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

CONTEXT AND TRENDS
While perhaps not as healthy as they had been in the years directly following the global financial crisis, Chinese banks are still relatively liquid compared to their European and US contemporaries. This means that the flow of outbound acquisition and project financing by Chinese institutions is continuing apace....

CONTEXT AND TRENDS

While perhaps not as healthy as they had been in the years directly following the global financial crisis, Chinese banks are still relatively liquid compared to their European and US contemporaries. This means that the flow of outbound acquisition and project financing by Chinese institutions is continuing apace.

The capital itself is flowing all around the world, whether it be mining acquisitions in Mongolia, financing for the takeovers of European utility companies or infrastructure projects in Africa. While a lot of the money is going into natural resources, thanks to China's insatiable need for materials, there is also interest in high-tech and construction often when there is an intellectual property portfolio as part of the package.

Despite the relative liquidity of local and Chinese banks, Hong Kong practitioners have also seen a rise in more complicated financing deals, involving standard or high-yield bonds as part of the structure. As well as allowing companies to potentially raise more capital the strategy also allows more flexibility. It does however mean that firms with broader practices covering both bank finance and debt capital markets are coming to the fore.

Though the twin centres of Beijing and Shanghai are becoming more prominent, Hong Kong is still the established finance centre in Asia and Chinese and other institutions still use it as a key route for their operations. The island is still arguably the best choice for multicurrency transactions with banks dealing in not only Hong Kong dollars, but increasingly Renminbi denominated deals and those involving Japanese Yen.

MAJOR LATERAL HIRES

Eugene Man
From; Allen & Overy
To: White & Case

RISING STARS

Hogan Lovells
Allan Wardrop

CONTEXT AND TRENDS
The story in the debt capital markets continues to be that of the Renminbi denominated or 'dim sum' bonds. The strength of China and its currency has made these products very attractive to issuers and investors and this looks unlikely to change any time soon....

CONTEXT AND TRENDS

The story in the debt capital markets continues to be that of the Renminbi denominated or 'dim sum' bonds. The strength of China and its currency has made these products very attractive to issuers and investors and this looks unlikely to change any time soon. Hong Kong itself really comes into its own here as it is a lot easier, even with recent regulatory changes, to issue and buy such bonds in Hong Kong than it would be on the mainland. There is not the level of activity here as in the past, but it remains an important part of the market.

Offerings into the US via Rule144A and elsewhere through Regulation S have also maintained their popularity and with the US markets viewed as more liquid than those in Europe and parts of Asia, there is still an appetite for these models.

The market is also still hot in high-yield bonds. While in Europe these have been growing in popularity in recent years because of a lack of options elsewhere, in Hong Kong they are just another option, attractive because of the good return that they can offer. With most done under New York law, it is the US firms in the market that have really made hay in this space. The instrument has also been used in conjunction with bank loans as part of wider financing structures, so those firms with strong finance practices are the ones making the most ground.

Islamic finance is also gaining traction and more sukuks (Islamic bond) are being seen than in the past. Requiring quite specialised advice, again this is an area of great interest for firms with the capacity to do it.

CONTEXT AND TRENDS
Although Hong Kong is said to be the most important capital market in Asia, the decline of activity on the island looks to have set in for the foreseeable future, just as many US law firms entered the market with capital markets practices being a central pillar to their Asia strategy. The Hong Kong Stock Exchange (HKSEX) has seen a dramatic drop off in the number of listings and many of the listings that did take place underperformed....

CONTEXT AND TRENDS

Although Hong Kong is said to be the most important capital market in Asia, the decline of activity on the island looks to have set in for the foreseeable future, just as many US law firms entered the market with capital markets practices being a central pillar to their Asia strategy. The Hong Kong Stock Exchange (HKSEX) has seen a dramatic drop off in the number of listings and many of the listings that did take place underperformed.

The downturn is closely tied to economic uncertainty in Europe and the US and the resulting slowdown of the China market.

Many of the firms are putting on a brave face, but it is clear that the situation is causing concern. Traditionally solid equity capital markets practices are seeing their lawyers become more adaptable, with several, perhaps unfair, accusations of becoming 'resprays'. Firms are looking to broaden their client base. Investment banks and private equity houses are being chased and courted by law firms who have previously relied on the work coming to them. Firms with a large capital markets headcount are likely to be the ones to suffer the most. Smaller teams are more likely to ride out the storm.

Some law firms are looking to other areas in Asia to grow. Allen & Overy recently let go four top partners from Hong Kong and is said to be concentrating on the growth of its Singapore office, with Vietnam and Indonesia seen as having more energetic markets.

Partners who weathered the last financial are taking a longer view of the situation. One lawyer from a top US firm says: "We knew the slowdown was coming, but at the end of the day it's all cyclical and Hong Kong won't be permanently affected."

