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The banking sector has re-started with a flow of acquisition and LBO financing deals appearing in the market. "I would say last year it was a year for new starts on the acquisition finance side, there'll be new transactions on the French market which shows the market picking up again," says one banking partner....

The banking sector has re-started with a flow of acquisition and LBO financing deals appearing in the market. "I would say last year it was a year for new starts on the acquisition finance side, there'll be new transactions on the French market which shows the market picking up again," says one banking partner. France has been seen as a trusted market for LBO transactions in Europe at the moment, and one lawyer suggests that "it would probably represent more than one-third of all the transactions which have been completed in Europe from the beginning of the year".

When comes to the bank lending, lawyers believe that it is slowly coming back to normal, but it is still difficult to find a syndicate of lenders with an acceptable margin. "Certainly bank lending has been difficult lately," says one partner. As a result, in order to spread the credit risk, the number of syndicate banks acting as lead arrangers has clearly increased since the crisis accelerated. "Before one or two banks took the commitment and then they're syndicating the deal among other banks, but this is no more the case," says one practitioner. "What happens is now you've got all the banks attending the meetings, you don't have one lead arranger; you've something like six or seven even for a small deal."

In light of the current situation, practitioners find that the lending ratio has become more reasonable when compared to the crisis before. Previously, the percentage of bank loans occupied a much larger portion of the financing while equity capital injection is relatively smaller, but at the moment it is no longer the case. "Today, let's say its 50% of bank lending and 50% from the private-equity firms," says one lawyer.

In line with the rest of the Eurozone economies, French banks have been trying to increase their reserve capital in order to comply with the new Basel III requirements. However it seems there is a lot of space in the regulations, which could allow different interpretations towards the Basel III rules, and the problem is believed to be down to its definition, as one partner explains: "What is lending? What falls in the scope of loans? What kind of instrument falls in the scope of loans? I mean today Basel III is subject to a lot of discussions."

Sovereign debt restructuring has also been an active area over the last 12 months; this has seen French practitioners getting involved in advising the European Commission over sovereign debt issues in Island, Greece, and Spain alike.

Unfortunately, the equity capital markets have seen very few successful IPOs over the last 12 months. A number of offerings were in the pipeline, as one partner explains: "Euronext has six IPOs in the pipe for the first half of this year [2011]....

Unfortunately, the equity capital markets have seen very few successful IPOs over the last 12 months. A number of offerings were in the pipeline, as one partner explains: "Euronext has six IPOs in the pipe for the first half of this year [2011]." But the political and financial instability that spread across the continent has somewhat halted their progress or put them on hold. "I'm talking about the big IPOs. You'll hear more about the sale of IPOs that didn't manage to sell their shares, so did not succeed," says another capital markets lawyer.

However, compared to 2010, there was an increasing number of deals waiting to be realised, which to some extent helps to build up practitioners' confidence. "In the future, IPOs will start to pick up again; we've been saying it for the last five years. At one stage it will become true and hopefully we'll see that," says one, while another agrees: "2010 was a better year than 2009 to certain extent; and 2011 I'm reasonably optimistic."

Due to the unpredictable economic condition within the Eurozone, 2011 saw the French issuers waste no time queuing up for listings in the emerging markets, which ultimately led to their debuts on the Hong Kong Stock Exchange. The main driving force behind this is the higher prices provided by Asian investors compared to their European counterparts. "The Asian market is very dynamic and we're seeing French companies asking a lot of questions, particularly in the Hong Kong market, which is something entirely new this year until recently," one equity capital markets partner explains.

In Europe, the market for small-and-medium size companies, Alternext, has welcomed a bunch of eager issuers trying to get their shares onto the market and the move has since received the back of the French state. "The government is trying to improve [the trading platform] by making it easier for these companies to enter the market. The trend is picking up in the last 12 months," says one partner.

On the debt side, on the one hand issuers are coming to the market due to the lack of bank financing, however, the market is suffering from its own volatility. "It's quite challenging for those people who actually manage to do the deals or push on trying to do them," says one capital markets partner. In addition, first-time issuers acting in the bond markets seem to be small-and-medium size companies.

