IFLR 1000
The Guide to the World's Leading Financial Law Firms

CONTEXT AND TRENDS
The banking arena in Belgium has been a mixed bag throughout the first half of 2012. During the first quarter firms witnessed asset-based lending work....

CONTEXT AND TRENDS

The banking arena in Belgium has been a mixed bag throughout the first half of 2012. During the first quarter firms witnessed asset-based lending work. "ABL (asset-based lending) is getting quite interesting and more specifically in Belgium, where it is getting more and more in the picture," says a partner. This might be a result of the difficult lending environment amongst banks in Belgium. "Banks are more stricter at providing financing," confirms a partner. "Reasons are mainly due to the general crisis and the Greek tragedy", says one peer.

Firms have become more focused on regulatory and advisory rather than transactional work and the market in general agrees that there is "no new money lending". "Transactional work is not very active and creditors are not ready in Belgium," says one partner. Problems with corporate borrowers repaying has also led to litigation. "Litigation is becoming more active in banking", says one partner. The fall out from the bail out of Belgian-French bank Dexia is one example of an issue, which is likely to generate a lot of activity.

Lawyers also found themselves increasingly involved in refinancing and restructuring deals. Towards the second quarter of the year, "there is a clear shift from bank funding to capital markets bond work," notes a partner.

Since traditional bank lending is becoming less attractive, borrowers are looking at ways to finance themselves, often through bond issues, or a mixture between lending and bonds. "A lot of corporate borrowers replace loans with capital market corporate bonds," explains a partner. "Because of lesser liquidity in the European market, new structures come up. Normally it's a combination of bank debt and bonds," Although partners notice more transactions, "there are no big ticket private equity transactions," says one partner, "Mid cap deals have kept us busy," continues the partner.

In project finance, the public-private partnerships (PPP) model in infrastructure projects remains popular. "The PPP structure is getting more and more embedded in lending culture," says one partner. From the DBFM road project involving the A11 in Bruges to the Mons Prison in Wallonia and the Beveren and Dendermonde prison projects, the country is inundated with new deals. "In the next 12 months there are already infrastructure and renewable energy projects in the pipeline," says one partner.

MAJOR LATERAL HIRES

Jacques Richelle
From: Linklaters
To: DLA Piper

Charles-Antoine Leunen
From: Freshfields Bruckhaus Deringer
To: Linklaters

CONTEXT AND TRENDS
The different parts of the capital markets in Belgium have experienced mixed fortunes in the last year. Equity capital markets (ECM) has been quiet in many countries in Western Europe and Belgium brings no surprises....

CONTEXT AND TRENDS

The different parts of the capital markets in Belgium have experienced mixed fortunes in the last year. Equity capital markets (ECM) has been quiet in many countries in Western Europe and Belgium brings no surprises. "Not a lot happened in the last 12 months," says a partner. The market feels that nervousness of investors as a result of the financial crisis is the reason behind low deal flow. "People have no confidence yet," explains one partner. "There is still a lot of uncertainty in the market," agrees another.

The environment outside Belgium is having a clear affect on work. "Look at the Facebook disaster," says a partner regarding the social media's IPO. "IPOs are dead in Belgium". Even when deals are in process they do not necessarily reach a conclusion. "We worked on a number of deals but they are not closed," says one peer. Cancellations or postponements of public offerings are becoming common. "They are either postponed or pulled out at the last minute," confirms a partner. Taminco could have been the biggest Belgian IPO of the country since 2007, raising an estimated €160 million, but it was abandoned. With unattractive share prices and higher transparency required regarding prospectus for potential investors, a number of companies have decided to go private. "There have been cases of delisting," notes a partner. One example of this is Omega Pharma.

Whilst there is now little activity on the equity front, the debt capital markets (DCM) have been quite active and there have been a number of issues of corporate bonds by Belgian issuers such as Fluxys and Telenet. Given the difficult conditions in bank lending and the Basel III requirements for balance sheets, issuers have taken advantage of the bond market as a means of diversifying their funding. "In the mix of debt financing, DCM has become a prominent tool," notes a partner. Banks are also now playing a slightly more different role. "They serve as underwriters and less as lenders, although there are still bank lending," says a peer.

The entire market feels that ECM will continue to remain quiet and DCM will still be active. "With respect to equity capital markets, they will remain quite flat in our view," predicts a partner. "Between 2012 and 2014, a lot of existing financing will have to be refinanced, because the maturity is coming closer. I believe that in the bond market there will be a big chunk of the refinancing work. So the bond market will remain active, not to raise new money, but to especially help refinance existing financing."

CONTEXT AND TRENDS
The M&A sector in Belgium did not start positively in the beginning of 2012. "There has been loss of M&A activity," says a partner....

CONTEXT AND TRENDS

The M&A sector in Belgium did not start positively in the beginning of 2012. "There has been loss of M&A activity," says a partner. "This is due to uncertainty in the eurozone and difficulties with bank financing," continues the partner. Other partners have a more depressing response: "M&A is quite inactive, almost dead," says one.

On the other hand other areas are growing: "We see a revival of private equity in the market," notes a partner and another agrees: "The private equity sector has shown some signs of recovery, with a greater availability of finance and increasing competition between banks, although the lending conditions remain tough". Over the last few months buyers managed to raise capital through bond issuance. "Private equity players are also looking to alternative ways of financing deals," says one partner. For example, the sale of Taminco to Apollo was done via a US stapled-bond issue.

Partners have also noted increased opportunities for industrial buyers. As one partner suggests "We have seen a confirmation of the shift from a seller's to a buyer's market, for example, contract protection terms are now more favourable to buyers". This can be seen in the energy sector with Fluxys and EDF, in finance with the Dexia Group's sale and in media with deals like RTL.

Interest has also come from international buyers, with examples including KBC's sale of KBL to a Qatari investor. There is also interest from the emerging markets such as China and South America. An example is Chilean Group Sigdo Koppers' purchase of Magotteaux.