

— Germany

EnterpriseWorldwide.org) and the German Near and Middle East Association, Berlin (www.numov.de). The firm attends to companies of all sizes, all legal forms and branches which are active on a national as well as international scale. Its clients include established joint-stock enterprises as well as young and growth oriented technology companies or innovative service providers. Another focus is on vocational organisations as well as nonprofit-making institutions and organisations. The firm believes that it is the right contact for medium and small-sized companies in particular.

-----------------------------------------------------------------------FIDAUDIT GMBH Wirtschaftsprüfungsgesellschaft is a cross-sectoral association of public accountants, tax advisers and lawyers. ------------------------------------------------------------------------

The firm has its headquarters in Berlin and branch offices all over Germany. FIDAUDIT considers it the firm’s task to render comprehensive consultation for its clients in an ever more complex economic field.

“This principle has proved its worth: the reward for our involvement is the satisfaction and gratitude of its clients which result in numerous recommendations.” FIDAUDIT combines extensive professional competences, and believes that the availability of special knowledge is the basis of its success.

The firm attends to private persons and companies – a widely distributed mainly medium-sized clientele active in the commercial, freelance and non-profit making field, including communal enterprises.

The firm accompanies the business activities of its clients nationally as well as internationally. Its numerous German branch offices are assisted by over 450 staff members inside of Germany.

FIDAUDIT believes that the orientation to the individual requirements of its clients and consultation on an independent factual basis are the most important principles in dealing with its clients and their staff members.

FIDAUDIT has established international consultation competence through its memberships in cross-border networks. Thus, the firm makes allowance for the world-wide development of markets. FIDAUDIT is an Independent Member of Enterprise Worldwide (www.

— Greece -----------------------------------------------------------------------Dr Katerina Perrou is Head of Tax at Rokas (Athens) - I.K. Rokas & Partners Law Firm. ------------------------------------------------------------------------

Commenting on the importance of choosing the right business entity for a new company, Dr Perrou stated the level of dividend taxation, the extent of the director’s tax liability for company tax debts and the scope of application of EU tax legislation to various domestic company types are more often discussed when choosing the right form of company. She noted that day to day concerns include transfer pricing issues as well as issues of qualification of income that may create problems with the applicable withholding tax rates. Discussing bilateral and multilateral treaties, Dr Perrou explained that Greece has concluded 47 double taxation treaties for the avoidance of double taxation on income and capital; a number of bilateral treaties for the avoidance of double taxation in inheritance and gift tax cases and a number of treaties for the elimination of double taxation of income from shipping and air transport.

ACQUISITION INTERNATIONAL

FIDAUDIT assists and accompanies private persons whose status and financial structure require trustworthy consultation. It helps this circle of persons, which expects a lot of experience from its advisers, in particular in all matters of financial structuring, succession and in the establishment of foundations.

As an EU member it is bound by the EU legislation on tax matters: Arbitration Convention; VAT directives; Merger Directive; Savings Directive; ParentSubsidiary Directive; Interest-Royalties Directive; and Mutual Assistance Directive.

Company: FidAudit GmbH Wirtschaftsprüfungsgesellschaft Name: Norbert von Hoyningen-Huene Email: norbert.von.hoyningen@fidaudit.de Web: www.fidaudit.de Address: Lietzenburger Str. 51, 10789 Berlin, Germany Telephone: +49 (0) 30 235078-0 Fax: +49(0) 30 23 50 78-90

that purely domestic law remedies include: (i) the recourse to the tax authorities; (ii) recourse to arbitration (not activated yet); and (iii) recourse to the domestic courts. She noted the measures were recently adopted to reduce the time of court proceedings in tax cases. “At the international level: Greece is a party to the EU Arbitration Convention, for the resolution of transfer pricing disputes; it also uses the Mutual Agreement Procedure in disputes with treaty parties. Both international law procedures offer an interesting alternative to the domestic law remedies,” she concluded.

Dr Perrou stated that Greece follows the ordinary credit method for the elimination of international double taxation. Special, reduced rates are usually agreed for interest, royalties and dividends. “In a limited number of treaties Greece has agreed on tax sparing clauses,” commented Dr Perrou. “In these cases the taxpayer is entitled to a tax credit, irrespective of whether the foreign tax has actually been paid. Such tax sparing clauses aim at protecting the effects of tax incentives programs that are in place in the other contracting state and are considered important from a policy perspective for the increase of cross-border economic relations.” When asked to describe the procedural frameworks for enforcement and dispute resolution regarding double taxation within Greece, Dr Perrou explained

Company: Rokas (Athens) I.K. Rokas & Partners Law Firm Name: Dr. Katerina Perrou Email: k.perrou@rokas.com Web: www.rokas.com Address: 25 & 25A Boukourestiou Str, 106 71 Athens, Greece Telephone: +30 210 3616816

November 2012 /

SECTOR SPOTLIGHT:

FCPA Compliance: Mitigating Risk in M&A Transactions

FCPA COMPLIANCE — Mitigating Risk in M&A Transactions

l Mergers and acquisitions is an area that often carries many hidden Foreign Corrupt Practices Act (FCPA) liability risks. A company with a long record of FCPA compliance may buy or merge with another firm and find itself responsible for the legal consequences of the target firm’s less rigorous historical practices. Given the increased awareness and enforcement of anti-bribery laws worldwide, companies would be wise to expand their financial and legal M&A due diligence to include efforts aimed at uncovering possible corrupt practices, as although companies engaging in M&A activity are usually familiar with the legal and financial due diligence that precedes a deal, there has been a recent focus across many regions on compliance with anticorruption laws. An increased level of scrutiny is required from prospective buyers in order to avoid acquiring potential corruption liability along with a new business. The FCPA requires that companies maintain accurate books and records and a system of internal controls designed to prevent and detect suspect payments. Potential acquirers need to ensure that their new target business complies with these requirements before entering into any agreements. Acquisition International discusses the complexities of FCPA compliance with experts in the subject. -------------------------------------------------------------------Gönenç Gürkaynak, LLM, Esq. is a Partner and Ç. Olgu Kama, LLM is an Associate at ELİG, Attorneys-at-Law. -------------------------------------------------------------------While ELİG, Attorneys-at-Law takes pride in being able to assist its clients in almost all fields of law, the main focus of its practice consists of: corporate law; mergers & acquisitions; competition law; white collar irregularities; EU law; banking and finance; litigation; telecommunication law; energy, oil and gas law; administrative law; real estate law; and intellectual property law. As an independent Turkish law firm, ELİG collaborates with many international law firms on various projects. ELİG has a significant practice in Turkey in terms of internal investigations and white collar crime matters in connection with Turkish corporate compliance issues under the FCPA, the UK Bribery Act, and under the mandatory provisions of Turkish law on anti-corruption. ELİG has interviewed over 200 employees, drafted disclosure petitions, dealt with PR and GR aspects of projects of this nature, prepared extensive white collar due diligence reports, provided over 90 FCPA trainings, and helped clients adopt and implement policies of detecting and ensuring full corporate compliance in Turkey. The firm holds a significant capability in all the fields of law required for such projects, including but not limited to employment law, data privacy law, and corporate law. Commenting on the requirements of the Foreign Corrupt Practices Act, Mr. Gürkaynak noted that the anti-bribery provisions prohibit certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining businesses. For these purposes, the U.S. Department of Justice seeks corporations subject to these provisions to implement corporate compliance programs (Principles of Federal Prosecution of Business Organisations, Title 9, Chapter 9-28.800). “In particular, companies engaging in a merger or acquisition should be able to, inter alia, conduct appropriate risk-based FCPA and anti-corruption due diligence, ensure that the company’s anti-corruption policies and procedures also apply to the newly acquired or merged entities as quickly as practicable, and train the employees of the newly acquired or merged entities on anti-corruption laws,” said Mr. Gürkaynak.

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The FCPA also requires companies whose securities are listed in the United States to meet its accounting provisions (15 USC Section 78m). The FCPA’s accounting provisions require those corporations that are covered by these provisions to make and keep books and records that accurately and fairly reflect the transactions of the corporation. These provisions also require corporations to devise and maintain an adequate system of internal accounting controls. Ms. Kama stated that legal and financial FCPA due diligence is an important safeguard for companies contemplating mergers and acquisitions. This is because matters such as illegal practices, inaccuracies in the books and records of the target company may become the responsibility of the acquiring company or the merged entity. “FCPA due diligence can allow the company to assess potential exposure from the target’s past activities, and potentially unearth unaccounted or unreasonably high expenditures for gifts and entertainment, as well as small, but regular expenditures as facilitation payments,” she explained. “Insufficient FCPA due diligence or a lack thereof may expose corporations to liability for the past corrupt acts of a target company in a contemplated merger or acquisition transaction. Furthermore, the value of the target business may be reduced if it is discovered that its business depends on bribes to be profitable.”

“Conducting due diligence before making any payment for the transaction may enable the buyer to lower the price or even pull out of the transaction because of violations that may have been especially detected through reasonable review prior to the acquisition,” she commented. Discussing recent changes to regulation, Mr. Gürkaynak noted that the legal provision regulating “bribery” in the Turkish Criminal Code No. 5237 was significantly amended in July 2012, bringing clarity on the types of actions that constitute bribery under Turkish law, as well as expanding bribery’s scope of application to private commercial bribery. He added that ELİG is expecting the long-awaited FCPA guidance to be released by the end of 2012. Mr. Gürkaynak concluded with the best piece of advice he has been given: “Corporations contemplating mergers and acquisitions should be particularly attentive about FCPA risks as well as compliance with local laws and regulations that are associated with and necessitated by the transaction. Conducting appropriate due diligence should constitute an inherent building block of the company’s compliance measures and corporate policies.”

According to Mr. Gürkaynak, ELİG is highly sensitive to several main points while it is conducting a thorough due diligence on the potential target. “We review the target’s prior third party transactions and cross check them with the target’s books and records, in cases where the target is engaged in transactions with government, we control whether the target has ever been banned from a tender, etc,” he explained. “Although it is intangible, our experiences have also taught us that conducting research on the target’s reputation in the market is also an asset while considering the potential deal.” Ms. Kama noted that acquiring a company that has not complied with FCPA may result in the acquirer to assume certain legal liability for past FCPA violations.

Company: ELİG, Attorneys-at-Law Web: www.elig.com Address: Çitlenbik Sokak No:12, Yıldız Mahallesi, Beşiktaş, 34349 Istanbul, Turkey Telephone: +90 212 327 17 24 Name: Gönenç Gürkaynak Email: gonenc.gurkaynak@elig.com Name: Ç. Olgu Kama Email: olgu.kama@elig.com

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Secondary Buyouts – Still Booming

SECONDARY BUYOUTS

— Still Booming

l At the height of the buyout boom in 2007 secondary deals accounted for 13% of the total US buyout market; to this date this figure stands at 38% for 2012 and with a busy Q4 predicted, it is only set to increase. Private equity firms are fuelling this growth by selling off companies that were acquired during the boom-era – some of the notable companies being sold between PE firms this year include Getty Images, David’s Bridal, GCA Services Group and TransUnion. According to data provider Dealogic, the value of these deals accounts to more than $28 billion this year, this more than doubles the $10.5 billion for all of 2011 and marks the highest total since 2007’s $51 billion peak. Secondary deals haven’t always been looked upon positively; Steve Kaplan, a professor at the University of Chicago Booth School of Business, said secondary deals often are done at smaller multiples, signalling the buyers expect less growth. However with the recent surge in the market, industry experts confirm that today there is much less stigma, after all the buyout business has matured and the variety and speciality of PE firms has grown. With firm’s specialist at various stages in the business lifecycle, some deals simply make strategic sense. Acquisition International speaks to Justin Abelow, Managing Director, Financial Sponsors Coverage Group, at Houlihan Lokey, for his view on the secondary market. stated that previously, private equity firms would complain that a previous private equity owner would have “plucked all the low-hanging fruit” in a company. “Now, private equity ownership strategies have themselves diversified, and one now often hears a different sort of analysis that regards previous PE ownership as having added (versus subtracted) value.” According to Mr. Abelow, geographically, SBO targets are almost twice as likely as all M&A targets to be located in core North American and Western European markets. In terms of industries, SBOs are common in the industrial and consumer spaces but less so in technology, communications, financials, and utilities. “While there is still a handful of private equity firms whose specialised strategies are less amenable to SBOs, the stigma from SBOs has long faded,” said Mr. Abelow. “Understanding the differences between private equity firms has become much more important now. We find it invaluable that we own what we believe is the largest extant dataset on middle market private equity buyer behaviours. Our goal is to create sufficient insight that a seller to private equity has to have a very good reason to not use Houlihan Lokey to sell their asset.” Mr Abelow concluded: Houlihan Lokey advises a broad range of private equity firms, family business owners, entrepreneurs, and corporate sellers, on a variety of mergers and acquisitions transactions, including sponsor-to-sponsor transactions. “Houlihan Lokey offers best-in-breed financial restructuring advisory and valuation services as well as traditional corporate finance advisory services,” said Mr. Abelow. “Within corporate finance, we believe that we have developed both scale and scope that is unprecedented in our core areas. Our advisory services are tied together by a commitment to provide independent advice and a tradition of intellectual rigor.” Mr. Abelow noted that both growth and value-oriented deals are currently meeting warm receptions from

ACQUISITION INTERNATIONAL

secondary buyers. Commenting on the factors that have led to the pickup in secondary deals, he stated that both the trade buyer and the public equity buyer have hit speed bumps in recent years, and private equity buyers to some extent have stepped into the vacuum to create value.

“SBOs will become increasingly prevalent as private equity ownership strategies diversify and the broader financial market becomes increasingly convinced of the governance strengths of the private equity ownership model.”

“Sponsors remain highly motivated on both sides of the buy/sell equation,” he added. “They are both underinvested relative to where they had hoped to be and undermonetised on their existing investments.” A third factor observed by Mr. Abelow is the increased specialisation among private equity firms which has, in some ways, made secondary buyouts more logical. Discussing the risk/return profile of SBOs, Mr. Abelow

Company: Houlihan Lokey Name: Justin Abelow Web: www.hl.com

November 2012 /

SECTOR SPOTLIGHT:

The Risks of the Banking Industry

THE RISKS OF THE BANKING INDUSTRY

l The global financial crisis of 2008 has woken people up to the risks in the current financial system, particularly in Europe where the current debt crisis continues to cause instability. Many are looking at ways in which banks can become more secure to avoid any future government bailouts of banks deemed too big to fail. Problems linked to bank structure, activities and size have been profoundly negative for the global economy and structural reform is an essential step to putting that right.

The Liikanen Group, which was established by the European Commission last year to provide independent advice on structural reforms to make banks safer, has reached a conclusion similar to that of the UK’s Vickers Commission, which last year recommended that banks’ retail operations should be ring fenced from risky trading activities, and the US’s Volcker rule that limits proprietary trading. Other suggestions include paying bonuses in debt, which can be wiped out when a bank fails. The ring fence solution is partly a response to the difficulty facing US regulators, who are struggling to define where restricted proprietary trading ends and legitimate market making begins.

