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

CONTEXT AND TRENDS
"Poland avoided the recession because it was good and lucky at the same time," one partner says. The fact that Polish banks were "good" because they adopted a conservative approach and "lucky" because they weren't modernised insulated it from the widespread financial crisis....

CONTEXT AND TRENDS

"Poland avoided the recession because it was good and lucky at the same time," one partner says. The fact that Polish banks were "good" because they adopted a conservative approach and "lucky" because they weren't modernised insulated it from the widespread financial crisis. Of course, for some time banks had money delivered to them by parent companies, but in light of prevailing market conditions, this source understandably dried up. Nevertheless, despite its reluctance to dabble with sophisticated instruments, the economy is after all a network economy and so, not immune to the harsher environments. "The market reached maturity and for the first time the banks had to face the market," one practitioner says. "There's less new exposure and credit. Banks are closer and closer to a lending wall. There's less equity and they can't leverage anymore and have to refinance and restructure the exposure."

No doubt, despite relative liquidity, banks have been more careful investing in 2012 and from the regulatory point of view, setup more requirements to make banking more stringent. Yet, it really does depend on who actually requests borrowing. While the banking sector has been subject to consolidation in the last 12 months, its activities revolved around restructuring and refinancing and new money was apparent in the smaller deals, in the context of acquisitions or in infrastructure. "New money is in many deals of smaller size," one partner says. "The really big transactions are closed restructuring or pending restructuring." Another recent trend sees Poland attempting to position itself as a financing centre for Central and Eastern Europe (CEE) and recently, prominent institutions such as Goldman Sachs International have established a presence in the country. "The perception Poland wants to have is as a hub," one practitioner says. "But, unofficially, there was pressure on big investment banks to open a branch here."

With regard to project finance, in the last 12 months, we have witnessed conventional financing in respect to infrastructure. In fact, there are positive signs for PPPs (public-private partnerships) as the preparation of the first PPP for an incineration plant in Poland is underway. Moreover, in the hospital and construction sectors, for example, several projects are done on a PPP basis. Yet, alternatively, many banks do decide to finance project companies through 'project bonds'. Furthermore, renewable energy continues to be of interest. "Wind is going full speed on the development side," one partner says, while another adds: "Renewable energy is a sexy topic. I hear more and more that this is fashionable and it will be for some time as long as EU policy is as we have now. Money is going here but it is not the biggest amount". Finally, and perhaps most interestingly, we appear to be at the early stages of what might become a dominant trend in years to come. "Shale gas is a hot topic. There is a lot of expectation that this will improve the standard of living and the economy. It's in the exploration phase, it's early for financing. We have to find the fields, find gas and then finance it after," one partner says. Of course, independence from Russian gas is on the political agenda and Shale gas, subject to environmental concerns, offers an alternative to coal as does nuclear energy.

MAJOR LATERAL HIRES

Slawomir Szepietowski
From: LEXdirekt
To: Bird & Bird Maciej Gawronski

Aleksandra Widziewicz
From: LEXdirekt
To: Bird & Bird Maciej Gawronski

Andrzej Wysokiński
From: Dewey & LeBouef Grzesiak
To: Greenberg Traurig Grzesiak

Grzegorz Kycia
From: Squire Sanders
To: Kycia Legal

Przemyslaw Pietrzak
From: Schoenherr Cvak
To: Pietrzak Siekierzynski Bogen

Dominika Uberman
From: CMS Cameron McKenna Dariusz Greszta
To: n/a

CONTEXT AND TRENDS
Of late, The Warsaw Stock Exchange (WSE) has been Central and Eastern Europe's (CEE) success story as it has attracted a host of foreign investors and moved ever further towards its self declared aim of becoming the region's hub. A large part of this success is down to the fact that Poland moved earlier than others to create modern pension funds, which became a source of capital for the stock market....

CONTEXT AND TRENDS

Of late, The Warsaw Stock Exchange (WSE) has been Central and Eastern Europe's (CEE) success story as it has attracted a host of foreign investors and moved ever further towards its self declared aim of becoming the region's hub. A large part of this success is down to the fact that Poland moved earlier than others to create modern pension funds, which became a source of capital for the stock market. This was achieved by rules, which required pension funds to place significant chunks of their equity on the WSE. "The reason for this liquidity is that in Poland, they introduced pension system reform earlier and Czech Republic didn't do this," one partner says.

No doubt, the equity capital markets continued to be active over the last 12 months; however, expectedly, it failed to match the euphoria of the previous year. "In accord with expectations, there was a WSE slowdown," one partner says. "The last year was very impressive." Nevertheless, on behalf of the State Treasury, the market witnessed the continuing privatisation through the WSE of stakes held in state owned enterprises. For example, the €1.3 billion listing of Europe's largest coking coal producer, Jastrzebska Spólka Weglowa. Additionally, with the anticipated Grupa PHN IPO and even that of Alior Bank, there are still some big-ticket mandates available to the market. However, Poland is not immune from the crisis and it seems as if the mid-market has gone missing. "There are three IPOs and then a huge gap in value," one partner says. This would concern a recent trend, which has seen a decrease in IPOs from foreign companies from Ukraine, Czech Republic, Slovakia, Lithuania, Hungary, Bulgaria and Slovenia. Additionally, liquidity is lower than a year ago because the amount of money given by the government to pension funds was reduced by law. "So, there are Polish factors and EU factors that affect the market," one commentator states. Despite this, the WSE is one of top exchanges in the world. It just hasn't been as good a year.

