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

Finally, after a four-year hiatus, the IPO market returned to Austria in April 2011 as aluminium company AMAG raised €535 million on the Vienna stock exchange. However the listing is not indicative of what remains a cautious market.

Lawyers are not overly optimistic about what the deal signals for the IPO market and many suspect it will be an anomaly this year. "The stock exchange authority hopes that it will encourage and fire up the market, my feeling is that it's still too volatile," says one partner. "These issuers are not that big, they are still small-caps and not that visible to investors outside Austria and it's always necessary that you tap international capital markets." This view was given credence when Isovoltaic, a solar panel producer, pulled its IPO in the same month over disagreements on pricing.

Elsewhere on the equity side the picture is more encouraging, at least for law firms, with the majority noting a marked increase in mandates for capital increases in the last 12 months and pointing to a pipeline of deals.

The problems arise when it comes to closing, with the bulk of deals in 2010 and early 2011 suffering the fate of Isovoltaic and being postponed. "We have prepared several deals until almost to the signing phase but they were not signed. We have now just picked up a deal which was to be closed in November but we try now for the end of June 2012. This is not uncommon these days," says one lawyer.

Investors don't have the appetite for risk given the instability of global markets that have at various points in the last 12 months been rocked by the sovereign debt crisis, Fukushima and the Arab Spring, and issuers cannot get the share price they expect. Further hindrance came in February 2011 when the coalition government introduced a 25% capital gains tax in a bid to reduce its budget deficit.

There are of course exceptions. Utility company Verbund's €1 billion issue was the most significant transaction in 2010 and Porsche's €4.9 billion increase in April 2011 has already eclipsed that.

The outlook for the debt market meanwhile remains positive. For companies presented with a difficult equity market and an absence of affordable bank financing, bonds have proven increasingly popular .across the board. "The big ones have big activity, the smaller ones try to have activity but have issues with volume so run it like a programme, where they place bonds then wait, then place more," observes one partner.

The markets in Austria are becoming more sophisticated with clients willing to utilise convertibles and hybrid bonds to attract institutional investors. "Many of the people who tried to get in to the equity market but couldn't went in to hybrid, because of their need for rating," says one capital markets lawyer and another agrees: "Part of the hybrid strengthens and is recognised by the ratings agency. What is new is that we see it in combination with stock issues."

International investment banks are also enquiring about adapting products used in the US and the UK for the Austrian market. "We have seen quite a few bonds, fund activities are up again, corporate bonds, structured derivatives and syndicated loans," observes one partner. "There is the attempt to overcome the failures of the system which prevailed before the crisis through new innovative products."

The popularity of high-yield bonds in Germany is another source of optimism for Austrian firms with some suspecting they will see the first Austrian bond of this kind completed under German law in the next 12 months.

Market opinion on Cerha Hempel Spiegelfeld Hlawati is divided. Several competitors observe that the firm has lacked visibility in 2011, which one partner attributes to the scarcity of equity work available: "They have been very popular with equity transactions and since there were none they had no chance to be in the market." However this has not led to any reduction in headcount and the firm has been kept busy on enough debt work to justify its top-tier ranking.

"Cerha are still the strongest capital markets firm in Austria," insists one partner and another agrees: "Cerha is well-known and a more than reputable player in this area."

The firm's clients are also positive: "I think they are extremely professional, diligent, creative and commercially understanding. Exactly what you want from a lawyer," one says, citing name partner Edith Hlawati and partner Volker Glas. Another values the team's size and capacity: "There's a deep bench so you know they are not going to miss anything for due diligence purposes."

Although the team admits that debt work has been a preoccupation over the last 12 months, they were involved in the most substantial equity transaction on the Austrian market in 2010: Verbunds' €1 billion capital increase. Hlawati and Glas advised the arrangers, Morgan Stanley and Raiffeisen Bank, on the electricity providers' secondary offering which was complicated by the statutory requirement that 51% of the company must remain in government hands. This was assured by not setting a direct subscription ratio and determining the number of new shares to be offered through a book-building process. Closing in November, the deal consisted of a public offer in Austria and a private placement in the United States.

On the bond side, Glas advised steel manufacturer Voestalpine in setting up a €1 billion senior debt programme and an inaugural issue of €500 million senior bonds, which involved drafting documentation that allowed the international steel company to retain full flexibility in the selection of dealers for future issues.

Firms are seeing more complex instruments being utilised on the Austrian market and in line with this, Thomas Zivny and Peter Knobl drafted Spar's €200 million prospectus for offerings to Austrian and Luxemburg retail investors, which was approved in August 2010.

In other transactions, Knobl advised Total Capital Canada and its parent company on its' A$100 million private placement in February this year, while Zivny advised first-time issuer Alpine on its €100 million corporate bond, which was finalised in July 2010.