-------------------------------------------------------------------Mohamed Idwan Ganie is the Managing Partner, and one of the founders, of Lubis Ganie Surowidjojo (LGS). -------------------------------------------------------------------Dr Ganie graduated from the Faculty of Law of the University of Indonesia and holds a PhD in Law from the University of Hamburg. Dr Ganie is admitted to the Indonesian Bar (PERADI) since 1984 and is a licensed Indonesian Capital Market lawyer. LGS was founded in 1985, and since then has grown into the largest corporate transaction and corporate litigation firm in Indonesia. This combination of commercial law experience and litigation uniquely positions the firm to deal with the full range of commercial issues faced by its clients in Indonesia. LGS has a long and distinguished history of banking work, including advising a number of domestic and foreign banks on matters that range from M&A to regulatory issues to dispute resolution, and previously advising the Indonesian Bank Restructuring Agency (IBRA) following the Asian financial crisis. At present, the firm continues to build on its long-standing reputation in the sector, having

58 / November 2012

been recognised for its excellence in the banking and finance practice area on a number of occasions.

“There will be a certain amount of consolidation of the smaller players, due to the recent introduction of more stringent financial health requirements for banks.”

Dr Ganie stated that the Indonesian banking sector is currently undergoing substantial growth, with significant interest from foreign parties in entering the rapidly growing market. “Indonesia has remained a relative island of economic calm compared to the economic uncertainty in other jurisdictions,” he explained. Commenting on the key risks currently faced by the industry, Dr Ganie noted that new restrictions on bank ownership have recently been issued, a new financial services regulator will take over certain roles from the central bank during the course of 2014, and a new Banking Law is currently being drafted. “There exists an inherent risk of regulatory uncertainty in the near term,” he observed.

Company: Lubis Ganie Surowidjojo Name: Dr. Mohamed Idwan (‘Kiki’) Ganie Email: ganie@lgslaw.co.id Web: www.lgsonline.com Address: Menara Imperium 30th Floor, Jl. H. R. Rasuna Said Kav. 1 Kuningan, Jakarta 12980, Indonesia Telephone: +62 21 831-5005, 831-5025

Dr Ganie concluded with his predictions for 2012/13:

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Mapping Global Gender Equality

MAPPING GLOBAL GENDER EQUALITY

l Many of our global economies have made significant gains toward workplace equality over the last few decades and today, the world’s most competitive countries are those where women have the same opportunities as men. In the 1970s only 2% of global executives were female and today this figure stands at 52%; this increase has been made thanks to enhancements to equal employment opportunities by improving women’s access to education, skills, training and healthcare. Despite these advances however, official statistics published by the UN tell us that whilst women are performing 66% of the world’s work and producing 50% of the food, they are only earning 10% of the world’s income and own 1% of the world’s property. These statistics prove that collectively we still have a long way to go.

Company: Pontificia Universidad Javeriana Name: María Fernanda Navas-Herrera Email: mnavas@javeriana.edu.co Web: www.javeriana.edu.co Address: Bogotá D.C. Carrera 7 No. 40 – 62, Colombia Telephone: +571 3208320

ACQUISITION INTERNATIONAL

Company: PwC - Tax and Legal Name: Patrick Yombock Email: patrick.yombock@cm.pwc.com Web: www.pwc.com/cm Address: Rue Christian Tobie Kouoh - BP: 5689 - Douala - Bonanjo - Cameroun Telephone: +237 33 43 24 43/ 44/45

November 2012 /

SECTOR SPOTLIGHT:

Powering the Future of Energy

POWERING THE FUTURE OF ENERGY

l There are a growing number of private equity firms investing in renewable energy deals. M&A activity increased by almost 70% between the second and third quarter of this year, although still well below the same period last year. Venture capital investment in advanced materials as well as green transportation companies grew by 45% and 98% and project investment in sub-1MW clean energy projects is up 26% on the corresponding period last year. The private-equity firm Terra Firma is planning to create a multibillion-dollar fund to invest in renewable energy, showing confidence in growth for the sector despite cuts to subsidies in the wake of the financial crisis. Confidence in the financial markets, policy uncertainty, and subsidy cuts have been undermining energy investments. Global clean energy investment fell to the lowest levels since the beginning of 2009. Global venture capital and private equity investment is down for its fourth successive quarterly, a 60% decrease on the corresponding period last year. Figures last year had been supported by large solar deals which have fallen to just 10% of the total investment seen during the same quarter last year. Acquisition International speaks to leading professionals in the industry for a look at the future of energy.

-------------------------------------------------------------------Tessa Lee is a Counsel at Linklaters Studio Legale in association with Linklaters LLP. -------------------------------------------------------------------Ms Lee describes the energy sector in Italy as “prudent but constant”. She noted that areas of the market are still very active, especially in the M&A sector, where there has been a continuous consolidation in the renewables area (PV in particular) and a focus on the gas sector. She believes this will continue, especially in light of the recently proposed National Energy Strategy, which is under discussion, and aims to make Italy a European gas hub. “Given the financial crisis, there has been much less activity in terms of debt financings. The effect of this is that the players who have the equity to develop or purchase plants are predominant and the littler or more speculative investors do not have the same access they did to the market previously,” she explained. Ms Lee has noticed an increased interest in renewables in other jurisdictions where the incentives are attractive – clients are looking at South Africa (Ms Lee advised the

60 / November 2012

SA Government in relation to their renewable energy programme and current tender process), the Middle East and, “closer to home”, Romania. “In Italy, we also noticed an increase of the investments in new areas, such as new technologies (eg: concentrated solar technology, which still has attractive incentives or small biomass portfolios) and also the first investors looking at PV merchant plants as grid parity approaches and large PV ground mounted plants are no longer eligible for incentives,” said Ms Lee. “There is also a greater focus on the gas sector, both locally and abroad at a European law and we are seeing increasing interest in gas storage, distribution and transmission assets.” Ms Lee noted that Italy has few domestic fossil fuels so has to look to other sources for its energy supply. In order to meet its energy needs and its legal obligations (eg: at a European level), the country will continue to encourage investment in renewable energy, as will other European countries, but will also need to ensure that it has a more open, competitive gas market.

“Gas will continue to be a principal energy resource and Italy needs to encourage the realisation of LNG terminals as well as facilities for storage and transportation to ensure sufficient supply,” she concluded.

Company: Linklaters Studio Legale in association with Linklaters LLP Name: Tessa Lee Email: tessa.lee@linklaters.com Web: www.linklaters.com Address: Via Santa Margherita, 3 – 20121 Milan Telephone: 02-88 39 35 230

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

Powering the Future of Energy

-------------------------------------------------------------------Sunil Seth is a Senior Partner at Seth Dua & Associates. -------------------------------------------------------------------Seth Dua & Associates is a full service law firm having headquarters in New Delhi and main practice areas including Energy and Power Projects, Infrastructure projects, Real Estate and Construction, Aviation, Aerospace & Defence, Corporate and Commercial, Taxes and Dispute Resolution. The firm is recognised as one of the premier law firms in India specialising in energy laws. The firm has provided legal advice to and has worked with various clients in the Power, Oil & Gas industry for over 20 years and is wellplaced to support and advice clients looking to achieve growth and competence even in these turbulent times. The power sector is ranked sixth among the leading sectors of the Indian economy. Mr Seth noted that effective and investment friendly policy initiatives include ambitious five-year plans for increasing installed electricity infrastructure, the NELP for increasing the production of oil and gas, and tapping of nuclear power and renewable energy. As per estimates, the scope for investments in the Indian power sector stands at US$300 billion. -------------------------------------------------------------------Ian Thomas is a Managing Director of Turquoise International Limited, a specialist merchant bank in energy and environment. -------------------------------------------------------------------Mr Thomas explained that, given the size and diversity of the European energy industry, it was not surprising that parts of it such as oil & gas are in relatively good shape, whereas elements of the renewables sector (e.g. Spanish wind and solar) are struggling. “Investment in clean technologies continues but at a reduced rate and investors’ appetite for risk has been curtailed,” he commented. “In China and some other parts of Asia, investment in energy across the board is a priority. By comparison, Europe is suffering from the impact of the financial crisis on government budgets and the financial sector in general.” In Europe, investors are moving away from renewable energy generation and towards energy efficiency, although the appetite for wind and solar continues in some jurisdictions. Mr Thomas explained that technologies and projects that do not rely on public subsidy and instead generate payback from savings in fossil energy consumption are seen as lower risk. Investors are also avoiding technologies that have high capital intensity.

ACQUISITION INTERNATIONAL

“The last decade has seen a sea change in India’s electricity sector, from being the 10th largest in the world to the 5th largest now,” commented Mr Seth. “Opportunities are coming up in power generation, transmission, distribution and equipment and servicing with capacity additions for power generation with greater focus on improving efficiency and introducing advanced technology and greater need for operational and maintenance services.

these, India is endeavouring to meet its energy needs via renewable energy. “Meeting this demand will require a fivefold to tenfold increase in capacity addition. In the 12th five year plan, India has planned to add close to 75 GW of power generation capacities,” he concluded.

“Some of the prominent policies which have boosted the private players’ confidence in the sector are National Electricity Policy, Ultra Mega Power Project Policy, Mega Power Policy, etc.” Mr Seth explained that India is committed to building a strong renewable energy portfolio in coming years and at present is offering a number of incentives to renewable energy developers to accelerate investments in the renewable energy space. He noted that India’s power demand is likely to cross 300 GW in the next ten years. Owing to the scarcity in the coal reserves and the increasing import prices on

Company: Seth Dua & Associates Name: Sunil Seth Email: sunil.seth@sethdua.com Web: www.sethdua.com Address: 601, Sixth Floor, DLF South Court, Saket, New Delhi-110017, India Telephone: +91 11 41644400

Commenting on the effect of the financial crisis on the energy industry, Mr Thomas stated:

these may have a greater-than-expected positive impact,” he commented.

“Although arguably renewable energy has not suffered as much as some other industries, the impact has been felt across the board,” he explained. “The lack of availability of bank debt for projects is a major issue, as well as reduced levels of risk capital for early stage investments.

“Coal and gas will continue to supply a large proportion of primary energy generation because of growth in developing economies and the US shale revolution. The impact of nuclear is hard to predict but it is difficult to see how supply can be maintained without it. Renewables will grow but cannot make much of an impact globally in the near term. Achieving demand side efficiencies is key,” he concluded.

“In addition, government indecision (e.g. UK solar and biomass) and changing regulation (e.g. EU biofuels) create obstacles to securing private sector investment. “Nonetheless, there are still a number of very promising businesses and technologies which are capable of securing finance providing they are realistic as regards valuation and other investments terms.” Mr Thomas stated that the future needs for energy supply can only grow - the question is how quickly. However, the potential for surprising new developments (as seen in US shale oil and gas) can have a significant impact on the supply/demand equation. “There are a number of clean/renewable energy technologies (e.g. waste-to-energy, renewable chemicals and other materials, automotive energy efficiency) that will reach maturity in the coming five to ten years and

Company: Turquoise International Limited Name: Ian Thomas Email: ian.thomas@turquoiseassociates.com Web: www.turquoiseassociates.com Address: 2 Lambeth Hill, London EC4V 4GG, United Kingdom Telephone: +44 (0)20 7248 7503

November 2012 /

SECTOR SPOTLIGHT:

Transfer pricing issues in cross-border M&A

TRANSFER PRICING ISSUES IN CROSS-BORDER M&A l Transfer Pricing issues are a major consideration for business executives, whether they are acquiring a new business, expanding into other regions or restructuring the company, transfer pricing tax implications are to be considered. M&A deals are swarmed with transfer pricing implications, not only in the bringing together of potentially inconsistent transfer pricing systems, but also in the integration objectives and financing needs of the prospective purchasers. Corporate transactions raise a whole host of issues from tax regulatory issues and compliance aspects to having influence over evaluation and the structure of the business. In M&A transactions, the interaction between transfer pricing and purchase accounting can play a critical role in determining the allocation of the purchase price among the target companyâ&#x20AC;&#x2122;s tangible and intangible assets.

-------------------------------------------------------------------David Lewis, Partner at Ernst & Young LLP, highlights some of the transfer pricing risks and opportunities to consider when undertaking an M&A transaction. -------------------------------------------------------------------Transfer pricing has far reaching implications in the M&A and PE space both from a risk perspective and from the point of view of value creation. Considering risk firstly, with the acquisition of a corporate group with operations spanning more than one tax jurisdiction, the legacy transfer pricing model needs to be carefully examined to ensure it is fit for purpose and the purchaser is not inheriting hidden transfer pricing exposures. This would involve examining the types of cross border transactions and the methodology used to price them. The existence and quality of transfer pricing documentation is a good indication of the risk management practices of the seller. It is important to note that in a number of tax jurisdictions transfer pricing adjustments are time barred and also suffer typically large penalties. This risk is compounded by the aggressive practices of revenue authorities to raise additional revenue.

62 / November 2012

Integration of acquired businesses can create transfer pricing risk by changing the profit potential of acquired entities through integration of juxtaposed transfer pricing models. Changes in profit potential raise arguments about the need for compensation or whether there has been a sale of intangibles. Carve outs from centralised supply chain models create additional transaction risk. It is essential to understand these risks prior to closing as they can influence the effectiveness of operational integration. At the same time transfer pricing is a significant value creating opportunity. As global businesses struggle in difficult economic times for profit growth they focus on cost reduction by reorganising supply chains and moving to more centralised structures. This leads to opportunities to lower effective tax rates by locating these activities in lower tax jurisdiction and designing the transfer pricing model to ensure the functions, assets and risks in the central model are appropriately remunerated. Similarly centralisation of intellectual property with the right substance in low tax jurisdictions can create substantial benefits. Today there is a lot more sophistication required around intellectual property planning to capture the benefits and manage risk with appropriate substance being a necessity.

Transfer pricing is a double edged sword in the transaction space requiring careful focus through the diligence phase to accurately price risk and at the same time it can be used post close to lower effective tax rates and extract more value from the transaction.

Company: Ernst & Young LLP Name: David Lewis Email: dlewis1@uk.ey.com Web: www.ey.com Address: 1 More London Place, SE1 2AF London, United Kingdom Telephone: +44 (0) 20 7951 8846

ACQUISITION INTERNATIONAL

SECTOR SPOTLIGHT:

The Aviation Insurance Industry

THE AVIATION INSURANCE INDUSTRY l From corporate jets to international airports, aviation presents a unique set of risks and opportunities. Aviation accidents have the potential to result in large-scale property damage and loss of human life; as a result the aviation insurance industry is extremely complex and fast moving. Insuring the industry is one of the key challenges; aviation insurance is geared specifically to the operation of aircraft and the risks involved in aviation; these policies are distinctly different from those for other areas of transportation. Acquisition International speaks to aviation insurance experts to get their opinion on the sector. -------------------------------------------------------------------Michael E. Chevrette is the Aviation Manager at Meadowbrook Insurance Group. -------------------------------------------------------------------According to Mr Chevrette, the aviation insurance market appears to be firming with regard to price and coverage. However, he noted that it doesn’t appear to be doing so at the same rate as the rest of the property & casualty industry. “An emerging trend in the aviation industry that will undoubtedly affect the aviation insurance industry is the growth and popularity of the ‘unmanned aerial vehicle’ (aka UAV) industry,” he commented. “UAV’s are no longer strictly military tools. They are gaining popularity in the civil arena as well. As an insurer, the risk of injury to persons on board the aircraft is non-existent. However, the values of many of these machines can reach into the millions, often creating challenges in insuring the machines themselves.” The aviation insurance industry is reliant on reinsurers, and Mr Chevrette explained that they act as the industry’s “capital providers”. He stated that, in many ways, the relationship is similar to that of an airline with a bank.