Covered bonds have been singled out by observers as one of the most popular instruments among investors currently. "Even when the market was very slow, issuers are looking for AAA-rated bonds," says one French lawyer. "It's true that the covered bonds sector is still very active and it was work that we were doing almost all the time during the financial crisis." Another area that practitioners have seen a come back is in high-yield, which is mainly being used for the purpose of acquisition financing. "It's a bond that has lots of covenant and protections for the investors that in a way corporates wouldn't have," says one partner.

French securitisation markets specialists were unsurprisingly at the forefront in creating the European Financial Stability Fund (EFSF), a vehicle that is able to issue the highest possible rating AAA bonds guaranteed by the Euro area member states. "We've been working on the EFSF; it's a completely new development," says one partner. "It's essentially using the structured finance technology to in public sector policy. So that has been a very interesting development."

Asset-backed commercial paper as a means of financing has also been boosted over the last 12 months, according to partners. Obviously, the banks were no longer interested in direct lending, and "the collateral-based or asset-based security lending is a way for the banks to take on that risk in a security format, so it's sort of a win-win for both banks and originators," says one.

In line with the international markets, there has been an increase in deals in the French M&A and private equity sectors in the last year. "I would say we've seen an increase of the deals in the last 12 months, especially in the last six months, there has been a boom in the number and the size of the deals in the last six months in both sectors," says one partner, while another one agrees: "M&A and private equity are very active and things are very interdependent....

In line with the international markets, there has been an increase in deals in the French M&A and private equity sectors in the last year. "I would say we've seen an increase of the deals in the last 12 months, especially in the last six months, there has been a boom in the number and the size of the deals in the last six months in both sectors," says one partner, while another one agrees: "M&A and private equity are very active and things are very interdependent."

The reasons behind this reflect the re-emergence of acquisition and LBO financing. In addition because "a number of companies have not been hit as was expected, they still have cash to acquire companies who've suffered from the financial crisis", says one partner who says that in particular "some of the private houses have cash to spend".

Unlike the previous year, companies seem ready to pay higher prices than the investment funds investing in the core businesses. "Right now, the corporations have a lot of cash; therefore they're very active in looking for acquisitions in their core business, not in diversification, but in their core business."

There has also been an easing in the price discrepancy between buyers and sellers in the market. "I would say for those companies who have shown a strong ability to perform during financial crisis, there's no longer any gap between the expectations of the sellers and the buyers," says one M&A partner. "The money the buyers are ready to spend on those companies was proved to be very efficient in the financial crisis."

The private-equity market has also been significantly re-born and there is a huge amount of money, raised before the financial crisis, to be invested by the private-equity firms, "There is a lot of pressure on many private funds to find investment opportunities during the next two years," says one partner, while another one adds that the sectors the private equity houses are investing in include "the energy sector, especially the green energy sector, the internet sector and luxury goods".

Africa has been a busy area for French lawyers, with a raft of new mandates being seen in the form of infrastructure and natural resources projects. The rise of global commodity prices' has also brought a real boom to the continent's mining activities, while a growing middle class and the transportation needs for the mining sector have boosted African governments' roads, railways and ports plans....

Africa has been a busy area for French lawyers, with a raft of new mandates being seen in the form of infrastructure and natural resources projects. The rise of global commodity prices' has also brought a real boom to the continent's mining activities, while a growing middle class and the transportation needs for the mining sector have boosted African governments' roads, railways and ports plans. "In Africa, first we saw infrastructure projects, secondly power, and then mining projects," says one partner, and another one agrees: "The major development in Africa are the continuing and very strong mining and power projects."

Elsewhere, Asia and Central and Eastern Europe (CEE) have also become visible when it comes to new work. "You will find international law firms in central Europe," says one. "It's a trend because all these countries are now equipping themselves with infrastructure since they're now part of the Europe, they need also to develop infrastructure transportation, so you'll find a lot of motorways, railways, and airports."

Natural gas related projects have also been seen in Asia, particular Indonesia and Australia.

In the French domestic market, infrastructure projects involving PPP (public-private partnerships) has obviously become a major trend, several partners agree that there is a huge potential to develop the area. "The French state has launched a great number of transport networks, infrastructure and stadiums projects," says one lawyer. "There's an increasing level of public spending these days in the French infrastructure sector, I think that has maintained it at quite a high level." While another agrees: "The major part of what has been going on in the market over the past two years is the launch by the French government of major infrastructure work in PPP projects, so basically roads and railways."

