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Baker McKenzie Enhances Leveraged Finance Team With Significant Hire

Leading global law firm Baker McKenzie has hired Ben Wilkinson from White & Case where he was a partner in the Debt Finance practice. Ben will join the Banking & Finance practice in London on May 3rd, to help build out the Leveraged Finance team.

With over 16 years in the legal industry, Ben’s experience includes advising investment banks and private credit funds in relation to cross-border acquisition finance transactions, in particular those with complex capital structures. He regularly advises lenders, borrowers and financial advisors in connection with the bank financing of acquisitions of public companies, and also acts for a variety of lender syndicates, steering committees, sponsors and companies in relation to various restructuring matters.

Ben is an important strategic hire with a focus and strong experience in cross-border leveraged / acquisition financing transactions, particularly on the lender-side, which will significantly expand our capabilities in the leveraged finance space.

Matthew Dening, Global Chair of Baker McKenzie’s Banking & Finance practice group, commented: “Ben has an outstanding reputation in the acquisition finance and bank lending market. Expectations are that 2021 is going to be very busy as financial performance re-stabilises with pent-up refinancing and liquidity that has yet to be deployed, creating key opportunities. Ben’s appointment will put Baker McKenzie in a solid position to take advantage of these openings.”

London Managing Partner Alex Chadwick added: “We are very excited about Ben joining our Banking & Finance group in London. His practice is firmly aligned with our strong industry focus and his hiring represents our ambitions to become one of the leading transactional Firms globally. Ben has a long track record of doing deals in the financial sector which supports our ambitions to strengthen our relationships with sponsors. We will continue to grow our transactional partnership in London and other key markets, both laterally and organically.”

Ben Wilkinson’s hire comes after a number of recent lateral appointments including M&A partner Nick Rainsford who joined from Ashurst, private equity partner Justin Hutchinson who joined from Kirkland & Ellis, Adam Eastell a partner from Slaughter & May and Nick Bryans, also from Ashurst.

Baker McKenzie is a transactional powerhouse with over 2500 deal lawyers and expertise in over 46 countries. We excel in cross-border deals – over 60% of our deals are multi-jurisdictional. We are global and local, combining money market sophistication with local excellence.

Challenges remain for Industrials, but calculus shifts

Disruption arising from COVID-19 has accelerated trends already apparent in the industrials market – particularly digitalisation and trade volatility – and transformation has gone from a “nice to have” to a necessity, according to the latest findings from Baker McKenzie. The law firm surveyed 700 company leaders in six industrial sub-sectors in early 2020, and again at the end of the year after the pandemic had taken hold of the global economy.

Interviews with sector leaders highlighted renewed action and energy, with companies looking to acquire technology and reimagine systems, networks and services to thrive in future. A License to be Bold: Transforming Industrials covers four areas of focus: adapting to the new market; digitalising for growth; disruption-proofing supply chains; and sustainability.

Nikolaus Reinhuber, Global Chair of Baker McKenzie’s Industrials, Manufacturing and Transportation industry group says, “Our findings show that disruption arising from COVID-19 has accelerated trends already apparent in the market –– particularly digitalisation, trade volatility and the importance of sustainability –– and transformation has gone from “nice to have” to necessity. There is a significant imperative to change, with greater stakeholder buy in and long-term viability outweighing short-term performance.

“Those organisations that meet disruption with a bold and innovative vision and execute effectively on it, will be best placed to adapt and grow over the coming decades. The industry has an imperative to change and a new license to be bold –– the stage is set for transformation.”

A License to be Bold: Transforming Industrials

Kuehne+Nagel acquires Asian logistics provider Apex

Leading global law firm Baker McKenzie has advised global transport and logistics group Kuehne+Nagel on its acquisition of Apex International Corporation (Apex) from private equity firm MBK Partners and management, its largest acquisition to date.

Apex is one of Asia’s leading freight forwarders, especially in the transpacific and intra-Asia. The company was founded in China in 2001 and has expanded throughout Asia and beyond over the years of its growth history. With approximately 1,600 employees, Apex generates yearly turnover in excess of CHF 2.1 billion. In 2020, the company handled total air freight volume of approximately 750,000 tons and sea freight volume of 190,000 TEU.

Dr. Detlef Trefzger, CEO of Kuehne+Nagel International AG, says: “The combination of Apex and Kuehne+Nagel provides us with an opportunity to offer our customers a compelling proposition in the competitive Asian logistics industry, especially in e-commerce fulfilment, hi-tech and e-mobility. We are looking forward to welcoming the Apex colleagues to the Kuehne+Nagel family.”