-------------------------------------------------------------------James E. Cooling is the managing director and Paul V. Herbers is a member and director of Cooling & Herbers, P.C. -------------------------------------------------------------------Our law firm has been engaged extensively in aviation insurance defense work since the 1970s. Over the last 35 years, we have represented, through insurers, OEM aircraft and component manufacturers, MRO and FBO overhaul and maintenance organizations, airport owners and operators, aircraft owners and operators. We have also handled many matters directly involving coverage issues, both for insurers and for reinsurers, as well as for their insureds. Our practice includes many years of experience in environmental matters, ranging from regulatory compliance to litigation over large airport contamination disputes. In addition, our aviation practice expanded in the early 1990s with the growth of business turbine aircraft and transactional matters. These have included providing legal services to sellers and purchasers of aircraft, lessors and lessees, fractional aircraft owners and operators, lenders, importers and exporters of aircraft. Our participation in the National Business Aircraft Association and the Aviation Insurance Association have been significant factors in our success. Our clients’ needs for our services encompass North America and span the globe with regular activity in Europe, Asia and the South Pacific. We have expanded services to meet our clients’ needs in the growing regulatory environment of the EU community.

ACQUISITION INTERNATIONAL

“When the airline wishes to purchase a new aircraft, it will work with its bank for the capital. An insurer’s relationship with its reinsurers is similar in that the reinsurer provides much of the capital needed to offer insurance coverage. We in the aviation arena are especially reliant on our reinsurance partners because of the enormity of aircraft values and liability potential.”

beef increases, they may be forced to increase the price. Insurance is no different. As long as I can continue to profit at a certain rate, I will continue to charge that rate. If I do no profit, or if my cost of doing business increases (i.e.: more expensive reinsurance), then I will have no choice but to raise my rates,” he concluded.

Mr Chevrette stated that increasing insurance rates would help to bring stability to the industry. However, he doesn’t see increasing rates as a “decision” as much as it is a “result” of some other factor. “I could decide today that I am going to increase all of my rates by 10%. However, unless the rest of the market takes a similar approach, I’m not likely to succeed. In terms of rate increases being the ‘result’ of some other factor, we can compare ourselves to any other industry… even fast food. “I can go to a fast food restaurant and purchase a cheeseburger for $1.00. I will continue to have this ability, as long as the restaurant can continue to profit by selling me a burger for $1.00. However, if the cost of

In that regard, we have worked with numerous members of the aviation insurance industry both on behalf of insurers and reinsurers, and on behalf of those who purchase insurance. Further, we represent many insureds in regulatory and investigative matters before the FAA, the DOT, and the NTSB. This breadth of experience and continuing service gives us a broad perspective on the industry, and a unique ability to provide counsel and legal services to all members of the insurance community. Aviation insurance risks differ from many other types of insurance, due to the smaller pool of insureds as well as the nature of the risks themselves. Recent years have been difficult for the industry as rates have declined with a significant growth of capacity among insurers. Further helping to keep rates lower has been the reduced number of major aviation losses in recent years. While the resulting lower premiums have been a welcome relief to airlines and other insureds everywhere, for insurers there remains the concern that this reduced premium base may not adequately allow for losses which have occurred historically, and may occur again at any time. From the standpoint of claims handling and legal defense of claims, the insurers’ abilities to manage and control claims costs have become increasingly important. The pressure on insurers and their service providers remains a continuing challenge for all members of the industry.

Company: Meadowbrook Insurance Group Name: Michael Chevrette Email: michael.chevrette@meadowbrook.com Web: www.meadowbrook.com Address: 1520 U.S. Hwy 130, Suite 206, North Brunswick, NJ 08902 Telephone: +1 732-940-8407

The near-term future of insurance rates in aviation is unclear, but there is no doubt that the aviation industry, including both airlines and business aviation, will serve as a large and critical component of world economic activity for many years to come. Insurance will always be required, and rates will fluctuate with economic conditions.

Company: Cooling & Herbers, P.C. Web: www.coolinglaw.com Address: 1100 Main Street, Suite 2400, Kansas City, MO, 64105 Telephone: +1 (816) 474-0777 Name: James E. Cooling Email: jcooling@coolinglaw.com Name: Paul V. Herbers Email: pherbers@coolinglaw.com

November 2012 /

DEAL DIARY:

M&A from around the world

DEAL DIARY — Deal index 65

ACROTEC

VILLAGE CENTER

ARACHNID

VR TRANSPOINT

ATENTO

YAHOO

BOAFIELD

CENTERPLATE

COLUMBUS

CONTINENTAL NICKEL

COPYTREND

ENARA

EURODIP

HEDRICH

KMD

LANDACORP

LANGA

LIMACORPORATE

PLAYSPACE

SECUOYA

TEXA

64 / November 2012

ACQUISITION INTERNATIONAL

DEAL DIARY:

M&A from around the world ACROTEC l Acrotec, a market-leading group in the manufacturing of watch components, has welcomed the family-owned Quilvest Group as its new cornerstone shareholder. The group remains under the control of its current management, which is delighted by the backing of Quilvest in supporting its long-term development plan. Acrotec, an independent group created by watch and micromechanic industry professionals, manufactures small and complex components including shock absorbers, regulator assemblies, oscillating weights, mainsprings and barrels. Acrotec’s clients include the most well-known Swiss watch brands and manufacturers. The diversity and power of the group’s production capabilities also allow it to respond to the needs of the medical, connectivity, automobile and aeronautic sectors. With more than 300 employees, Acrotec generates an annual turnover of over CHF70 million. The different companies that compose the Acrotec group (KIF Parechoc, Générale Ressorts, Décovi, and Vardeco) are all leaders in their respective niches, possessing the ability and technical excellence required to develop finished modules for watch movements in line with the precise and exclusive requirements of their clients. Quilvest’s investment of over CHF30 million in the capital of Acrotec coincides with the exit of funds managed by EPF Partners, which had been a shareholder in the group since 2006. Vischer represented Quilvest and its acquisition vehicle in the firm’s first transaction with Quilvest. Stéphane Konkoly, Partner (M&A, co-head of the Banking&Finance group), led the Vischer team, which included Janusz Marty, Associate. Mr Konkoly commented: “The main challenges were the legal complexity and tax impacts of the deal structure as originally proposed by the target. We assisted Quilvest in restructuring the transaction, thus avoiding legal traps and insecurity and allowing Stéphane Konkoly for a more efficient tax treatment of the deal. “The structure of the shareholding rendered the closing of this transaction (in terms of documents to produce and organisation) quite challenging.”

ACROTEC WELCOMES QUILVEST AS NEW CORNERSTONE SHAREHOLDER

ARACHNID l Publicis Groupe has acquired 100% of Arachnid, a highly awarded Malaysian digital agency. Arachnid was established in Kuala Lumpur in 1996, and now employs a team of more than sixty digital communications specialists. With firm roots in digital and interactive marketing, its service offering has evolved to cover all forms of interaction-oriented touch-points. The agency’s portfolio of blue-chip multinational clients includes Dutch Lady (dairy), Lexus, MINI, Petronas (oil and gas), Reckitt Benckiser, and Toyota, and the agency serves over 25 markets across North America, South America, Western & Eastern Europe, Africa, Asia and Australia. Since it was founded, Arachnid has won more than 160 local and international awards for its creativity, strategy and marketing effectiveness. It has been ranked three times on the Deloitte Asia Pacific Fast 500 - a roster of the 500 fastest growing technology companies across Asia Pacific. In the last four years alone, the agency received 11 client-nominated and client-judged ‘Advertising and Marketing Agency Of The Year Awards’ in five agency categories including Digital Agency of the Year, Direct Marketing Agency of the Year and Creative Agency of the Year. The agency will be rebranded Saatchi & Saatchi Arachnid, and becomes part of the Saatchi & Saatchi network in the Asia-Pacific region. Founder and CEO Chin Weng Keong will continue to lead the business as Saatchi & Saatchi Arachnid, and will now report to Chris Foster, Chairman & CEO of Saatchi & Saatchi Asia Pacific. Publicis Groupe now counts more than 600 full-time employees in Malaysia through its networks Leo Burnett, Publicis Worldwide, Saatchi & Saatchi and VivaKi. At the end of June 2012, Publicis Groupe employed nearly 13,000 people across the AsiaPacific region. PUBLICIS GROUPE ACQUISITION OF 100% OF ARACHNID

ATENTO l Telefónica has agreed to sell Atento, the callcentre business, to Bain Capital for €1bn. KPMG Abogados advised Telefónica on the deal, led by Javier Gazulla, M&A tax partner. The firm has a long-standing working relationship with Telefónica and has worked for them in recent M&A deals. Mr Gazulla commented: “The challenges were the existence of many jurisdictions with complex tax issues arising in the disposal, and how to arrive to a deal structure that satisfies both seller and buyer requirements, in terms of tax treatment and financing requirements. We assisted Telefónica in finding tax efficient solutions to overcome requests raised by the buyer, and for this task we were supported with our KPMG firms network to provide answers almost “online” during negotiations.” Javier Gazulla

Merlin Piscitelli, Director, Merrill DataSite International, was brought into this deal by Telefónica for the provision of a virtual data room, used throughout the due diligence phase of this project. Merrill DataSite has a long established relationship with Telefónica and has previously supported their due diligence processes across multiple transactions. Mr Piscitelli commented: “Throughout the lifecycle of this deal, the Merrill DataSite team securely managed an extensive amount of confidential information spanning numerous jurisdictions. The due diligence phase was very Francisco Palá complex due to extremely tight timelines and sheer volume of materials critical to the successful and smooth conclusion of this international transaction.” Ramon y Cajal Abogados advised Telefónica on the deal, led by Francisco Palá, Diego Lozano and Daniel Alaminos. Israel de Diego and Antonio SánchezMontero, partners, also participated. Diego Lozano

Mr Palá commented: “It was a complex operation lasting several months and has required the coordinated efforts of many areas of the firm (corporate, capital markets, banking, labor and administrative). The first part of the transaction was a due diligence to then make the sale of the company.

“This is a multijurisdictional deal that has required the involvement not only Daniel Alaminos of our firm in Madrid but also several firms in Latin America.”

TELEFÓNICA TO SELL ATENTO TO BAIN CAPITAL Financial Advisor to the Vendor

Legal Adviser to the Vendor

Legal Adviser to the Purchaser

Athemis

Financial Vendor Due Diligence Provider & Tax Due Diligence Provider

Financial Adviser to the Vendor

JPH Hottinguer

Financial Due Diligence Provider

Legal Counsel Of The Vendor & Legal Vendor Due Diligence Provider

Financial Advisor to the Vendor

Vendor Due Diligence Provider

Co-Adviser Legal Advisers to the Vendor

Mazlan Associates ACQUISITION INTERNATIONAL

Tax Adviser

November 2012 /

DEAL DIARY:

M&A from around the world BOAFIELD

CENTERPLATE

l Bridge Energy, the AIM and Oslo Axess listed oil and gas exploration and production company has completed the acquisition of a 1.55% working interest in the producing Boa field from OMV (U.K.) Limited for an adjusted consideration of $18.1m.

l Centerplate, the largest event hospitality partner to North America’s premier sports stadiums, convention centres and entertainment venues, has concluded its management led buyout of the company in partnership with Stamford-based Olympus Partners from former owner Kohlberg & Company, LLC.

The acquisition includes a transfer of around 40,000 barrels of oil stock which will be sold following completion for an estimated value of around $4.4 million (based on prevailing prices of around $110/bbl). The acquisition is being funded through a combination of current cash and Bridge’s existing reserve base lending facility. The Boa project was led by Mike Wynne, Vice President of Reservoir Management in the AGR Aberdeen office, supported by members of the technical team. The Competent Persons Report (CPR) was prepared for Bridge Energy, with whom AGR TRACS have a long-term working relationship. The AGR offices in Oslo Mike Wynne and Guildford have previously cooperated in producing both year-end reserves reports and a CPR for the entire Bridge asset base. Mr Wynne commented: “As so often, the main challenge is producing a comprehensive report capturing and quantifying the key uncertainties in a strictly limited time. The experience of our team was the critical element in achieving this goal.” The insurance broking team was led by Tim Regan – a partner in Miller Insurance Services LLP and specialist in oil and gas insurance with 22 years of experience. Bridge Energy has been the firm’s client since 2009. Mr Regan commented: “We acted as the insurance advisor and broker advising Bridge on all insurance aspects of the deal and ensuring that the acquired assets were covered appropriately. This required marketing the revised package to the London and international specialist markets.” Stronachs LLP acted as legal advisers to Bridge Energy on the deal, led by David Sheach, partner. Bridge Energy has been Stronachs’ client for several years.

BRIDGE ENERGY ACQUISITION OF BOAFIELD

Centerplate, named the fastest growing hospitality group in the country by Nation’s Restaurant News in 2011 will now see an infusion of resources which will accelerate the company’s growth and innovation strategy. Centerplate’s executive team will remain intact, providing stability, and a continuation of Centerplate’s highly successful growth strategy and event hospitality focus. Under the supervision of President and CEO Des Hague and Chairman Joe O’Donnell, Centerplate has realised significant revenue growth, adding major new business including the University of Notre Dame, the New Orleans Convention Center, and the new San Francisco 49ers stadium. “We were thrilled to announce we had come to terms with Olympus Partners last month and we are even more energised today now that we have consummated the transaction,” says Mr. Hague. “We have the leadership, strategy and resources to fuel our success and our ability to grow our clients’ business. This management led buyout will also provide continuity of key leadership, including our current, and invaluable, Chairman, Joe O’Donnell. Ultimately, we are in a really good place to drive meaningful growth in the months and years ahead.” “We are investing resources into Centerplate for one simple reason: this is a best in class company, led by an outstanding management team, poised for even greater growth in their industry,” says new investor David Cardenas, Partner with Olympus Partners. “We are joining with this talented team in support of their industry-leading “Event Hospitality” approach, which we’re confident will continue to drive the company’s growth.” IntraLinks (NYSE: IL) empowers global companies to share content and collaborate with businesses partners without losing control over information. Through the IntraLinks platform, companies, partners, and third parties can share and work together on even the most sensitive documents — while maintaining compliance with policies that mitigate corporate and regulatory risk. IntraLinks has more than 15 years of experience, and a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion. IntraLinks is the proven provider of enterprise strength collaboration solutions, and is headquartered in New York City. In addition the company operates eleven offices on four continents.

COLUMBUS l Arbor Investments has acquired Columbus Manufacturing, Inc. Established by the Domenici and Parducci families in 1917, Columbus is one of the finest producers of superior quality cured Italian meat delicacies and authentic deli meats in the US. The company has a 95 year heritage of producing and marketing unique, specialty salumi and premium deli meat products under the Columbus® brand. The company maintains one of the strongest reputations for quality in the super premium subsector of the protein industry. Products are exclusively sold through supermarkets, club stores and specialty grocery stores across North America. Columbus operates three manufacturing facilities in the San Francisco area occupying more than 270,000 square feet and has the capability to manufacture a wide variety of products such as finocchiona, genoa and calabrese salame. The company will continue to operate out of its existing facilities and will be led by Timothy Fallon, CEO and his senior management team. “We were drawn to Columbus due to the company’s unrivaled quality products and exceptional management team led by well-regarded food industry CEO Timothy Fallon,” said Ryan McKenzie of Arbor Investments. “Columbus’ family of products are simply peerless in all respects, from the use of proprietary spice blends and old world recipes, to their hand-crafted manufacturing processes. The Columbus® brand is synonymous with unmatched quality and our investment objective is to build upon their 95 year tradition and foundation to increase the availability of Columbus’ gourmet level salame and deli products across North America.” Dasciad Intelligence advised Arbor Investments on the deal, led by Dina Gaspari, President. This was a new relationship. Ms Gaspari commented: “We perform background due diligence of management teams in advance of financial transactions, including capital Dina Gaspari investments, mergers and acquisitions. We do a great deal of work for private equity firms and law firms hired in connection with this type of transaction.”