There are two main reasons for this. One is due to the ageing infrastructure in France built in the 70s and 80s, the country has to consider building new roads and railways to replace the old facilities. The other one is largely down to the current Eurozone debt crisis which left the government facing a huge public deficit, therefore "there is pressure for the government to outsource these projects and request the private sector to invest instead in these projects", according to one partner.

The renewable energy sector in France has also prospered and is expected to grow further in the near future. The Fukushima nuclear disaster has to some extent boosted the area's development, as one lawyer says: "Because of what happened in Japan, we're called in more and more to develop renewable projects. It's mainly wind or solar."

In addition, there could be a possible change in the feed-in tariffs regime within the photovoltaic sector, which would see investors facing a cut in the set price for the energy they produce. "What the government wants is to launch a 'request for proposal' bid process for investors to invest but with reduced feed-in tariffs." He then went on to add: "The government still allows feed-in tariffs, but in the solar energy sector, they will propose feed-in tariffs on a case by case and project by project basis, so not a general feed-in tariff."

On the wind side, though the market is still waiting to see what the new Decree is going be in order to govern the said area, practitioners are quite optimistic about the sector's development. "I would say this is the main area, there's a development for this type of financing," says one. "We've a clear feed-in tariff price. The feed-in tariff is increasing, it's higher than the market price, it's to subsidise the development and the position of the renewable project and plants. So the government is encouraging this sector."

You would expect that after the largest financial crisis in recent memory that more companies across Europe would have been forced into insolvency proceedings. On the contrary the crisis has if anything hardened corporates to this possibility and has led to the evolution of various procedures across the continent to try to prevent such an occurrence....

You would expect that after the largest financial crisis in recent memory that more companies across Europe would have been forced into insolvency proceedings. On the contrary the crisis has if anything hardened corporates to this possibility and has led to the evolution of various procedures across the continent to try to prevent such an occurrence.

Most of these have born out of the concept of reaching an 'agreement among creditors' over a company's indebtedness to stave off the risk of more drastic measures. Loosely based on US Chapter 11 proceedings, the French sauvegarde is proving to be a useful tool for restructuring and insolvency practitioners. "The law is trying to improve prevention procedure instead of insolvency and liquidation procedure," says one lawyer. "The law is [there] to convince people that when they have some difficulties, to try to solve the problems before the insolvency procedure."

The most recent developments have been an attempt to increase the speed of proceedings, partly due to the volume that needs to be dealt with, but more importantly to get companies back to operational levels as quickly as possible by removing the threat of further proceedings.

"The idea behind the new proceeding is that you just open a very quick procedure for one month and it's designed to push through the restructuring agreement agreed upon by a large majority of creditors," explains another partner.

While most are in favour of keeping proceedings out of the courts, one partner points out that the commencement of such proceedings is not in everyone's interest. "It's a good procedure in order to obtain a restructuring plan, but it's not good news for creditors, because they can be obliged to agree some delay for their payment," he explains. "So it's good news for the company, but it's not good news for banks. Now it's more and more difficult to get loans, for example, because the banks are afraid of such proceedings."

However, as another lawyer points out, in the wider scheme of things, having a healthy and operational client base is still preferable, even with some potential losses, to having a row of dead ducks. "It's not so bad for the banks, because sometimes it's better to agree with this account instead of losing all your claims under liquidation proceedings," another agrees: "I think we can say that with less insolvency or liquidation procedures, the companies are in more of a good situation so the economy is better."

Another development has been the continuing success of the fiducie (law trust). Introduced in 2008, the procedure is beginning to gain traction in the market and providing a steady pipeline of mandates for firms. Essentially the procedure allows creditors and debtors to set up a new holding body, separate from the main indebted company, which can hold assets which will be used to pay off the company's debt, with any subsequent profit returning to the debtor. "The second thing that is very interesting is that we've been using very much the new trust law in France," says one partner. "Banks wanted to make sure that the money is not diverted and is used for the purpose which has been agreed upon and therefore trustees have been appointed in order to make sure that the cash flow is managed correctly by the borrowers."