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

The drought of liquidity did not arrive in 2008. A gift from the sub-prime crisis that hit in 2007, it merely got worse....

The drought of liquidity did not arrive in 2008. A gift from the sub-prime crisis that hit in 2007, it merely got worse. Lehman Brothers' collapse in September 2008 did more than just destroy market confidence. It also severely dented the balance sheets of those that had been counterparties.

This showed just how interconnected the banking system is; almost no bank was unaffected. Many - including Goldman Sachs and Morgan Stanley - had to turn to the US government for financial assistance. Local operations in Asia could not help but be affected.

As a result, banking work has been thin on the ground over the past 12 months. Banks have retrenched and shored up their own positions rather than gambling on the security of any other company.

But those deals that happened were all the more challenging. Law firms' experience and expertise has been stretched to cope but, as the markets pick up, they can now capitalise on their work during the downturn.

In the latter half of 2008, Lehman Brothers' bankruptcy ensured that the capital markets entered a coma. In China, CSRC (China Securities Regulatory Commission) effectively put a stop on initial public offerings with a revised policy statement....

In the latter half of 2008, Lehman Brothers' bankruptcy ensured that the capital markets entered a coma. In China, CSRC (China Securities Regulatory Commission) effectively put a stop on initial public offerings with a revised policy statement. And elsewhere, the only IPOs to come to market were those in their final stages of preparation.

In the interim, companies looked to alternative means of raising capital. In Japan, companies issued large private placements and toyed with the local law issues of being the first company to do a rights issue; in Hong Kong, HSBC and Standard Chartered did rights issues; and in Australia, companies undertook secondary offerings.

New debt issuances also dried up. Instead, lawyers became liability management specialists, negotiating tender offers and exchange offers for companies that found they couldn't meet their bond obligations.

Structured finance's name was dragged further through the mud with the Lehman minibonds trouble in Singapore and Hong Kong. Regulators are still reacting to the fallout but practice in the region will never be the same again.

But after five months of virtual silence in Hong Kong's equity markets, Real Gold Mining's offering in February signalled a change in market sentiment. This has increased over the following months and companies are now rushing to make IPOs before market confidence changes. Perhaps recovery has begun.

The end of 2008 was not a good six months for M&A. Market players struggled to find financial backing for deals and those that had not finalised were either aborted or fiercely renegotiated....

The end of 2008 was not a good six months for M&A. Market players struggled to find financial backing for deals and those that had not finalised were either aborted or fiercely renegotiated. But the lull did not last for long. With many companies getting into difficulty when they found that they could not refinance their loans or meet dividends, opportunities for distressed acquisitions were soon plentiful for any company with cash.

In Asia, while some businesses did get into trouble, many more were well capitalised enough to take advantage of the distress. Chinese companies, in particular, which are required to maintain strict capital adequacy standards, were keen to take advantage. Chinese outbound M&A activity such as Sinosteel's takeover of Midwest in 2008 and Chinalco's investment in Rio Tinto has followed.

But with a lack of liquidity, private equity houses were not able to follow their (recently) typical leveraged buyout strategy. Instead, while also looking for opportunities in distress, they have been dipping a toe into public M&A, getting involved in public-to-private transactions and Pipe (private investment in public equity) deals.

Projects have weathered the financial tsunami better than many other areas of financial law. While structured finance lawyers have rebranded themselves as debt restructurers, projects lawyers have continued to see work ticking over....

Projects have weathered the financial tsunami better than many other areas of financial law. While structured finance lawyers have rebranded themselves as debt restructurers, projects lawyers have continued to see work ticking over.

Admittedly, few new deals have launched, but the long-term nature of projects work means that those underway have broadly continued to progress.

Indonesia and India continue to be hot destinations and, with many firms running these operations out of Singapore or Tokyo, these teams have had a particularly good year. In China, resources work continues to provide mandates. Mining is particularly busy, as is conventional power and renewable power.

China has also started to look at financing projects elsewhere regionally and globally. This looks set to become an increasing focus for projects lawyers over the next 12 months.