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

Previously regarded as one of the most progressive countries in the gulf, the tiny oil-rich state of Bahrain was rocked by mass protests in February and March this year. Inspired by uprisings in Egypt and Tunisia, the predominantly Shiite muslim demonstrators organised rallies calling for greater democracy, in a country where they are ruled by a Sunni Monarchy.

These events led King Hamad bin Isa to declare a three-month state of emergency. However, since June 1 2011, when the emergency conditions were lifted, rallies have been staged demanding a proportionate representation of the Shiites in government and an end to discrimination. This has led to many protestors being tried including the head of the human rights section of a radical Shia party Al-Haq, Abduljalil Abdullah Al-Singace who received life, as did the parties' leader. The spotlight has turned elsewhere but in Bahrain the tensions are still simmering and much remains unresolved.

The majority of lawyers insist this period of turbulence was a "blip," as two partners referred to it, for what is otherwise one of the most stable countries in the gulf. "It seems very much business as usual," one says, "There was a bit of a lull in terms of certain deals going on hold, a little bit of a wait and see." Another partner concurs "It had a bit of a chilling effect in terms of the business and from a reputational point of view all the eyes of the world were on Bahrain so that did have an impact."

Prior to the now notorious events, the country was dealing with a more familiar quandary. "The gulf region caught up a bit with the crisis lately. It started falling off later here," explains one partner. This lag has seen crisis-driven work creating a decent deal-flow in the last 12 months: "There's been various restructurings of debt and that's been a bit of a follow on from credit crunch times," says one finance partner.

"The capital markets are flat," as one partner succinctly puts it. Businesses are unwilling to accrue any more debt and investors are hesitant. The only active player has been the government. It issued its largest sovereign bond ever at $1.25 billion in March 2010 and then in October, Mumtalakat, Bahrain's sovereign wealth fund launched an IPO issuing 11.5% of Aluminium Bahrain (ALBA) raising $338 million. Unsurprisingly a planned $1 billion sovereign bond issue in February 2011 was delayed.

It is too early to see what the extent of the damage the countries part in the 'Arab Spring' will have on the economy but based on current statistics it doesn't look good. The countries growth forecasts have been downgraded twice this year, making it the worst performing state in the region. Its sovereign bond rating has suffered similarly having been cut from A3 to BAA1 and according to the HSBC Middle East sovereign bond index, as of June 29 the country was the worst performer among the region's dollar bonds with maturities of ten years.

Traditionally an investor friendly country, Bahrain will have certainly lost prospective capital and this will subsequently reduce law firm's mandates. "The impact on the business will be on new companies holding back their expansion plans in the region. Things like company start ups will be quieter," admits one partner. One point of solace for firms is that the unrest has spurred the government on with projects: "There's government money being spent and projects are being brought forward and we've certainly seen that in Bahrain," says a lawyer.

The Government's 2030 vision, which involves wide-scale plans for privatisation is still intact and was moving even before February. Norton Rose and Freshfields, the Governments firms of choice, have both been active in the last 12 months advising on PPP (public-private partnership) deals which have been granted to private companies. One was for a contract to build and operate a waste-to-energy plant and integrated waste management system and another for a sanitation treatment in plant in Muharrak, which is yet to be awarded. Freshfields have also been mandated to advise the Government on its first affordable housing project, something that is greatly lacking in the country. "It's in the press every day. It was highly politicised before February so you can imagine what it's like now," says one lawyer. "It has been actively pushed forward because they want to see that succeed. They want to show that they are looking after the public interest.

In terms of the legal landscape, lawyers in the UAE and Saudi Arabia noticed an influx of partners from banks and law firms with offices in Bahrain when the trouble erupted in March. Firms were, however, quick to dismiss these measures as merely temporary evacuations while things settled down.

Kuwaiti firm ASAR - Al Ruwayeh & Partners launched an office in the country in 2006 and have been building up its market share ever since.

Practice head Michael Durgavitch has been active on a number of deals in the last 12 months that display the firm's range of capabilities.

In some notable project work, he advised steel manufacturer SULB on the tender offer for an engineering procurement contract for the construction of a new $2 billion plant.

In refinancing work, Durgavich advised client United Stainless Steel Company on amending it's $380 million loan facility for a steel plant. The deal closed in December 2010.

Another impressive achievement for the firm saw it set up the first ever Australian equities fund in Bahrain for Hyperion Investment Company. It is expected to launch in September 2011.