OLYMPUS SERVES UP CENTERPLATE ACQUISITION

ARBOR INVESTMENT ACQUISITION OF COLUMBUS MANUFACTURING, INC

Debt Providers

Management Team Due Diligence Provider

Legal Advisers to the Debt Providers Pensions and Actuarial Adviser

Legal Adviser to the Buyer

Legal Adviser to the Seller

Legal Adviser to the Purchaser

Tax Adviser

CWN Energy Debt Providers

Embree Financial Legal Advisor to the Purchaser

Financial Due Diligence Provider

Legal Advisers to the Debt providers

Tax Adviser

Risk & Insurance Due Diligence provider

Tax Adviser

Environmental Due Diligence Provider Risk & Insurance Due Diligence provider

Miller

66 / November 2012

Tax Adviser

Virtual Data Room Provider

ACQUISITION INTERNATIONAL

DEAL DIARY:

M&A from around the world CONTINENTAL NICKEL

COPYTREND

l Continental Nickel Limited and IMX Resources Limited have closed the plan of arrangement announced on May 16, 2012.

l Constellation, working in close collaboration with the management, has successfully acquired Copytrend Group based in Switzerland.

Pursuant to the terms of the Arrangement, IMX has acquired all of the issued and outstanding common shares in the capital of Continental that it did not already own. Shareholders of Continental (other than IMX) received 3.7 ordinary shares in the capital of IMX and 0.5 of an ordinary share purchase warrant of IMX for each Continental share held.

The company is a specialised provider of plotting-, scanning- and printing services with eight branches active in a very fragmented market in the German and French speaking part of Switzerland. Copytrend can look back on a 30-year company history and stands for a high service level. Among the wide base of customers are leading companies in the field of construction, pharmaceutical-, luxury- and a variety of other industry sectors.

Continental Nickel Limited is focused on the exploration, discovery and development of nickel sulphide deposits in geologically prospective, but under-explored regions globally. The Company’s key asset is its 75% interest in the Nachingwea Nickel Project in Tanzania. The project is a 75:25 joint venture between Continental and IMX. Continental also has an option to joint venture on the St. Stephen project in New Brunswick, Canada where the 2010-2012 diamond drill programs discovered Ni-Cu sulphide zones not previously identified. IMX Resources Limited is an ASX-listed company headquartered in Perth, Western Australia. IMX is a mining and mineral exploration company with an iron ore mining operation in South Australia, and a pipeline of advanced exploration projects in Australia and Africa, focusing on iron ore, nickel, copper and gold. Finlaysons acted as Australian lawyers for IMX in the transaction, led by Jeremy Schultz, Partner Corporate. Mr Schultz commented: “Our role included advising on how processes predominantly undertaken Jeremy Schultz in Canada were impacted, from an Australian corporate law perspective, on IMX as an Australian listed company. This involved consideration of the application of the ASX Listing Rules and Corporations Act to various aspects of the transaction and approval processes undertaken in the transaction. Finlaysons’ expertise in these areas, combined with the involvement of Canadian lawyers, facilitated resolution of the transaction issues.”

IMX ACQUISITION OF CONTINENTAL NICKEL

The acquisition of the company took place in close cooperation with the current owner related to his succession planning. The future plan is to foster the organic growth of the company by selective add-on acquisitions in line with the Buy-&-Build of Constellation. PwC Corporate Finance represented the shareholder of the company (seller) as sole financial advisor. PwC advised the seller as well as sole legal advisor in all contracts (SPA etc.) and negotiation matters.

Marco Tremonte

The client was a PwC audit client for many years, however, it was the first interaction with Corporate Finance. The project was led by Marco Tremonte (Senior Manager) with overall responsibility of Martin Frey (Partner). Mr Tremonte commented:

ENARA l MITIE Group PLC, the strategic outsourcing company has acquired Enara Group Limited, from August Equity LLP and Enara’s senior management team, for a total consideration of £110.8m on a cash and debt free basis. Enara is the fourth largest provider of home care services in the UK and will give MITIE a scalable platform to compete in the growing outsourced health and social care sector. Enara provides high quality home care in the UK, delivering a wide range of services to people who require help and support due to illness, disability or infirmity. The business cares for people via local authority, NHS and private pay agreements. For the year ending 31 March 2013, Enara is expected to have revenue of £93m and operating profit before amortisation of £10.1m. Costs of approximately £5m are expected to be incurred within the first 12 months following the completion of the acquisition to support its integration into MITIE. The gross assets of the business are £97.3m. The acquisition is expected to be earnings enhancing before integration costs in the year ending 31 March 2013 and thereafter. The acquisition has been funded by the use of new bridge debt facilities of £150m provided by existing lenders to the group, which will be refinanced into longer term debt facilities in due course.

“The Copytrend Group is one of the largest players in a fragmented Copying and Printing market in Switzerland. For the deal it was important to not only contact direct competitors but also to identify Private Equity companies with interest in consolidating the market.

Deloitte initially provided strategy consulting and corporate finance services to MITIE Group PLC to assist in exploring new market opportunities in healthcare. In respect of Enara Group Limited, Deloitte were engaged to provide MITIE Group PLC with financial, taxation and information systems due diligence services.

“We ran a competitive auction process and received very strong interest from both strategic and financial buyers (from Switzerland and abroad). In that process it was as well crucial to align the seller’s interests (succession case with complete exit) with buyer’s concern of losing important know-how.”

The transaction was led by Carol Mackinnon, senior partner from Transaction Services and Colin Hudson, MITIE Group PLC relationship partner, supported by Matt Henderson who provided specialist healthcare industry expertise. Taxation due diligence was led by Jason Clatworthy and IT due diligence was led by Julian Hunt.

CONSTELLATION ACQUIRES COPYTREND GROUP

MTE ACQUIRES LEADING HOMECARE SERVICE PROVIDER ENARA

Debt Provider

Adviser to MITIE Legal Adviser & Legal Due Diligence Provider

IMX acquires Continental Nickel Limited

Legal Adviser to the Purchaser & Tax Adviser

Legal advisors to IMX:

Financial Due Diligence Provider

Legal Due Diligence Providers Legal Adviser to the Vendor & Financial Adviser to the Vendor

Commercial & Market Due Diligence Provider

Property Due Diligence Provider

ACQUISITION INTERNATIONAL

November 2012 /

DEAL DIARY:

M&A from around the world EURODIP l An affiliate of private equity investment firm Paine & Partners has entered into a definitive agreement with Aquanova International, a company controlled by Global Capital Investors II, a private equity fund advised exclusively by Global Finance, as well as with Bellaria Holding, for the sale and purchase of majority ownership of Eurodrip. Under the agreement, the Paine & Partners affiliate would purchase all of the shares of Eurodrip currently held by Aquanova International and Bellaria, which represent approximately 67.5% of the company’s outstanding shares, for a price of EUR1.53 per share. The purchase price represents a premium of 28.6% compared to the closing share price on October 5, 2012. Following the completion of the transaction, such affiliate of Paine & Partners would be required to launch a mandatory tender offer to acquire the company’s remaining shares, in accordance with Greek law. Established in 1979, Eurodrip manufactures drip irrigation solutions, which allow farmers to realise greater crop yields while more efficiently using limited water resources. The company has a market presence in over 70 countries, with operating subsidiaries in the US, Turkey, Greece, Egypt, Jordan, Peru and Mexico, and employs more than 500 people worldwide. At completion of the transaction, the majority of Eurodrip’s directors would be nominated by Paine & Partners, with Mihalis Panagis remaining chief executive officer and continuing to lead the company’s management team.

HEDRICH l Quadriga Capital has backed the management buyout of Hedrich Group, a leading manufacturer of specialised production equipment for the electronics industry. Hedrich Group is a family-owned worldwide acting group of companies. With its subsidiaries, the company develops and manufactures production equipment and complete production lines. Its customers range from the electrical and electronics industry, automotive industry and chemical industry. They are offered customised and innovative technical products as well as services meeting with their entire chain of requirements. Their benefit: receiving all Hedrich system solutions from one source, in highest quality, worldwide. Being active in more than 30 countries, the company employs more than 270 people and fuse under one umbrella internationally acting companies. Its equipment and solutions for automation exactly match with each other. All customers can be assured that with Hedrich Group’s products they will obtain top quality, top innovative, best reliable and safe equipment and services. Ruhmann Peters Altmeyer, a partnership enterprise domiciled in Wetzlar, has given the vendor both tax and legal advice and support in the course of the transaction and been closely involved in the entire due diligence process. Ruhmann Peters Altmeyer had already been advising the Hedrich-group on all questions of commercial law for several years.

“It has been a challenging deal, especially in terms of exploring different possibilities and seeking alternative ways to approach commercial and legal issues, so that all parties would be happy with the outcome. This required theoretical background, knowledge business ethics and creative thinking.”

By way of preparation for the transaction, the partnership executed a complete restructuring of the group and was closely involved in the legal and tax aspects of it. Dr. Ingo Peters (lawyer and notary) and Mr. Thorsten Straßheim (lawyer) led the Ruhmann Thorsten Straßheim Peters Altmeyer team for the transaction, providing overall co-ordination covering the legal due diligence, giving the vendor legal advice which included the SPA contract negotiations and the land purchase contracts. Mr. Thomas Ruhmann (Business graduate, auditor and tax adviser) was closely involved in the tax and financial part of the due diligence as well as in the transaction.

PAINE & PARTNERS TO ACQUIRE MAJORITY OWNERSHIP OF EURODRIP

QUADRIGA CAPITAL ACQUIRES ALL SHARES OF HEDRICH GROUP

A.S. Papadimitriou and Partners advised the Seller, Aquanova International Holdings B.V (together with Edwards Wildman), reinforcing a long standing relationship with Global Finance advised funds and affiliates. The team was led by Mr Evangelos Lakatzis, Partner of the firm. Mr Lakatzis commented:

Legal Adviser to the Equity Provider

Legal & Financial Adviser

Financial Due Diligence Provider

Financial Adviser

Legal Adviser to the Vendor

Financing Adviser

KMD l EQT V and ATP Private Equity Partners/Via Venture Partners have signed an agreement with Advent International for the sale of 100% of the shares in KMD Equity Holding A/S. The parties have agreed not to disclose the transaction value. Since being acquired in early 2009, KMD has successfully completed an extensive transition from public to private sector ownership. The company has implemented a wide range of improvements and efficiency enhancements of its internal systems and processes, while also developing a number of new software solutions. KMD is today a professionally run and competitive business with exciting growth potential. In 2011, the company reported revenue of DKK 4,266 million and EBITDA of DKK 577 million. KMD is Denmark’s largest provider of software and IT-services. KMD generates the majority of its revenue from Danish municipal authorities. Services include among others software solutions to handle social and pension benefits. In addition, the company is a provider of IT-solutions to the central government as well as the private sector. In recent years, KMD has also built a platform for further growth in the Swedish market. Olaf Ehrenskjöld, partner in the Gorrissen Federspiel M&A department, acted as legal advisor to EQT and head of the Gorrissen Federspiel Transaction team. Mr Ehrenskjöld has worked with EQT on various transactions over the last 10 years. He is also the legal adviser to the target, KMD A/S. Mr Ehrenskjöld commented: “The deal faced the challenges you may expect in a M&A environment as the present, but these challenges were overcome by a great mutual effort from EQT and all advisors involved using the combined significant experience in the M&A marked achieved by the participation in countless M&A transactions over the years.”

EQT V AND ATP TO SELL KMD TO ADVENT INTERNATIONAL Legal Adviser

M&A Adviser

Insurance Adviser Accounting Adviser Financial Adviser to the Vendor

Risk & Insurance Due Diligence Provider

68 / November 2012

Financing Bank

Market Adviser

Tax Adviser

Accura Tax ACQUISITION INTERNATIONAL

DEAL DIARY:

M&A from around the world LANDACORP

LANGA

LIMACORPORATE

l ExlService Holdings, Inc. (“EXL”) has acquired Landacorp Inc., significantly increasing its capabilities to serve the healthcare industry.

l FSI Régions and Sodero Gestion have invested in LANGA.

l AXA Private Equity, the leading European diversified private equity firm, and Intesa Sanpaolo, the international banking group have agreed to acquire a majority 66% stake in Limacorporate SpA. The existing management of Limacorporate SpA will reinvest in the remaining 34% capital.

Landacorp, a leading provider of healthcare solutions and technology with more than 50 million members under management on its platforms, has developed services and technology solutions that share vital clinical data with payers, providers, plan participants and accountable care organisations (ACOs). These services and solutions enable collaborative care, provide insights through analytics, improve health and realise cost savings across the healthcare value chain. Landacorp’s flagship CareRadius suite is a flexible platform designed to integrate a payer’s internal and external data to streamline workflows, support collaboration among healthcare professionals and drive better health decision making with analytics. “I am excited to announce our acquisition of Landacorp, which provides EXL with an end-to-end solution for the healthcare industry, and which is consistent with our strategy of building deep domain expertise in select industry verticals and offering platform-based solutions,” said Rohit Kapoor, Vice Chairman and CEO of EXL. “This acquisition brings us a best-in-class proprietary technology platform, embedded analytics and deep healthcare domain expertise. Equally important are Landacorp’s strong relationships with many leading health insurers and its strong culture of client centricity. EXL sees an opening to establish a leadership position in healthcare by integrating care management technology, clinical outsourcing services and focused analytics. We believe that this will be a compelling value proposition for healthcare payers and make EXL an ideal partner as they confront both the challenges and opportunities of the market environment.” Prior to this acquisition, Landacorp was a subsidiary of SHPS, Inc. Following its acquisition by EXL, Landacorp will be known as EXL Landa. IntraLinks (NYSE: IL) empowers global companies to share content and collaborate with businesses partners without losing control over information. Through the IntraLinks platform, companies, partners, and third parties can share and work together on even the most sensitive documents — while maintaining compliance with policies that mitigate corporate and regulatory risk. IntraLinks has more than 15 years of experience, and a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion. IntraLinks is the proven provider of enterprise strength collaboration solutions, and is headquartered in New York City. In addition the company operates eleven offices on four continents.

Gilles Lebreux, Hervé Guerin, Guy Canu and Daniel Jeulin founded LANGA SOLAR, now LANGA, in 2008. With more than thirty operating companies, LANGA’s major activity is based on the production of electricity and heat from renewable sources. Sodero Management is a company approved by the AMF, a subsidiary of the Caisse d’Epargne Bretagne - Pays de Loire and piloting several investment vehicles. Funds managed on behalf of third parties are intended to be invested in SMEs in the West in the form of equity or quasi-equity. Sodero Management has 100 million of capital it intends to finance for SMEs. These funds come from the Caisse d’Epargne and the CDC, on the one hand, the Brittany and Pays de la Loire, on the other hand, as well as through specific FIP (local investment funds). Avenir Entreprises became FSI Régions in 2011. With an additional €350 million made by the Strategic Investment Fund (FSI), bringing its total funding to €800 million, it is a public fund for economic development in France, with an expanded and diversified investment capacity.

