What does Mallesons Stephen Jaques have to offer in Asia?
Our primary focus is assisting clients with international transactions and disputes as well as facilitating investments between Australia and Asia. We have lawyers on the ground in the region with local language and transaction skills, and as a leading Australian firm, we draw on the expertise and experience of lawyers who are specialists in structuring complicated deals.
But can you compete with the major US and UK firms?
Yes. We can and we are already doing so. Our strength in Australia and our lower cost base provides the support to our presence in Asia that very few competitors can match. On projects work, for instance, Mallesons is already recognized as having one of the leading Asian practices - in 2003 we advised on the most deals in the region and ranked third in the Dealogic league tables.
This success epitomizes our approach - our team comprises a number of specialists in all areas of projects work, so clients have benefited not only from our specialist energy experience and financing skills, but also from our advice on project management, construction contracts, environmental issues and the eventual disputes that are almost inevitable in large projects.
Our specific expertise in the energy and construction industries led to us playing a role on numerous high-profile deals, including the Gorgon gas deal, the Map Ta Phut power plant in Thailand, the Nanhai Petrochemical project in China, The Nam Theun 2 hydro project in Laos, the Yulchon power station project in South Korea and the rehabilitation of the Tuanku Jaafar power station in Malaysia as well as a number of recently announced M&A transactions.
Are you committing senior lawyers to Asia?
That has always been the case, but we significantly raised our commitment level with the addition of Robert Milliner, Adrienne Showering and Richard Mazzochi in 2002. Their arrival strengthened the firm's presence in Asia and expanded its corporate, financial services, projects and telecommunications practices in Hong Kong.
All three partners are skilled and experienced lawyers. Adrienne, for instance, has had a profile acting for clients on Asian securitizations for quite a number of years and her move to Hong Kong was a logical progression to provide our clients with a more accessible service.
That decision has reaped rapid dividends and Mallesons is now one of the established firms in the Asian securitization industry, having worked on a number of landmark securitization deals, particularly in the area of Asian conduit structures. We acted for the arranger, the trustee and one of the credit default swap counterparties on the establishment of Artemus Strategic Asian Credit Fund, an Asian CDO synthetic securitization arranged by HypoVereinsbank.
We also acted for the arranger (ABN Amro) and the trustee on the establishment of Orchid Asset Securitization Investment Services, a $2 billion Asia-Pacific commercial paper conduit. This vehicle was established in January 2003 and has securitized and repackaged a wide range of assets in the Asia-Pacific region by funding in a variety of markets, including the US capital markets and local Asian markets. In addition we also acted for Hong Kong Mortgage Corporation and the conduit, Bauhinia, on the November 2003 issue of mortgage-backed securities from its mortgage-backed securitization programme arranged by HSBC.
What prompted this Asian expansion?
It was partly in response to increasing regional demands from clients for the provision of a full-service commercial law firm capability out of Hong Kong. This led to the development of our commercial finance practices, through which we been much more effective in demonstrating our international credentials to our global clients.
Our banking team acted for Telstra in its renegotiation of a $1.5 billion financing for Reach Finance and also acted for Macquarie Bank and Schroders Asian Properties in their financing for the acquisition of the retail podium of 8 Russell Street, Causeway Bay, Hong Kong. The funding was the first transaction of its kind in Hong Kong; a combination of equity and secured senior debt and mezzanine debt. We have also advised Cheung Kong Infrastructure (CKI) and Hong Kong Electric on all their major acquisitions in Australia, including the recent CitiPower acquisition. And we also advised CKI on its successful bid for the Sydney Cross City Tunnel tollway and on several other toll way projects.
As we expanded our commercial finance capabilities in Asia we also started to offer financial services dispute resolution through a team headed by Paul Starr and Jennifer Lee-Shoy - we have found that our approach to helping clients find a commercial resolution to matters without litigation has been appreciated by our financial institution clients.
But our expansion was also partly a natural progression. During the last decade in Hong Kong our specialization in projects, construction and construction dispute resolution evolved to encompass new areas that were becoming increasingly relevant to our clients. For example, the environmental practice developed out of an increasing array of issues faced by our projects and construction clients, and has now matured into a recognized practice of its own.
And the vast Chinese market is obviously a key attraction too...
Of course, our clients are increasingly focused on investments in China, but another trend we have noticed is a string of very large investments in Australia by Chinese companies. One particularly significant transaction was the acquisition by China Huaneng Group, a state-owned enterprise, of a 50% stake in OzGen, the Australian subsidiary of InterGen.
This was particularly significant as it was important to China's ambitions to become a regional investment force - but also reinforced our belief that this kind of investment will be increasingly common. The China Huaneng deal is just one example of Robert Milliner's success in meeting the needs of clients for a combination of M&A and finance capability in the infrastructure projects and energy sectors since his relocation.
Our capital markets team has also worked for a Chinese state-owned enterprise, on the successful restructuring of two series of notes. This was a complex transaction involving many jurisdictions and the security adopted for the Chinese assets was novel.
So are you satisfied with your presence in Asia now or do you plan further expansion?
We are not standing still and will continue to add resources and capability to provide an expanded range of services and products to meet our clients' needs in this changing environment.
Having said that, we are satisfied with our achievements to date. We are practising English, Hong Kong and Australian law in all our practice areas and we believe that we have added the right mix of partners whose skills and practices complement and work very effectively with our existing pre-eminent construction, projects and dispute resolution practice. Indeed, we have been pleasantly surprised that our existing projects and construction client base has made use of our corporate finance skills; our corporate finance clients have crossed over to use the disputes side of our practice when necessary; and we have been able to develop new clients whom we have not advised before, all thanks to our full-service capability in Asia. Also, our Australian clients, serviced out of Asia are now receiving the full service in Asia they require, from lawyers who know their business.
To give an example, Richard Mazzochi has been able to translate his significant expertise in the banking and finance and capital markets industries into Asia and has made great progress in a relatively short period of time.
His team has been busy acting for Macquarie Bank on its issue during the last year of over 150 Hong Kong listed derivative warrants. The warrants are over shares and indices, and are often highly structured. We were also involved in designing and documenting structured note issues for Macquarie, which require the approval of the Securities and Futures Commission because the notes are distributed to retail investors. This work reflects the strength of the retail investor base in Hong Kong, as well as the recent strong performance of the Hong Kong Stock Exchange.
For further information about Mallesons Stephen Jaques, please visit their web site at www.mallesons.com/hk