The Baker McKenzie team was led by Alexander Fischer, together with Howard Wu, Alexander Blaeser, Matthias Trautmann, and with the following deal team members: Zurich: Boris Wenger, Matthias Courvoisier, Eva-Maria Strobel, Markus Wolf, Yves Mauchle, Roger Thomi, Zarina Fueglister, Tiziana Hongler and Jan Lusti; PRC: Zheng Lu, Terry Xu, Gege Li, Merry Du, Coco Xi, Emma Zhao, Leo Zhang, Sufi Shang, Luis Zhang, Rachel Ye, Cora Wu, Lucca Li, Xi Chen, Hunt Wu, Kevin Yuan and Laura Liu; Hong Kong: Harold Van Kooten, Isabella Liu, Jannice Lau, Joel Cheung, Mandy Hung, Bryan Ng, Stephen Crosswell, Charlie Wong, Thomas Jenkins, Amy Ling, Lu Zhou, Jannie Mak, Rainbow Fu, Lesley Jingyu Luo and Antonia Chan; USA: Eunkyung Shin, Jeanne Song, Andrew Sagor, Chen Tang, Derek Liu, Stuart Seidel, John Fedele, Jennifer Trock, Alexander Matthews and Arvind Miriyala; Australia: Eric Thianpiriya; Canada: Yana Ermak; Germany: Alexander Ehrle; Mexico: Reynaldo Vizcarra-Mendez and Jesus Antonio Perez-Palazuelos; Netherlands: Christiaan Van der Meer, Danielle Pinedo, Florian Fehres, Emile Doelwijt, Julie Wulfften Palthe, Maarten van Laar, Philip Luckmann and Anastasia Moonen-Vaes; Taiwan: Gwyneth Gu and Yiting Lin; Thailand: Pornapa Luengwattanakit, Narumol Chinawong Teo, Sirikan Buranasiri and Kritchaya Rattanasakul; Vietnam: Lan Phuong Nguyen, Chi Hoang Yen Ngo and Xuan Nghi Ma.

The acquisition is subject to customary closing conditions, including merger clearance by the competent competition authorities. The purchase price will be financed by available liquid sources and, if needed, by available credit lines. Following closing of the transaction, a minor stake of Apex shares is to remain with the experienced and entrepreneurial management of Apex.

Baker McKenzie Advises Mytheresa in Approximately $407mn IPO

Baker McKenzie advised MYT Netherlands Parent B.V., the parent company of luxury e-commerce platform Mytheresa, in its approximately USD 407 million initial public offering of American Depositary Shares (ADSs). Mytheresa’s ADSs now trade on the New York Stock Exchange under the symbol “MYTE.”

The Baker McKenzie team included Roger Bivans, Chris Bartoli, Leif King, Eric Mattingly, Jamie Nix, Jeremy Poore, Derek Liu, Tom Asmar, Jonathan Martin, Robin Chesler, Christoph Wolf, Bernhard Trappehl, Kim Tan, Rebecca Kuijpers-Zimmerman, Ulrich Weidemann, Denise Ozmis and Willem Treuren, and numerous other team members in the United States, Netherlands, Germany and other countries.

About Baker McKenzie

Baker McKenzie is a transactional powerhouse with over 2,500 deal lawyers and expertise in over 46 countries. Our strong global reputation for both issuer and underwriter counsel is based on our ability to successfully navigate the highly complex mix of legal system and cultures in complex cross-border and domestic equity and debt offerings.

Pandemic Slows China’s Global Deal Making in 2020

The global coronavirus pandemic has so far not triggered a Chinese buying spree of distressed assets but further slowed the pace of outbound acquisitions by Chinese companies in 2020.

According to Baker McKenzie’s 7th annual analysis of Chinese outbound investment trends, conducted in partnership with Rhodium Group, completed Chinese outbound M&A totalled just $29 billion in 2020, down almost half from $53 billion in 2019 and a record high of $139 billion in 2017. This is the lowest figure since 2008. Worldwide, only completed Chinese acquisitions in Latin America in 2020 kept pace with the previous year.

Adding greenfield investment to completed M&A, North America and Europe attracted a combined total of $15.2 billion of Chinese FDI. Completed investment in North America outpaced completed investment in Europe for the first time in five years, fuelled by the completion of several billion-dollar transactions. Investment in Europe was more fragmented and consisted of smaller transactions spread across geographies and industries.

All other regions of the world also saw declines in Chinese M&A activity in 2020 compared to 2019, except for Latin America where completion of a number of energy and utilities acquisitions announced in 2019 in Brazil, Chile, and Peru kept year-over-year activity flat compared to the previous year. Acquisitions in Asia fell by a third to $7.1 billion.

