Davis Polk, a Wall Street law firm, has hired two senior IPO specialists as part of a plan to take on its multinational rivals in Asia.
In a bold statement of its intent to compete at the highest level, the US firm has lured Antony Dapiran from Freshfields, a British firm that often works alongside the US lawyers at Davis Polk. The two firms will now be fighting over the same seat at the table.
Dapiran, the former managing partner of Freshfields’ Beijing office, lends Davis Polk instant credibility as a one-stop adviser on Hong Kong IPOs thanks to his experience on China’s biggest offers, including the world-record $22.1 billion Agricultural Bank of China deal and the $21.9 billion IPO of Industrial and Commercial Bank of China (ICBC), which was the world’s largest IPO at the time and the first simultaneous Hong Kong and Shanghai dual listing.
Bonnie Chan, who was previously head of the IPO transactions department at the Hong Kong Exchanges and Clearing, will join Dapiran as a partner in December. In addition to her experience at the exchange, Chan has worked in equity origination at Deutsche Bank and, until 2007, was head of legal and compliance at Morgan Stanley, a long-standing and still important Davis Polk client.
The two hires are part of a shift in Davis Polk’s strategy in Asia, which includes the launch of a Hong Kong-law practice. With the addition of Dapiran and Chan, the firm will have a chance to win dual roles on massive China IPOs, instead of just advising on the US aspects.
It is a sign of the growing importance of Hong Kong’s stock exchange that a thoroughbred Wall Street securities firm is making such a commitment. Davis Polk long ago made the decision not to compete with the English firms in London and, apart from a French practice that dates to the 1960s, the firm has concentrated solely on US law advice.
That continues to be a lucrative business, but the development of Asia’s capital markets has meant that businesses here can now raise more money in Hong Kong than in the US – and the exchange’s work to attract issuers from outside the region has helped to make it the busiest IPO market in the world.
“Hong Kong is an increasingly important market,” said Bill Barron, managing partner of Davis Polk’s Hong Kong office. “We’re not just doing this as an add-on; we want to be in the top rank. Practising Hong Kong law creates so many opportunities for us that it’s a bit of a no-brainer.”
Indeed, the firm is by no means a first-mover in offering local law in Hong Kong. Several US firms have already opened practices, including Davis Polk’s Wall Street rivals Shearman & Sterling and Skadden Arps.
“Nobody would accuse us of doing anything rashly,” said Barron, who adds that the firm’s ambition is not limited to Hong Kong IPOs. “We want to do those, of course, but we also want to advise companies listed in Hong Kong on all manner of things. More and more of the deals we’re seeing out here are intra-region, with no real connection to the US, and we’re interested in those.”
While Barron said that it would be arrogant to take on firms like Freshfields and Linklaters in London, it is a different matter in Asia, where many clients make no distinction between US or English firms and where old-school investment banking relationships mean relatively little.
The opening of US practices by English firms in the 1990s has had little effect on the profits of firms like Davis Polk, but the opposite trend, played out in Asia, could see the magic circle firms losing out on some prestigious mandates.