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

Activity in the Japanese capital markets was sluggish before the dramatic natural disasters, which struck the country in early 2011. Now, as one partner puts it: "The market is very slow and very soft."

Equity work has been hardest hit with IPO deals few and far between, and with those that do get started rarely getting over the finishing line. With the economic gloom hanging around the country this could be a trend that persists for some time.

The government has tried to encourage growth through low interest rates but so far little impact has been seen.

What hope there is in terms of new deals is around the potential capital raising activities of Japanese banks as they try to increase their capital bases in line with stricter regulations.

Debt work has held up slightly better with some activity seen in both Euro and Yankee bond issuances. Practitioners have also seen an increase in Renminbi denominated 'dim-sum bonds'. This is perhaps no surprise considering China's ascendancy as the dominant economic force in the region and peers will no doubt expect to see more work in this vein in the future.

Another area where practitioners were hopeful of seeing an upturn in mandates is high-yield. With liquidity restricted all over as banks try to tighten their belts and get their capital reserves in order, the bonds market have stepped in to fill the void, either fulfilling the entire financing requirement or as part of a bank/bond hybrid. So far, activity in this field in Japan has been limited but with Hong Kong having fully embraced the product there is optimism that it may cross the water and open up a new stream of work. If so the race will be on for firms to recruit practitioners (more than likely New York trained) able to handle the new work.

"With Allen & Overy, you can sleep easy," a client says. Though counsels Aaron Comerford and Seiji Matsuzoe focus on the firm's outstanding structured finance practice, they also possess a high level of expertise in capital markets. The firm's close relationship with large international banks means it has advised a plethora of household names including Nomura, Bank of America Merrill Lynch, Mizuho, Daiwa and Citi.

In a highlight deal, Comerford acted for arrangers Goldman Sachs, Mizuho and Nikko Cordial regarding the initial offering of units in the Mori Trust Sogo real estate investment trust (Reit), worth over ¥40 billion ($520 million).

Living up to its reputation as one of the country's top firms, Anderson Mori & Tomotsune saw another excellent year in transactions. The firm frequently advises many major international and domestic underwriters as well as international and domestic issuers.

Last year leading lawyer Akiko Kimura, along with Kazuhiro Yoshii, acted for the issuer in Nomura Holdings' $3 billion global offering of US dollar senior notes.

Another transaction which shows the capabilities of Anderson Mori's capital markets practice saw Hironori Shibata and Hiroshige Nakagawa combine to advise one of four large state-owned banks in China, Agricultural Bank of China, in its global offering in Japan last July. This landmark deal is one the world's largest IPO, and raised a record $22.1 billion in its public offering.

Kimura and Yoshii joined forces again for the biggest public offering in 2010 by a Japanese non-financial institution. The duo were legal counsel to the underwriters, including Nomura Securities, Goldman Sachs Japan and Mizuho Securities among others, in regard to the Japanese law aspects of Ipex's $6.11 billion global offering in August 2010.

Atsumi & Sakai has been quite active in Japanese capital markets this year. The addition of partner Yutaka Sakai from TMI Associates has bolstered its practice, and since his October 2010 arrival, he has been involved in the firm's highlight capital markets deals.

Sakai led the preparation of a ¥55 billion ($715 million) loan agreement for a fast food restaurant corporation. In another transaction, he advised a Japanese company regarding setting up a ¥200 billion fund in Japan.

Prominent partner and "grandfather" of Samurai bond issuances Hiroyoshi Kuromaru is one of the key reasons Baker & McKenzie GJBJ keeps afloat in the second tier. His stellar practice has loyal clients and admiring peers lauding his expertise. Despite the dominance of the big four Japanese firms on most domestic securities deals, the Bakers team stands tall among formidable peers in the local law space and managed to land several notable mandates in 2011.

In one demonstration of its abilities, a team advised the joint lead managers in the issue and public offering of several Samurai bonds from the National Bank of Australia. These totalled in value at ¥156.3 billion ($2 billion). In another similar transaction, Australia and New Zealand Banking Group relied on Kuromaru and his team for its issuance and public offering of two Samurai Bonds.

This year, a focus of the firm's capital markets practice was expanding and bolstering its foreign law capabilities, particularly in the US Generally Accepted Accounting Principles (GAAP) sector.