Dorda Brugger Jordis is renowned for its capital markets practice and respected amongst its peers: "Dorda is definitely tier one," says one.

Clients highlighted the three main partners in the practice: "Christoph [Brogyányi] is the most experienced and is really involved in the transactions and knows the papers, knows the issues. Andreas Mayr is more the relationship guy, so plays the senior role. Tibor Varga is also a hands-on guy," says one client, adding that: "All three are very knowledgeable." Peers also praised Varga, with one pointing out that "he does not make small things a big issue".

In March 2011 Mayr and Brogyányi advised Intercell on the issue of €82.5 million 6% convertible notes due in 2014. The deal was one of the first of its type in Austria and features include the right of holders to activate two increase options of €33 million and €16.5 million; the exclusion of statutory subscription rights with the placement of the notes; and a provision to allow the issuer to repay both the principal and the interest with shares.

Another highlight saw Varga – who clients praise for being, "a seasoned practitioner," and "very responsive and very practical," – act for long-standing client Egger Holzwerkstoffe on the €200 million issue of senior notes in March 2011. The firm has advised the European wood processing company on its two previous notes issuances.

In November 2010 the team finalised two more notable transactions. The first saw Brogyányi, Varga and Paul Doralt advise Brazilian based Odebrecht Drilling Norbe (a subsidiary of Odebrecht Oil & Gas) on a $1.5 billion project bond issuance, under US Rule 144A/Reg S. The capital raised was used to purchase two Austrian deep-sea offshore drill ships which were later chartered to Petrobas. The second saw Varga advise website Kapsch Traffic on a €75 million corporate bond used to finance the acquisition of US and Canadian based Mark IV IVHS.

One notable deal which did not reach close saw the firm act for Isovoltaic, a producer of solar panels, as the issuer on what would have been only the country's second IPO since 2007. The deal was pulled at a late stage due to pricing issues.

Competitors praise the team for its hands on approach: "You never see associates there. It's the role Christoph plays as he is always really involved in the deals," says one.

By virtue of a strong year, in which the team closed some complex and significant mandates, Freshfields moves to the top tier in capital markets this year. "Freshfields still receives a lot of work from their Frankfurt office and they are doing well," says one peer. Although some suggest that the Vienna office is overly reliant on referrals from its CEE (Central & Eastern Europe) network, several partners could not differentiate between the firm and those in the top tier, agreeing, as one partner puts it, that "in terms of quality and track record it's basically equal".

Clients are consistent in their praise for the firm's capital markets practise: "Very smooth, fantastic, they did an excellent job," says one, who continues, "only three firms are able to write a prospectus on the issuer's side in Austria and Freshfields is one." Another client highlights the firm's deal brokering: "Anyone can write a deal and a prospectus but how you bring the right topics to the table to discuss and how you find them, that is another thing. It's not the M&A deal style you have to find a solution that fits everyone."

On the equity side last year Maria-Theresa Pflügl and Stephan Pachinger (highlighted by competitors as one to watch) advised AMAG on its €366 million IPO, the first in Austria for four years. The shares were offered under Rule 144A placement in the US as the now public company holds operations in Canada. The pair also advised Evn on its' €200 million capital increase. The deal featured a novel up-front placement to institutional investors subject to a claw-back of holders' subscription rights.

The firm prides itself on being a cross-border specialist and several deals in the past 12 months illustrate this. In one Pflügl acted as sole Austrian counsel on Porsche's €4.9 billion capital increase and she also acted alongside Pachinger on Sappi Papier Holding's high-yield bond issuance, which was offered in the US.

The team is a favourite of the banks and has completed some notable bond work over the last 12 months. In one deal, managing partner Friedrich Jergitsch acted for UniCredit Bank Austria as arranger of two €1 billion pfandbriefe issuances in Germany. The team also advised Deutsche Bank and DZ Bank as lead arrangers of two bonds by Raiffeisen Bank in February and March 2011.

Although Stefan Weber's competitors all concur that he is an outstanding capital markets lawyer, several repeated the phrase "one-man band," when describing his practice. Another said: "Stefan Weber's firm is more or less a boutique firm," while one felt: "It's rather focussed on Stefan Weber than his team."

The reason the recently rebranded firm (the name of which now excludes existing partner Maxl from its title) is yet to break in to the top tier is perhaps best illustrated by a commentator: "I appreciate Mr Weber's expertise but he is, to a certain extent, a one man show. If he's not available, he's not available, there is no fall-back position for the clients."

However despite this lack of depth the quality of Weber's work and connections shines through. "They have recently been doing quite a fair chunk of work where they represent the banks, working as Austrian council," says a competitor, "Stefan Weber has very good connections to the investment banks."