Frédéric Burot

The corporate team of the law firm Avoxa (www.avoxa.fr) is led by Frédéric BUROT (fburot@avoxa.fr), Managing Partner. Regarding M&A (mergers and acquisition), Frederic BUROT collaborates with an associates team and more particularly with Estelle ROUVRAIS (erouvrais@avoxa.fr), lawyer with the Rennes Bar since 2006. Avoxa advises LANGA. Frédéric BUROT has developed a close, partnershipbased relationship with the management team since its incorporation in 2008. He commented:

“LANGA has to face a strong growth and to achieve significant projects which involve important needs of financing. Avoxa’s role consists of accompanying LANGA in its development strategy and the imperious necessity of strengthening its shareholders’ equity. Avoxa supported LANGA during the negotiation with FSI Régions and Sodero Gestion and in drafting the appropriate enforceable contractual documentation.” Estelle Rouvrais

E X SERVICE ACQUIRES US BASED LANDACORP

FSI RÉGIONES ACCOMPAGNE LE DÉVELOPPMENT DU GROUPE LANGA

Legal Adviser to the Purchaser

Intervenants

Schulte Roth & Zabel

Limacorporate SpA, founded by the Lualdi family in 1945, is a global leader in the design, production and distribution of orthopaedic devices. The group has 600 employers and three production facilities in Italy. In 2011 it had revenues of 117 million euros, 66% of which was generated in markets outside of Italy. The future strategic growth plan for Limacorporate SpA is focused on the further international expansion of the Group and on the enlargement of its existing product portfolio. AVICENNE advised AXA Private Equity and conducted Strategic Due Diligence for the acquisition. AVICENNE, founded in 1992 in Paris, is a leading advisor on business strategy in the medical devices industry and has been involved in major orthopaedic transactions for over 15 years. Ali Madani, CEO of AVICENNE commented: “We are pleased for having been involved in this significant transaction. Firstly, because we were able to advise AXA Private Equity, a Ali Madani world leader in its business, and secondly because of the acquisition of LIMA, who is one of the most important and most promising “challengers” in the European orthopaedic industry. Our support of this Strategic Due Diligence has facilitated our client to apprehend the opportunities and threats of such an endeavour while at the same time understanding the markets and the products as well as the regulations, the company and its management.”

AXA PRIVATE EQUITY AND INTESA SANPAOLO ACQUIRE A 66% STAKE IN LIMACORPORATE SPA

Financial Adviser to SHPS

Rysing Advisory & Research, LLC Financial Due Diligence Provider

Tax Adviser

Virtual Data Room Provider

ACQUISITION INTERNATIONAL

November 2012 /

DEAL DIARY:

M&A from around the world PLAYSPACE l PlaySpace S.L., the fastest growing developer and operator of social and multi-player evergreen games, has closed of $1.9 million investment round led by PeopleFund with the participation of the Spanish venture fund Faraday Ventures. Founded in 2011 by Alfonso Villar and incubated by Enrique Dubois of Mola.com, PlaySpace has successfully launched traditional Spanish evergreen games such as Parchis, Dominos, Luno, La Oca and Chinchon. Available in Facebook and Tuenti all games are offered as a freemium service and users have the ability to purchase virtual currency and goods. PlaySpace rapidly growing gamer community counts with more than 3 million users and its games are available in important social networks like Facebook and Tuenti and will soon be available in IOS and Android. The funds will be used to improve the product, to develop and launch new games and to expand their offering internationally. PlaySpace is looking to launch its portfolio of games in the USA and in Latin America where the company aims to become the leader in social gaming for the Spanish and Portuguese speaking market. Antonio Coll Zaforteza is the partner in charge of the business law area of “Rambla Abogados y Asesores”, a law firm established in Mallorca and aimed at assisting its clients (small, medium and large companies) in all the legal and tax implications of their activity. Mr Zaforteza advised PlaySpace in the legal and tax implications arising from the investment to be performed by People Fund and Faraday Venture Partners. He also prepared all the legal documents for the execution of such investment. Rambla Abogados y Asesores has been working with Playpace and the “Mola” group (owner of PlaySpace) for the last year.

SECUOYA l The funds managed by N+1 Private Equity have acquired a majority stake in the Secuoya Group. The funds managed by N+1 Private Equity (Dinamia and the funds comprising the N+1 Private Equity Fund II) have agreed to acquire of up to 55% of the share capital of Secuoya, Grupo de Comunicación, S.A. (“Secuoya” or the “Group”), with a view to making the target the leading vertically-integrated Spanish provider of audiovisual content and services, by (i) reinforcing its competitive positioning, (ii) strengthening its capital and management structure, (iii) boosting its growth potential in attractive markets and (iv) facilitating its international expansion. Secuoya is an audiovisual service and television content provider with a presence throughout the sector’s entire value chain. In 2011 Secuoya generated revenue of €24.4mn and EBITDA of €4.1mn, year-on-year growth of 19% and 72%, respectively. Net debt at year-end 2011 was less than 1.5x EBITDA. Secuoya’s core business (in which it is the market benchmark) is the provision of audiovisual services (90% of 2011 revenue), noteworthy among which are the provision of: (i) the news services for IB3, the Balearic regional television broadcaster; (ii) postproduction services for Antena 3 TV and the news teams and programming for this network nationwide; and (iii) the ENG teams for Telemadrid’s news and other programming. Sabadell Corporate Finance represented N+1 as sole corporate finance advisers. The firm has been involved in other buy-side mandates with N+1, some of them in the same sector as Secuoya. The SCF team was led by Rafael Gómez de Iturriaga, currently a Director in the Corporate Finance team. He commented: “The main challenge was to reach a valuation that satisfied the expectations of the majority shareholders and at the same time was in line with our client’s forecasts. “We helped N+1 to design a contingent valuation and to put down into numbers the main terms of the agreed structure.”

TEXA l The funds managed by Apax Partners France have acquired a majority stake in Texa, one of France’s leading loss adjusters and real estate diagnosis companies. The transaction was carried out alongside Texa’s founder, Christian de Belair, Pragma Capital and the management team, all of whom remain shareholders in the company. Founded in 1987 as a merger of six loss adjusters, Texa expanded very quickly through a combination of organic growth and acquisitions of independent loss adjusters. Initially specialising in large technical risks, Texa has expanded into all other non-life insurance segments (theft, fire, water damage, property damage, third-party liability, business interruption, construction, etc.), with the exception of auto insurance. Texa is now one of France’s leading loss adjusters in non-life and large technical risks, serving the major insurers. The group has also been active in the real estate diagnosis market since the 2009 acquisition of AlloDiagnostic, France’s first integrated national network of real estate diagnosis inspectors. Texa has 80 offices throughout France and 1,300 employees, including 430 loss adjusters and 100 real estate inspectors. In 2011, the group posted revenue of €106 million. Backed by its new shareholder, Texa aims to develop further by enhancing its service offering, implementing innovation-driven improvements across its business, expanding is network, and seizing bolt-on acquisition opportunities for key assets in a market that is consolidating to the benefit of the largest players. Bruno Vesval, Chairman of Texa’s Board said, “The entry of Apax Partners into Texa’s capital structure, alongside the current shareholders, will enable us to accelerate our growth over the next few years. We are delighted to enter into a partnership with Apax Partners, a contributor to the development and success of a significant number of French companies.”

PLAYSPACE SCORES $1.9M TO EXPAND ITS SOCIAL GAMES TO U.S., LATIN AMERICA

N+1 PRIVATE EQUITY TAKE A MAJORITY STAKE IN THE SECUOYA GROUP

APAX PARTNERS ACQUIRES TEXA, A LEADER IN LOSS ADJUSTMENT AND REAL ESTATE DIAGNOSIS

Debt Provider/Equity Providers(s)

Financial and Legal Advisors For N+1

Legal Adviser to the Purchaser

Landwell & Associes

Faraday Ventures Legal Adviser to the Purchaser

Due Diligence Tax and Financial Advisors For N+1 and Legal Advisors For Secuoya

Legal Adviser to the Vendor

Legal Adviser to the Equity Provider Registered Advisor to MAB

Financial Due Diligence Provider, Tax Adviser, IP Due Diligence Provider & Pensions and Actuarial Adviser

Tax Adviser

Oliver & Maura 70 / November 2012

ACQUISITION INTERNATIONAL

DEAL DIARY:

M&A from around the world VILLAGE CENTER

VR TRANSPOINT

YAHOO

l AXA Private Equity, the leading European diversified private equity firm, has arranged a €37 million mezzanine tranche alongside Capzanine to finance the acquisition of Village Center by private equity firm 21 Centrale Partners and Promeo, the company’s founding shareholder.

l Itella has acquired VR Transpoint’s groupage logistics business in Finland and the entire share capital of PT Logistiikka Oy..

l Alibaba Group Holding Limited, China’s largest e-commerce company, has completed the initial repurchase of shares from Yahoo! and restructured its relationship with the Silicon Valley company in transactions valued at approximately US$7.6 billion. The closing follows the May 20, 2012 announcement by Alibaba Group and Yahoo! of a comprehensive plan for Yahoo! to reduce its stake in Alibaba Group in stages over time and a series of agreements to implement the restructuring of the ongoing relationship between the two companies.

Created in 2003 within Promeo Group, Village Center (including Village Center Loisirs, Kawan Group and Le Gain) is a leader in outdoor accommodation, operating 13,500 pitches and 7,800 mobile homes installed in 33 campsites. The group has developed a comprehensive business model comprising the operation of campsites, sale of residential mobile homes as well as the distribution of off-season stays. In 2011, the group generated a turnover in excess of €70 million. This transaction follows the partnership signed on August 1 2012 between Village Center and Vacances Directes, a 21 Centrale Partners portfolio company, to create Europe’s leading outdoor accommodation group, with 38 campsites, 20,500 pitches and 13,500 mobile homes installed in 168 partner campsites in Europe. The new group is expected to generate a turnover in excess of €100 million in 2012. In a fast growing and fragmented market, this partnership will accelerate the development of Village Center and Vacances Directes by capitalizing on their complementary business models. It will also strengthen the position of the new group and generate significant synergies. Guillaume Chinardet, Director Private Debt, AXA Private Equity, said: “We are pleased to support Village Center in its partnership with Vacances Directes. The mezzanine financing arranged by AXA Private Equity and Capzanine will support the development of the group and facilitate its growth, both organically and through future acquisitions in France and in Europe.” AXA Private Equity is a world leader in private equity, with assets of 28 billion dollars managed or advised in Europe, North America and Asia. Prior to this acquisition, Landacorp was a subsidiary of SHPS, Inc. Following its acquisition by EXL, Landacorp will be known as EXL Landa.

The net sales of the groupage logistics included in the acquisition is approximately 130 million euros, and the number of personnel is over 800. The personnel comprise mainly transportation, terminal and warehouse personnel and they will be transferred to Itella as existing employees. The business purchase agreement was announced on 29th May, 2012, and was approved by the Finnish Competition Authority on 23rd August, 2012. “This is good for Finnish logistics operations because the extensive operations also involve efficiency benefits. Our in-depth research has shown that merging the companies’ functions will also achieve advantages visible to the customers,” said Jukka Alho, President and CEO of Itella. “VR Transpoint will focus on mass goods logistics and its development both on railways and road. Giving up on groupage logistics is part of the change in VR Group’s strategy,” said Mikael Aro, President and CEO of VR Group. Itella Logistics, part of Itella Group, supports and develops the business of its customer companies by providing them with service logistics solutions for road, sea and air freight, warehousing and other contract logistics. Customers may outsource an individual element of their logistics process, or even their entire supply chain, to the company. Itella Logistics has operations in eight countries (Finland, Sweden, Denmark, Norway, Latvia, Lithuania, Estonia and Russia). The company provides global services through its partners. The net sales of Itella Logistics were in 2011 MEUR 732 and it employed 7,100 persons. VR Group is a versatile, environmentally friendly and responsible travel, logistics and infrastructure construction service company. VR Group provides employment for 11,500 professionals in Finland and ten European countries.

The initial repurchase of shares, which represented one-half of Yahoo!’s 40% stake in Alibaba Group on a fully diluted basis, was valued at approximately US$7.1 billion. Of this, Yahoo! received approximately US$6.3 billion in cash and US$800 million in preference shares in Alibaba Group. Concurrent with the initial repurchase, Alibaba Group paid Yahoo! a one-time cash payment of US$550 million in connection with the amendment of their existing technology and intellectual property license agreement. Under the terms of the agreement with Yahoo!, Alibaba Group has the right to repurchase one-half of Yahoo!’s remaining stake upon a qualifying initial public offering in the future. Yahoo! originally acquired its stake in Alibaba Group in 2005 in exchange for US$1 billion and sale of its Yahoo! China business to Alibaba Group. “The completion of this transaction begins a new chapter in our relationship with Yahoo!,” said Jack Ma, Chairman and Chief Executive Officer of Alibaba Group. “We are grateful for Yahoo!’s support of our growth over the past seven years, and we are pleased to be able to deliver meaningful returns to our shareholders including Yahoo!. I look forward to working with Marissa Mayer and her team in our continued partnership.” Alibaba Group financed the transaction with a mixture of cash on hand, senior debt and the issuance of convertible preference and ordinary shares. The financing package is the largest ever private financing for a private sector Chinese company, and the largest non-LBO private financing for a technology company globally. The new equity financing was completed at a valuation of approximately US$40 billion. Eight international banks – Australia and New Zealand Banking Group, Barclays Bank, Citi, Credit Suisse, DBS Bank, Deutsche Bank, Mizuho Corporate Bank and Morgan Stanley – provided US$1 billion of senior debt financing for the transaction, while China Development Bank was the sole Chinese bank that provided a parallel senior debt facility of US$1 billion.

AXA PRIVATE EQUITY ARRANGES MEZZANINE FINANCING FOR ACQUISITION OF VILLAGE CENTER

ITELLA AND VR’S BUSINESS PURCHASE FINALIZED

ALIBABA BUYS BACK HALF OF YAHOO!’S STAKE

Legal Adviser to the Vendor

Commercial Due Diligence Provider

PRC Council

De Pardieu Brocas Maffei

Intellectual Property Adviser

Financial Due Diligence Provider Financial Due Diligence Provider & Tax Adviser

Lead Council

Legal Adviser to the Vendor

Legal Adviser to the Purchaser

Vendor Due Diligence Provider

ACQUISITION INTERNATIONAL

Lead Legal Council to Alibaba

Legal Council to Yahoo

Virtual Data Room Provider

Legal Council to Yahoo

Adviser to CIC International

November 2012 /

Deals

of The Year 2012

DEALS OF THE YEAR:

The Best Deals of 2012

— Deal index

l Acquisition International looks back over 2012 to highlight the most important, interesting and complex deals of the year. These transactions represent the best of the best in M&A.

GERMAN/SPANISH CROSS-BORDER DEAL OF THE YEAR - AURELIUS

FRENCH PE BACKED CONSUMER SECTOR DEAL OF THE YEAR - HOMAIR

DEAL OF THE YEAR - Delic-Pol S.A.