Davis Polk's duo of Eugene Gregor and Theodore Paradise ensures it retains its top position in the market. The firm has deal highlights across all facets of the debt and equity capital markets this year.

Referring to Gregor, one client says: "He's definitely one of the most respected US securities lawyers in the region and when he weighs in both the clients and the other side defer, because he's so knowledgeable and experienced and definitely someone people are eager to hire."

Another client appreciates the firm's willingness to evolve to meet its needs and develop its servicing. "The Davis Polk lawyers are very active about seeking feedback and will definitely take note of our thoughts," says the client. "If we have any issues, they are very quick to resolve them. They take them seriously and fix them."

One landmark deal saw Gregor, along with Tokyo's Michael Dunn and London's John Paton, advise the initial purchasers, including UBS Securities, ING Bank (Singapore Branch), and Crédit Agricole Corporate and Investment Bank, in connection with a Rule 144A/Reg S notes offering by eAccess. The offering, valued at approximately $700 million, not only constitutes the first high-yield debt offering from Japan in five years but also the first-ever to be offered on a global basis under US Rule 144A/Reg S. The transaction is exceptional considering it had moved forward to completion despite the great Tohoku earthquake and tsunami and opens a new high-yield debt offering product area for Japanese issuers.

Another highlight had Paradise, along with Paton and Dunn, advise Sumitomo Mitsui Banking Corporation in connection with its three bond offerings valued at approximately $4.5 billion in aggregate. The July 2010 and January 2011 senior offerings were, respectively, the fourth largest and largest dollar-denominated offerings in 2010 and 2011. The euro-denominated subordinated offering was the only such issuance in Japan in 2010.

The firm also continues to strengthen its team with the addition of a few lawyers from New York including Jesse Gillespie, who relocated from the firm's Menlo Park office last October 2010.

Japanese clients praise DLA Piper for its ability to interface with Chinese clients. Partner Koji Ishikawa is a noted figure in the firm's China-Japan relations. A client says: "He is familiar with Japan, Hong Kong and China-related regulation and can speak Chinese fluently."

Ishikawa is advising several companies on ongoing IPOs, including a pachinko business in Japan looking to list on the Hong Kong stock exchange.

Though peers pan Freshfields Bruckhaus Deringer's work in the capital markets area, the firm retains a prestigious list of banking clients, including Barclays Bank, Daiwa Capital Markets Europe, Macquarie Goodman Japan, Macquarie Bank and SBI Holdings.

This year partners Junzaburo Kiuchi and Edward Cole of the Tokyo office assisted SBI Holdings with partners in the firm's Hong Kong and Shanghai office regarding the proposed HK$2.55 billion ($330 million) of Hong Kong depositary receipts on the Hong Kong Stock Exchange.

"Philip Hyde, who's a partner, and Jonathan Green, who's a senior associate, are both reachable, responsive, and provide quite practical advice with consideration of commercial constraints," says a client of Hogan Lovells.

The firm leverages its strong international network to act for clients such as BNP Paribas, Morgan Stanley, Credit Suisse and the Bank of New York Mellon. In a highlight this year, the firm, led by Hyde and Green, advised Morgan Stanley Japan Securities regarding its joint venture with Mitsubishi UFJ Financial Group.

Linklaters' full-service practice remains in the top tier in the foreign law rankings this year. Although former departures continue to haunt the magic circle firm, it proves to any doubters that it is a dominant force by securing lead mandates on a range of enviable securities transactions. One peer highlighted its prowess on Reg S offerings. Another offered praise for partner Peter Frost's work in the market. "Linklaters is quite professional in the capital markets area and are very reliable," notes one client. "Both the Japanese and foreign law advisors are involved where necessary and complete things on a timely basis. Things go quite smoothly with them."

An impressive feat, the team at Linklaters worked on every single Renminbi bond deal by Japanese issuers to date, entirely cornering an important niche with the rise of China's dominance in the Asian space. Leading lawyer Andrew Carmichael advised Morgan Stanley and Nomura as the international managers in Shinsei Bank's ¥72 billion ($890 million) Rule 144A/Reg S international offering of 690 million shares of common stock.