Baker & McKenzie's local practice is headed by partner Ian Siddell. He and Julie Alexander split their time between the Bahrain and Saudi Arabia offices and are active on several notable cross border deals between the jurisdictions.

"They're very competent, they do a really good job," was one competitor's observation of the team at Baker & McKenzie's Bahrain office. One client, who says the practice is his preferred choice of the international firms, says: "On the advisory side I find them very friendly compared to the other firms." Another is particularly impressed with the firm's dedication: "Sometimes I call at 8.30 or 9 at night and I find them in the office."

Two major projects currently underway in Saudi Arabia are the King Abdulaziz International Airport and the CMA Tower, part of the new King Abdullah Financial District, and Alexander was active for two separate banking syndicates who were involved in financing the developers, the Saudi Binladin Group. Acting for a syndicate of banks, led by Gulf International Bank, Alexander advised on the SR6 billion ($1.6 billion) multi-option Islamic and trade finance facilities for the development of the airport in March 2011. She also advised on setting up an identical facility for a club of regional banks, led by The National Commercial Bank in relation to the SR1.085 billion fund to assist with the engineering, design and construction of the CMA Tower.

"She is very thorough, she has vast experience. She understands the structure and the requirements of the deal in a very short time," is one client's summation of Alexander. "She passes on valuable insight she has learnt from other banks. She is fast efficient and effective."

Practice head Ian Siddell has been active on Islamic finance deals recently. In an on-going transaction, he was mandated by Al Rajhi Bank to restructure a sukuk (Islamic bond) issued by a Bahrain property development company and in January 2011, Siddell closed a deal for Ahli United Bank where he advised on structuring, financing and security issues of an istisna'a (shared risk), a parallel istisna'a and a murabaha (deferred sale). The financing was for one of the bank's customers to construct and develop an office tower in Bahrain. "One of the better lawyers in the region, he's very measured. He's not one of these prima-donna types he's a good competent lawyer," says one client of Siddell. "He works for lenders and borrowers which is a good sign I think." One local lawyer also compliments Siddell: "He seems to have a good overall perspective on deal structuring."

In a deal signed in July 2010, Alexander advised Arab Bank in relation to a $75 million multi-option facility made available to FAS Saudi Holding. Partner Bilal Kahlon meanwhile, represented the Arab Banking Corporation in relation to $203 million term loan and revolving credit facilities for the operation of a plant for the manufacture of cold-rolled stainless steel in Bahrain. Last July he also advised the bank on a $35.8 million term loan facility it provided for Yusuf Bin Ahmed Kanoo for the construction of a commercial building in the Diplomatic Area of Bahrain.

Competitors claim Charles Russell has not been visible on the market in the last 12 months but the firm has been mandated on some interesting deals.

One example saw Islamic finance specialist Nicholas Polley, advise Bahrain Islamic Bank as part of a syndicate that provided the $240 million financing of the Bahrain Financial Harbour.

Described as "a clients dream," by one, Polley is commended for his diligence and broad outlook: "He's got that great blend of international perspective and middle eastern knowledge," the client continues.

In an ongoing deal Polley is advising the potential syndicate to a shariah compliant project financing, on the basis of an istisna'a (shared risk) structure, for the construction of infrastructure and related assets at an international airport in the Mena (Middle East & North Africa) region.

In other notable work the firm were active for a local bank, advising on the restructuring and refinancing arrangements of an interbank lending facility, and negotiating and preparing a $20 million multicurrency revolving loan facility in connection with an Omani bank.

Recognised for its well-established relationship with the Bahrain Government by competitors, all the practice's most notable recent activity has been for its key client.

Part of the Bahrain Government's privatisation strategy for 2030 is a waste-to-energy plant and integrated waste management system. Practice head Harnek Shoker acted for the Government on structuring its agreement with French company, Construction Industrielles de la Mediterranée, who will build the $300 million plant. It was one of the first solid waste PPP (public-private partnership) deals to achieve commercial close in the Middle East when it was finalised in June 2010.

Addressing the region's housing shortage is important if the authorities want to avoid a reoccurrence of events earlier in the year and Freshfields advised on the implementation of the first affordable housing PPP project, which continues at time of writing.

In more familiar territory for the country, partner Joseph Huse was acting as counsel for the National Oil and Gas Authority and Bahrain Petroleum Company (Bapco) on the proposed exploration and production sharing contract for deep gas in Bahrain in February 2011. A follow-on instruction sees Shoker advising Bapco on the $1.1bn financing for the new project.