After the hurricane

China’s reintroduction of outbound investment controls, increasing regulatory scrutiny in many parts of the world over Chinese investment, geopolitical tensions, and the COVID-19 pandemic have all created headwinds for investment in recent years. But improving political and macroeconomic conditions seem likely to change this downward trend for Chinese investors in this year. The M&A pipeline remains low in early 2021 but China’s favourable macroeconomic conditions, a more predictable regulatory setup abroad and a less contentious geopolitical environment could help increase deal appetite and support a rebound in Chinese deal making globally, as well as continued growth in investment into China.

The drop in completed Chinese outbound M&A in 2020 stands in contrast to M&A flows in the other direction. Foreign M&A into China rebounded strongly in 2H 2020 and reached full-year levels similar to 2019. China’s relatively early and rapid recovery from the impacts of COVID-19 have made it an attractive target for foreign investors looking for near- and intermediate-term economic growth.

“We think 2020 is likely the low point for Chinese outbound investment if political and macroeconomic headwinds moderate,” said Michael DeFranco, global head of M&A at Baker McKenzie. “The commercial incentives for Chinese companies to invest in European and North America markets remain strong, and several variables – including higher sustained levels of investment by Western companies into China – are moving in a direction that is supportive of greater deal making in both directions in 2021.”

North America: investment edges up

In 2020, Chinese investors completed $7.7 billion worth of deals in the United States and Canada, up from $5.5 billion completed in 2019. This came even as regulatory scrutiny and tensions with China were elevated in both countries. California, Ontario, Delaware, North Carolina, and Massachusetts were the North American regions seeing the most Chinese investment.

Entertainment, health and biotech, and natural resources were the top sectors in North America. Billion dollar deals like Tencent’s stake in Universal Music and Zijin’s stake in Canada’s Continental Resources drove high industry concentration in North America in 2020.

Canada accounted for a larger share of total Chinese FDI in North America than in previous years (17%), reflecting momentum in mining deals and persistently low US investment.

Chinese companies continued to make major asset divestitures in North America in 2020. For example, Platinum Equity agreed to acquire Ingram Micro from HNA for $7.2 billion in December 2020. And in September, PetroChina dissolved its Alberta shale gas joint venture project with Ovintiv after outing up $2.2 billion for a 49.9% stake in the project in 2012.

The United States attracted more greenfield investment from China in 2020 than Canada. However, total Chinese greenfield investment in the United States was still modest at around $700 million. The biggest greenfield deals in the US included expansions of existing US footprints for companies like Haier-owned GE Appliances, Fuyao Glass, and Geely-owned Terrafugia.

Chinese companies nearly halve investment in Europe

Completed Chinese FDI in Europe continued its downward trajectory in 2020 to $7.5 billion from $13.4 billion in 2019, registering a lower total than in North America for the first time since 2016. Compared to North America, Chinese M&A transactions in Europe targeted medium-sized targets across a broader spectrum of industries. Chinese greenfield activity in Europe in 2020 was more robust than in North America, with nearly $1 billion in completed investment during the year. There were more midsized transactions in Europe dispersed across industries such as real estate and hospitality, automotive, and energy.

As with investment in North America, outbound capital controls and increased scrutiny of Chinese investment in host countries presented headwinds, as did the coronavirus pandemic. For example, FAW Group discontinued talks to acquire Italian truck maker Iveco for €3 billion during the year, with FAW citing the pandemic as a factor in its decision.

Germany ($2.0 billion), France ($1.0 billion), Poland ($780 million), Sweden ($719 million), and the United Kingdom ($427 million) received the most investment. Investment levels in Germany reverted to the roughly $2 billion normal range typical before 2019. Chinese investment in France mounted a comeback in 2020 after falling precipitously in 2019 thanks to a few major completed acquisitions. Investment in Poland focused on a single major warehouse portfolio acquisition, while in Sweden there continues to be sustained Chinese investment above historical averages.

With the uncertainty of Brexit, persistent Chinese restrictions on outbound transactions in real estate and other service sectors, and increasing tensions with China, the United Kingdom fell to the fifth among European countries this year with only about $427 million of investment through a few smaller completed M&A deals like Jingye Group/British Steel. But a major billion-dollar Huawei greenfield R&D investment announced in June suggests Chinese firms are still interested in the UK and will bolster future totals if it comes to fruition. Levels of Chinese investment in Italy, Ireland and the Netherlands also fell to very low levels.

Compared to North America, Chinese M&A transactions in Europe targeted medium-sized companies across a broader spectrum of industries. The top deals by investment size included targets like a warehouse network in Poland and a few other Central European nations (GLP, $1.1 billion), Germany’s Steigenberger Hotels AG (Huazhu Group, $780 million), France’s Asteelflash (Universal Scientific Industrial, $422 million), National Electric Vehicle Sweden (Evergrande, $380 million), and France’s Maxeon Solar Technologies (Tianjin Zhonghuan Semiconductor, $300 million).