Since the establishment of 'Catalyst', a platform for trading in financial debt instruments, the debt side of the capital markets has been growing in sophistication. "There's more of a push from banks and issuers to go to Catalyst," one practitioner says. "The platform is more popular than before." In fact, this year, the WSE issued bonds to institutional investors in an attempt to stimulate the growth of the Catalyst market. Furthermore, it is hoped that the interest for high-yield bonds will develop and in fact, the landmark Polkomtel acquisition had a debt component to it, which ended up being the largest European high-yield notes issuance of the year. However, as one partner intimates: "High-yield is still being explored but the problem is that it is still expensive. The appetite tends to be for smaller local bond offerings which are ten times less expensive."

MAJOR LATERAL HIRES

Ewa Szlachetka
From: CMS Cameron McKenna
To: Gessel

Jaroslaw Grzesiak
From: Dewey & LeBouef Grzesiak
To: Greenberg Traurig Grzesiak

Ireneusz Matusielański
From: Dewey & LeBouef Grzesiak
To: Greenberg Traurig Grzesiak

Rafal Sieński
From: Dewey & LeBouef Grzesiak
To: Greenberg Traurig Grzesiak

Filip Urbaniak
From: Garrigues Polska
To: K&L Gates Jamka
Pawel Halwa
From: Salans
To: Schoenherr Cvak

CONTEXT AND TRENDS
Compared to some other practice areas in Poland, the M&A market is deep and diverse. The Polish markets are mature and saw, in what has been termed a hostile takeover attempt, a Russian company, Acron, try to expand into the Polish chemical sector....

CONTEXT AND TRENDS

Compared to some other practice areas in Poland, the M&A market is deep and diverse. The Polish markets are mature and saw, in what has been termed a hostile takeover attempt, a Russian company, Acron, try to expand into the Polish chemical sector. "If you look at the regulatory environment, it's extremely modern and easy," one partner says. In fact, the last 12 months bears testimony to the success that has made Poland the envy of Central & Eastern Europe (CEE). "It has been a great 12 months; spectacular," one practitioner says. "There's been a lot of activity at all levels and in Poland and record transactions." Indeed, this year, Zygmunt Solorz-Zak, one of Poland's wealthiest men, acquired Poland's second-largest mobile network operator, Polkomtel, for €4.4 billion. It was Europe's largest leveraged buyout (LBO) since 2008, the largest acquisition ever made in Poland and one of the largest in the history of Central and Eastern Europe (CEE). "Poland is not emerging anymore, but it has emerged enough to yield a return above Western Europe," one partner says.

Recent times have certainly provided a good platform for public and private M&A and in line with the dominant trend, there is still scope for privatisations. "We're still waiting for the privatisations in the energy sector," one practitioner says. "Two big companies have not been privatised." As part of its wider goal to privatise 300 state-controlled companies by the end of 2013, the state, in March 2012, announced its desire to privatise Energa and Enea through the Warsaw Stock Exchange.

Another trend has seen consolidation in the banking sector. For example, at €490 million, Raiffeisen acquired a 70% share in Polbank, the Polish branch of the Greek bank EFG Eurobank Ergasias. The new entity will become the sixth largest commercial bank in Poland. Furthermore, in one of the biggest bank mergers ever in Poland, Kredyt Bank, the Polish bank that Santander bought recently, agreed on a €5 billion merger plan with Bank Zachodni. "In banking we have a virtual monopoly," a partner says.

Private equity has been busy as well as there are funds that will need to exit naturally and so, there will be a few deals available to the market. "Private equity is going robustly," one partner says. "There are plenty of deals. There's one hospital deal and one in biomass." Nevertheless, even though the market moves into unchartered waters with further big ticket deals on the horizon, it will be interesting to see how sustainable this will be for all the players concerned.

MAJOR LATERAL HIRES

Agnieszka Duda
From: Stolarek & Grabalski Kancelaria Prawnicza
To: Garrigues Polska

Pawel Bajno
From: Dewey & LeBouef Grzesiak
To: Greenberg Traurig Grzesiak

Lejb Fogelman
From: Dewey & LeBouef Grzesiak
To: Greenberg Traurig Grzesiak

Piotr Sitarski
From: Garrigues Polska
To: K&L Gates Jamka

Andrzej Chrzanowski
From: Krawczyk i Wspólnicy
To: Krassowski

Torsten Bogen
From: Schoenherr Cvak
To: Pietrzak Siekierzyński Bogen

Pawel Siekierzyński
From: Schoenherr Cvak
To: Pietrzak Siekierzyński Bogen

Katarzyna Terlecka
From: Allen & Overy
To: Schoenherr Cvak

Jolanta Tropaczyńska
From: Linklaters C Wisniewski
To: Telekomunikacja Polska