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

Overleveraged companies in Kuwait have felt the brunt of the global recession and crisis particularly in the investment sector. "A lot of the work since the crisis has been restructuring, that involves many of the investment companies in Kuwait," explains one lawyer.

With cheap unsecured debt readily available, Kuwait witnessed a mushroom in the number of investment firms "Between 2004 and 2008 we had about 120 and quite honestly, from their standpoint things were great, they were able to get debt easily and what's happened is that's been rolled over in to new debt facilities. The banks like it because it's no longer a provision on their books," says one lawyer. Consensus is, however, that the bad investments made will never pay off and these companies will be forced to consolidate or go insolvent. "My personal opinion is that even with all these restructurings they are going to default on those as well and even the companies that have restructured you are going to see a lot of liquidations and or mergers in to stronger investment companies as the next cycle starts," says one partner.

New lending is sparse with banks remaining cautious and only extending facilities to established clients. "All we have seen is a lot of rolling over of debt to pre-existing clients," says one lawyer.

Uncertainty has pervaded the sukuk (Islamic bond) market with lawyers admitting activity has been limited to refinancing outstanding issues. "Before the crisis we were working on a dozen sukuks we were only able to place half and the others we're restructuring now because they are in default," says one lawyer.

Corporate activity has not abounded and lawyers reflect that the protests will have dimmed any interest from outside investment in to the country in the short term. "What it has stopped is western involvement on M&A deals in the region. I think a lot of that is on hold, a wait and see kind of attitude," remarks one lawyer.

One burgeoning area in Kuwait is project finance. Long before any unrest in the region the government had set out a $140 billion five year PPP (public-private partnership) plan to encourage private sector investment. "There's a lot off PPP work in the country there's been a couple of engagements and there are a number of bids in the pipeline," remarks one lawyer, adding: "I think in light of the problems on the Middle East the government has seen there is a need to spend money in the country to create jobs and to create development."

New rail and metro, an Independent Waste Water Plant, in addition to several projects in the energy sector have all been awarded legal representation. But, the government has implemented a new procedure to decide how these projects are awarded which is a slightly laborious process. "There are three stages: a consortium being appointed of advisers for the government. So if the minister of education has a project they'll go to the PTB (Partnership Technical Bureau), the PTB will put together that consortium, which will be a law firm, a financial adviser and an expert in whatever the field is, then they will open it up to the private developers. Then, once the bid is won, an SPV (special purpose vehicle) is set up and a sizeable number of the shares have to be floated on the exchange," explains one lawyer.

This last element is another attempt by the government to encourage privatisation. New legislation was passed which requires an SPV to be established to design, finance, build and operate the projects for a fixed duration of 30 years or less, unless special dispensation is granted at the bidding stage. 50% of this SPV must be floated on the stock exchange via an IPO although it is not clear at what period during the development. "In theory it's a great idea there's a lot of excess liquidity in the market because a lot of individual investors were burnt with investment companies perhaps if they see the opportunity to put money in to a BOT (build-operate-transfer) contract or a concession there will be interest. I think the intent is there and the motivation is there but we will see if the interest is there from investors and financiers."

Even with a number of lucrative mandates needing counsel, Kuwait's legal market shows no signs of broadening according to its incumbent lawyers, with most feeling the international firm's are content to continue dipping into the region from bases elsewhere in the Middle East.

One of the most respected local firms on the market, Asar - Al Ruwayeh & Partners receives the approval of its peers. "They are certainly one of the leading firms in Kuwait," says one. "Pretty much every large engagement you are going to see them on one side of the deal," explains another. Clients are equally complimentary with one saying the firm are, "the best Kuwaiti advisors by some margin" and adding that "no other firm in Kuwait offers a better overall service."

International practise head Sam Habbas is considered one of the firm's main attributes, with one client describing him as an "excellent lawyer, who really knows the market." Rob Little is another singled out for praise with several regarding him as the firm's "star performer." One client remarks that he is very capable and says: "He has seen it all before and provides polished, understated advice and reassurance."