Wolf Theiss remains in the second tier this year with competitors noting the firm's strong debt ability while questioning whether it focuses too much on this type of work at the expense of its equity practice.

However, this being said the team did work on one of the key equity deals of the last 12 months advising Verbund on its €1 billion capital increase in November 2010. Name partner Richard Wolf, who a competitor refers to as the firm's "most important practitioner", led on the deal which used a novel structure to account for the statutory requirement that the Government holds a 51% majority stake in the company and could only purchase new shares with a value of up to €510 million, the total value of shares offered were therefore capped at €1 billion with value determined using a book building exercise.

Cerha Hempel Spiegelfeld acted for banks on the Verbund issue and the two firms met again in February 2011 when Wolf Theiss advised private equity house Heights Capital Management on the structuring and documentation of a bespoke €33 million convertible bond issuance by Intercell. Offered to institutional investors as part of a private placement, the total volume of the bond may be increased by 150% to €82.5 million at the option of the note holders through a number of warrants.

The firm also continued to work on the recapitalisation of bank Hypo Alpe-Adria. Markus Heidinger acted for the bank on the issue of €450 million of participation capital to the Republic of Austria. The firm was also involved in the tender offer for four of the nationalised banks' government guaranteed notes, valued at €1.3 billion. Claus Schneider advised a syndicate of banks, including BNP Paribas, Morgan Stanley and UniCredit Bank Austria, on their tender offer for the notes launched seven days after the mandate had been secured. The offer closed with an excess of 50% of the outstanding aggregate amount.

Wolf is well liked by competitors, with one describing him as, "a nice guy and an excellent lawyer." Another competitor appreciates his candour and experience: "We like to have him on the other side because he's very straight - he knows what is possible and what is not."

Binder Grösswang's capital markets team has traditionally been overshadowed by its leading banking practice, but the firm has had a strong year.

In June 2011, Florian Khol and Tibor Fabian advised Lenzing, an Austrian cellulose fibres group, on a €620 million capital increase and secondary offering.

On the debt side the pair, which is described by clients as "pragmatic", also acted for Lenzing, advising on a €120 million issue of bonds in Austria and Luxembourg in October 2010. The pair also advised steel company Voestalpine on its €1 billion debt programme, which closed in January 2011.

A team consisting of Khol, Fabian and Thomas Berghammer also acted on two separate issuances of real estate bonds for mortgage providers Hypo Wohnbaubank and Raiffeisen Wohnbaubank. Hypo's bonds could be worth an aggregate of €860 million and Raiffeisen's could reach €1.15 billion.

Some commentators were hesitant about the team's capacity to challenge firms above them when securing the more significant deals. "I don't see them being mandated by the banks, which is really the test," was one lawyer's appraisal of its position in the market.

Fabian also advised the struggling Kommunalkredit Austria on its €2 billon DIP (debtor in possession) financing in November 2010 and Khol and Berghammer acted for Shedlin Capital in connection with the approval of a prospectus for investments in private equity fund participations.

Lawyers remain uncertain about Schoenherr's capital markets practice. "Capital markets is certainly one of their weakest areas," observes one, adding: "They have good experts like Peter Feyl, but they are very rarely involved in transactions."

Most of the firm's most notable recent work has been driven out of the financial crisis. The firm acted on two significant refinancing transactions with a capital markets angle. Feyl, who one client values for his "strong service approach" and for being "well-organised and responsive", advised German pharmaceutical company Phoenix in relation to the group's refinancing consisting of a €2.6 billion fixed term revolving facility and a €500 million high-yield bond. Feyl also acted for lead managers Deutsche Bank, Citigroup and RBS on a €2.5 billion secured high-yield bond issued by Conti-Gummi Finance as part of their restructuring in July 2010.

Commentators say Baker & McKenzie in association with Diwok Hermann Petsche is becoming more visible on the market. Partners Eva-Maria Ségur-Cabanac and Philipp Spatz, who is recommended by several competitors, represented the underwriters on catering company DO&CO's capital increase and secondary listing on the Istanbul Stock Exchange, which closed for €68 million in November 2010. In May 2010 the pair also acted for the underwriters of the capital increase by listed Austrian property development company, Warimpex. The €29 million transaction included a listing in Austria and Poland and a backstop commitment by an investment management company.

Brandl & Talos is respected within the market for its capital markets regulatory expertise, but the firm has been active on the transactional side, most notably for WEB Windenergie on its €10 million bond, the first issued by an Austrian independent wind energy provider. The deal was led by Thomas Talos and new partner Christian Thaler, who joined the firm from DLA Piper Weiss-Tessbach in 2010.

In addition, the firm was advising CPI Immobilien on the issuance of two corporate bonds with a total value of €40 million, and Capital Bank Grawe Gruppe on its debt issuance programme.