Nicknamed "the rainmaker" by one of his rivals, Toru Ishiguro, along with an impressive ambit of partners, continues to generate exemplary deals despite the earthquake. September 2010 saw Ishiguro along with Yasuhiko Fujitsu advise Mitsubishi Corporation in its issuance of $500 million of five year US dollar denominated unsecured straight bonds. This marked the corporation's first public offering in a foreign market of US dollar denominated unsecured straight bonds in 25 years. The deal, which was almost eight times oversubscribed, led to Mitsubishi issuing US dollar denominated unsecured straight bonds in February 2011 under the same conditions as those issued previously. The bond continued to perform favourably in the secondary market due to strong demand.

Another highlight saw the firm acting as counsel to Nomura Holdings in the first US dollar denominated sukuk (Islamic bond) for a Japanese corporation issued out of Malaysia. The deal, valued at $100 million, paves a new path for Japanese corporations to diversify their funding sources by tapping into overseas Islamic finance markets. Participating in such a deal shows Mori Hamada's extensive capabilities.

"I highly recommend Morrison & Foerster's services due to its strong expertise in J-Reits and capital markets," says a Japan-based banking client. "It is an innovative firm and we're always in discussions around new structures for Japanese convertible bonds," says another.

Brandishing well-known names among its leaders and a very strong tripartite offering of UK, US and Japanese law, Morrison & Foerster has enjoyed a steady workflow this year. "Each individual stands out as they have their own expertise," says an investment banking client. Competitors have kind words for partners Tony Grundy, Fuyuo Mitomi and Andrew Winden. One peer commends the latter for showing excellent potential and having the capability to further build up the firm's practice.

"Grundy is one of the most important lawyers in Tokyo," says a client. "He contributed to the establishment of the Japanese capital markets." Another from an English bank offers: "Tony is very experienced and I appreciate that Mitomi is very open to any discussions and is very accessible. I always pick up the phone and ask him questions about Japanese law."

"This firm has very deep experience in the capital markets business, such as bond-related business, both in the Japanese market and cross-border, international market," says a client.

On the Japanese law side, Mofo's bengoshi practice is highly-regarded, with noted practitioners Mitomi and "Reit Queen of Japan" Saori Nakamura leading the charge. "Mitomi's replies are very valuable compared to the expenses incurred," says a client. "The Japanese law team is the best value for money," says another. Mitomi and Nakamura, plus partners Mitsutoshi Uchida and Katsuhiko Fujihira, offer clients such as Merrill Lynch Japan Securities and SMBC Nikko Securities first-rate local law advice. A sampling of the team's work includes acting as sole counsel to Mizuho Securities and Deutsche Securities for Advance Residence Investment's ¥29.3 billion ($381 million) public offering and providing securities advice to Mitsubishi UFJ Financial Group in its $5 billion combination of its securities business with Morgan Stanley Japan.

One client compliments Mitomi further: "He has business knowledge of banking operations accumulated during his previous assignment in a bank; he fully understands our true intention of such inquiries."

Mofo has been steadily fortifying its three year-old UK law practice and has developed a reputation for being one of the leading firms for various cutting-edge UK law products.

Although the firm was not as visible on international-related big-ticket transactions, it did have its fair share of interesting deals. UK-qualified counsel Robyn Nadler and US-qualified Winden provided advice to Deutsche Bank as the lead manager in Pioneer Corporation's $321 million Rule 144A/Reg S institutional offer of new shares. Mofo was the sole counsel to Deutsche and was able to provide advice on UK, US and Japanese laws. "Robyn [Nadler]'s bilingual skills are a big plus for Japanese clients," says a Tokyo bank client. "I also like to work with Kahoru Sakurai, she is friendly, easy to speak to and her eagerness to solve problems is excellent."

With an impressive roster of clients spanning from AIA Group to RBS Securities Japan, the experienced capital markets team at Nagashima Ohno & Tsunematsu stands firmly among its domestic peers in the top tier. "I often work with Nagashima Ohno & Tsunematsu on equity financings," says a banking client. "Its level of service is so high."