MAJOR LATERAL HIRES

John Moore
From: Herbert Smith Freehills
To: Morrison & Foerster

Melody He-Chen
From: Herbert Smith Freehills
To: Morrison & Foerster

Christopher Betts
From: Paul Hastings Janofsky & Walker
To: Skadden Arps Slate Meagher & Flom

RISING STARS

Clifford Chance
Virginia Lee

Morrison & Foerster
Gregory Wang

CONTEXT AND TRENDS
Within the wider structured finance and securitisation area, it is derivatives and securitisations that seem to be gaining the most traction. While both areas hit a slump directly after the financial crash, confidence is being restored and the markets are definitely coming back....

CONTEXT AND TRENDS

Within the wider structured finance and securitisation area, it is derivatives and securitisations that seem to be gaining the most traction. While both areas hit a slump directly after the financial crash, confidence is being restored and the markets are definitely coming back. This is mainly down to the lack of financing available elsewhere and in the cases of derivatives, an increasing recognition by certain corporates and banks that they need to look more closely at hedging the risks inherent in their portfolios.

Alongside transactional work there has been an increased focus being put on regulatory advice, not just on the rules in Hong Kong and China but also the regimes in Europe, the US and Japan. Where the systems are most complex is in derivatives and particularly with the tightening of regulatory regimes and the introduction of central counterparty clearing. It is difficult enough to get a grasp on the rules and obligations in a home market, but when considering that the systems across the main financial centres are in most cases not synchronised, global traders have a lot to consider and a lot of advice to seek.

MAJOR LATERAL HIRES

Neil Campbell
From: O'Melveny & Myers
To: K&L Gates

Sau-Wing Mak
From: Simmons & Simmons
To: King & Wood Mallesons

RISING STARS

Bingham McCutchen
Daryl Yip

CONTEXT AND TRENDS
Most competition teams based in Hong Kong have practices that cover the Greater China area, which is all very well as most transactions will need to pass under the nose of PRC regulator MofCom. Hong Kong itself is finalising its own competition law, which will add another layer of complexity to deals, but as the only country in the region not to modernise its system, the change has been long awaited....

CONTEXT AND TRENDS

Most competition teams based in Hong Kong have practices that cover the Greater China area, which is all very well as most transactions will need to pass under the nose of PRC regulator MofCom.

Hong Kong itself is finalising its own competition law, which will add another layer of complexity to deals, but as the only country in the region not to modernise its system, the change has been long awaited.

Firms are increasingly investing in both their China and Hong Kong teams in an effort to offer clients a full range of services in competition and antitrust

CONTEXT AND TRENDS
The pace of regulatory change continues to intensify as an increasing number of initiatives are introduced to the Hong Kong market to improve market quality. For example, enforcement has been stepped up in a few key areas namely market misconduct (especially false or misleading information, price rigging, false trading), unlicensed activities and offshore entities targeting the Hong Kong public....

CONTEXT AND TRENDS

The pace of regulatory change continues to intensify as an increasing number of initiatives are introduced to the Hong Kong market to improve market quality. For example, enforcement has been stepped up in a few key areas namely market misconduct (especially false or misleading information, price rigging, false trading), unlicensed activities and offshore entities targeting the Hong Kong public. Practitioners are seeing the SFC flexing its muscles to catch entities outside its traditional territorial reach (such as Tiger Asia) and its proposal that financial institutions self-report breaches of law by their clients. This enhanced "holistic" oversight by the SFC is heightened by its new risk management department and regulation of the OTC derivatives market.

New sources of regulation are also ramping up the regulatory environment including the new insurance authority and the Privacy Commissioner's increased proactive enforcement and push through of key changes with the Personal Data (Privacy) Ordinance. Further, there is an increase in binding legal obligations as codes and guidelines are turned into law including the statutory regime to oblige listed companies to disclose price-sensitive information and the new AML Ordinance.

Despite shifts in regulatory controls, we are seeing encouraging growth in the asset management and private banking industry with more asset managers establishing offices in Hong Kong – as a result of Hong Kong's self-promotion as well as investments leaving Europe and the USA in search of Asian opportunities. The development of the Islamic finance centre, subject to changes to legislation, is also indicative of this growth. Cross-border relationships are also increasing with more financial co-operation between Hong Kong and Mainland China in areas such as cross-border Renminbi (Rmb) Foreign Direct Investment, Rmb Qualified Foreign Institutional Investor (RQFII) opportunities, the loosening conditions around IPO listings.

RISING STARS

Freshfields Bruckhaus Deringer
Georgia Dawson

CONTEXT AND TRENDS
Funds work in Hong Kong is becoming more focused around private equity. Most of the top firms have advised on these type of deals through their existing clients but there are plenty of opportunities for new firms to break in....

CONTEXT AND TRENDS

Funds work in Hong Kong is becoming more focused around private equity. Most of the top firms have advised on these type of deals through their existing clients but there are plenty of opportunities for new firms to break in.