BELGIAN PHARMACEUTICALS DEAL OF THE YEAR - IBA

DEAL OF THE YEAR - Enovos

GREEK DEAL OF THE YEAR - KERNEOS

DEAL OF THE YEAR - BaltCap

CZECH DEAL OF THE YEAR - K+S

GERMAN MANUFACTURING DEAL OF THE YEAR - Bühler

OVERALL EUROPEAN DEAL OF THE YEAR - MEYN

SWEDISH DEAL OF THE YEAR - Cloetta

DUTCH ENERGY DEAL OF THE YEAR - KEMA

DANISH ENERGY SECTOR - Energinet.dk

DEAL OF THE YEAR - Esterel Technologies

NORWEGIAN PE BACKED DEAL OF THE YEAR - Reiten & Co

DEAL OF THE YEAR - Fashion For Home

TURKISH OIL & GAS DEAL OF THE YEAR - RUBIS SCA

DEAL OF THE YEAR - FSN Capital

FRENCH PE BACKED CONSUMER SECTOR DEAL OF THE YEAR - SARGARD

US/EUROPEAN CROSS-BORDER DEAL OF THE YEAR - Gardner

DEAL OF THE YEAR - Sveafastigheter

EUROPEAN MERGER OF THE YEAR - H2

ACQUISITION INTERNATIONAL

FRENCH FUNDING DEAL OF THE YEAR - Movea

DEAL OF THE YEAR - NCC EUROPEAN MANUFACTURING DEAL OF THE YEAR - PIPELIFE

November 2012 /

DEALS OF THE YEAR: The Best Deals of 2012

German/Spanish Cross-Border Deal of the Year AURELIUS Group (ISIN: DE000A0JK2A8) has acquired Thales Information Systems S.A.U. (thereafter: Thales CIS), a subsidiary of Thales España. Thales CIS is a key player in the IT market in Spain and Argentina, providing a range of IT services which include development, installation and support of software and software tools to support clients in the management of their day-to-day business. Furthermore the company provides technical assistance and maintenance services, along with specialist advice and services in areas such as IT security and IT mobility as well as process consulting in targeted key sectors. Thales CIS generated revenues of roughly 45 million euros in 2011. Gallego, Martos & QuadraSalcedo acted as Legal adviser on behalf of Aurelius on the deal. Mr. Rodrigo Martos Prat (pictured), Partner and co-founder of the Firm led the team, he commented: “We provided legal advice in preparation of a “red flag” due diligence report based on Spanish Law covering corporate, tax and labour issues, direct analysis and draft of the corporate report and coordination and supervision of the tax and labour issues of the report, coordination and supervision of an Argentinean equivalent due diligence carried out with the assistance of a firm based in Argentina part of the Firms trust (Errecondo, Salaverri, Dellatorre, González & Burgio, led by its Partner Mr. Saturnino Funes), assistance in the legal issues connected with the future operation of the target companies, in the swift negotiation and in the execution of the SPA which was subject to the fulfilment of certain closing conditions, and on the former closing of the transaction.” ERRECONDO | SALAVERRI | DELLATORRE | GONZÁLEZ & BURGIO advised in all Argentine legal matters related to the acquisition of the Argentine subsidiary of the Target. The team was led by partner Saturnino Funes, and included associates Victoria Hitce and Luciana Parada Villar. Saturnino Funes commented: “We represented Aurelius Group. ESDG&B conducted a limited legal due diligence review and advised on several legal issues, including, certain foreign exchange and tax matters related to the structuring of the transaction, as well as general corporate advise in connection with the closing and acquisition of control of the subsidiary.”

Deal contact: www.gmqabogados.com AURELIUS Group Acquisition Of Thales Information Systems S.A.U.

Deal of the Year

Resource Partners, consumer-focused investor in CEE, and AXA Private Equity, the leading European diversified private equity firm, acquired Delic-Pol S.A, the Polish confectionery producer. Ryszard Wojtkowski, Managing Partner of Resource Partners, said: “Our investment in Delic-Pol demonstrates our commitment to supporting Polish companies, both in terms of performance and geographical expansion. The company has demonstrated that it can adapt to the increasing requirements and expectations of the retail market, reflected in the fact that is has now been a reliable partner of both modern and traditional retailers for a number of years. We want to increase production capacity and support the company in the next stage of its development.” Dominique Gaillard, Member of the Executive Board of AXA Private Equity, added: “Delic-Pol is a high quality, successful business with very strong management, which is good news for our investors. Through our international network, we look forward to supporting the company as it continues to grow both domestically and internationally.” Delic-Pol S.A. (“Company”) was the large Polish producer of wide range of cookies products and the leading manufacturer of Jaffa Cakes in Poland, owned by the Polish private individuals, with consolidated revenues in 2011 of nearly PLN 200 million (EUR 50 million). KPMG Corporate Finance acted as the sole financial advisor to the Company’s shareholders in the process of finding an investor. The engagement was initially envisaged as KPMG assistance to the vendors in a one-to-one selling process with a selected investor, which however shortly withdrew from the process due to its own internal situation. Given the circumstances, KPMG proposed finding an alternative buyer for the Company to the vendors. Our role then was enlarged to the full-scale sell-side advisory. During the SPA negotiations KPMG closely cooperated with its affiliated legal advisor D. Dobkowski LLP. Furthermore, in relation to the disposal, KPMG coordinated the process of some non-core assets carve-out and implementation of the effective tax structure for the vendors. The final bidder was a private equity fund from Resource Partners group, which specialises in transactions in consumer goods and services sectors, operating in Central and Eastern Europe. Krzysztof Klamut – Partner at KPMG in Poland, Corporate Finance Group, Head of M&A Consumer & Industrial Market Group. Piotr Grauer – Director at KPMG in Poland, Corporate Finance Group, M&A Consumer & Industrial Market Group. Tadeusz Dudziński – Partner Associate at KPMG law firm in Poland (D. Dobkowski LLP), Head of M&A Group. Tomasz Kamiński – Associate at KPMG law firm in Poland (D. Dobkowski LLP), M&A Consumer & Industrial Market Group.

AXA Private Equity and Resource Partners acquire Delic-Pol S.A. Financial Adviser

Deal of the Year

Acquisition reinforces AXA Private Equity’s leading position at the heart of European energy infrastructure sector AXA Private Equity, the leading European diversified private equity firm, announced that it will acquire a 23.48% stake in Enovos from ArcelorMittal for €330 million through its latest Infrastructure fund. Headquartered in Luxembourg, Enovos is an integrated utility company focused on electricity and gas transmission and supply as well as power generation including renewables. Its core activities are based in Luxembourg and Germany. With this investment AXA Private Equity now becomes the company’s second largest shareholder after the State of Luxembourg with a 23.48% equity stake. Enovos is a highly strategic company, geographically wellpositioned at the heart of the EU and based in a strong domestic market which is one of the most resilient in Europe. The company has a leading domestic position with strong growth potential to expand in other surrounding markets. Since its creation in 2009, Enovos has already consolidated the majority of gas and power grids in Luxembourg, and leads the supply of gas and electricity in the country. The company has a sound growth strategy to pursue its mission as leading energy operator in Luxembourg, while taking advantage of market opportunities in neighbouring markets Mathias Burghardt, Head of Infrastructure at AXA Private Equity, said: “We appreciate the long term attractiveness and the conservative financial profile of the company. AXA Private Equity highly values the opportunity to become a long term investor and a strategic partner of Enovos. This transaction is a major milestone in our strategy of growth in the Eurozone’s energy sector, provides geographic diversification of our portfolio into Luxembourg and Germany, and demonstrates the continued ability of our team to originate proprietary deal flow for our investors..” Enovos has over 1,300 employees and more than 280,000 points of delivery (electricity and natural gas). The company has around 9,500 km of electric lines and 3,500 km of gas pipelines. In 2010, the group had a turnover of €1.5 billion.

AXA Private Equity to acquire €330 million stake in Enovos

Advisors of AXA Private Equity

Legal Advisers to AURELIUS Legal Adviser Debt Providers

Legal Adviser to the Equity Provider

Tax Adviser Environmental Due Diligence Provider

Financial Due Diligence Provider

74 / November 2012

ACQUISITION INTERNATIONAL

DEALS OF THE YEAR:

The Best Deals of 2012

Deal of the Year

On May 9, DMT Pluss SIA, the SPV owned by the management team of the largest and the most sucessful DIY chain in Latvia – DEPO, backed by a local financial investor ABLV Private Equity Fund, signed the contract to acquire 72% of DEPO DIY SIA’s shares from Baltic Investment Fund III managed by leading Baltic private equity firm BaltCap and the Icelandic financial investor Byko Lettlandi ehf. DEPO DIY SIA operates nine retail stores throughout Latvia and employs more than 1000 people. The company was founded in late 2004 and within seven years has grown from greenfield to operations with sales of more than EUR 125 million. According to Andris Kozlovskis, the CEO of DEPO DIY, the management buyout supported by a new financial investor will allow the company to develop further and maintain the previously achieved growth rates. “With the help and backing of its founding financial parters, DEPO has achieved remarkable growth and unmatched profitability that was not significantly affected even during the worst economic crisis in Latvia,” Kozlovskis said. IBS Prudentia was the exclusive financial arranger of the transaction. Kristaps Berzins, Associate at IBS Prudentia: “We arranged the equity and bank financing for the acquisition of majority of shares. As a result, existing owners DMT Pluss increased their stake to 75% (from 28%), while the new financial partner - ABLV Private Equity Fund 2010 - acquired 25% of the shares. The deal was challenging since it required to align the interests of all involved parties – existing shareholders, who were seeking for an exit, existing shareholders who were interested to increase their stake, banks and the new investor.The deal is in line with the company’s future development plans.”

BaltCap Sale of Depo in a management buyout backed by ABLV

German Manufacturing Deal of the Year

EQT III sells Leybold Optics

EQT III has reached an agreement to sell German vacuum thin film technology company Leybold Optics GmbH (“Leybold” or the “Company”) to the Swiss family-held conglomerate Bühler Group (“Bühler”). The Swiss technology group has a global footprint and specializes in the field of process engineering, especially production technologies and services for producing foods and advanced materials. BNP Paribas acted as financial advisor to EQT, the owner of Leybold Optics on the deal. Jochen Czelecz (Director, Frankfurt, picture above) led the M&ATeam of BNP Paribas and coordinated the different parties involved in the process. Joern Hagen Fuenfstueck (Vice President, Frankfurt) had day-today project responsibility, with further team members from Frankfurt, London, Paris and Hong Kong supporting the transaction. Jochen commented: “As there was a truly international universe of potential buyers, it was key to run a very structured process, in order to keep momentum. Pre-meetings with interested parties before the official process kick-off helped to get bidders up to speed, which was especially relevant for bidders with less experience in a buy-side process. Continuous interaction with multiple bidders until the end of the process helped to maintain maximum flexibility.” Deloitte & Touche GmbH performed vendor, commercial and tax due diligence on behalf of EQT. Sanja Mikic, Karsten Hollasch and Nicole Kaeckenhoff led the team. PwC represented Bühler AG on the deal. Dirk Stiller and Christine Mark led the PwC Legal team. Dirk is a partner of PwC and the leader of the German M&A practice. Christine is a salary partner of PwC.

Bühler Group Acquisition Of Leybold Optics

Swedish Deal of the Year

The combined company will take the renowned Cloetta brand name and become a leading Swedish confectionery company with a strong base in the Nordic region, as well as in Italy and the Netherlands. The new brand will manage a portfolio of iconic brands and have pro forma net sales of SEK 5.7 billion and recurring EBITDA of SEK 666 million. Cloetta’s largest shareholder, AB Malfors Promotor, is to invest SEK 545 million in the merger, showing its strong commitment to the brand. Bengt Baron, CEO of LEAF, said: “This merger is a perfect match where we will unite iconic, local brands, from complementary categories with very few overlaps. The new Cloetta will offer a full range of strong brands, and a very strong route to market in the Nordic countries as well as in Italy and in the Netherlands. In an industry where the brand is nearly as important as the taste of the product, this transaction makes both industrial and strategic sense.” Willem Blom (pictured), a partner at Deloitte Belastingadviseurs BV, assisted reinforced Deloitte’s long-standing relationship with Leaf, represented the company and its shareholders CVC and NC in the vendor process (diligence and valuation)and the subsequent unwinding of the existing (tax) structure. Blom commented: ““One of the major challenges faced was to demonstrate the existence of additional (tax) value within the structure opposed to the initial valuation. These challenges were overcome via presenting all parties involved with additional tax structuring steps in combination with an in-depth risk analysis substantiated by additional information.” Björn Hallin (pictured) a partner at KPMG and Jan Källqvist, partner at KPMG, and their team advised Cloetta in the whole process with deal structuring, valuation, accounting matters, financial and tax due diligence. Hallin commented: “the major challenge was to create and devise a structure that would work considering the various objectives of all parties involved. The transaction was complex with several restrictions from a financial, tax and accounting perspective which we managed to solve in a manner that supported the feasibility of the transaction” KPMG acted as financial advisor in Cloetta’s acquisition of the shares in LEAF. The assignment included M&A advise, valuation, structuring and design of a management incentive program. The deal was headed by Björn Hallin, Partner at KPMG Corporate Finance. The transaction was financed by means of debt, a rights issue and a contribution in kind issue. KPMG successfully facilitated the deal by being able to provide project management as well as specialist competence within corporate finance, tax, accounting and stock market regulatory issues. KPMG has an ongoing relationship with Cloetta and has continued providing advisory services.

Cloetta AND LEAF Merger

Financial Adviser to the Vendor Exclusive Financial Arranger Of The Transaction

Financial Advisor Legal Adviser to the Vendor

Debt Providers

Lead Manager and Bookrunner Vendor Due Diligence Provider Legal Adviser to the Vendor Legal Advisers to the Purchaser

Legal Adviser to the Equity Provider & IP Due Diligence Provider

Raidla Lejins Norcous Financial Due Diligence Provider

Potapovica & Andersone ACQUISITION INTERNATIONAL

Environmental Due Diligence Provider

Virtual Data Room Provider

Financial Adviser to the Vendor

Due Diligence Provider

November 2012 /

DEALS OF THE YEAR: The Best Deals of 2012

Danish Energy Sector Deal of the Year

Dutch Energy Deal of the Year

DNV has acquired KEMA, forming a world-leading energy consulting, testing, and certification company that can drive the worldwide transition towards a safe, reliable, efficient and clean energy eco-system . DNV KEMA Energy and Sustainability will consist of all 1,800 KEMA employees and 500 employees from DNV”s renewable energy and sustainability activities. The new company will be led by Thijs Aarten, CEO of KEMA, and will be headquartered in Arnhem, the Netherlands. Mr. Aarten will report to a Supervisory Board chaired by DNV CEO Henrik O. Madsen. Greenhill acted as exclusive financial adviser to DNV on this transaction, with Philip Meyer-Horn from the Frankfurt office leading the team. Philip commented: “We have known DNV’s senior management for a number of years and are proud to be associated with such a high quality enterprise which dates back to 1864. The Greenhill team enjoyed supporting DNV on this important, visionary milestone.” Willem de Nijs Bik (partner) and Baukje Dreimuller (associate) led the Houthoff Buruma team that represented new client DNV. Willem commented: “It was a very competitive process and arrangements had to be made with Alliander and Cogas the remaining shareholders. DNV put in a good bid and we found a creative solution for the remaining shareholders.”