In a landmark deal showcasing the firm's penchant for cutting-edge securities work, "luminary" Fumihide Sugimoto and Shinichi Araki led a team for Goldman Sachs and JPMorgan in the Dai-Ichi Life Insurance Company $1.3 billion 7.25% step-up callable perpetual subordinated notes issue. This was the first-ever issuance of hybrid bonds which constituted specified subordinated debts and was completed under the new solvency margin regulations of insurance companies in Japan effective in 2012.

Another key transaction for the Nagashima team saw Toshio Kobayashi and Masaki Konishi advise Mizhuho Financial Group in a simultaneous international and Japanese offering of six billion of its shares of common stock. This deal was valued at ¥780 billion ($10 billion).

On the back of favourable client comments and strong recommendations from peers, Nishimura & Asahi debuts in the top tier this year. Over the past few years, the firm has been solidly building up its track record, amassing a devoted following of clients and working on a balanced mix of deal types, from samurai bonds and IPOs to convertible bond issuances. Hideki Ebata and Mitsuhiro Yasuda continue to stand out as star partners for their dealings with the likes of Daiwa Securities, Deutsche Securities, and Elpida Memory, among others.

In a groundbreaking IPO, the Nishimura lawyers served as domestic counsel to Dai-Ichi Life Insurance. This offering, which raised $11 billion, marked the largest IPO by a Japanese issuer this century and was a demutualisation transaction. This was the first demutualisation made under the latest Japanese company's Act. Another notable transaction that highlights why Nishimura edged into the first tier was SBI Holdings' Hong Kong IPO. Partners Takashi Ejiri and Shinpei Nakada acted for the issuer on its Hong Kong Depositary receipts (HDRs) on the Hong Kong Exchange, the first listing of HDRs for a Japanese Company on the Hong Kong bourse.

A darling of certain clients, the Paul Weiss capital markets offering is well-regarded by peers. "That it has at least NEC Corporation as a major client is a testament to its strength," says a rival. Another one notes that "its lead partners are quite effective". Tong Yu and Kaye Naoko Yoshino helm a relatively lean team, though this includes a deep bench of bilingual associates. However, as clients will often note, it's not the size of a law firm that counts, but its quality.

Yu worked with the Bank of Tokyo-Mitsubishi on its $1 billion senior bond offer that closed in February 2011. This deal came after another successful senior notes offer of $2 billion by the senior issuer that was also represented by Yu and his team. In particular, Paul Weiss has developed a reputation among clients for doing complex deals and being at the forefront of creating new structures. Its real estate securities work remains strong, a prime example being Yu and his team representing Kenedix, the largest independent real estate asset manager in Japan, in its $177 million global common stock offering.

Since the October 2009 arrival of renowned capital markets partner Bradley Edmister at Ropes & Gray, its capital markets work has skyrocketed. Peers are impressed with Edmister's clout, as several large clients have switched firms to maintain their long-standing relationship with him.

One client who has followed Edmister to the firm following his lateral move comments, "We are very satisfied with his work and with his expertise. He responds quickly, and speaks English as well as great communication in Japanese."

Shearman & Sterling's equity and debt offering is helmed by the well-regarded Masahisa Ikeda. With numerous blue-chip clients under its wing, in particular representing an enviable amount of Japanese issuers, Ikeda's team continues to punch above its weight. It is a key strategy of the firm to focus on premier issuers like Toyota, Kyocera, Olympus and Toshiba. A modestly sized team, the firm has invested in its practice over the past year by hiring a number of experienced counsel and associates.

"We are impressed with Mr Masahisa Ikeda and his team of associates," says a managing director of a private equity firm. "We rely on him and his team when it comes to US law issues. His most significant strength is that he is a true expert on capital markets and fundraising issues. We believe Mr Masahisa Ikeda is the best Japanese lawyer in town in terms of expertise and experience. He can get deals done properly and promptly and his advice is always pragmatic. The other significant strength is that he and his team can provide top quality advice all in the Japanese language, on the ground in Japan. We are sure many Japanese clients appreciate the language and cultural abilities of Shearman & Sterling."

Reflecting the calibre of the firm's transactions, this year Ikeda and of counsel Satoko Kato advised eAccess on its $700 million high-yield bond issuance. Utilising an integrated team across all its Asia offices and New York and Menlo Park, this was a unique deal due to the rarity of Japanese high-yield issuers. Additionally, this was the first Japanese high-yield offering since June 2007. Another significant deal has Ikeda leading a team for Sumitomo Metal Industries in its $50 billion offering. The firm in particular advised on the Form F-4, Form 20-F, and other legal compliance issues relating to the Securities and Exchange Commission.