Early in 2010, Shoker acted for the Central Bank of Bahrain and the Ministry of Finance on issuing a $1.25 billion international bond, its largest ever. The ten-year sovereign bond, which was closed in March, was admitted to trading on the LSE's main market, a first for a Bahrain sovereign bond.

Respected as one of the leading local firms in the country, Hassan Radhi & Associates is favoured by major international firms who regularly mandate the firm to advise on local law in transactions. "They've long been the choice of Norton Rose, Trowers and Dentons who appoint them as local council," says one international partner. The firm have been elevated to the second tier in banking and capital markets after strong market recommendations. Name partner and practise head Hassan Ali Radhi is praised by clients and competitors alike and has been active on the majority of the firm's notable work over the past 12 months. One client says: "He's commercial, he understands the issues and he's a very fine lawyer."

In a deal highlight, Radhi advised the managers in respect to a $3 million disinvestment of a 10% share held by Mumtalakat, the sovereign wealth fund of Bahrain, in Aluminium Bahrain (ALBA). The shares were offered as GDRs in the Mena (Middle East & North Africa) region and abroad.

The firm worked in conjunction with Allen & Overy's London office in December 2010, advising on the local law in connection with a guarantee, provided by a Bahraini entity on a $1.7 million note issuance.

In July last year Radhi advised Baker & McKenzie on preparing security documents and for a $35 million banking facility for a Bahraini entity.

The firm has also been active for lenders providing loans for struggling banks and businesses with in the region, notably acting for an international bank backing a Bahrain one under administration, with a $13 million loan in December 2010. Partner Jalil Al Aradi was similarly involved in a $75 million facility for a Bahraini company, acting for the lender, a Hong Kong branch of an international bank. The transaction involved amending the incorporation documents of the Bahraini corporation as the international bank became a shareholder through a subsidiary of the company in the Cayman Islands.

On the M&A side, the firm advised MetLife on the regulatory requirements relating to the transfer of the Bahraini Branch of American Life Insurance Company, a subsidiary of AIG, to the firm's client. The deal which closed in October 2010 was part of the global merger of the two companies.

Haya Rashed Al Khalifa is considered a strong local law firm by the market. One partner, who uses the firm predominantly for litigation, says: "They are very good as a local firm. We use them more than any other and we have a very good relationship,"

The firm has been been active for several clients establishing funds in the country recently. Partner Ronald Langat advised the Liquidity Management Centre in relation to a setting up the $106 million Bahrain Property Musharaka Trust for Eskan Bank. The first of its kind, the trust was established to fund affordable housing projects in the country. Name partner Sheikha Haya Al Khalifa advised KIPCO Asset Management Company (KAMCO) in its capacity as lead sponsor, investment manager and placement agent of a $50 million fund.

Another notable deal saw the firm advising Hochtieff Facility Management Bahrain in setting up a joint venture with the Bahrain Airport Company, Hochtieff Facility Management Bahrain Airport, which has secured an $85 million six year contract for the operation of all technical systems and airport infrastructure.

Although present in the country for over 30 years (second only to Baker & McKenzie in terms of longevity), some former clients of Norton Rose have grown despondent with its service. "Norton Rose have lost their way a little bit in Bahrain. They've had a lot of management changes or personal changes so they've lost a lot of their continuity and I think they've changed their focus to Dubai a little bit," says one referring to the relocation of global head of Islamic finance, Neil Miller, to Dubai office in 2009 and the subsequent appointment of Mohammed Paracha, who returned to the firm after three years in London with Al Salam Bank Bahrain.

Although clients welcomed Paracha's appointment, there is a feeling that other firms have stolen a march: "This time last year I would of thought Norton Rose would of been pushing ahead but it's actually the likes of Charles Russell and Trowers & Hamlins."

Competitors, however have a different view with one insisting: "They are an excellent law firm." One peer highlights Adrian Woodcock in particular: "He is very competent in structuring deals and direct in his questioning."

Since his return Paracha has been active and one deal saw him advise Novus Aviation Services and Millennium Aircraft Leasing on a combined $11.5 million financing for a lease and refinancing by PK Airfinance of one Airbus A319 to China Eastern Airlines.

Alongside Freshfields, the practice has close links to the Government and is currently active for the Ministry of Works on the development of a privatisation strategy for the entire wastewater sector in Bahrain, part of the 2030 plan. In February 2011 partner Jonathan Brufal and projects and infrastructure practice head, Dominic Harvey, advised the Ministry of Finance, in partnership with HSBC and Fichtner Bahrain, on the financing of a wastewater treatment plant and conveyance system in Muharrak. The project is the first plant procured by the Government of Bahrain on a PPP (public-private partnership) basis with a projected capital expenditure of $250 million and a 27-year operating license.