There were also large multi-year greenfield projects announced during the year such as SVolt Energy Technology’s announced $2.4 billion battery plant in Germany slated to open in late 2023.

EU-China Investment Deal

The proposed CAI Deal will facilitate minor additional opening of the EU market to Chinese investors. The European market was already very open to Chinese and other foreign capital. The CAI commits the EU to further open its energy sector, with the focus on retail and wholesale, but excluding trading platforms.

The CAI will not limit EU member states in deploying defensive measures including FDI screening, legislation to address subsidy distortions in the Single Market, the adoption of a more restrictive procurement regime and its push to reduce risks related to 5G.

“While regulatory and political headwinds for Chinese investors in the EU will persist and the Comprehensive Agreement on Investment is not an instant game-changer, it does send a strong signal that Chinese investment is welcome in Europe, which is likely to positively impact investor psychology,” said Thomas Gilles, chair of Baker McKenzie’s EMEA-China Group. “That, combined with potential political encouragement by Beijing, could help revive Chinese FDI in Europe and reverse the downward trend since 2017.”

Outlook brightening?

“Recent signals – most importantly the transition to a new US administration and a successful conclusion of the CAI – point toward a more constructive global environment for Chinese companies compared to the previous four years, which could help improve investor sentiment and risk appetite,” said Tracy Wut, Baker McKenzie’s head of M&A for Hong Kong and China.

Additionally, China’s current account surplus ballooned in 2020 as global travel halted Chinese overseas tourism spending while Chinese exports recovered before many other nations impacted by the coronavirus pandemic. This has put appreciating pressure on the renminbi and is creating an opportunity for China to allow more capital outflows, including outbound M&A.

Finally, Chinese investors will have more transparency on ‘red lines’ in overseas jurisdictions as new investment screening regimes are settling: “Tougher investment screening rules and related policies have substantially increased regulatory risks and uncertainty for Chinese investors, especially in data, technology, infrastructure, and related areas in recent years,” says Sylwia Lis, an international trade partner in Baker McKenzie’s Washington, DC office. “Additional uncertainties came through ad-hoc tightening of review criteria in many jurisdictions during the height of the pandemic. Looking ahead, while foreign investment review rules and practices will undoubtedly continue to evolve, some of the uncertainty around new regulatory regimes is easing as legislation has been implemented and regimes become functional.”

Hogan Lovells boosts Paris practice with leading hires

Hogan Lovells is strengthening its Corporate & Finance Practice in Paris with the hire of leading M&A and Private Equity partners Matthieu Grollemund and Hélène Parent. They join with five associates from Baker McKenzie, where Grollemund co-headed the Paris Corporate department.

Matthieu and Hélène’s practice focuses on M&A and Private Equity transactions with an emphasis on buy-out funds, high-end growth or venture funds, and family offices with significant private/public equity activity. They represent numerous public and private companies and private equity funds in a wide range of domestic and cross border transactions, including business combinations, divestitures, leveraged buy-outs, IPOs, and restructuring matters. In addition, they regularly advise boards and committees on a variety of governance and other issues.

Their appointments follow the additions announced in Private Equity last year in London (Ed Harris and Leanne Moezi), United States (Adam Brown), Shanghai (Don Williams, Tony Mou, and Cheng Xu) and Frankfurt (Nikolai Sokolov).

“We are very happy to be joining Hogan Lovells” said Grollemund.The firm has a great culture based on collaboration, cooperation and cross selling and we are excited to be adding our experience to such an impressive team. The partners’ conqueror mindset combined with the strength of the firm’s high quality full service platform and its depth of capabilities in Europe, Asia, the Americas and beyond, present unique advantages for our clients.”

David Gibbons, Global Head of the Corporate & Finance Practice at Hogan Lovells, added: “We are absolutely delighted to welcome Matthieu Grollemund, Hélène Parent and their team of associates to Hogan Lovells. They will add significant depth to our existing Tier 1 team in Paris who are already executing a broad range of sophisticated transactions for clients. Furthermore, Matthieu and Helene’s reputation for excellence in technology and life sciences M&A aligns with the strengths of the firm and our own focus on highly-regulated industries.”

The Hogan Lovells Corporate & Finance practice provide end-to-end transactional solutions to clients globally across a wide range of capital strategies and funding structures. We have over 400+ partners (and approximately 1,400 lawyers) within the Practice, located across all the major financial centres in the world. We are a fully integrated global team that combines exceptional transactional experience with deep industry sector knowledge. Our Corporate practice in Paris is ranked as Tier 1 in the market by multiple sources and has recently been involved in major transactions, such as the acquisition by TowerBrook Capital Partners of the rail activities of Consolis group and the acquisition by PAI Partners of a majority stake in Euro Ethnic Foods.