"We think Shearman & Sterling has the top capital markets lawyers in town who can also operate flexibly in other corporate areas. They are always prompt and timely in their response, and their advice is practical and realistic," says a client. "They have the right business instinct and truly understand our business needs. They lay out the alternatives and discuss the pros and cons, making it easier for us to make a business decision on some of the most difficult legal issues."

While peers note that the firm does not have the clout of Japanese firms, they unanimously agree on Simpson Thacher's tremendous reputation in the Japanese market. The Wall Street firm saw another excellent year, with an impressive deal list involving Japanese issuers, particularly IPOs and bank capital transactions. This client appreciates Simpson Thacher's underwriter relationships: "We appoint Simpson Thacher because its lawyers are very good at disclosure work. Also, they know the underwriters very well and are good at handling them."

Another is a fan of Alan Cannon's: "On the international law side, Simpson is very helpful and the lawyers are always approachable. I'd personally choose Cannon as the most capable partner, but he's very very busy."

A showpiece transaction early this year had the team, led by Cannon, representing Resona Holdings, Japan's fourth-largest banking group by asset size, in its global offering of common stock that raised ¥547.7 billion (approximately $6.6 billion) for the issuer. The international portion of the transaction included an offering to qualified institutional buyers in the United States pursuant to Rule 144A and an offering outside the US in reliance on Reg S.

Another highlight saw, the team led by Takahiro Saito, represent the issuer in a global offering of 5,609,000,000 shares of common stock issued by Mizuho Financial Group. Mizuho Securities, Nomura Securities, JPMorgan and Merrill Lynch Japan Securities were the joint global coordinators in the transaction that closed in July 2010.

"David Sneider and Alan Cannon are knowledgeable and take care of juniors very well," commented a financial firm client. The firm's impressive broad base of both issuer and underwriter clients include Dai-ichi Life, Goldman Sachs, Merrill Lynch, Mizuho Financial Group, Morgan Stanley, Nomura Securities, Shinsei Bank and UBS.

The managing director of a large domestic investment house says: "My first choice would always be to work with Sullivan & Cromwell. It is very reliable, knowledgeable and well-coordinated." Small, but packing a powerful punch, the venerable Wall Street firm remains at the top of the securities game in Japan. Few practitioners in the market garner as much praise and respect as star partner Izumi Akai. "Mr Akai has a very good character, the smarts to proceed a deal with deep consideration of Japanese business culture, and he takes care of all top management concerns and interests," says a corporate client. The dual-qualified Akai and his team, including partner Garth Bray, have had a very busy year with peers acknowledging their presence on a number of coveted mandates. "The quality of advice and the responses are excellent," says another loyal client.

Sullivan's strong underwriting portfolio is highlighted in its work on Japan Finance Corporation's (JFC) and Mizuho Financial Holdings' global offerings. JFC is a key client of Bray's. The latter of the two deals saw Akai advising the underwriters as to US law in Mizuho's ¥690 billion ($8 billion) global offering of its common shares. In particular, the execution was challenging as the offering was launched during unstable economic and market conditions. Akai and the other lawyers acting on the transaction had to structure the offering so that it was convincing to investors but at the same time, was clear about risks involved. Over the past five years, league tables have illustrated the firm's dominance in completing SEC-registered and Rule 144A offerings by Japanese issuers - this year it boasted a staggering 50% of all those done since 2006.

White & Case has had a banner year, representing Credit Agricole, Deutsche Bank, the Development Bank of Japan and Sumitomo Mitsui Banking in its capital markets practice.

In a landmark deal, Tokyo partner Simon Collins and Hong Kong partner Hallam Chow served as the English legal counsels to Nomura Holdings, Nomura Babcock and Brown and BBAM Aircraft Management in the issuance of a Shari'a law-compliant sukuk (Islamic bond) with a principal amount of $100 million, which was used to finance an aircraft purchase. This multi-jurisdictional sukuk issuance was the first to be completed in a US dollar denomination.