Energinet.dk’s acquisition of ten regional transmission companies in Denmark, which are owned by a total of 41 different sellers, has been made public. Bech-Bruun has advised Energinet.dk during the entire process. Anders Stubbe Arndal and Caroline Pontoppidan, both partners haeded the team at Kromann Reumert. Anders heads Kromann Reumert’s energy law practice group and is also an experienced advisor in M&A matters. Caroline specializes in M&A, adjacent stock exchange law in addition to commercial and company law. They were representing Danish Energy Association acting on behalf of the 41 owners of 10 regional electric power transmission network companies. Our main challenge was the Regulatory forced sale as a result of EU law. Solved by negotiating a voluntary deal within the framework. The shares in the 10 regional electric power transmission network companies were sold to Energinet.dk, a state-owned company, in consideration of DKK 5.709 billion, adjusted for net debt, working capital, tax, dividend etc. With this transaction, all Danish electric power transmission networks (“the energy highways”) are now owned by the Danish State. Bech-Bruun represented its long-standing client, Energinet.dk. We faced numerous unchartered legal challenges and significant project management and timing issues. We resolved these by dividing our large multidisciplinary team into smaller teams. Each team had an individual focus area, e.g. drafting and negotiating 32 agreements with 41 sellers or conducting 11 due diligence exercises. Moreover, we applied sharp project management skills and effectively collaborated with Energinet.dk and its advisors. The tight time frame was achieved by complying with negotiation and due diligence milestones.

Per Hemmer

Peter M. Andersen

Our 28 member team was led by Energy Law partner, Per Hemmer and M&A partner, Peter M. Andersen.

Per Hemmer - phe@bechbruun.com Peter M. Andersen - pma@bechbruun.com www.bechbruun.com

DNV Acquisition Of KEMA

Energinet.dk acquisition of ten transmission companies Legal Adviser to the Purchaser

Deal Leybold of the Year EQT III sells Optics

ANSYS, Inc. (NASDAQ: ANSS), a global innovator of simulation, and Esterel Technologies S.A. (“Esterel”) a leading provider of embedded software simulation solutions for mission critical applications, signed a definitive agreement whereby ANSYS will acquire Esterel Technologies for a cash purchase price of approximately €42 million (or approximately US$53 million), subject to certain working capital adjustments at close. The agreement also includes retention provisions for key members of management and employees. Headquartered in Elancourt, France, Esterel has about 80 employees and reported revenues of approximately €15 million for fiscal year 2011. The transaction, currently anticipated to close in the third calendar quarter of 2012, is subject to customary closing conditions and regulatory approvals. The Esterel SCADE solution enables software and systems engineers to design, simulate and produce embedded software, the control code built into the electronics in aircraft, rail transportation, automotive, energy systems, medical devices and other industrial products that have central processing units. Modern products are increasingly complex systems of hardware, software and electronics. For example, today’s complex aircraft, rail and automotive products often have tens of millions of lines of embedded software code, from flight controls and cockpit displays, to engine controls and driver assistance systems. Esterel is often chosen when the embedded software is critical for safety and compliance reasons. Esterel provides software and systems engineers a solution to accurately model and simulate the behavior of the embedded software code to gain insight earlier in the design process and trace it to its requirements. Esterel solutions also reduce engineering time and cost by automatically generating certified and dependable embedded software code from these high fidelity models. Esterel certified code generators are currently compliant with more than 10 certification standards including aerospace, defense, rail transportation, automotive, industrial systems and nuclear plants. Nat Burgess, Corum’s President and a 20 year tech M&A veteran, led the team at Corum. Corum represented Esterel. Burgess had previously assisted some of the Esterel investors in selling Calendra to BMC. Esterel’s CEO and chairman both commented that the sale to Ansys would Nat Burgess not have happened without Corum’s assistance. Corum helped shape a technology vision and story that put Esterel ahead of the market. Corum also attracted multiple bidders to the auction and ultimately closed the deal with a buyer that had no prior relationship with our client.

nburgess@corumgroup.com

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76 / November 2012

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DEALS OF THE YEAR:

The Best Deals of 2012

Deal Leybold of the Year EQT III sells Optics

Fashion For Home, the online designer furniture store, has scored a new funding round led by the Munich-based VC Acton Capital Partners, while Holtzbrinck Ventures has also participated. And with it we have an exit of sorts. That’s because, as part of the round, the Samwer brothers’ incubator, Rocket Internet, has sold its shares, although terms of the transaction aren’t being disclosed — unsurprising given the Samwers’ notorious reputation for secrecy. It’s also especially curious when you factor in last year’s leaked memo where Oliver Samwer described ambitions to become “number one” in the e-commerce sector for furniture with a strategy he controversially likened to “blitzkrieg”. Fashion For Home’s new funding round as a whole is said to be in the “lower double-digit millions”, so also make of that what you will. Operating out of Berlin, but targeting Germany, the UK, U.S., Austria and the Netherlands, Fashion For Home sells designer furniture online through an innovative vertically integrated “made-to-order” production process and business model and it’s this that enables it to be competitive as costs are kept low and savings passed on to customers. It’s a model that is strikingly similar to the UK’s Made.com. Being a partner of VOIGT WUNSCH HOLLER, Dr Oliver Wunsch (M&A, Private Equity, Venture Capital, Corporate Law) led a team who advised the Munich based growth investor Acton Capital Partners in its acquisition of a stake in FASHION FOR HOME, a leading online shop for designer furniture. In addition to lead investor Acton, Holtzbrinck Ventures has also participated in the transaction. The total value of the funding round is in the lower doubledigit millions. As part of the transaction, incubator Rocket Internet has sold its shares to the other investors. Within VOIGT WUNSCH HOLLER, Dr Oliver Wunsch is head of M&A, Private Equity and Venture Capital. He advised Acton Capital Partners on all corporate law aspects of the deal and the contractual documentation. VOIGT WUNSCH HOLLER under the led of Dr Oliver Wunsch advises Acton Capital Partners on a regularly basis. Further members of the team are: Dr Helen Mahne of VOIGT WUNSCH HOLLER and Eckart Opitz of Counsel Treuhand regarding finance issues.

Fashion For Home Scores New Funding As Samwer Brothers’ Rocket Internet Exits

Deal of the Year

FSN Capital LP II has signed an agreement to divest the leading Nordic fitness club chain Actic to funds managed by IK Investment Partners. Closing of the transaction is subject to legal and regulatory approvals. Founded in Sweden in 1981, Actic (formerly Nautilus Gym) has developed into a leading Nordic fitness club chain with 143 clubs and around 200,000 members in six countries. In 2011, Actic had sales of SEK 575 million and an EBITDA of SEK 139 million. Since the investment by FSN Capital LP II in 2007, Actic has seen strong growth in sales and EBITDA – on the back of healthy like-for-like performance and considerable expansion of the club network – with CAGRs of 14% and 16% respectively. The doubling of EBITDA has been achieved despite significant investments in central operating expenses, and the implementation of large structural changes on both club and central level. “During our ownership, Actic has increased the number of clubs from 120 to 143 and grown the member base from 150,000 to 200,000, while at the same time complementing its Nordic presence with a profitable growth platform of eight clubs in Germany. Carnegie Investment Bank has acted as financial adviser to FSN Capital, Roschier Advokatbyrå has acted as legal adviser, and Deloitte has carried out a financial and commercial vendor initiated due diligence. Deloitte acted as provider of financial, commercial and tax vendor due diligence services in the sales process of Actic. The Deloitte team was appointed by FSN Capital and led by Tom Pernodd, M&A Partner within Deloitte Financial Advisory. Actic has operations and expansion plans across several countries and is driven by an entrepreneurial spirit, which required a fairly comprehensive analysis of the dynamics of the fitness club estate to satisfy investor needs. Our significant experience in the health & fitness sector contributed to the successful completion of the deal.

US/European Cross-Border Deal of the Year Gardner Denver Inc. has acquired 100% of the outstanding shares of Robuschi SpA, a manufacturer of blowers and pumps, from Aksia Group SpA, a private equity firm, for €152 million. Robuschi has annual revenues of approximately €70 million. The acquisition involves a strategic addition to the Gardner portfolio and is an excellent fit with its Industrial Products. The acquisition will allow Gardner to provide significant cost synergies as the company continue to optimize its European manufacturing footprint supported by the principles of the Gardner Denver Way. Baker & McKenzie is acting as legal advisor to Gardner Denver, while Robert W Baird & Co Incorporated is acting as financial advisor and Dewey & LeBoeuf is acting as legal advisor to Robuschi. Deloitte Financial Advisory Services Spa provided financial due diligence services on the deal.

Merlin Piscitelli, Director, Merrill DataSite International, worked on provision of the virtual data room for this deal. He was brought into the transaction by Roschier, the law firm representing the sell-side team. There was an extensive due diligence process on the project, which involved close to 90 participants throughout its 6month lifecycle. Over 11,000 pages of confidential information were secured and made available for review, helping this deal reach its successful conclusion.

FSN Capital Sale of Actic to funds managed by IK Investment Partners

Gardner Denver Inc. Acquisition of Robuschi SpA

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November 2012 /

DEALS OF THE YEAR: The Best Deals of 2012

European Merger of the Year

H2 Private Equity Partners has acquired and merged Durobor and Sobodec GroupH2. Equity Partners (H2) is an independent private equity firm founded in 1991, with offices in Amsterdam, Munich and London, whilst Sobodoc Group is a glass decoration company and Durobor is a glass manufacturing company. The group Durobor – Sobodec realizes sales of 50 million and employs more than 300 assistants in Belgium and in France. ABV Environment is an environmental consulting firm, based in Brussels who acted on behalf of H2 and Sobodec on the deal. The project was led by Jean-Marc Lambert (pictured), Head of Department at ABV Environment, he commented: “As part of the due diligence in this transaction, ABV Environment analyzed the level of soil contamination and the costs of its remediation, and advised on the environmental arrangements to the transaction. The engagement was carried out successfully in a highly compressed time frame, thanks to the strong commitment of ABV Environment team, and a swift co-ordination of the field teams. It was the first time that ABV Environment acted for H2 and Sobodec.”

Deal contact: www.abv-environment.eu

French PE Backed Consumer Sector Deal of the Year HOMAIR Vacances announced a reorganisation project of its shareholding structure pursuant to which the current participations held by the funds managed by Montefiore Investment, (i) directly up to approximately 37% of HOMAIR Vacances’ share capital and 42.3% of its voting rights, and (ii) indirectly through Iliade up to approximately 24.8% of HOMAIR Vacances’ share capital and 26.3% of its voting rights, would be totally held through Iliade. Easton acted as the sole financial advisor of Homair’s main shareholders, led by Montefiore Investment. As we had a long standing relationship with Montefiore Investment and frequenlty discussed their strategy in the campsite management business, it was deeply convinced of the quality of Homair as a European leader in its segmen and impressed by the skills of the management team. Within the team, Laurent Camilli (Managing Director of Easton) was the team leader along with Thomas Gaucher (Executive Director), Nicolas Saint Pierre (Manager), Julien Choppin (analyst) and Charlotte Trin-Duc (Analyst). Camilli commented: “In a very adverse economic context, combined with a lack of debt, our mandate consisted in identifying the potential partners able to fulfil Montefiore Investment requirements. As Naxicap demonstrated a strong interest, we negotiated with them the valuation pf the company in the view of factoring in the fast path of growth the company was able to prove. Along with Montefiore legal advisors, we conceive and put in place the legal structure designed to match both Naxicap and Montefiore requests.” Venue©, the RR Donnelley proprietary solution, was mandated by Montefiore Investment via Easton Corporate Finance to provide the Virtual Data Room for the deal. The project was handled locally by the Paris based Venue team. The point of contact was Greg Tringat, Sales Manager, along with the dedicated Project Managers.

Deal contact: els.dumortier@kbc.be

H2 Private Equity Partner Acquisition Of Durobor and Sobodec

HOMAIR VACANCES REORGANISATION

Belgian Pharmaceuticals Deal of the Year Ion Beam Applications and SK Capital Partners, a US-based private investment firm, created IBA Molecular Imaging, a jointly-owned new company derived from IBA’s molecular imaging division. SK Capital Partners owns 60% of the new company while IBA has a 40% stake. The parties have also agreed to equally share the development cost of the current pipeline of new molecules and, in recognition of IBA past investment, their resulting profits will benefit for 60 % to IBA and 40 % to SK Capital. The enterprise value used as the basis for the transaction is approximately EUR 180 million on a debt- and excess cashfree basis. Linklaters advised IBA with a core team consisting of Arnaud Coibion (lead – corporate partner, Brussels), Henk Vanhulle (tax partner, Brussels), Nicolas Gauzès (corporate partner, Luxembourg) and Géraldine Hanotiau (associate, Brussels). The Brussels, Luxembourg, Paris and New York offices of Linklaters were involved. Morgan Lewis represented long-time client, SK Capital Partners, in this transaction. The Morgan Lewis team was led by Steven Cohen (M&A) with assistance from Roland Montfort (Paris), Richard Zarin (Tax), Donald Silverman (Nuclear Regulatory) and Howard Young (Health Care Regulatory). ENVIRON acted as technical environmental adviser to its client SK Capital Partners in this transaction. The ENVIRON team was led by Fred Loneker, an ENVIRON Principal and senior M&A due diligence practitioner based in the US. Technical expertise in the area of radiological hazards and regulatory compliance was provided by a multi-national team led by Jason Miller (Principal; Arlington, VA USA), Thomas Perrier (Senior Consultant; Aix-en-Provence, France) and Erik Sinno (Senior Consultant; Paris, France), with project support provided by staff throughout Europe (Belgium, Germany, Italy, Spain).

IBA AND SK CAPITAL PARTNERS CREATE IBA MOLECULAR IMAGING

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78 / November 2012

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DEALS OF THE YEAR:

The Best Deals of 2012

Greek Deal of the Year

Czech Deal of the Year

Kerneos, world leader in calcium aluminates has acquired a 54% stake in the capital of the Greek company Elmin, the leading European exporter of monohydrate bauxite.

Esco (european salt company GmbH & Co KG) a wholly owned subsidiary of K+S Aktiengesellschaft has acquired Czech salt processing company, Solné mlýny, a.s. (SMO), from Czech trading group EQUUS for an undisclosed sum.

A Greek mining company founded in 2000, Elmin extracts, processes and sells monohydrate bauxite on industrial specialty products markets. Its annual sales volumes of roughly 500 Kt involve exports to Europe, Asia, the Americas and Africa, and its reserves stand at several tens of millions of tonnes.

SMO is a major supplier of salt products in the Czech Republic and also operates in other European markets.

Kerneos is bolstering its position as a reference supplier able to satisfy its customers’ needs in the building chemicals and refractories industries by securing long-term access to one of the key raw materials required for part of its range of calcium aluminates. Lambadarios represented Kerneos on the deal. The team was led by Constantinos Lambadarios and Prokopis Dimitriadis both Partners at the firm, they collectively commented: “The main challenge was the very strict timeline required for the completion of the transaction due to the importance for both Buyer and Seller. We created a 24/7 team of lawyers for conducting the due diligence exercise as well as to prepare the documentation and the closing here in Athens. We had two dedicated partners assisted by 4 senior associates to be able to complete on time. This project was set as top priority for all the team and we organized internally to move other projects to other members of the firm to avoid delays in getting back on queries and being always available for the client to solve the complex legal issues that arose during the transaction.” KERNEOS ACQUISITION OF A STAKE IN ELMIN

Strategic Due Diligence

The company has been operating the salt processing business in the eastern Czech city of Olomouc since 1921 and currently employs about 70 people. Particularly in the table salt segment, the company has a brand that is well known nationwide and enjoys a high level of recognition, and is established in the market with a wide product range of food grade, industrial and de-icing salts. In a normal year, SMO sells around 100,000 tonnes of its various salt products and has until now been one of Esco’s customers in the important Czech market. Alfery Hrdina Advokati and WTS Alfery assisted in the transaction with Dr. Pavel Alfery-Hrdina (pictured) leading the project. The legal part of the transaction was covered also by JUDr. PhDr. Vladimir Brejcha and Mgr. Bc. Roman Knedlhans. The financial and tax due diligence was covered by Ing. Jana Alfery, LL.M. and Ing. Josef Mašek. Dr. Pavel Alfery-Hrdina commented: “The owner of the shares in Solné mlýny, a.s. was in insolvency proceedings and the insolvency administrator having the right of disposal over the shares opened a tender for the best potential buyer of shares of the owner`s bankruptcy estate. Therefore, as a potential buyer we had to comply with many obligations and conditions laid down by the administrator and accept a variety of restrictions when processing the legal, financial and tax due diligence (such as e.g. limited access to all documents).”