In September 2010, Little and Ezekiel Tuma, who is described as "promising" by a client, advised Fairfax Middle East Holdings, a Canadian company on its acquisition of 39.2% stake in a listed Kuwaiti insurance company for $212 million.

On the firm's largest M&A deal Ibrahim Sattout and Akram Al Zu'bi advised International Finance Corporation (IFC) on it's purchase of Jeezan Holding and Kuwait Invest in deal worth KD79.6 million ($282.3 million).

Long standing client Kuwait Finance House meanwhile have mandated the firm to advise on the $1 billion restructuring of the debts of Aref Investment Group. Hossam Abdullah and Akram Al Zubi closed the deal in November 2010.

In repossession, Little and Tuma combined with Habbas to act for two leading international aircraft leasing companies, International Lease Finance Corporation and Aercap Aviation Solutions, in regard to the repossession of four airbus aircraft from a Kuwaiti airline that suspended its operations.

The market is in accord when considering Abdullah Kh Al-Ayoub & Associates with clients expressing their appreciation of the firm and peers feeling it has earned it's rank. "They provided a very good service. Everything was done on time," says one client adding: "They would always get back to us quickly." Managing partner and founder, Abdullah Kh Al-Ayoub, is a name that continually arises when peers consider leading individuals at the firm.

The practice is split between the Arabic law division led by Mohammad Hassan Omar and the international department governed by Prateek Shete.

The firm is recognised for it's experience in the oil industry and has been active on several mandates in this sector. Shete and Hassan Omar took the lead advising a US company on a $140 million acquisition of a controlling stake in a Kuwaiti petroleum company in November 2010.

A further deal saw Shete advise a leading South Korean IT services company on a $400 million contract for engineering, procurement and construction with a Kuwaiti Oil Company

On behalf of another a Japanese power company Shete advised on a $400 million bid for a power substation project tendered by the Ministry of Water and Electricity.

An ongoing transaction sees the firm active for a Kuwaiti company, renegotiating and restructuring a joint venture with a Canadian based health services company to establish a molecular imaging medical and research centre in Kuwait.

Founded in 1983, Al Markaz Law Firm initially only practised litigation but has long since branched out in to corporate and finance work.

Restructuring has provided the firm with its most substantial mandates in the last 12 months with the $3.7 billion Investment Dar corporate restructuring the largest. The first deal to be performed under the protection of the financial stability law in Kuwait sees the firm take a role for the debtors in the ongoing transaction.

A further deal sees the firm active for Kuwait Enterprises House on a $450 million restructuring of companies and assets in its portfolio.

A mandate in the oil and gas sector saw the firm advise a Kuwait company, Triple E Holding, on establishing a cooperation agreement with the Chinese government. The ongoing deal is valued at $400 million.

Since opening in November 2009 in a joint venture with Yacoub Al Munayae, Al Tamimi & Company has hit the ground running.

Former DLA Piper managing partner Alex Saleh, who heads the practice, has been active across all the firm's major transactions and notably two restructurings.

Saleh acted for the lead arrangers, National Bank of Kuwait and Ahli United Bank, on behalf of 21 international lenders on the KD145 million ($532 million) restructuring of Kuwait Finance & Investment Company conventional and shariah-compliant debt and bond issue. The second issue was the KD92 million ($337 million) debt restructuring of First Investment Company in which Saleh acted for the creditors. The debt was restructured through a sukuk al wakala (Islamic bond linked to underlying assets) structure.

A further Islamic deal saw the firm advise Ahli United Bank and Ahli United Bank in the providing KD20 million Islamic facilities murabaha (deferred sale) and ijarah (capital leasing) to Kuwait Telecommunications.

The firm also assisted the Jordan office in advising Capital Investment & Brokerage and Jordan Co as the lead managers in relation to the first ever Jordanian sukuk (Islamic bond) issuance by Al Rajhi Cement, which was valued at JD85 million ($119 million).