In 2010 the firm were also involved in the deal to construct a waste-to-energy plant and integrated waste management system in Bahrain, also one of the first PPPs of its kind to close in the region. It advised French company, Constructions Industrielles De La Méditerranée, in securing the contract and 25 year operating license in June.

Outside of government work, Harvey is advising the lenders, Mizuho Corporate Bank, Sumitomo Mitsui Banking Corporation and Yamato Kogyo, of a $1.1 billion facility in relation to the construction and operation of a direct reduction iron plant, a steel melt shop, a heavy section mill and related infrastructure in Bahrain.

In partnership with HSBC, the firm is also active for the sponsors of Korean chemical companies, Sipchem and Hanwha Chemical, $750 million petrochemical project in Jubail, Saudi Arabia.

"Good. They were cooperative to work with," is one competitor's view of the team at Qays H Zu'bi. Head of practice, the firm's founder and son of Hatim S Zu'bi, Qays is well regarded by the market. His firm are is supplemented well by local western talent such as Grahame Nelson, who is recommended by peers.

In August 2010 Nelson counselled a syndicate of lenders, lead by Liquidity Management Centre, in restructuring a $100 million wakala (agency contract) facility and a security swap that had been afforded to a large Bahrain based investment bank. The firm also acted as Bahrain counsel to Standard Chartered in connection with a $75 million mezzanine investment in Jawad Business Group in January 2011.

Capital markets have been quiet for some time in the country apart from the inaugural issue of Government bonds but in a challenging time for the country, the firm was involved, again as local council, to International Finance Corporation (IFC) in relation to a $125 million subscription for mandatory convertible preference shares in Ahli United Bank and the provision of a $165 million subordinated loan.

The firm also acted for Unicorn Investment Bank in connection with a $200 million convertible murabaha (deferred sale) facility to be treated as tier two capital.

M&A has provided the bulk of activity for the firm. July 2010, lead partner Qays H Zu'bi and Grahame Nelson, closed the $2.5 million acquisition of a substantial stake in a major Bahrain based elevators company for Almoayyed Lifts. The duo also advised Skaugen Petchem Carriers and IM Skaugen on an establishment of a joint venture to operate vessels to transport natural gas; and on the $200 million acquisition of controlling stake by LIA and Tasameem in a private investment bank in Bahrain.

On the projects side, the firm acted for a The Export - Import Bank of Korea, on the financing for the Muharraq Wastewater Treatment Facilities.

A respected contender among the international firms in Bahrain, Trowers & Hamlins is viewed as solid practice that offers good advice.

The firm has a strong corporate focus and has been active for private equity houses and private funds in the region. A team headed by partner Bill Jefferies closed two deals for client BNP Paribas Private Equity in 2010: the acquisition of a $5 million majority stake Bahraini car-hire business under an exclusive franchise from Avis and the purchase of a $7 million minority stake in a Bahrain-based foreign exchange company. A third instruction sees the firm advising on a minority acquisition of a Saudi Arabian fast food business headquartered in Saudi's Eastern Province.

A Bahraini investment firm, Esterad, mandated the firm to advise on the sale of a majority shareholding in Saudi company Overseas Technical Coatings & Services, which is involved in the oilfield services support sector, Hertel Group.

In October 2010 Capital Management House retained the team to advise on its acquisition of a $50 million minority stake in Skaugen Gulf, a company that operates chemical tankers as part of a ship pooling agreement with Norgas of Norway.

On the finance side, partner Jermey Downes has been active for new client, BMI Bank on providing a BD10 million (£26 million) secured murabaha (deferred sale) facility to Bahrain Water Technology ,a special purpose project company established by Bahrain based real estate development and investment firm Inovest. The facility is to be used for financing part of the purchase price of machinery for a new water filtration plant and to fund costs associated with the subsequent installation and testing of such equipment.

Full-service local firm Zeenat Al Mansoori & Associates was established in 1989 by its eponymous founder, a banking and finance specialist, who is also a partner at Qatari law firm Nada Al-Sulaiti & Partners.   

The full service firm has an 11-lawyer team and advises a wide range of clients.
 
In the last 12 months the firm has assisted an insolvent international corporate on the sale of its assets, in addition to representing real estate developers and a number of financial institutions.