K+S Aktiengesellschaft Acquisition Of Solné Mlýny, a.s. (SMO)

Overall European Deal of the Year Altor 2003 Fund (”Altor”) has reached an agreement to sell Meyn Holding B.V., parent company to Meyn Food Processing Technology B.V. (“Meyn”), the global leading poultry processing solutions company, to CTB, Inc. (“CTB”), a subsidiary of Berkshire Hathaway Inc., and a leading designer, manufacturer and marketer of agricultural systems and solutions. Van Doorne advised Altor 2003 GP Limited in the auction sale of the Meyn Group, the global poultry processing solutions company, to Chore-Time Brock Holding, a subsidiary of Berkshire Hathaway Inc. (Warren Buffett), a leading designer, manufacturer and marketer of agricultural systems and solutions. Onno Boerstra led Van Doorne’s deal team, together with senior associate Joost Kolkman. Onno is head of Van Doorne’s corporate department, with a number 1 ranking in the mergermarket Benelux League Table 2011 and also responsible for the M&A Awards Deal of the Year 2011 (sale of Action to 3i). The team consisted of more than 10 lawyers, representing almost all disciplines that Van Doorne offers. Van Doorne acted on behalf of Altor and Meyn in this sale process. Van Doorne has a long-standing relationship with these parties, which started with Altor’s acquisition of the Meyn Group in 2005 and which was followed by a series of subsequent transactions and restructuring over the past seven years. Like any auction also this transaction had its challenges, which were overcome by an efficient and close co-operation between the responsible teams of Altor, Nomura and Meyn, as well as Van Doorne’s thorough understanding of their business and market. One was obtaining competition clearance in multiple jurisdictions. In addition, to comply with American trade embargo legislation, several business relationships of the Meyn group in embargoed countries had to be completely terminated prior to closing the deal. Further, during the process Van Doorne arranged for a carve-out of the previous real estate (with related liabilities) of the Meyn Group and a complete restructuring of the shareholding structure. Most challenging perhaps was that Van Doorne managed to reach full agreement on all issues within 3 days and nights after exclusivity was granted to CTB. Altor and Meyn were further advised by Nomura (investment bank), KPMG (tax), Salans (legal Poland) and Skadden Arps (legal US). CTB was advised by Loyens & Loeff (transaction), Allen & Overy (competition clearance), Sequoia (corporate finance) and Ernst & Young (tax).

MEYN HOLDING B.V DISPOSAL

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November 2012 /

DEALS OF THE YEAR: The Best Deals of 2012

French Funding Deal of the Year Movea, a leader in motion processing and data fusion technologies, has secured a new round of funding in the amount of 6.5 Million Euros led by Intel Capital, together with existing Investors iSource and GIMV. “This new round of funding will help provide the necessary resources for Movea to continue to grow and develop cutting-edge technology,” said Sam Guilaumé, CEO of Movea. “The support from such industry leaders validates our vision of convergence from mobile devices - such as tablets, smartphones and Ultrabooks - to Set Top Boxes, Activity Monitoring and Car Infotainment, etc. We’re pleased to welcome Intel Capital as an investor and value this recognition of Movea as a leading edge company in the development of motion processing and data fusion technology to enable this convergence.” Commenting on the deal, Marcos Battisti, Managing Director Intel Capital Western Europe and Israel, said: “Intel Capital is pleased to have led the latest funding round in a dynamic company such as Movea. Movea’s solution is on the forefront of technology developments that are being aimed at enriching user experience, which is one of the main differentiators in consumer devices. We strongly believe we will be able to assist the company’s growth as we add, besides capital, access to Intel Capital’s expertise and extensive network.”

Deal Leybold of the Year EQT III sells Optics

NCC Construction in Norway completed the acquisition of the Norwegian construction company OKK Entreprenör AS in August 2012. OKK’s core operations focus on the production of housing units and commercial properties. OKK operates in Oslo and in the Drammen region southwest of Oslo. OKK generates annual sales of approximately SEK 1 billion and has 350 employees. The acquisition of OKK is in line with NCC’s growth strategy in Norway, which encompasses all business areas. NCC is already a powerful player in the Oslo region and aims to further strengthen this position.

The acquisition of OKK will provide NCC with a stronger geographic base and create the necessary conditions for future growth in Oslo and Buskerud. The acquisition will also complement NCC’s existing expertise in residential production, renovation and building services.

Pipelife is one of the world’s leading suppliers of plastic pipe systems. With 29 production plants and headquartered in Vienna, Austria, the company employs about 2.600 employees in 27 countries and realized about EUR 800 million in sales in 2011.

Leading the team at KPMG was Are Skjøy, Partner in the Transactions & Restructuring group of KPMG. He commented: “We represented NCC whom we have a long standing relationship with.”

We represented Movea and the existing investors. We have worked first with the Series A and B investors when they first invested back in 2007 and from then with the company to C. Nguyen-Van-Yen help it secure IP protection of its assets.

“We represented the seller of OKK Entreprenør AS, Mrs. Ellen Karlsen Raaholt, daughter of the late founder Ole K. Karlsen.

Movea Secures 6.5 Million Euros in Series C Funding led by Intel Capital

For Solvay the deal represents an Enterprise Value of about EUR 257 million for its 50% stake when taking into account assumption of liabilities, including pensions and other debtlike items, for about EUR 85 million. Solvay received in total EUR 172 million in cash for the shares including a special dividend of EUR 10 million.

Saga Corporate Finance deal team was Torbjørn Gladsø (Partner) and Per Erik Sandersen (Associate).

Christian.Nguyen@fr.marks-clerk.com www.marks-clerk.com

Solvay and Wienerberger have completed the sale of Solvay’s 50% stake in Pipelife, one of the world’s leading suppliers of plastic pipe systems, to Wienerberger.

“The development resulting from the high rate of population growth caused by urbanization and the overall need for additional housing units in Norway are factors contributing to the strong growth expected in both Oslo and the Drammen region”, says NCC’s CEO Peter Wågström.

Marks&Clerk France presentation: The team was led by Christian Nguyen-Van-Yen (Managing Partner).

We have assisted Movea’s management and Board of Directors in their discussions on the IP and licensing aspects of the transaction.

European Manufacturing Deal of the Year

EQT III sells Leybold Optics

Per Erik Sandersen

“We have a long-standing relationship with this client. The deal was carried out as a structured competitive transaction process. Selected North-European potential buyers were approached. The buyer, NCC found a good strategic match (geographical and operational), and important to the seller, the desire/ability to continue maintain the strong business culture and operations of OKK.”

Saga email: mail@sagacorporate.no website: www.sagacorporate.no

NCC acquires construction operations in Norway

Wienerberger is the world’s largest brick producer (Porotherm, Poroton, Terca) as well as the market leader for clay roof tiles (Koramic, Tondach) in Europe and for concrete pavers (Semmelrock) in Central-East Europe. In pipe systems (SteinzeugKeramo ceramic pipes and Pipelife plastic pipes), the company is one of the leading suppliers in Europe. With a network of 232 plants, Wienerberger generated revenues of EUR 1,555 million and operating EBITDA of EUR 214 million in the first nine months of 2011. Alix Frank Rechtsanwälte GmbH acted on behalf of Wienerberger Group on the deal, reinforcing a long lasting relationship spanning 25 years. Senior Partner Alix Frank- Thomasser led the team consisting of Franz J. Heidinger (partner), Zuzanna Noetstaller (junior partner) and Georg Schuh (associate).

PIPELIFE STAKE DISPOSAL

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Joffe & Associés 80 / November 2012

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DEALS OF THE YEAR:

Highgrowth Tuset, 20-24, 4º 5ª 08006 Barcelona - Spain Phone +34 93 3630386 Fax +34 93 2183333 Mail info@hg.com.es

Doing Business in

Spain

The Company Highgrowth is an independent financial company which, by means of two clearly differentiated lines of business, invests in innovative companies with growth potential, and offers them support, advice and guidance. These two lines of business are: l Venture Capital. l Financial Consultancy.

The Best Deals of 2012

Norwegian PE Backed Deal of the Year

Turkish Oil & Gas Deal of the Year

Reiten & Co fund buys majority stake in Con-Form – the Nordic leader of building envelopes based on prefabricated concrete elements Reiten & Co Capital Partners VII L.P. (“RCP VII”), a fund advised by Reiten & Co, buys into ConForm, the concrete prefabrication specialist, through a share purchase and capital increase and obtains a 62% ownership. Established in 1982, Con-Form has grown to become the leading provider of building envelopes based on prefabricated concrete elements for the apartment and hotel building markets in Norway and Sweden. Delivery of concrete building envelopes consist of the casting of foundation as well as casting and assembly of the structural work such as walls, floors, bearing constructions and technical equipment and typically constitute 15-30% of the total cost of a building. Con-Form offers a unique concrete casting frame solution that combines on site casting and pre-cast frames produced in factories. Con-Form has about 320 employees in Oslo, Trondheim, Vest Agder, Stockholm and Gothenburg with factories in Bergen, Lunde, Orkanger, Strömstad and Töcksfors. In 2011 Con-Form generated revenues of over NOK 570 million (€77m) and the current order backlog is worth more than NOK 600 million (€81m). The market for new apartments in Norway and Sweden is expected to grow by over 30% per annum from 2010 to 2014 (SSB/Prognosesenteret). Uncovered need for housing in the large cities is urgent and Oslo expects a need of 100.000 apartments or houses the coming years. About 75% of the investment from RCP VII is in the form of a capital increase that will strengthen the company’s financial position and enable the company to continue to grow at a rapid pace. “We have been seeking a new co-owner that can support us in developing Con-Form to reach its market potential and our goal to be the preferred provider of concrete building envelopes in Sweden and Norway. This will be achieved by offering a high quality product with delivery expertise, innovative solutions and a focus on overall project costs. Reiten & Co shares our goals and can offer us additional financial and strategic input in the future development and growth of the company” says Bjørn Bakke.

Rubis Terminal SA, the French company engaged in petroleum storage and distribution, has acquired 50% of Turkish oil storage facilities operator Delta Petrol Urunleri Ticaret AS, Reuters reported.

Contact Details: www.bdo.no

Contact Details: info@herguner.av.tr

Reiten & Co fund Acquisition Of majority stake in Con-Form

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Delta Petrol’s facilities are located in the Mediterranean port of Ceyhan, which serves as the terminus for the Kirkuk-Ceyhan and Baku-TblisiCeyhan pipelines. The former transports oil from northern Iraq and the latter brings in crude from Azerbaijan, Reuters added in its article. Paksoy acted as main counsel to the seller Med Energy on this transaction, with a core team composed of Serdar Paksoy (Senior Partner), Stephanie Beghe Sonmez (Foreign Counsel) and Esen Irtem (Associate). Serdar commented: “Delta Petrol and its main shareholder Med Energy have been clients of Paksoy for several years, during which the firm represented them on various M&A and commercial transactions. Hergüner stated that: “This was a complex deal involving entities in Turkey, Lebanon, France and the Netherlands. Another challenging aspect was the need to carve out certain assets relating to other operations of the sellers from the joint venture entity.” Freek Haerkens, partner and member of the executive committee of Van Iersel Luchtman Advocaten led the team acting on behalf Rubis. Freek commented on their role on the deal: “We translating the terms of the joint venture that were negotiated with an international mind-set into their equivalents under Dutch corporate law.”

RUBIS SCA ACQUISITION OF 50% OF DELTA PETROL ÜRÜNLERI FROM MED ENERGY SAL Advisers to Med Energy

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November 2012 /

DEALS OF THE YEAR: The Best Deals of 2012

French PE Backed Consumer Sector Deal of the Year

EQT III sells Leybold Optics

Sagard, Jean Jacques Namani (President of Stokomani) and his management team have signed an agreement to acquire, from Advent International, Stokomani, the leading French discount wholesaler of leading brands. This transaction should be finalised by June 2012. The value of the transaction was undisclosed. For over 50 years, Stokomani has been the leading French specialist discounter of end-of-line products. Through its network of 37 stores, Stokomani offers a large range of constantly renewed brand name goods at attractive prices in the clothing, sportswear, beauty and healthcare, home ware or toy sectors. It is based on this unique concept, developed by Jean-Jacques Namani, the son of the company’s founder, that the group has achieved strong performance, doubling its size in five years and, today has sales of nearly 200 million euros. Frédéric Stolar, Partner at Sagard, declared: “We are delighted to accompany Jean-Jacques Namani in this new phase in the group’s development. We particularly appreciate the relevance of Stokomani’s model in the current economic environment, where consumers are seeking quality goods at attractive prices. In unfavourable conditions for specialised distribution, Stokomani has increased its turnover by over 15% per year, thanks to a remarkable management team and a permanently renewed offer. We are also delighted to be able to finalize this transaction in a difficult LBO market – evidence of the confidence that Stokomani and Sagard hold with senior and mezzanine lenders who are financing the transaction and thank them for that.” Isabelle XOUAL led the team at Lazard, she commented: “I was the partner in charge of the transaction and am based in Paris. I have known the management team for years and advised them on their past two transactions. Lazard was retained jointly by the management team and SAGARD. SAGARD did an outstanding job in understanding the specificities of Stokomani’s business model, hence managing to secure the financing of the acquisition in a very challenging environment.”

SARGARD ACQUISITION OF STOKOMANI

Deal of the Year

Sveafastigheter’s third fund, Sveafastigheter Fund III, has signed its sixth acquisition in Finland. The portfolio comprises 68 grocery store properties around Finland and is acquired together with new local asset management partner Capitol Asset Management. The transaction is financed by Aareal Bank. The acquired properties are small and mid-sized grocery stores (i.e. in the neighbourhood-store and supermarket segments) located all around Finland. The properties are acquired from Niam for a purchase price well above EUR 100 million. The total leasable area amounts to approximately 80,000 m2 and all properties are leased to Kesko Food. Sveafastigheter’s and Capitol Asset Management’s business plan is to develop the properties and invest in them according to the tenant’s needs. The aim is to create a balanced grocery stores portfolio, with long and stable cash flow and well diversified lease maturity. “We find the grocery store segment overall very interesting and are pleased to have been able to acquire this portfolio. In the coming year we seek to increase the portfolio size through addon acquisitions. Kesko Food is an excellent tenant and we look forward to cooperating with them. We are also happy to have a new partner that has wide expertise and experience within the grocery store segment,” said Patrick Gylling, partner at Sveafastigheter. “Our intention is to work closely with the tenant and support them in their strategy by e.g. carrying out necessary investments in the properties, says Jarkko Lehtonen, CEO at Capitol Asset Management.”

Sveafastigheter acquires 68 grocery stores in Finland

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