Private equity focused firms like Ropes & Gray and Kirkland & Ellis have been making inroads in the last few years and this has led to a spate of hires.

Rmb-funds are increasingly popular, as in the capital markets, the allure of Chinese investment has encouraged many to look at this space.

This year we have also included a table based around offshore firms advising on fund structures. This part of the market has been growing in recent years with a number of key players moving into the country to fill a gap in their international networks.

RISING STARS

Simpson Thacher & Bartlett
Adam Furber

Harneys
Lisa Pearce

CONTEXT AND TRENDS
M&A work out of Hong Kong is increasingly dominated by Chinese outbound work. With so many firms now based both on the island and on the mainland opportunities to advice Chinese corporates have increased, which is fortunate because they are the entities with the most appetite for deals....

CONTEXT AND TRENDS

M&A work out of Hong Kong is increasingly dominated by Chinese outbound work. With so many firms now based both on the island and on the mainland opportunities to advice Chinese corporates have increased, which is fortunate because they are the entities with the most appetite for deals. Inbound work is still being completed but it is not at the same level.

Natural resources and financial services are still the hottest sectors in terms of transactions, with corporates looking to take advantage of the growth of markets like Mongolia.

Financing is still difficult to come by, though Chinese banks remain relatively liquid and are in a position to lend on the right transaction. There is also an increased tendency to use combination-financing deals involving not only bank finance but also bonds.

In terms of firms, competition is as fierce as ever. More and more US firms are entering the market, with many establishing local teams. At the same time both they and those outfits already on the island are enhancing their China practices to offer clients a broader offering.

MAJOR LATERAL HIRES

Andrew Abernathy
From: Norton Rose
To: Akin Gump Strauss Hauer & Feld

Gregory Puff
From: Shearman & Sterling
To: Akin Gump Strauss Hauer & Feld

Christopher Betts
From: Paul Hastings Janofsky & Walker
To: Skadden Arps Slate Meagher & Flom

CONTEXT AND TRENDS
With more and more firms looking to move into the private equity space, competition is becoming increasingly fierce. While many new entrants, particularly those from the US, have opened offices in part due to client demand and thus have brought those relationships with them, there are a lot of other opportunities out there....

CONTEXT AND TRENDS

With more and more firms looking to move into the private equity space, competition is becoming increasingly fierce. While many new entrants, particularly those from the US, have opened offices in part due to client demand and thus have brought those relationships with them, there are a lot of other opportunities out there. Asian private equity is still developing and the relationships with the key houses and funds are not as imbedded as they are elsewhere. They also, to a degree, have different targets and philosophies to their Western counterparts and require a different brand of advice.

In general the busiest sectors are the same as on the M&A side, though high-tech could also be thrown into the mix considering its growth potential.

RISING STARS

Shearman & Sterling
Sidharth Bhasin

CONTEXT AND TRENDS
Project finance teams based in Hong Kong remain primarily focused on projects away from the island. The jurisdiction remains a base for firms to coordinate their Asian strategies, however with the rise of Singapore this could be on the brink of change....

CONTEXT AND TRENDS

Project finance teams based in Hong Kong remain primarily focused on projects away from the island. The jurisdiction remains a base for firms to coordinate their Asian strategies, however with the rise of Singapore this could be on the brink of change. The benefit of Hong Kong is that it offers access to Chinese banks with their greater liquidity and willingness to lend. However in other countries around Asia, notably Japan and Thailand other financial institutions are starting to compete, which could switch the focus away from Hong Kong.

This is especially true when you consider that project finance remains restricted to the occasional large-scale deal, often in power or infrastructure, which does not allow the opportunities for a broad market.

Areas of interest remain those markets that are on the brink, or so it would appear of opening up, countries such as Vietnam, Mongolia and to a lesser extent Myanmar and Cambodia. The problem, particularly with the latter two, is that the lack of structure in some of these systems does not give investors confidence, so while opportunities are many, so are the risks.

CONTEXT AND TRENDS
Hong Kong is still not a hot bed of restructuring and insolvency mandates. While the Chinese economy has slowed down there has not been the raft of failed companies that have been seen in the US and Europe....

CONTEXT AND TRENDS

Hong Kong is still not a hot bed of restructuring and insolvency mandates. While the Chinese economy has slowed down there has not been the raft of failed companies that have been seen in the US and Europe.

Nevertheless, there is still work to be done. Multinational collapses affect Asia as much as anywhere else and the fall out from failures such as Lehman continues to throw up mandates.

There is also work closer to home. The recent problems surrounding Chinese companies and their foreign stock exchange listings, some suggest, point to potential similar issues in the corporate structures of some of these companies, with the prediction that when the Chinese economic juggernaut begins to slow, problems will start to emerge from the woodwork.

The legal market itself is still one of the few areas where smaller local boutiques can thrive and until the level of work increases this is likely to continue to be the case.

MAJOR LATERAL HIRES

David Kidd
From: Allen & Overy
To: tbc